Ryanair 2009 Annual Report Download - page 61

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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, although some may have periodic increases linked to inflation.
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 kiosks for the issuance of boarding passes and the provision of other
services. The Company has these kiosks in operation at London (Stansted), Frankfurt (Hahn), Belfast and
Girona (Barcelona) and plans to eventually extend them to all of its main bases. These, together with the
introduction of Internet check-in and the reduction in the number of bags carried by passengers, is expected to
enable Ryanair to achieve 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.
The Irish Commission for Aviation Regulation (“CAR”) is currently 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 €1.2 billion of additional planned capital expenditures (which includes approximately €800
million for the new terminal) to be counted towards the regulated asset base (which would enable 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 is 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 planned by the DAA (”Terminal 2”) was “considerably oversized” and that
DAA should have to bear the full risk for that over-sizing. Despite the Panel’s findings, the CAR has refused to
reduce airport charges. In June 2009, the CAR issued its draft decision on charges at Dublin Airport and, based
on this draft decision, Ryanair anticipates that the cost per passenger for fiscal 2010 will likely increase by 13%.
In June 2009, Ryanair announced that it was reducing its fleet at Dublin Airport to 17 by summer 2009 and 16
by winter 2009 (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 €10 on all passengers departing from Irish airports on routes longer than
300 kilometers.