I move: "That the Bill be now read a Second Time."
I wish to share time with Deputy Conor Lenihan.
Aviation Regulation Bill, 2000 [ Seanad ] : Second Stage.
Is that agreed? Agreed.
I am pleased to introduce the Aviation Regulation Bill, 2000, to the House. I have already initiated the Bill in the Seanad where we had an interesting and worthwhile debate. All parties made some useful contributions and I was pleased to be able to accept the thrust and content of many of the suggested amendments. The Bill has benefited from that process.
Its primary purpose is to establish a new regulatory body to be known as the Commission for Aviation Regulation, which will carry out the regulation of charges levied at Irish airports, both by Aer Rianta and those levied by the Irish Aviation Authority in respect of services rendered to aircraft for take-off and approach.
The new commission will have responsibility for five policy areas. These are: approval of airport and air traffic control charges; approval of ground-handling service providers at airports; the granting of operating licences to air carriers established in Ireland; administration of the rules governing the allocation of take-off and landing slots at airports; and licensing and bonding of travel agents and tour operators. In carrying out these responsibilities the commission will exercise its functions under both primary and secondary legislation as well as EU regulation.
The aviation sector has played an important part in the Irish economy, primarily by supporting growth and commerce in many vital areas of industry. Being an island nation on the periphery of Europe can provide opportunities in some areas but it also provides challenges for transport. The Government must, therefore, ensure it is doing all it can to respond to the demands facing the providers of air transport and also those bodies which provide the essential infrastructure and services to the transport providers.
For some time, there has been a considerable amount of public debate on the issue of airport charges and some very diverse views are evident. The airlines, as one would expect, are anxious to have charges as low as practicable to drive growth in their business. From the viewpoint of Aer Rianta, there has been no increase to the tariffs since about 1987. It was interesting to note that the UK assistant permanent secretary on transport who was over at the Institute of European Affairs told me our charges are far lower than in the UK and in many of the European countries. He cannot understand the fuss created here about charges.
One of the main reasons Aer Rianta was in a position to offer discounted rates was the steady and healthy stream of revenues coming from duty free sales. We know what happened in that area.
The Minister lost that and it was her own making.
I did. Given that it had been decided to provide for independent regulation from this year on, Aer Rianta announced that it would roll on the discount scheme to the end of 1999, thereby allowing a further six months of discounted rates to the airlines. The shortfall in revenues arising from the loss of duty free together with a major requirement for capital expenditure presented a very critical issue, which pushed the issue of the appropriate level of charges to the forefront of the debate. Aer Rianta was of the view that a fresh appraisal of the structure and basis for airport charges was long overdue. Aviation business had changed since the late 1980s with the liberalisation of air travel across Europe, competition and the significant increase in passenger numbers. All those factors combined created a different climate.
The liberalisation of air services coupled with strong growth has given rise to rapidly growing passenger numbers. Since 1994, total passenger traffic has increased at an annual rate of 12% to 16.5 million passengers in 1999. A programme of investment has been under way since 1997 – planned by the previous Government in 1995-96 – and major capacity enhancing projects under this programme at the State airports, particularly Dublin Airport, will be substantially completed, at a cost of £350 million by the end of 2000.
A policy response had to be made to the situation which had emerged, not only as a result of duty free losses but also as a result of the changing face of the air transport market. The solution lay in a fresh independent examination of airport charges and the creation of a new regime. In looking at the position, it became clear that the central issue was the potential for conflict between the shareholder role and the regulatory role. The difficulties of having the two roles merged in one entity has been highlighted in many decisions.
We heard that old story before.
I took the decision that the best way to resolve this issue was to do just that so that we could pave the way for a full and unfettered analysis of the core issue. I then put to Government my proposals for an independent economic regulator. There are many who will argue, such as Deputy Stagg, that the Government is wrong to hive off its regulatory function and that it should instead divest itself of its share holder's role. This issue was a feature of the Second Stage debate in the Seanad where I made some comments. Irrespective of the final outcome of the whole Aer Rianta semi-official debate, the matter of the regulator stands on its own merits.
