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Dáil Éireann debate -
Thursday, 26 Feb 1998

Vol. 487 No. 8

Adjournment Debate. - State Aid to Ryanair.

I thank the Ceann Comhairle for permitting me to raise this matter. I appreciate that the Minister has come into the House to respond.

The prospectus which was issued by Ryanair at the time of its flotation states:

Since 1992, Ryanair Limited has rented its corporate headquarters at Dublin Airport from Darley Investments Limited ("Darley') at an annual rental of £200,000 per annum. Darley developed the site at Dublin Airport under a 30 year licence on land from Ireland's Minister for Transport, Energy and Communications. Ryanair Limited provided loan facilities to Darley to develop the site. From the period of its incorporation (1988) to 31 March 1996 the share capital of Darley was held by CDS Trust, a trust established for the benefit of C. M. Ryan, D. F. Ryan, S. T. Ryan and their children. Darley became a wholly owned subsidiary of Ryanair Limited during the year ended 31 March 1996. The building is included in fixed assets in the consolidated balance sheet at a net book value of £1,330,000. The annual rental payable by the group to the Minister is £192,000, but payment of the rent is suspended for the first 12 years of the agreement and Darley will receive a 50 per cent rebate on the rent for six years thereafter.

This was a remarkable sweetheart deal between the then Minister for Tourism, Transport and Communications and the "round robin" circle of companies in the Ryanair family. Irrespective of who built the Ryanair building or what will happen the building after the 30 years, the fact remains that Ryanair got a 30 year licence on a valuable State owned site at Dublin Airport, the company has it rent free for 12 years and at half rent for six years, and the deal amounts to a £3 million subsidy from the Irish taxpayers.

I ask the Minister to publish the terms and text of the agreement which was made in 1992. Who proposed the arrangement? Who approved it? What advice did the then Minister get on this deal? Did the then Minister seek the opinion of the Valuation Office, and what was its view? This site belongs to the people who have a right to know the precise basis on which Ryanair has subsidised use of it until 2010.

The issue of the Ryanair site, taken with the information which the Minister has already given to the House about valuable rebates worth £12 million which were made available to Ryanair, raises serious questions about the relationship between the State and Ryanair since its foundation. Ryanair has always pretended — even in its advertising today — that it is the little airline pitted against the might of the State. It is now gradually emerging that Ryanair has received considerable assistance from the State in direct payment and in kind. It is in the public's interest to know the full extent of all State assistance to Ryanair.

I call on the Minister to have conducted and to publish an audit of all State aid of any kind to Ryanair. In particular, I ask her to publish the promotional assistance, in cash or in kind, which has been provided to Ryanair, and to publish if Ryanair has been provided with preferential arrangements at Pier A in Dublin Airport and if this resulted from a departmental or ministerial instruction. I also want to know the full details of all ministerial and departmental instructions given to Aer Rianta to assist Ryanair over the years.

I ask for this information because Ryanair, in its dispute with its baggage handlers, has adopted a particularly dismissive attitude to the State's institutions, and it is behaving recklessly towards the social partnership on which the country's collective economic well-being is based.

The public have a right to know the extent to which this private company has benefited from the taxpayers. Indeed, the EU Commission, which is normally so vigilant about matters of competition and State aids to economic activity, should also be apprised of the full extent of the State's benevolence to this company.

I am fully in agreement on the Deputy's sentiments about the full and open publication of all matters as the present dispute is destructive, disturbing and demeaning to all concerned.

I want to state the facts surrounding the arrangements made in 1991 in relation to Ryanair's headquarters at Dublin Airport between the then Minister for Tourism, Transport and Communications and Ryanair, through the offices of Aer Rianta, as the Minister's agent in managing the State airports.

The facts are as follows. In the early 1990s Ryanair sought relocation of its head office from its accommodation in the city centre to Dublin Airport. Aer Rianta agreed to provide Ryanair — in the form of Darley Investments Limited, a wholly-owned subsidiary of Ryanair — with a site adjacent to the cargo terminal subject to the following conditions: that all construction costs were to be borne by Ryanair; the annual upkeep and maintenance costs were to be borne by Ryanair; ownership of the building was to be vested in the Minister on completion of the construction; and the site and building thereon were to be provided by the Minister on a 30 year lease to Ryanair and subject to no rent in years one to 12, 50 per cent of full rental value in years 13 to 18 and 100 per cent of full rental value in years 19 to 30.

The base rent for the building in 1992 was calculated at £192,000. Under the agreement the rent payable in 2004 will be 50 per cent of the full market value at that time. Full market rent will apply from 2010 for the duration of the lease.

The Ryanair head office building was occupied by Ryanair in 1992. On expiry of the lease, Ryanair will surrender to the Minister full and vacant possession of the site and building in good and substantial repair.

The 12 year moratorium on rent, plus the subsequent 6 year 50 per cent rent rebate, reflected the fact that Ryanair constructed the building at its own expense and transferred it, for no consideration, to the then Minister, and that Ryanair also incurs the annual upkeep and maintenance costs associated with the building.

Aer Rianta has assured me this type of financial arrangement in respect of accommodation for its customers at the State airport has been employed in other cases. I have the documentation relating to other airlines, but we are dealing with Ryanair in this instance. Ryanair has assured me this is an equally valid commercial arrangement, from the point of view of Aer Rianta and the Minister, as against the alternative arrangement of Aer Rianta providing such accommodation at its own cost and recovering such cost through annual rents over a lease period. Aer Rianta believes the agreement with Ryanair, which was vetted by Aer Rianta's legal and financial advisers and by the office of the Chief State Solicitor, represents a commercially sound arrangement from the point of view of the State.

Ryanair sought approval from Aer Rianta for the construction of a large engine and maintenance facility in 1996. As a first step it was agreed between Aer Rianta and Ryanair that Ryanair would redevelop the existing hangar facility that it uses at its own cost of £450,000. Site rental of £5,000 is currently being received by Aer Rianta in respect of this site. In May 1997, the chief executive of Aer Rianta approved a proposal to redevelop the site, including the refurbished hangar, at an overall cost of £1.5 million to be borne by Ryanair. The funding and lease arrangements would be on a similar basis to those applying to its existing headquarters. Work on this facility has not yet commenced pending final agreement between Aer Rianta and Ryanair. I have letters appertaining to that. The 1996-97 arrangement was modelled on that of 1991-92.

I appeal to Ryanair to avail of the offer of the Labour Court in relation to the ongoing dispute involving baggage handlers. The stance of Ryanair in refusing to use the State labour reconciliation services is both disturbing and ultimately destructive.

I will make public all the details, memoranda, letters and ministerial recommendations relating to the two arrangements.