Dublin Airport Operating Expenditure: Bottom-up Efficiency Assessment 3rd May 2019 Commission for Aviation Regulation PUBLISHABLE DRAFT REPORT www.cepa.co.uk PUBLISHABLE DRAFT REPORT IMPORTANT NOTICE This report was prepared by Cambridge Economic Policy Associates Limited (CEPA) and Taylor Airey for the exclusive use of the Commission for Aviation Regulation (CAR). Information furnished by others, upon which all or portions of this report are based, is believed to be reliable but has not been independently verified, unless expressly indicated. Public information, industry and statistical data are from sources we deem to be reliable; however, we make no representation as to the accuracy or completeness of such information, unless expressly indicated. The findings enclosed in this report may contain predictions based on current data and historic trends. Any such predictions are subject to inherent risks and uncertainties. The opinions expressed in this report are valid only for the purpose stated herein and as of the date of this report. No obligation is assumed to revise this report to reflect changes, events, or conditions, which occur subsequent to the date hereof. CEPA and Taylor Airey does not accept or assume any responsibility in respect of the report to any readers of the report (third parties), other than CAR. To the fullest extent permitted by law, CEPA and Taylor Airey will accept no liability in respect of the report to any third parties. Should any third parties choose to rely on the report, then they do so at their own risk. 2 PUBLISHABLE DRAFT REPORT CONTENTS Important notice ...................................................................................................................................................................... 2 Executive summary .................................................................................................................................................................. 5 1. Introduction ..................................................................................................................................................................... 8 1.1. Background ............................................................................................................................................................. 8 1.2. Current price control period ............................................................................................................................ 8 1.3. Our study ............................................................................................................................................................... 9 1.4. This report ........................................................................................................................................................... 10 2. Approach........................................................................................................................................................................ 11 2.1. Regulatory context ............................................................................................................................................. 11 2.2. Data collected / stakeholder consultation .................................................................................................... 12 2.3. Core assumptions ............................................................................................................................................... 12 2.4. Outline analytical approach .............................................................................................................................. 13 2.5. Elasticity assumptions ........................................................................................................................................ 15 3. Overview of Operating Expenditure ....................................................................................................................... 20 3.1. Expenditure over time ....................................................................................................................................... 20 3.2. Opex over current price control period ...................................................................................................... 21 3.3. Staffing levels ........................................................................................................................................................ 22 4. Efficiency of Staff-Related Expenditure ................................................................................................................... 25 4.1. Salary costs ........................................................................................................................................................... 25 4.2. Security .................................................................................................................................................................. 34 4.3. Maintenance ......................................................................................................................................................... 43 4.4. Central functions staff ........................................................................................................................................ 51 4.5. Facilities and cleaning ......................................................................................................................................... 58 4.6. Campus services ................................................................................................................................................. 66 4.7. Information Technology .................................................................................................................................... 72 4.8. Retail ...................................................................................................................................................................... 79 4.9. Airside operations .............................................................................................................................................. 84 4.10. Car parking ........................................................................................................................................................... 89 4.11. Capital projects ................................................................................................................................................... 94 4.12. Other non-pay staff costs ................................................................................................................................. 98 5. Efficiency of Non-Staff Expenditure ....................................................................................................................... 100 5.1. Rent and Rates .................................................................................................................................................. 100 5.2. Consultancy services ........................................................................................................................................ 103 5.3. Marketing and related costs ........................................................................................................................... 105 3 PUBLISHABLE DRAFT REPORT 5.4. Passengers with Reduced Mobility................................................................................................................ 107 5.5. Utilities ................................................................................................................................................................ 110 5.6. Insurance ............................................................................................................................................................. 115 5.7. Other expenditure (including new cost items) ......................................................................................... 117 6. Capital investment and opex implications............................................................................................................ 121 6.1. Introduction ....................................................................................................................................................... 121 6.2. Approach taken to reviewing the CIP ......................................................................................................... 121 6.3. Analysis ................................................................................................................................................................ 122 6.4. Impact on projections ...................................................................................................................................... 144 7. Conclusions and forecast summary ....................................................................................................................... 145 Comparison of CEPA and Frontier Forecasts .................................................................................. 147 Detailed security efficiency analysis ..................................................................................................... 150 Elasticity Benchmarking .......................................................................................................................... 176 4 PUBLISHABLE DRAFT REPORT EXECUTIVE SUMMARY Scope of work Dublin Airport is subject to price-cap regulation by the