The issue of the shareholder interest is a critical one and must be considered carefully. As it now stands, the people of Ireland, through the relevant Ministers, own the State airports which are an important asset. The regulatory issue, on the other hand, was in a different category but it carried with it other issues of concern, primarily that of creating the right framework. I share the concerns some people have in relation to giving over huge segments of public activity to newly formed independent agencies. If we were merely to transfer power as happened under the Telecommunications Act, 1996, without accountability, clearly there would be a democratic deficit. Even though we were obliged at European Community level to establish regulatory agencies in the telecommunications and electricity sectors, it is essential that we also provide sufficiently robust redress and balance. I saw a big article in The Phoenix that I am out to do Etain Doyle. That is far from the case, I am not out to do her.
She might do it herself.
I just saw the article in The Phoenix. It was for that reason that I invited public comment last year on a range of issues in the area of governance and accountability. They poked fun at my document and called it a dreary document. I will have to tell Andy Cullen about that and I hope he reads it. This invitation prompted a wide-ranging discussion of what should be best practice in the regulatory process.
I am sure he has read it already.
I was very appreciative of the level of the response and of the valuable comments received. The exercise resulted in the publication of a comprehensive set of policy proposals, a copy of which was made available to Members.
As this is the first legislation establishing an independent regulatory office since the publication of those policy proposals, I have included in the Bill some of the recommendations from the proposal process, such as issues of transparency, independence and accountability. I hope these policy proposals will set a blueprint for other future regulatory bodies and will be the cornerstone of ensuring public confidence in the independence and fairness of their operations. The remaining area on the charges front, which we have added to the regulator's brief is the determination of a cap for certain air traffic control charges, particularly those that are imposed by the IAA.
In relation to the remaining areas in the Bill, these flow from the existing regulatory functions traditionally dealt with by my Department. We have assigned to the regulator all the relevant aspects from an economic perspective, of the chain of events in which the carriers are involved, stretching from the licensing stage through to the allocation of departure and arrival slots and up to the regulation of ground handling and the determination of landing charges.
Regulation is, to a great extent, a balancing act, one which seeks to address the interests of the parties being regulated and the rights and requirements of the users of the services supplied by those parties. In terms of the State airport authority, Aer Rianta, we have sought to provide that regulation takes into account the various aspects of its role and function. The commission will have regard to the necessary levels of investment in airport infrastructure, the requirement of sustainable and profitable airports and the level of Aer Rianta's operating costs and expenses.
I presume every second chapter of the Minister's script is not important.
I will not have time to read it all and the Deputies are well able to read. I often think that standing up and delivering a long scéal, which is available to everyone, is a dreary exercise.
Not when delivered in the Minister's sweet tones.
I do not like the Deputy's behaviour. This will be an important part of the analysis conducted by the commission prior to deciding on the charges cap.
In relation to the commission's role on air traffic control charges, we have introduced measures in the Bill which will balance the competing interests of the service provider, the IAA and its client base, the airlines. As I said, regulation is a balancing act. The framework for which I have opted combines the relevant measures thereby allowing regulation to take place on the middle ground.
The provisions in the Bill which outline the regulatory objectives reflect the policy concepts in my Department's strategy statement – I wonder if Deputy Stagg remembers that – and provide a sound economic and regulatory framework within which the commission will work. In framing the legislation and in line with the requirements for introducing new statutory measures, my Department consulted all interested parties and relevant Government Departments. The Bill is framed to provide the commission with the necessary level of flexibility and discretion and this approach will be open and transparent. As I said in the Seanad, independence and accountability are very much two sides of the same coin. It is important for the development of the market that there is confidence in the regulatory process. However, it is not acceptable for a Minister to hand over all responsibility and then step back. The rules of democracy dictate that there should be accountability.
