Priority Questions

Sale of Aer Lingus

Timmy Dooley

Question:

114. Deputy Timmy Dooley asked the Minister for Transport, Tourism and Sport if he will provide an update on his position, regarding the sale of the Government's shareholding in Aer Lingus to the International Airlines Group; the nature and character of any assurances sought from the group on connectivity, jobs and the management structure at Aer Lingus; and if he will make a statement on the matter. [10010/15]

Could the Minister outline to the House the current status of the discussions between the Department and the interest group that was set up to involve itself in dialogue with IAG on the notion of the purchase of the State's shareholding in Aer Lingus? Along the way, the Taoiseach mentioned that he was interested in seeing specialised or "cast-iron" guarantees in relation to the sale around issues such as employment and connectivity. Could the Minister, Deputy Donohoe, outline also the nature and character of the assurances that were sought as part of those discussions with IAG?

As I stated previously, as Aer Lingus remains in an offer period under the Irish takeover rules, I am constrained in what I can say publicly on the matter, as these rules apply to significant shareholders in some regards as well as offerors and offeree companies during an offer period. However, I did make a detailed statement clarifying the Government's position on the matter last month.

While acknowledging the details and clarifications which both IAG and Aer Lingus have offered since IAG announced its initial proposal to acquire Aer Lingus, it is the Government's view that the IAG proposal does not at present provide a basis on which we could provide an irrevocable commitment to accept an offer. Further consideration of any IAG proposals will be based on having greater clarity from IAG on the overall employment prospects on the basis of the proposals received, with particular reference to the timeframe within which net additional employment would be created; firm commitments on plans for growing Aer Lingus transatlantic business; and plans to grow Aer Lingus routes at Cork and Shannon and to enhance the Knock-Gatwick service. The Government also requires a longer period on the commitments related to Heathrow. The nature and acceptability of oversight mechanisms on the Heathrow slots and routes needs to be confirmed. These would also be subject to any EU considerations.

As I stated last week, the Government, in line with stated policy, remains open to considering any improved proposal. On Wednesday last, the Government's interdepartmental steering group held a further meeting with representatives from the consolidated International Airlines Group at its request. Further meetings are expected.

I thank the Minister for his reply although he has not added anything to our knowledge. While I understand the issues around takeover rules, it would be possible for the Minister to outline to the House the kind of assurances he has sought. I understand he was seeking assurances on particular areas but I am interested in the nature and detail of those assurances. I am concerned that in the context of any contract that the Minister might enter into based on assurances given by IAG, the only remedy in the event of a breach by IAG of those assurances would be sought through the courts. As I have said before, the likely outcome of such proceedings if a breach was found to have happened would be that State might receive some financial compensation. While that might benefit the State in some way, the loss of access to Heathrow for locations like Shannon and Cork could not be compensated for financially. Furthermore, it is unlikely that it would be open to the courts to insist on the retention or recovery of access to Heathrow. That is why it is extremely important for the Minister to put before the House the nature of the assurances sought and the mechanism he intends to put in place to deal with the fallout in the event of there being a breach of such assurances and a failure to comply with any contractual arrangements that might be entered into.

It is now very much a matter for IAG as to whether it wishes to make a further proposal which we would then consider in the way I have outlined. In response to the Deputy's specific question about the nature of assurances, we have not received any further assurances beyond the proposed deal that IAG made available a number of weeks ago which I have said was not acceptable to the Government and which did not provide the basis upon which I could give an irrevocable commitment to sell our share in Aer Lingus. Regarding the Deputy's point on access, we have always made clear that in evaluating any proposed bid we would look beyond the price of a share, important as that is and I have always specifically referenced access as being vital in our considerations.

I appreciate that the Minister recognises the importance of access but I contend that if he really believed in its extreme importance, he would have to question whether the State should even be negotiating with IAG about the sale of the State's share holding. My contention is that once we sell the State's share holding, our capacity to influence the retention of access to Heathrow from Shannon and Cork is diminished absolutely. In other words, any assurances backed up by letters of warranty or any contractual arrangements that might be entered into have no long-term capacity to be maintained. The State will have no power to maintain those links. At best, in the event of a breach of contract, the State will get some financial compensation which in no way has the capacity to meet the needs and demands of the locations and jobs which are supported by access to Heathrow.

