Dáil Éireann debate -
Tuesday, 21 Oct 1997

Vol. 481 No. 7

Air Navigation and Transport (Amendment) Bill, 1997: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

Mr. Wright

I mentioned previously that I spoke in the Seanad in 1992 about the crisis then facing TEAM Aer Lingus and the airport in general. I mentioned that I believed employee share option schemes should be part of any restructuring programme. I am pleased that this is part of the restructuring programme and the employee share participation scheme has been a great success in Aer Lingus. This should be included in Part 2 of the Bill. The report of Aer Rianta's chief executive stated:

We believe that the involvement of staff and management on a partnership basis in all matters which affect the company is the right way to go and one which will underpin the success of the future.

I agree with this statement and I hope that when the Minister replies on Second Stage she will consider the possibility of incorporating an employee shareholding scheme. If not, I hope it will be contained in a future Bill. This would be a natural extension of the company's success story.

Duty free sales have been an integral part of Aer Rianta's success. I commend the Minister's efforts in bringing this issue to the forefront of future decision making. The removal of duty free sales would have a devastating effect on the company's profits and, more importantly, on jobs and investment. Throughout Europe, 140,000 people are involved in duty free sales; 1,500 of these are in this country. Many of our major companies and best products have achieved success through marketing at duty free outlets. The Minister should continue her efforts. She has the support of all Members who want to see jobs created.

Duty free sales have ensured a price structure in air travel. Aer Rianta has not increased airport charges since 1987. Many airlines offer cheap fares and this has ensured the development of our tourism industry. I have yet to see any country which is opposed to duty free sales. It is a travel perk. In the past it may have been a perk for the well off but that is no longer the case. On-board duty free sales are an integral part of Ryanair's pricing structure. Aer Rianta currently achieves £35-£40 million profits each year, perhaps 85-90 per cent of these from duty free sales. The abolition of these sales would have a huge impact on the company.

Duty free sales are a success showcase post Maastricht and should be marketed as such rather than being considered for abolition. I hope that the current review will be successful. The Minister will soon meet John Prescott and the Taoiseach has raised this issue on each occasion he has met the British Prime Minister. This rightly highlights the priority which this Government attaches to duty free sales. It is easy to talk about a success story in the context of the profits I have mentioned. I support the extension and the retention of duty free sales as part of our airport structure. I welcome Aer Rianta's worldwide success. It has been a flagship in many airports.

Previous Ministers may have had a different view of the value of the Great Southern Hotels to Aer Rianta. The development of hotels at airports is a core value for any airport. I support the Minister's view that these hotels should be a part of Aer Rianta. In spring 1998 a Great Southern Hotel will open at Dublin Airport with over 120 beds, creating over 120 jobs. If the Minister believes that the hotel group is to be a part of Aer Rianta it should be allowed freely to develop these hotels similar to a private sector company. One or two of these hotels need investment and refurbishment. This should be allowed to take place.

The Bill imposes a £250 million cap on investments. It is a great credit to Aer Rianta that it has been able to fund the capital investment in our airports from its profits. It is committed to a further £200 million investments in the next few years. I am concerned about the cap on investments and we should look at this on Committee Stage. In 1992 the Culliton report spoke of investments in the private and semi-State sectors. There is nothing wrong with future private sector investment alongside that of Aer Rianta at Dublin, Shannon and Cork Airports. This will develop the full potential for jobs in the North Dublin constituency. In the debate about the 1992-3 development plan those of us who believed in the job creation potential at the airport travelled to airports abroad. We saw warehouse development and other airport related activities adjacent to those airports and I would welcome this.

Deputy Cowen, as Minister with responsibility for this area, asked his Department to produce a document in relation to a public and private sector partnership for the development of the airport. I would like to see that revived. Unfortunately, the idea of developing the airports with the support of capital as opposed to constant State grants was dropped by the previous Government. No progress was made in relation to developing such an ethos. I would like to see the Minister reintroduce that document which was a point of reference regarding airport development and allow us debate it again. We should ensure that lack of capital in no way inhibits the progress and job prospects possible at the airports, especially at Dublin Airport.

The staff and management believe absolutely in ensuring that Dublin Airport is an international airport of the highest standards in line with the demands of travellers. This was my reason for not supporting a second airport for Dublin when the issue emerged in debate. It is only through capital investment that the board can ensure Dublin Airport is of the highest possible standard. Capital investment will ensure the board's hands are not tied.

I support the Bill and welcome the chance to develop the debate. Regarding the board's structure, I ask the Minister to discuss the issue of providing in the Bill for a worker director on the board.

Mr. Gilmore

I wish to share my time with Deputy Joe Higgins. I welcome the purpose of this Bill which is to establish Aer Rianta as a normal commercial State company in line with the practice over a number of years of enhancing the commercial freedom of State companies. It is a welcome development. Aer Rianta has been a very successful State company and the new structure gives expression to this. Its profits for 1996 were £40 million. The Minister traced the 60-year history of Aer Rianta and it is time for the company to move into a new modern era.