I will now deal with the main provisions of the Bill. Part I, sections 1 to 4, relates to the short title, interpretations and the establishment day. Part II, sections 5 to 7, provides for the independence and functions of the commission. Sections 8 to 9 assign the four other functions. Section 10 provides for ministerial authority to issue policy directions of a general nature. One of the main suggestions proffered by all parties in the Seanad was the inclusion of a regional dimension which has been included in this section. Section 11 provides for the appointment of the members of the commission. Sections 12 and 13 provide for the recruitment of staff by the commission and the appointment of a deputy commissioner.
Section 14 empowers the commission to engage consultants if it requires these services. Section 15 addresses the issue of ethical behaviour and controls on staff interests. Section 16 outlines the usual prohibition in respect of election at local, national or European level, on a member of the commission. Sections 17 and 18 place a requirement on both members of the commission and staff or consultants employed by the commission to make an initial declaration as to their interests and to make ongoing disclosures of interests as appropriate. Section 19 provides for the standard penalties for the unauthorised disclosure of information. Sections 20 and 21 allow for the creation of superannuation schemes. Sections 22 to 25 provides for the resources and revenues of the commission. It is intended to assign staff from my Department to carry out the functions being transferred. These officers will remain staff of my Department and will be replaced and reassigned in the usual manner. This arrangement ensures the continuity of staff experience, something which is vital in the start-up phase of a new office.
The main provision in relation to funding is the commission's power to impose a levy on the regulated entities, subject to the obligation to set the levy at an amount, which only secures the operational costs and expenses of the office. Section 26 deals with the reporting measures in terms of financial accounts – the format of these are to be agreed with my Department and the Department of Finance and they will be subject to the scrutiny of the Comptroller and Auditor General on an annual basis. The accounts and the auditor's report will be laid before the Houses. Section 27 places a requirement on the commission to report to the Minister whenever requested to do so and to report to the relevant Oireachtas committee. Section 28 empowers the commission to require the separation of accounts. Section 29 gives scope to the commission to deal directly with its requirements for office premises. Section 30 provides that the commission shall have a seal which shall be used to authenticate its official documents.
Part III, section 31, outlines the scope of the regulation which will apply to airports having more than one million passengers annually, that is, the three State airports, Dublin, Cork and Shannon. This may be varied by ministerial order. Section 32 outlines the nature and scope of the regulator's role and the framework in which a determination is made. Section 33 outlines the regulatory objectives which will be addressed by the commission prior to making a determination on airport charges. Section 34 amends the Air Navigation and Transport (Amendment) Act, 1998, by substituting the commission for the Minister as the approving body for the charges levied by the airport authority. Section 35 deals with the regulation of aviation terminal services charges. These are the charges for air navigation services provided by the IAA. Section 36, similarly to section 33, sets out the broad policy framework in which the commission will carry out its functions regarding a determination on the air traffic charges. We have sought to balance the respective requirements of the IAA and its customers. Safety will continue to play the lead role in all of those activities.
Section 39 is an enforcement procedure. Section 40 is a standard procedure outlining the methods by which a notice may be served on interested parties. Section 41 governs the role and powers of authorised officers and section 42 empowers them to procure a search warrant in carrying out their duties. Section 43 provides the standard indemnification in relation to the bona fide performance of his or her duties by a member of staff. Section 44 provides that in line with company law requirements, in the case of an offence committed by a body corporate with the knowledge and consent of a director or officer of that body, the individual concerned as well as the company, shall be regarded as having committed the offence. Section 45 provides that in line with usual practice, summary offences are prosecutable by the commission. Section 46 seeks to amend the Irish Aviation Authority Act, 1993, to facilitate any future decision regarding the use of military aerodromes for civil aviation purposes.
That is an exciting one in which Deputy Conor Lenihan and I will be interested.
Senator Costello put down an amendment which I said I would consider here. The amendment will give jurisdiction to the Irish Aviation Authority in relation to civil aviation matters. Section 47 provides that the commission will be subject to the freedom of information legislation. Section 48 amends a typographical error in the Air Navigation and Transport (Amendment) Act, 1998. Section 49 amends the Air Navigation and Transport Act, 1973.