It is very important to be clear about the legal powers of the State at the moment. As the Deputy knows, the power that our shareholding confers on us at the moment is the ability to play a role in blocking the disposal of slots at Heathrow but not in determining their use. I must emphasise again that maintaining and growing access for our country, with particular focus on what will happen at airports such as Cork and Shannon, is core to how the Government and I will evaluate this proposal.

Bus Éireann Services

Dessie Ellis

Question:

115. Deputy Dessie Ellis asked the Minister for Transport, Tourism and Sport his plans to extend public service obligation funding to currently unsubsidised bus routes which are economically and socially valuable, such as routes 5 and 7 and the over 100 services which are to be cut by Bus Éireann. [10200/15]

An bhfuil beartas ag an Aire chun airgead sa bhreis a chur ar fáil do bhealaí PSO, public service obligation, agus go háirithe do bhealaí uimhir a 5 agus uimhir a 7 atá á ngearradh siar ag Bus Éireann? Tá plean ann gearradh siar a dhéanamh ar thart ar 100 seirbhís in 2017. An ndéanfaidh an tAire ráiteas ar an bplean seo?

Tá brón orm that I do not have enough of the líofacht to respond to the statement from the Deputy as Gaeilge but I want to accurately respond to the points he made. The National Transport Authority, NTA, has responsibility for securing the provision of public transport services, including the provision of PSO subvented services. I ensured that PSO funding was maintained at current levels in the last budget, the first time this has happened since 2008. I was also able to secure an additional €101 million in funding for our public transport companies in a Supplementary Estimate,

Expressway services are commercial services operated in competition with private operators on main trunk routes and are licensed by the NTA. These commercial services do not receive any PSO funding from the Exchequer. I am acutely aware of the concerns of many people regarding recent decisions to withdraw services to a number of intermediate locations on major routes into Dublin. Major improvements to the national roads network have provided the opportunity for commercial bus operators to offer improved journey times between Dublin and the regional cities in particular with the consequent effect of reducing the level of service provided to a number of intermediate locations.

There are two routes - not hundreds, as reported in the media - that are currently at issue. These are routes 5 and 7. At a recent community meeting in Castlecomer, Bus Éireann agreed to postpone the changes to its licensed route 7 services until June. A working group comprising local representatives and members of the local community is now in place to respond to this issue. The NTA is examining what might be an appropriate PSO service to put in place subject to funding.

Separately, the NTA, in conjunction with Bus Éireann, is examining options to reconfigure existing PSO services in the south east in order to maintain socially necessary services to the affected areas following the withdrawal of route 5.

Additional information not given on the floor of the House

I assure the Deputy that I will continue to work with the NTA on wider issues around transport in rural Ireland over the coming weeks.

An mhí seo caite, fógraíodh go raibh Bus Éireann chun breis agus 100 seirbhís dá chuid a chiorrú. Is seirbhísí bus iad seo a fhreastalaíonn ar bhailte agus ar shráidbhailte iargúlta. Fógraíodh chomh maith go leanfaí le dhá bhealach thábhachtach a athrú i slí ins nach mbeidh siad ag freastal ar roinnt stadanna iargúlta anois. Is é an baol atá ann ná go dtarlóidh sé seo le bealaí eile chomh maith. Is ó Chluain Meala go Baile Átha Cliath-Aerfort Bhaile Átha Cliath a bheidh i gceist le bealach uimhir a 7 anois agus ní ó Chorcaigh go Baile Átha Cliath-Aerfort Bhaile Átha Cliath. Beidh deireadh le bealach uimhir a 5 ó Bhaile Átha Cliath go Port Láirge ach sínfear bealach uimhir a 4 go Ros Mhic Thriúin. Tá imní ar an-chuid daoine faoin bplean seo. Tá imní ar na daoine sna bailte ar na bealaí seo faoin tslí ina cuireadh na hathruithe seo isteach orthu agus ar eacnamaíocht an bhaile. Tá fios ag an Aire go ndúnadh na bancanna i sráidbhailte éagsúla. Tá an seans ann agus imní ann go dtarlóidh an rud céanna anois agus go ndéanfaidh sé damáiste do bhailte éagsúla.