Over the 60 years industrial relations at the company have been remarkably good. It is probable that industrial relations will be put under considerable strain in the years ahead if the decision to abolish duty free sales in 1999 is proceeded with. Duty free sales account for half the profits made by Aer Rianta. Their abolition on foot of the 1992 ECOFIN decision, which was subscribed to by the Taoiseach when Minister for Finance, will have a devastating effect on employment, the future of Aer Rianta, tourism and the company's revenue. It is particularly important that the decision is reversed. It has enormous implications for the companies dependent on it in Ireland. It would be ironic if Aer Rianta, the pioneer of duty free shops and their management both here and abroad, should find itself exposed to a very serious financial problem caused by the abolition of duty free sales. The employees of Aer Rianta have a strong interest in ensuring the continuation of the duty free regime and every effort should be made by the Government to have the decision to abolish it reversed in the interests of the company, its employees and the sea ports and ferry companies, the employees of which also have a strong interest in ensuring duty free facilities are maintained.

I am also interested in the lands owned by Aer Rianta. It owns a substantial land bank, particularly in the surrounds of Dublin Airport. As Deputy Wright stated, some years ago those lands became the focus of various rezoning efforts during consideration of the Dublin county development plan. It is necessary for Aer Rianta to maintain sufficient land for the development of the airport. However, it is also clear that airports have the potential to attract considerable investment and I hope Aer Rianta in managing its land bank and its future use has regard to the industrial and employment potential in the areas adjacent to our airports.

I am curious as to where the legislation provides for the disposal of land or property by Aer Rianta. There is provision for the properties to be transferred from the Minister to the new company when it is established. Power is given to Aer Rianta to acquire land, to sell water and to fell trees. However, I see no reference in the Bill to the disposal of land or the circumstances under which land might be disposed of by the company. Will they have the power to dispose of land? If they have that power, under what circumstances may they do so? Will disposal require ministerial approval? I would like this issue clarified.

How was this Bill approved by a Government which claims to have signed up to Partnership 2000 and to subscribe to the concept of social partnership without making the standard provision for worker participation and the election of worker directors to the board of the company? For 20 years it has been standard practice, including in Aer Rianta, for workers to be represented on the board. Such provision is not made in this legislation, the first to come before this House for a long time establishing a State company which has no provision for the election of worker directors to the board. This should be rectified and the Minister should introduce amendments on Committee Stage to effect this. It is the intention of my party to introduce appropriate amendments to correct this serious omission from the legislation.

I am also disappointed that there is no provision for workers' shareholding in the company, the precedent for which was established in Aer Lingus. These omissions should be corrected. Given that the Government has signed up to Partnership 2000 and that its spokespersons seek to assure the social partners of its commitment to social partnership, I am astonished the Bill was approved and introduced by Government with these serious omissions. If the Bill is to have any real meaning the basic achievement won by the trade union movement over many years which gives workers the right to elect representatives to the boards of State companies must be protected. The omission of this important provision from the legislation is a very worrying sign from the Government and a worrying indication of the rightward trend in thinking in the governance of State companies.

Mr. Higgins

(Dublin West): I thank Deputy Gilmore for sharing his time with me. Aer Rianta is a crucial public enterprise and national resource and the first concern of any new legislation must be to protect it and to copperfasten it in public ownership. Any suggestion of privatisation of a company like Aer Rianta, any preparation for privatisation or anything which leaves the company open to privatisation should be strenuously resisted. Unfortunately, the Bill does not do this. Rather it gives rise to a suspicion that this crucial resource is being left open to privatisation. Under the Bill the Minister has latitude to dispose of the shares and core activities of the company without reference to the Dáil. Public ownership of Aer Rianta must be regarded as sacrosanct. The staff of TEAM Aer Lingus suspect the company is being prepared for privatisation, that sections of management, political interests and some sections of relevant Departments have a privatisation agenda and that policies are being directed towards this. Such policies must be resisted.

Sections 17 and 18 deal with the acquisition of land for airport development. However, when it is known that a large concern such as Aer Rianta proposes to buy land in the environs of an airport for development purposes landowners can move in for the kill by speculating in land which they know the company must acquire. There are no provisions in the Bill to prevent blatant speculation in lands around airports, particularly Dublin Airport. Aer Rianta stated that during the next ten years it will require a substantial number of acres to the south and west perimeters of Dublin Airport for a new terminal and related activities. This land was the subject of a scandalous rezoning decision in the context of the 1993 county development plan. I drew attention to this during the debate on the tribunal and it should be covered by the Bill which is supposed to protect the interests of Aer Rianta as a public company. I will give one example.