I commend the Bill to the House and I hope we will make some inroads in the short time available. I understand time has been allocated for further debate.
I thank the Minister for sharing her time. Like Deputy Stagg, I welcome section 46 of the Bill which provides for the removal of the statutory impediment which, under the Irish Aviation Authority Act, 1993, prevented the use of military aerodromes for commercial or civil purposes. This has a direct bearing on my constituency of Dublin South-West, which is a large expanding conurbation with large levels of investment in industrial estates, but it also affects the surrounding counties of Kildare and Wicklow. A second airport sited at Baldonnel would be of great benefit to this city. I appreciate the two Ministers involved, Deputies O'Rourke and Michael Smith, have to look at the hard proposals behind the opening up of Baldonnel for civil use. However, I am glad this section enables that to happen. I look forward to the debate on this.
The reasons for opening up Baldonnel are fairly clear. A large number of smaller aircraft, including executive jets, are taking up unnecessary runway space at Dublin Airport. From a practical point of view, it would be helpful if these could be moved to Baldonnel. Baldonnel could develop, at least initially, as a location for commercial executive jet travel, which is a growing area in the aviation industry. Many companies prefer to charter their own executive jets, which allows them to transport their executives abroad and back in the same day, making large savings in terms of overnight expenses etc. Baldonnel is an ideal hub location for the early development of this type of business. This is the right way for the Government to go. We must also, in the long-term, look to the development of Baldonnel as a second airport for the large Dublin conurbation and the surrounding counties.
The opening up of Baldonnel would have a huge impact on the area I represent. Tallaght and Clondalkin have had difficulties historically with high levels of unemployment, crime and disadvantage. They also, paradoxically, have a high presence of high quality industrial estates in the Citywest and Parkwest business parks. Those two key employers are examples of the modern, developed industrial estates of the future.
Fair play to Deputy Rabbitte.
Deputy Rabbitte is getting all the credit for that now.
These industrial business parks are the way of the future. The Government, particularly the Minister, Deputy O'Rourke, has made a significant contribution to the development of Citywest as a hub for e-commerce, which is an important and growing part of Irish industrial life. It is only a matter of time before we need an airport to service both those industrial estates. Citywest will employ 12,000 people in the medium term and similar figures are being spoken about for Parkwest.
There is also a major hospital, institute of technology and the headquarters of South Dublin County Council in the south-west corner of the city. All this points to the development and opening up of Baldonnel as a serious resource for that portion of the city, which would also relieve the very obvious congestion at Dublin Airport. One does not need to be an airline traveller to know of the massive congestion at Dublin Airport. I note the Minister is committed to providing resources, including finance, so that Dublin Airport can meet its capacity difficulties. However, in the long run, we can develop two airports in Dublin. Most European cities have two airports, although this would be closer to a one and a half airport system. If the private sector is willing to invest in a second airport, it should be allowed get on with it.
Section 46, and the wider developments in the aviation industry, make this a very exciting time. One could be envious of the Minister for having such an opportunity to develop this industry along the lines of what happened to telecommunications under her tutelage. Legislation is going through the House for the potentially very exciting offer to the public of Aer Lingus. Later, there will be the question of whether Aer Rianta will be the subject of a public offering of shares. The Minister has been criticised for the manner in which she sells shares but—
No, just the price.
—I am quite confident that when the Aer Lingus shares are offered she will do a very good hustle on them as well.
"Hassle" might be a better word.
She will get the best price for the taxpayer, which is our requirement in this House. We are not here to underwrite speculative share investments, thankfully.
I have two views on Aer Rianta, of which I hope the Minister will take note. I am not universally or ideologically committed to the IPO, or public share offering, route. I know it has benefits in terms of retaining investment in Ireland and among ordinary shareholders or investors. However, depending on market conditions, it might be worth considering the alternative of selling Aer Rianta by tender. This has been done before. Some leading business people in Ireland have bought airports abroad. A number of large merchant banks, such as Merrill Lynch, invest in large utilities. They try to maximise the return on the asset and, down the road, may consider offering that asset in an IPO.