I appreciate the point the Deputy is making regarding the tábhacht or the importance of the services to which he is referring.

These are services commercially delivered by Bus Éireann and not delivered by way of the PSO funding made available to Bus Éireann by the State. As I outlined in my initial response, one of the challenges to which Bus Éireann is currently responding as the road network improves is the provision of services along the route to enable people within new communities access to villages, larger areas, Dublin city centre and Dublin Airport.

The National Transport Authority is near completion of its analysis of the options for replacement of the services referred to. The response will vary depending on the route chosen.

In regard to the Deputy's point about the worry this issue and the withdrawal of other services is causing people, I am conscious of that and considering how best to respond.

Ba mhaith liom athrú meoin a fheiceáil maidir leis an gceist seo. Ní dóigh liom go dtarlóidh sé sin. Tá imní ann ó thaobh na ciorruithe siar a tharla ar fud na tíre, go háirithe nuair a dúnadh stáisiúin Gharda agus mar sin de. Anois tá daoine faoi bhrú mar nach bhfuil a fhios acu conas is féidir leo taisteal go dtí na príomhbhailte. Is dualgas an Stáit é, airgead a chur ar fáil le haghaidh na bealaí seo. Is cuma mura dhéanann siad brabús. Tá siad an-tábhachtach le haghaidh cosmhuintir na mbailte seo.

In regard to the Deputy's reference to the importance of money in the context of delivery of these services, that is the challenge. Bus Éireann has withdrawn these services because there is no adequate commercial rationale to it delivering them. In the absence of these services, changes will have to be made to existing subvented services. The Deputy will be aware that subvented services are services funded by the taxpayer. Another option is the putting in place of other services that would be delivered via the National Transport Authority, which will cost the State money to deliver. The National Transport Authority is currently engaging on this issue.

In regard to the Deputy's point about the impact of this on rural communities, I fully appreciate and understand that. The approach of Sinn Féin is to continually make big, uncosted promises, as it is again doing in relation to rural transport. Sinn Féin made many commitments at the weekend in relation to services which it proposes to maintain or deliver, including the filling of many potholes. However, what it did not say is from where this money will come. With the funding available to me, I am responding to the level of social need that I accept exists.

Sale of Aer Lingus

Shane Ross

Question:

116. Deputy Shane Ross asked the Minister for Transport, Tourism and Sport if he will consider making it a precondition of any sale of the Government's stake in Aer Lingus that the longer service Irish Airlines (General Employees) Superannuation Scheme deferred pensioners be compensated in proportion to the compensation given to the current employees of the Dublin Airport Authority and Aer Lingus; and if he will further consider making available the required sums to compensate the deferred pensioners out of the proceeds of the sale of the Government's stake in the airline or, failing that, out of general Exchequer funds. [10012/15]

The Minister will be well aware that it is now the eleventh hour for long serving deferred pensioners of the IASS. He has, I suggest, a unique opportunity at this stage to pull the fat out of the fire. Will he pledge that, in the event of a sale of Aer Lingus, he will ring-fence sufficient money - there will be plenty of money over in respect of which the Government has not yet made any decisions in terms of allocation - to compensate the deferred pensioners in equal compensatory proportion to the actives?

I thank the Deputy for his question. As I have previously said on a number of occasions, the IASS and its funding is a matter for the trustees, the companies participating in the scheme, the scheme member and the Pensions Authority.

