Aer Lingus sees serious risk of US retaliation over Dublin airport cap

DUBLIN, March 25 (Reuters) - Aer Lingus sees a "serious risk" that the U.S. government could retaliate and restrict its number of transatlantic flights if a passenger cap at Dublin Airport is not quickly scrapped, the Irish airline's chief executive said on Wednesday.

The Irish government has pledged to enact a new law by the early summer to lift the 32 million passenger-per-year cap that is currently suspended pending a European Court ruling. The airport overshot the limit by 4 million passengers last year.

U.S. industry trade group Airlines for America (A4A) filed a complaint with the U.S. Department of Transportation in January, accusing Ireland of breaching the EU-U.S. "Open Skies" agreement granting airlines the right to operate in each jurisdiction and asking it to curtail Irish carriers' access to the U.S. if the cap is not swiftly scrapped.

"I think there is a serious risk of retaliation, absolutely," Lynne Embleton, CEO of IAG ICAG.L-owned Aer Lingus, told a parliamentary committee scrutinising the proposed law.

The head of the International Air Transport Association and former Aer Lingus CEO Willie Walsh told the committee that there was "no question" that the threat of retaliation was real.

A4A CEO Chris Sununu said he discussed the issue at the White House and Department of Transportation in the last week and that the U.S. is watching the next steps very closely.

"If you think this administration is going to have one of their bilateral agreements violated, and they're just going to take it? In case you haven't read the headlines, that's not what these guys do," he said.

Sununu added at the end of the meeting that he would bring "some good news" back to Washington that lawmakers were prepared to move quickly.

The cap was introduced as part of planning permission granted in 2007 for the construction of a second terminal, in part to avoid local road congestion. It only became an issue in 2024 when passenger numbers started to reach the limit.

Airlines are pushing ministers to speed up the legislative process after an advisor to the court last month backed the basis for the cap. They warn that the airport may be forced to sharply cut capacity if the new law is not in place before the imposition of a full EU court ruling.