I know the Minister is keen on offering shares, but there is the separate route of simply trying to get the highest price available when the international merchant banks see what kind of return they could get from the asset. That is a possible alternative route for Aer Rianta, although another share offering would be good for the development of our capital markets. These matters must be carefully judged in the context of when the last offer was made and if money is available to invest in another.
This is a great enabling Bill. It introduces the idea of a regulator for this industry. As the Minister outlined, there have been huge vexed issues in relation to the landing charges in Irish airports. There have been unseemly disputes between the different carriers and operators, Ryanair and Aer Rianta. These long-lasting disputes have not been helpful in terms of the development of this industry. Everybody is interested in reducing the charges. Mr. O'Leary of Ryanair presses that case very strongly. This is an important Bill which removes the Minister and the Department from the decision-making process on the level of the charges and whether they are suitable. This is a massive step forward. The regulator has already been appointed and I presume the Bill provides for the detail required to run an office of that kind.
I am glad the Minister has avoided some of the pitfalls in the telecommunications legislation, on which I presume this is modelled, where, for some reason, it was not deemed necessary to have the regulator accountable to this House. I understand the Minister is introducing legislation that will require the regulator to appear before Oireachtas committees and account for himself or herself. That is how it should be. If we are introducing a system of regulators who are at one remove to regulate important industries, it is important to have political accountability and that we, the elected tribunes of the people, have an opportunity to tease out the detail of policy issues and the way these offices work, so that anything wrong in these offices can be seen in the plain light of day and they will have to defend themselves before Parliament.
Other aspects of the Bill are very interesting. The provisions in relation to codes of conduct and the disclosure of interests by the commissioners and staff of the regulator's office will go a long way towards ensuring confidence in the probity and transparency of the new office. Section 33 deals with the policy objectives to be used by the commission in determining airport charges. This must be welcomed by everybody in the industry, as it will create a level playing field, in terms of disclosure of financial and economic information to underpin the setting of fair and equitable charges. I am glad there are serious regulations in the Bill in relation to the wrongful disclosure by that office of commercially sensitive information. This is vital if the industry is to have confidence in an operation of this nature. It is also important in the context of the House's planned consideration of whistleblower legislation. That will have a role where there is bad practice in the sector. The regulator will also be important in that regard and the Minister has provided for that. It may even be helpful with regard to how these offices are run if we opt for whistleblower legislation for the business and industry sectors.
The interesting modern phenomenon of air rage is being dealt with. The Minister provides for a stiffer regime of penalties and fines for people who misbehave or commit misdemeanours, crimes or offences on aircraft. This is a healthy development. People who travel on aircraft are irritated by long delays due to a truculent passenger being awkward, even drunk, and causing huge problems for everybody. This legislation will allow the gardaí to board an airplane without a warrant and to remove the offender. That was a huge practical problem.
I commend the Bill. I urge the Minister to give serious consideration to Baldonnel. I appeal to her and the Minister for Defence, Deputy Smith, to move fast on the matter and to open the airport to executive jets. There is a real priority here for speed and to move development further and I am aware that the Minister for Public Enterprise likes to get things done quickly.
The principal purpose of the Bill is to establish a regulator to deal with the economic aspects of airports. Before I discuss those and the issue of regulation, I am anxious to press a matter which was not dealt with in the Seanad debate but which is separate, specific and important.
I have received representations from IALPA – the Irish Airline Pilots Association – about safety issues. Deputy Lenihan also referred to them. I will put three points to the Minister which demonstrate serious gaps in the law. Nobody disputes the need to deal with these problems. The first problem is that it is not an offence to smoke on board an airplane, although most airlines direct passengers not to smoke. Under Statutory Instrument 62 of 1986, the carrier should take all reasonable steps to ensure that smoking is prohibited. However, it is not an offence. People will go into the toilet to smoke. They generally remove the battery of the smoke detector or disable the smoke alarm. They might then throw the lit cigarette into the bin which can cause a fire. Of course, the smoke detector cannot work and a frightening scenario can result.
