IAA Price Cap Finalised

(24 Oct 2011)

The Commission for Aviation Regulation has today published its final determination governing the level of aviation terminal service charges (ATSC) that the Irish Aviation Authority (IAA) may levy. These ATSC are levied for air traffic control services used by aircraft landing and taking off from Dublin, Cork and Shannon airports. The IAA’s charges are separate from the airport charges levied by the DAA. Over-flight or en-route services are not regulated by the CAR.

The determination will come into force on 1 January 2012 and will apply until 31 December 2015. It will result in a 40% decrease in charges over the four-year period. In 2012, the first year of the price cap, there will be a price reduction of approximately 25 per cent on the 2011 price cap. Thereafter, the cap is expected to fall a further 6 per cent each year.

The significant fall in the 2012 price cap is due to a lower level of investment planned by the
IAA for the next regulatory period, compared to when the current cap was set (2007). In
addition, the Commission has ‘clawed back’ revenues collected by the IAA to fund
investments it subsequently did not make. The Commission has also set progressively lower operating cost allowances to bring the IAA’s operating expenditures in 2015 back to the level of 2006 when traffic was similar to that expected for 2015.

For the first time, the determination makes collection of the full price cap by the IAA dependent on its meeting certain service quality targets set by the Commission following consultation with the industry. If the IAA consistently fails to meet the targets set, the annual price cap could be up to 10% lower. These targets act as a financial incentive for the IAA to avoid delays and cancellations due to equipment failure or staffing problems.

Click here to view the third determination.


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