Ryanair 2010 Annual Report Download - page 68

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In December 2009, the CAR issued its decision on charges at Dublin Airport for 2010-2014 and as a
result, airport fees per departing passenger increased by 27% in May 2010, from 113.61 to 117.23, and could
increase by up to 8.0% in November 2010 to 118.64 following the opening of Terminal 2 in November 2010
and by up to a further 12.0% in January 2011 to 120.88.. However, the Appeals Panel, following a request from
Ryanair, ruled on June 2, 2010, that the CAR should introduce differential pricing for the use of the existing
Terminal 1 and the new Terminal 2. The CAR must decide whether to introduce such pricing by August 2,
2010.
In June 2009, Ryanair announced that it was reducing its fleet at Dublin Airport to 17 by summer 2009,
16 by winter 2009, 15 by summer 2010 and 12 by winter 2010 (down from 22 in summer 2008 and 20 in winter
2008), as a result of rising airport charges and the introduction of an Air Travel Tax of 110 on all passengers
departing from Irish airports on routes longer than 300 kilometers. Excluding the planned reduction by winter
2010, these reductions have been carried out. The introduction of the aforementioned 110 tax has likely had a
negative impact on the number of passengers traveling to and from Ireland. The DAA has reported that
passenger volumes fell by 13% in 2009 and by a further 14% in the period to June 2010, in each case compared
to the prior-year numbers. Ryanair believes that this is partly reflective of the negative impact of the tax on Irish
travel. Ryanair has called for the elimination of the tax to stimulate tourism during the recession. The Company
has cited the example of the Dutch government, which withdrew its travel tax with effect from July 1, 2009. The
Dutch travel tax had ranged from 111 for short-haul flights to 145 for long-haul flights and had resulted in a
significant decline in passenger volumes at Schiphol Airport, Holland’s main airport, according to data
published by the airport. The German government has also announced that it plans to introduce a passenger tax
in 2010 for all departing passengers, however, to date, no details on the amount of this charge have been
published.
In March 2007, the discount arrangement formerly in place at London (Stansted) airport terminated,
subjecting Ryanair to an average increase in charges of approximately 100%. The increase in these charges,
which was passed on in the form of higher ticket prices, had a negative impact on yields and passenger volumes
in the winter, resulting in Ryanair’s decision to ground seven aircraft. Ryanair responded to the increases by
filing complaints with the U.K. Office of Fair Trading (“OFT”) and the U.K. Competition Commission
(“Competition Commission”), calling for the break-up of the British Airports Authority plc (“BAA”) monopoly
and the introduction of competition in the London airports market. The OFT referred the matter to the
Competition Commission, whose preliminary findings were released in April 2008. The Competition
Commission found that the common ownership by BAA of the three main airports in London affects
competition and that a “light touch” approach by the Civil Aviation Authority was adversely impacting
competition. The Competition Commission subsequently ordered the break-up of BAA, a reorganization that
will require the sale of both London (Gatwick) and London (Stansted) airports and either Glasgow or Edinburgh
Airport in Scotland. In October 2009, London (Gatwick) was sold to Global Infrastructure Partners for £1.5
billion. In February 2010, this decision by the Competition Commission was quashed by the Competition
Appeal Tribunal, and the quashed ruling was appealed by the Competition Commission and Ryanair to the
Court of Appeals. This appeal was heard in June 2010 and a judgment is expected in the summer of 2010. In
the meantime, however, costs at London (Stansted) remain high.
Following the December 2003 publication of the U.K. government’s White Paper on Airport Capacity
in the Southeast of England, the BAA in 2004 announced plans to spend up to £4 billion on a multi-year project
to construct a second runway and additional terminal facilities at London (Stansted) airport with a target
opening date of 2013. Ryanair and other airlines using London (Stansted) support the principle of a second
runway at London (Stansted), but are opposed to this development because they believe that the financing of
what they consider to be an overblown project will lead to airport costs approximately doubling from current
levels. Following the final decision of the U.K. Competition Commission forcing BAA to sell London
(Stansted), it is highly unlikely that BAA’s planned £4 billion program will proceed, and Ryanair intends to
work with the new owners to develop appropriate low-cost facilities. The recently elected Liberal/Conservative
U.K. government has also outlined that it will not approve the building of any more runways in the southeast of
England.
Ryanair announced on July 21, 2009 that, as a result of the U.K. government’s then £10 APD tourist
tax (as well as the then scheduled increase in APD from £10 to £11, which occurred in November 2009) and the
high costs of operating at its London (Stansted) base, it would implement a 40% reduction in capacity at such
base between October 2009 and March 2010. In particular, the Company announced its intention to reduce its
London (Stansted)-based aircraft from the then current 40 to 24 during the aforementioned period, and also
reduce by 30% the number of weekly Ryanair flights to and from the airport. The Company announced at that