It is reported to me that cabin crew on board a flight have faced the problem of having a fire on board. There is a mandatory procedure in aviation whereby a mayday call must be made. That sets in motion a substantial ground and air response to deal with the emergency. I appeal to the Minister – I intend to put down a relevant amendment – to make it an offence to smoke aboard an aircraft when the no smoking sign is illuminated. A person who has smoked aboard an aircraft and, having been requested by a member of the crew to stop, continues to smoke should be guilty of an offence which would carry a fine of £2,500. A person who smokes in a compartment of the craft and damages the safety equipment components should also be guilty of an offence and subject to a fine of £2,500. This is not a theoretical problem; there have been such occurrences.
The second problem is disruptive passengers. I understand the Department has received corre spondence on this. There is a statutory instrument – Statutory Instrument 98 of 1998, in this regard but it has been put to me that it not quite clear to the Department how serious a problem a disruptive passenger can be. In the last six weeks there have been three attempts in Europe and the USA by disruptive passengers to enter the cockpit, overpower the pilot and cause the aircraft to crash. If this occurred on an airbus with over 300 people on board, given the kerosene fuel and the laden weight, it would be horrific.
The original fines were linked to public order offences. However, this is a new order of offences. An aircraft cabin is unique in the cost of diversion alone. The pilots are asking that the fines be increased to £5,000 from the present level of £500 and £700 and that the offence carry a prison term not exceeding five years or both. The carrier should also be able to seek to recover the cost of diversion caused by such a person. There was a case in Shannon recently where two men caused huge disruption. They were detained in the Garda barracks.
Yes, it was in the newspapers.
The cost of flying them home was horrendous. The carrier refused to bring them back because they were so disruptive. Another airplane had to be hired to return them. The fines must be greatly increased.
The third problem is interference with flight crew. The current situation is unbelievable. A member of the crew must personally press charges if they have been interfered with or assaulted by a passenger. Two weeks ago, two cabin crew were sexually assaulted on a flight to Los Angeles. The passenger was released to the local police force and escorted to his next flight because the local police were unsure of the jurisdiction. The cabin crew are particularly vulnerable. They deal with emergencies and many other difficulties.
The Minister should examine section 59(a) of the UK Navigation Act, 1999. It recognises the cabin crew's special role in aircraft safety and it should be adopted into Irish law. It would provide that no person while in an aircraft could use threatening, abusive or insulting words towards a member of the crew, behave in a threatening fashion or intentionally interfere with the performance of a member of the crew and that any person guilty of such an offence would be fined £5,000.
These are three specific proposals for the Minister. The main body of my contribution will deal with the economic aspects of regulation but because this list of problems is specific and finite, I urge the Minister to examine section 49 of the Bill and see how it can be amended to deal with them.
I support the Bill. Last year we were knee deep in consultants' reports commissioned by Ryanair and Aer Rianta which claimed, inter alia, that charges were too high, too low, uncompetitive and competitive. Everybody who hired a consultant got the consultant to reinforce their argument. I called for the establishment of an independent regulator because there was an obvious conflict where the Minister owned Aer Rianta, a monopolist airport, and at the same time acted as regulator. This legislation seeks to resolve that dilemma by moving the regulatory role to the independent aviation regulator. I support the Bill in terms of what it sets out to achieve. It is in line with what has been happening in the energy, transport and telecommunications sectors.
I have met the regulator designate, Mr. Prasifka. I was highly impressed with him, his ability, affability, approach and his experience of anti-trust law in the US. Apparently he got his previous job in the Competition Authority because he was the most frequent person to appear before it as a legal representative with a legal firm in Dublin. I believe he is fair minded, able and intelligent to deal with the issues involved.
I was very interested in the Minister's reference to Mr. David Holmes. Unfortunately, I could not attend the round table Institute of European Affairs meeting but I received a copy of what he said. It is instructive some 13 years later to look at what happened in the UK. Having read his paper, there are lessons we can learn from the experience of the British Government in relation to the privatisation of BAA and the independent establishment of CAA. The 1985 White Paper stated that traffic charges and airports charges decreased by 50% and that these now represent 30% as opposed to 70% of total airport charges. Although we have a different scale of population and our geography is different, we can learn from the British experience.