In 1993 Aer Rianta made it clear it would need 100 acres of land at Harristown on the southern perimeter of the airport to further expand and develop Dublin Airport. Yet a coalition of councillors on Dublin County Council, including Progressive Democrats councillors, who moved the proposal, and Fianna Fáil and Fine Gael councillors, refused to listen and rolled their rezoning juggernaut over that 100 acres. The upshot of this is that the cost of the land will increase from £5,000 per acres under agricultural zoning to £100,000 per acre under industrial zoning. This means that instead of paying £500,000 Aer Rianta, a public company, could have to pay £15 million for this land. That is a scam by any standard and I ask the Minister to address it. I hope it will be addressed in detail on Committee Stage.

Speculation involving publicly owned companies should be criminalised. Provision should be made for this and other rezoning decisions relating to land around Dublin Airport to be negated and for the land to be rezoned as agricultural. The Minister for the Environment and Local Government has the power to vary the development plan under existing legislation. If this rezoning is allowed to stand then the Government will leave Aer Rianta open to the payment of up to £20 million to a handful of landowners. The political parties concerned will have to answer for this when the time comes. I hope the legislation deals with this matter. This kind of speculation is robbing from the public purse, it is stealing from the taxpayer to enrich a few speculators. It is scandalous that elected local representatives should facilitate this.

Section 23(e) deals with partnerships with other enterprises and provides that Aer Rianta may become involved in international ventures in other countries. If Aer Rianta becomes involved in such ventures it must take note of the interests of local communities. If I am not mistaken Aer Rianta has an interest in Manchester Airport. Local communities in Manchester have put forward very strong arguments against building new runways. Airports are essential but there is a big downside to them in terms of noise, aviation fumes etc. Residents must be protected and Aer Rianta must ensure it does not encroach on the rights and sensitivities of residents who live in the environs of airports in which it might have an involvement.

Workers' democracy in State bodies has usually been regarded as the appointment of one or two worker representatives to a board. However, they are so hidebound by restrictions that they are unable to report to their fellow workers on many matters of significance. The Bill does not even provide for this tokenism. What is the reason for the exclusion from the Bill of this modest input by workers? The constitution of boards of publicly-owned bodies is a scandal. Normally boards of directors comprise Ministers' hacks and political party hacks who, because they have run around constituencies looking after the interests of TDs and Ministers, or perhaps funded their parties, are rewarded by being promoted to State boards. All major parties are guilty of making such promotions. Political hackery is no qualification for the efficient management of Stateowned companies and it should be outlawed.

Deputies correctly paid tribute to the staff of Aer Rianta whose expertise, talent and commitment have rendered the company a success. A majority of the board should comprise elected staff and Government appointees who should be recommended by independent commissions rather than by political favouritism. Passengers who utilise airport services should also be represented on the board.

Mr. Dukes

They might have political views.

Mr. Higgins

(Dublin West): In making appointments to the boards of State companies expertise and knowledge should be taken into account rather than loyalty to a political party, which is hardly a guarantee of efficient input into a State company.

Mr. Haughey

I welcome the Bill which gives greater autonomy to Aer Rianta. Despite the fact that boards of State companies allegedly comprise party political hacks, Aer Rianta is undoubtedly one of our most successful public companies. Not only does it manage and develop our airports in an efficient and imaginative manner, it is also a major employer and promotes business and enterprise generally through its operation of duty free shops, worldwide retailing and airport management consultancy services, the Great Southern Hotels Group and its many other ancillary activities. In short, Aer Rianta is a success story. It should be congratulated on its views on partnership and particularly its policy on constructive participation. It is a model of the way public companies should be run.

Aer Rianta should be to the forefront in developing business and enterprise in and around the Dublin Airport hinterland, but sadly that is not the case. Unfortunately, the policy of Aer Rianta of sanitising the lands around Dublin Airport, of buying up as much land as possible, automatically objecting to planning applications and charging high rent for these lands obstructs the development of aviation-related industries by private enterprise in the locality, and that is regrettable. Deputy Wright drew attention to the fact that many aviation-related industries are unable to set up in and around Dublin Airport because of the policy of Aer Rianta in regard to the lands there.

I ask the former Minister for Enterprise and Employment what happened the enterprise development task force report on Dublin Airport. That task force was established by the former Minister, Deputy Quinn, in a fanfare of publicity in July 1993 in response to the serious crisis in TEAM Aer Lingus. The report was presented to the then Minister, Deputy Richard Bruton, in April 1995, but he got around to publishing it only in June 1996, more than a year later. Four recommendations in the report were the establishment of an enterprise centre in Swords, the development of advance factories, the creation of a large industrial park in the vicinity of Dublin Airport and the setting up of a pilot training technical school in Gormanstown, County Meath. Has progress been made in that regard? Have new jobs been created? The lack of an official response to that report by the previous Government gives employment task forces in general a bad name. That should be remembered when the next major factory closes down and demands are made for such a task force.