The Deputy will be aware that the trustee proposal which was approved by the Pensions Authority and implemented on 31 December 2014 includes a contribution by Aer Lingus and DAA totalling more than €260 million, which includes €60 million for deferred members. The IASS trustee has confirmed that the measures being implemented are in the overall best interest of the members of the IASS as a whole and are fully compliant with national and EU law. Not to have taken the course of action that I did would have meant going against the explicit recommendations of those charged with managing the fund. It would have taken the largest pension fund in the country into uncharted territory, with many risks, including the risk that the scheme would be wound up.

With regard to the proposed sale of the State's shareholding in Aer Lingus, I have consistently set out the Government’s position on the issues that it would take account of in considering any offer for its shareholding in Aer Lingus. In addition to price, the other issues that will be examined include connectivity to and from Ireland, including direct transatlantic services and connectivity via Heathrow, competition in the air transport market, jobs in Irish aviation and the Aer Lingus brand.

The specific issue raised by the Deputy in the event of a sale is a matter for the Department of Finance and the Department of Public Expenditure and Reform. However, the Deputy's suggestion raises two issues: first, how such an investment could be made without prompting further demands on a deal that has taken many years to negotiate; and second, the consequences of a direct investment by the taxpayer in a private pension fund when many other pension funds are in serious difficulties.

The Minister is correct. The question is specifically directed towards the placing of further demands on a deal that has taken many years to negotiate. That is exactly what I am trying to do, because this deal is a dastardly deal that discriminates against people who are now in a hopeless situation. I get no comfort from the Minister's reply. It seems to me that these people have been abandoned by the Government in an absolutely shameless way because they have nothing to fight with. The Minister said the trustee was acting in the overall interests of all the stakeholders. What the trustee, and the Government in its Pontius Pilate-like attitude, are doing is creating an oppressed minority. Here is a minority that cannot fight, that cannot withdraw its labour, and that is being discriminated against in a way that the Government would not dare to attempt with the active members of the scheme. I appeal to the Minister to make representations to the Department of Finance in order that, when the Government gets the money, there is nowhere more appropriate for a small proportion of it to go than to treat these people with equality, justice and fairness.

I assure the Deputy that I am absolutely aware of the difficulty and concerns that these individuals face. I have met them and I have had much dealing on their behalf, but a challenge that must be faced is the request - a request made by Deputy Ross and many of the deferrees also - to go against a recommendation from a trustee of the fund who has statutory responsibility for its management. This is a fund which reported a deficit of €769 million on 27 March 2013. The fund has received additional support from the employers involved totalling €260 million - €190 million from Aer Lingus and €72 million from DAA. Included within that is €60 million for deferred members, €20 million of which is an increase due to engagement with the expert panel. I would appreciate if the Deputy could clarify his position on the matter. I understand that on 2 February 2015 Deputy Ross wrote in an article stating that the State should not sell its stake in Aer Lingus, yet he has now asked in the Dáil Chamber that I sell the stake to deal with this matter.

The Minister is being ridiculous quite frankly. That is a trivial point. I am saying that in the event of Aer Lingus being sold the money should go to these people.

The Minister made an absurd point. He is particularly compromised on this issue because it involves a large number of voters in his constituency. This makes it very difficult for him to make objective judgments on a matter of this nature and will obviously influence his decision.

The Minister should be aware that the companies in question have issued strident documents to the employees in which they are told to sign a waiver or see their pensions go up in smoke. The employees are being asked to forego their legal right to sue or take action in future. These letters are placing additional pressure on people to give up their legal rights. The Minister is not being fair to these people who have been treated extraordinarily badly. The money will be available. The Minister should contradict the trustee - that is precisely what I am asking - and act in the just and fair interests of people who served the nation well.

If I had contradicted the trustee, Deputy Ross would have come to the House the following day to accuse me of taking an action that went against the recommendation of a trustee of the largest pension fund in the country.

I was struck by the Deputy's description of my motives in this matter. He implied that he is completely insulated from any electoral concerns in respect of the issues that are being raised. It is not ridiculous to point out that he has taken an inconsistent position in this matter when, on the one hand, he opposes the sale of Aer Lingus, while, on the other, he argues that the company should be sold to deal with the matter he raises in this question.