In relation to Aer Rianta and the regulator, he said this should be kept as a single entity. It is very important for the future of Aer Rianta that it be retained as a single entity. He also said that one of the key failures was to put in place adequate incentives for the airport. In other words, there is a constant conflict between investing in new capacity and obtaining profits from existing capacity. The successful airports that developed as a hub were those which were ahead of the posse in terms of building extra capacity, not just catching up with the growth in traffic. Therefore, if as a national objective we want to develop a hub in Dublin, that must be a key criterion.
The price cap formula set out – the retail price index minus X% – is interesting. I will return to the relevant section. Section 33 sets out the criteria which apply, which is, "Whatever you are having yourself", so to speak. Mr. Prasifka said that he wants four main issues included. The UK formula might be considered for the first period. Mr. Holmes referred to building incentives to take risks. We could consider allowing Aer Rianta to build a rail link to the airport – given that so many transport projects are needed in this city that it should not be prohibited from doing so. This could be done by way of a joint venture, perhaps. He said that only traffic charges were being addressed in the legislation. Perhaps other charges within the confines of the airport could also be looked at.
There was a role for the Monopolies and Mergers Commission in the UK but there is no comparable role for the Competition Authority here. Mr. Prasifka's background is the Competition Authority so perhaps that problem is overcome. However, it is worth making the point. There is proposed regulation of service quality. At the end of the day we are all here to serve the consumer and if he or she wishes to get in or out of the airport the question is whether there should be a service quality provision. There is no customer service provision included, just economic regulation.
There is no objective to develop a hub for Dublin or Shannon. The key objective seems to be to generate sufficient capacity in advance of it happening, as opposed to playing a game of catch up. I thought Mr. Holmes's insight, notwithstanding any philosophical difference between Ireland and the UK, was instructive in terms of how we should approach this issue.
It was a very interesting night.
I was impressed by the paper which seemed very fair minded.
This leads me to another issue – the lessons we must learn from the existing establishment of both the ODTR and the CER in the telecommunications and energy fields. Deputy Conor Lenihan referred to the need for proper accountability. In that regard Mr. Prasifka impressed on me that he was very anxious the Bill would not be changed very much. He said the nature of the political process is that Aer Rianta and its employees will lobby their local Deputies and that one could set the goal posts so as to be very favourable to Aer Rianta's profits rather than to consumer considerations. His main point was that he was happy with the Bill as it was.
With wireless local loop and the third mobile licence, the ODTR has become a first stop before the courts. There is no appeal mechanism in the original Bill and, therefore, Mr. Prasifka was anxious to keep section 38 so that the judicial review would be about points of law as opposed to a point of appeal. I am anxious to strike a balance to allow fair play, so that a dictator will not emerge while at the same time matters should not get bogged down in the courts. We should consider section 38 in some detail. There must be proper accountability to the committee or another structure. The budget in the first few years will be very important to allow for the hiring of adequate expertise and consultancies. The learning curve is at its steepest in the first few years.
This brings me to the question of Aer Rianta's future. I was very interested when the Minister stated in her speech, having received the Warburg Dillon report, "I am continuing to give very careful consideration to the findings in that report and will be formulating my own views on what is the best choice of option for the company." According to the Irish Examiner the dogs in the street know that the Minister has dropped this ball and been rebuffed by the Minister for Arts, Heritage, Gaeltacht and the Islands, Deputy de Valera, the Minister for Tourism, Sport and Recreation, Deputy McDaid, and a number of other Ministers who have a personal interest in their own pet airport. I am interested that she is continuing to give it careful consideration. At the end of the day, that must be a finite process and I have tabled a series of Dáil questions on the issue. This issue was put off for months and now it has gone into the ether. Perhaps her successor will have to deal with the issue.
No, I will deal with it.
