Ryanair 2012 Annual Report Download - page 67

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incremental 5 million passengers per annum over a five year period in return for reduced airport charges and the
abolition of the €3 air travel tax. Despite the fact that this offer was renewed in 2012, as of July 20, 2012, the
Company has not yet received a positive response to this proposal.
Both the Belgian and Greek governments planned to introduce similar taxes; however, they have now
cancelled plans to introduce these taxes. The German government introduced an €8 passenger tax on January 1,
2011 for all departing domestic or short-haul passengers and a passenger tax of €25 for all departing passengers
on flights bound for southern Europe and northern Africa. The €8 tax was reduced to €7.50 in January 2012. In
addition, the Austrian government introduced an ecological air travel levy of €8 effective January 1, 2011.
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 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 to regulating BAA by
the Civil Aviation Authority was adversely impacting competition. The Competition Commission subsequently
in March 2009, 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 UK Competition Appeal Tribunal (―Competition
Appeal Tribunal‖) on the basis of an alleged appearance of bias on the part of one of the six members of the
Competition Commission panel. However, in October 2010, following appeals from the Competition
Commission and Ryanair, the Court of Appeal overturned the Competition Appeals Tribunal ruling and
reinstated the Competition Commission‘s March 2009 decision to order the break-up of the BAA airport
monopoly. In February 2011 BAA‘s request for permission to appeal the Court of Appeal ruling was refused by
the Supreme Court, putting an end to this appeal process. The Competition Commission meanwhile initiated a
consultation on the appropriateness of the March 2009 remedies given the passage of time. In July 2011 the
Competition Commission confirmed its March 2011 provisional decision on ―possible material changes of
circumstances.‖ It found that no material changes of circumstances (that would necessitate a change in the
remedies package) have occurred since the March 2009 decision requiring the BAA to sell Gatwick, Stansted
and one of Glasgow or Edinburgh airports, and that consequently the BAA should proceed to dispose of
Stansted and one of the Scottish airports. The BAA appealed this decision to the Competition Appeal Tribunal,
and lost on February 1, 2012. The BAA then brought a further appeal to the Court of Appeal, which they also
lost on July 26, 2012. The BAA then announced that they intend to appeal this decision to the UK Supreme
Court in 2012. While these appeals were ongoing, the BAA proceeded to sell Edinburgh airport in April 2012.
Ryanair believes that Stansted airport will be sold in the next 6-12 months, unless the BAA is successful in the
Court of Appeal or unless it manages to appeal a negative Court of Appeal ruling to the Supreme Court, which
would likely delay the sale further. 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. In May 2010 the BAA announced that it would not proceed with
this £4 billion program.
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, from
£11 to £12 which occurred in November 2010 and from £12 to £13 in April 2012) 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 time that it
expected these cuts to result in 2.5 million fewer passenger trips during the period. In addition, on June 29,
2010, due to the continuance of the U.K. government‘s £11 APD tourist tax and high charges at London
(Stansted) airport, the Company announced that capacity at London (Stansted) airport would be reduced from