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Demise of duty free would spell trouble for Aer Rianta

February 16, 2011

By Staff Reporter

By Andrew Bushe

DUBLIN — If duty-free sales within Europe are abolished at an EU heads of government meeting this week, it will mean a £30 million "hit" for Aer Rianta.

The Ireland airports authority has announced a record group profit for 1998 up 15 percent to £52.3 million as the buoyant economy and tourism growth resulted in passenger numbers growing to 14.8 million.

Chairman Noel Hanlon said the abolition of duty free would cause problems for the company. The most obvious was "£30 million off the bottom line of our net profit".

"We have plans in place to surmount those problems and to replace our duty-free shopping with High Street shops," Hanlon said. "All our plans are made on the basis that duty free is going to disappear, although we are hoping for an extension.

"There will be chaos European-wide over what rates of VAT to charge and what rates of duty to charge. Nobody knows what’s going on. The new president of the Commission has already said he will examine the situation if he is requested to do so by the heads of state — and he thinks he will be requested to do so."

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The huge growth in passengers, particularly in Dublin now the seventh-fastest growing airport in the world, has been causing problems for the company.

"Dublin Airport is choc-a-bloc," Hanlon said. "Our investment program, which is a year behind, will cure that. At the moment we are bursting at the seams."

He said it was a "nightmare" in the summer finding slots for planes.

"The slots are just not there," he said. "Every slot has been allocated at the present time and those that want to get in at peak times just aren’t able to get in. Nobody anticipated this huge increase in demand in air traffic."

Hanlon said there was no need for a second airport, as proposed by Ryanair chief Tony Ryan.

Aer Rianta is in the process of applying for planning permission for a second runway at the airport, which would double capacity.

"At the moment it is not runway capacity that is the problem but terminal capacity, and when the present extension is complete, it will bring the capacity up to 25 million and that will cover the anticipated demand up to 2003," Hanlon said.

A report on the future of the company recommends a flotation of part of the company and a decision is expected from the government before the end of July.

Under the plan, Aer Rianta would sell off the Great Southern Hotels group. The hotel profits were up 17 percent to £3.4 million in 1998.

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