As the Minister said, it is a Cabinet decision. I am of the view that airports are as much part of the nation's infrastructure as seaports or roads. It is not the family silver, it is the kitchen back door. I am in favour of the three principal airports, Dublin, Cork and Shannon, being part of our State infrastructure and the public programme. It is fine if the Minister wishes to privatise Aer Rianta International, because that is commercial, but the airports are different.
In relation to regional policy and national access transport policy, we are an island nation and some future Government may decide to promote tourism or whatever else through our airport policy. Therefore, we should retain the core business of the airports in State ownership. They should be financed properly, in a fair manner and fully funded. This is totally against what the management of Aer Rianta wants. When I met with them, they were very disappointed with my attitude but I told them straight where I stood on the issue.
Dublin Airport is a licence to print money and there is no comparison with Baldonnel. All the carriers, apart from the executive jets, want to use Dublin Airport. Potentially, this may mean 40 million passengers in the future. The accounts published last year amounted to £40 million and this will be very profitable, regardless of the Celtic tiger. The profits of Dublin Airport should be used to develop Cork and Shannon. Once one goes down the partial privatisation route, one cannot be a little bit pregnant, so to speak. It is a question of earnings per share, whether we invest in Dusseldorf, Birmingham, Cork or Shannon, and which will give the best return. This is how a public company operates.
The Deputy Permanent Secretary, who was present last week, said that their airports have been fully privatised for 13 years. Aberdeen, Prestwick and others are loss making and the shareholders never sought—
On that point, if one takes London, there is a difference between Stansted, Gatwick and Heathrow – Heathrow is first. However, there is a difference between that and Dublin where there is only one airport. Therefore, whatever competitive arguments arise in the UK of competition between airports, the truth is that it is two and a half to three hours drive from Cork to Shannon. Dublin Airport is a monopoly and it is better that it is a public rather than a private monopoly. It is a public utility, while Eircom and even Aer Lingus are competing as trading entities.
The suggestion is for a 30% IPO. If the position in principle is that the State will not invest more money, the 30% will increase as it will need more equity in the future. Therefore, the argument about 30% does not address the point. Aer Rianta International can take on the world, but a public capital programme will ensure our specific requirements concerning the national interest and is in the best interest of the mid-west, Cork, etc. That does not mean we cannot cut costs in Aer Rianta or that it cannot be run better. Neither does it mean we cannot do more in terms of promotion and marketing – I am not saying everything is rosy – but if earnings per share is the mantra it will become very difficult.
Ryanair has lobbied me on different points concerning section 33. They want criteria inserted, including the criteria of lowest possible cost in respect of charges and the promotion and development of traffic in Dublin, Cork and Shannon Airports. I have also been lobbied by Aer Rianta on issues which I will deal with on Committee Stage.
A point I have raised on a number of occasions with the Minister is ground handling. I know the ground handling directive deals with the economic aspect of baggage handling. I am sure the Minister will make improvements to amendments I propose, based on the advice of the Attorney General and others, but I am seeking to amend the articles of association of the IAA to include in its remit and mandate a responsibility to ensure proper safety in all aspects of the operation of those licensed under the ground handling directive. My particular concern is before an aircraft takes off, when safety is the responsibility of the carrier, and while it is on the ground. The way luggage is professionally loaded on to an aircraft is a safety issue which the IAA says is beyond its scope and is a matter for the carrier while the carrier says it is not its responsibility. Who will carry the can if there is a problem with a charter company which is not based in Ireland? It also relates to various aspects of maintenance, fuelling, etc. I will propose a new section providing for the Minister to order the IAA to take responsibility and a new section 37 which will amend the Irish Aviation Authority Act, 1993. I will return to this, but the arguments have been well rehearsed.
At the end of the debate in the Seanad an amendment was brought forward providing that the regulations in section 46 would not come into effect earlier than one month prior to the commencement of civil aviation operations. The issue here relates to the concern of the FAI in terms of the new stadium, etc. I have not studied this in detail.
Debate adjourned.