Ryanair 2010 Annual Report Download - page 67

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AIRPORT OPERATIONS
Airport Handling Services
Ryanair provides its own aircraft and passenger handling and ticketing services at Dublin Airport.
Third parties provide these services to Ryanair at most other airports it serves. Servisair plc provides Ryanair’s
ticketing, passenger and aircraft handling, and ground handling services at many of these airports in Ireland and
the U.K. (excluding London (Stansted) Airport where these services are provided primarily by Swissport Ltd.),
while similar services in continental Europe are generally provided by the local airport authorities, either
directly or through sub-contractors. Management attempts to obtain competitive rates for such services by
negotiating multi-year contracts at fixed prices. These contracts are generally scheduled to expire in one to five
years, unless renewed, and certain of them may be terminated by either party before their expiry upon prior
notice. Ryanair will need to enter into similar agreements in any new markets it may enter. See “Item 3. Key
Information—Risk Factors—Risks Related to the Company—The Company Is Dependent on External Service
Providers.”
During 2009, Ryanair introduced Internet check-in for all passengers and also introduced kiosks at
certain bases for the provision of other payment services. The Company has these kiosks in operation at London
(Stansted), Frankfurt (Hahn), Belfast, Girona (Barcelona), Glasgow (Prestwick), Pisa, Dusseldorf (Weeze),
Marseille, Edinburgh, Brussels (Charleroi), Bristol, Birmingham, Dublin, Milan (Bergamo), Bremen, Cagliari,
Rome (Ciampino), Faro and Kerry. The introduction of Internet check-in and kiosks combined with the
reduction in the number of bags carried by passengers, are expected to enable Ryanair to achieve further
reductions in airport handling costs.
Airport Charges
As with other airlines, Ryanair must pay airport charges each time it lands and accesses facilities at the
airports it serves. Depending on the policy of the individual airport, such charges can include landing fees,
passenger loading fees, security fees and parking fees. Ryanair attempts to negotiate discounted fees by
delivering annual increases in passenger traffic, and opts, when practicable, for less expensive facilities, such as
less convenient gates and the use of outdoor boarding stairs rather than more expensive jetways. Nevertheless,
there can be no assurance that the airports Ryanair uses will not impose higher airport charges in the future and
that any such increases would not adversely affect the Company’s operations.
With respect to Ryanair’s bases in Ireland, the DAA has recently completed a second terminal
(“Terminal 2”) at Dublin Airport. When this was first announced, the DAA estimated that the proposed
expansion would cost between 1170 million and 1200 million. Ryanair supported a development of this scale;
however, in September 2006, the DAA announced that the construction of Terminal 2 would cost approximately
1600 million. Subsequently, the cost of the new infrastructure rose in excess of 11.2 billion. Ryanair opposed
this expansion at what it believed to be an excessive cost.
The CAR is responsible for regulating charges at Dublin Airport. In late September 2005, the CAR
approved an increase in airport charges of more than 22% (effective January 1, 2006). On March 30, 2006,
following an appeal by the DAA, charges at Dublin Airport were increased by an additional 3%. On September
5, 2006, the CAR announced the launch of a public consultation to review and obtain feedback on the levels of
airport charges at Dublin Airport. In September 2007, the CAR announced its decision not to change the cap on
airport charges but appeared to allow approximately 11.2 billion of additional planned capital expenditures
(including approximately 1800 million for the new terminal) to be counted towards the regulated asset base,
enabling the DAA to substantially increase charges from 2010 onwards. Ryanair challenged this decision in the
Irish High Court but was unsuccessful. The High Court did, however, confirm that the CAR’s decision was a
“determination” within the meaning of the Aviation Regulation Act 2001 and that Ryanair was therefore entitled
to appeal this decision to an Independent Appeals Panel established by the Minister for Transport.
In December 2008, the Appeals Panel issued its decision in which it criticized the CAR for its “passive
approach” to regulating the DAA monopoly and found that the new terminal (Terminal 2) was “considerably
oversized” and that DAA should have to bear the full risk for that over-sizing. Despite the Appeals Panel’s
findings, the CAR has refused to reduce airport charges.