When a Private Members' motion was put down in the Dáil on this matter, a number of Labour Deputies refused to support the Government. That was simply a political response and the enterprise development task force report on Dublin Airport was merely a public relations exercise. I ask the Minister to dig out that report, dust it down and see how much of it can be salvaged in order to develop much-needed projects in the locality of Dublin Airport.

Dublin Airport is a success story. In 1996 it had a throughput of 12 million passengers, an increase of 13 per cent on the previous year, and carried about 146,000 tonnes of freight, an increase of 18 per cent on the previous year. For many people living in and around it, including myself, the airport is part of our everyday lives. Residents are concerned from time to time about the operation of the airport. Noise pollution, particularly during the busy season, is an obvious nuisance and health related issues also arise from time to time. During the month of August residents have to put up with dreadful noise from planes, particularly those heading in an easterly direction over the Irish Sea. For example, people are unable to conduct a conversation in their houses or to hear their televisions while planes are flying overhead. Burglar alarms are regularly set off by the vibration from planes. Even though residents accept the role of Dublin Airport in providing employment, they should not be taken for granted. In the interests of good public relations, Aer Rianta should put in place a mechanism to allow for consultation with local residents about their anxiety. The residents should not be taken for granted. There should be a mechanism to allow for consultation to let them know which runways are being used at particular times of the year. In the interests of good public relations that would be welcome. The art exhibitions held at Dublin Airport are a popular and major feature of artistic life on the northside as are the Christmas decorations which are enjoyed by thousands of homecomers and their families during the festive season in December and January.

Plans by the EU to abolish duty free shopping on 30 June 1999 must be resisted at all costs. In her Second Stage speech the Minister said duty free sales help Aer Rianta keep airport charges low, fund their discount schemes and finance development at the three airports. The view that duty free sales are a subsidy to the well-off is simply out of date. Air travel is a reality for everybody and the suggestion from the Commission that it is merely a subsidy to the well-off is outrageous. The implications for such an abolition of duty free shopping on jobs, tourism, the aviation industry and the economy as a whole are serious. I welcome the Minister, Deputy O'Rourke's active role in the campaign to raise awareness of the duty free issue by her demand for an EU study on the matter. Ireland must insist on an open-ended derogation. Aer Rianta must seek also to develop alternative activities to save jobs at our airports should this abolition take place.

I deeply regret plans for a light rail system, as outlined in the DTI, to Ballymun, Dublin Airport and Swords have been put on the long finger.

Mr. Dukes

By whom?

Mr. Haughey

That is a good question.

Mr. Dukes

The Deputy should speak to the Minister.

Acting Chairman (Mr. Foley)

Deputy Haughey to continue without interruption please.

Mr. Haughey

Speaking as a northside representative and not on a party political basis northsiders have every right to be aggrieved about this. Dublin Airport is the largest single employment complex in the eastern region and yet there is no rail link to the city centre. We need a commitment from the Government that this line will go ahead even if EU funding should not materialise and planning should begin now.

I pay tribute to the work of a residents group known as Drumcondra 2005. This group is based in the Drumcondra area which is a hinterland of Dublin Airport and has to tolerate a great deal of traffic heading to and from the airport. This group is lobbying hard for the implementation of the Dublin Transportation Initiative and in particular the Luas project. The group has done much research on the role of Dublin Airport in the economy of this locality and is adamant there must be a Luas connection to Ballymun, Dublin Airport and Swords in due course. I hope the study on the underground option will not delay the Luas project and jeopardize EU funding. I know Deputy Dukes will not seize on my remarks to attack the Minister, Deputy O'Rourke and I accept her assurance EU funding is not being put in jeopardy. The Luas project is essential to implement the DTI plans and for the future development of Dublin airport.

Will the Minister or Minister of State respond to SIPTU's concern that the Bill fails to provide for an employees' share option scheme and outline his views on industrial relations in TEAM Aer Lingus. TEAM employees constantly lose out in pay and conditions in contrast to employees in the parent company. This should not be allowed to continue indefinitely. Employees of TEAM Aer Lingus have made great sacrifices as have the employees of the parent company, Aer Lingus, to put the company on an economic footing. There should be parity in respect of pay and conditions between the employees of Aer Lingus and TEAM Aer Lingus.

Like the Minister I pay tribute to the outgoing chief executive of Aer Rianta, Mr. Derek Keogh, who has overseen its growth as a public company. I commend his efforts in association with the various boards over the years. Aer Rianta is a success story and an example we should follow in respect of other companies. The compact for constructive participation is particularly good and brings forward the idea of partnership between management and employees. That has obviously been successful.

Debate adjourned.