That is a gross and deliberate misrepresentation of what I said. I stated that if there is money available, it should be provided for this purpose. The Minister's statement is outrageous.

This is a very vexed issue on which Deputy Ross is trying to play both sides. We are discussing a pension fund that has a deficit of more than €760 million, and a further contribution of €260 million has been made to address the issue we are discussing. The Deputy did not acknowledge that point. I fully understand the concern and worry that many people are experiencing. The challenge facing me was that if I had taken any other course of action, I would have deepened this worry and caused greater concern for even more people.

Bus Éireann Services

Timmy Dooley

Question:

117. Deputy Timmy Dooley asked the Minister for Transport, Tourism and Sport his views on the recent decision by Bus Éireann to withdraw service on routes linking Dublin with towns in the south and south east and plans being proposed by the company that could result in fewer services on the Athlone to Westport route. [10011/15]

I ask the Minister to expand on the Government's views on the decision by Bus Éireann to withdraw a number of bus services, especially in the south-east. The areas affected include towns such as Bunclody, Castlecomer, Ballyporeen, Roscommon and Castlerea. What is the Government's thinking on this matter? The Minister will be familiar with the ongoing conversation about the hollowing out of services in rural areas. Will he explain how he intends to address the issue?

I refer the Deputy to my reply to the earlier priority question relating to bus services in the south and south-east.  I am very much aware of the concern that these issues are causing in many rural communities. I reiterate that public service obligation, PSO, funding to public transport companies has been maintained this year at 2014 levels. This is the first time since 2008 that this funding has not been reduced.

I have been advised that Bus Éireann has not taken a decision to withdraw services on Expressway route 21 from Athlone to Westport.  The company informed me that it undertook a "Use it, don't lose it" public campaign in late 2014 in the area, with promotional fares and a media and marketing campaign to encourage people to use the service or face losing it.  These promotional fares are still in place and the company continues to review the service from a commercial perspective.

The Deputy will appreciate that Expressway services do not receive a public service obligation subvention. They are required to operate on a commercial basis and may be subject to competition from other operators.

I thank the Minister for setting out the position. An issue is emerging in discussions with unions and people who have an interest in the provision of these services. Concern has been expressed about the issuing of licences by the National Transport Authority. There would appear to be a lack of appropriate co-ordination in balancing the needs of the rural community with the necessity for competition on inter-urban routes. While I recognise fully the work the NTA does in ensuring a competitive environment exists on routes between large towns and what may be termed inter-urban routes, the associated effects, or, perhaps, the overemphasis on creating absolute competition on every service, has created a situation in which many services which had been profitable at certain times heretofore are no longer profitable. This is putting Bus Éireann in a difficult position.

I appeal to the Minister to talk more generally about the approach towards the issuing of licences, the role of the NTA and the direction from Government in terms of a coherent policy position on the provision of appropriate bus services to rural areas.

The Deputy has made some very fair and important points. One of the big drivers in all of this has been the fact that we have so many new and improved national routes. There is a great demand from communities on those national routes to make use of services from point to point. As a consequence, some communities are now facing either a significant reduction in a service or a complete loss of that service.

I will set out a direct answer to the core question the Deputy has put to me regarding how this should be managed. I am considering how we could develop it in future, but the way it is being done at the moment is that in the absence of a commercially feasible service we are looking at the alternatives that could be put in place and which would be affordable to the taxpayer to deal with the needs that I know rural and local communities have. This work is ongoing and I expect that we will be in a position to be able to confirm how routes 5 and 7 will be dealt with.

Will the Minister initiate a review of the issuing of licences by the NTA? I do not mean this in a Big Brother way, but perhaps in consultation with the NTA. Will the Minister review the entire process of the issuing of licences to establish when and if there is effective competition? I call on the Minister to look to the broader need of the catchment area to ensure that all areas are served adequately and appropriately.

Let us consider a route between two large towns or one of the cities and a large town. Not every service need go on the main route. With proper structuring it should be possible to serve the direct requirement and the indirect requirement, perhaps without requiring a subvention. None of us are suggesting that we simply need to find more money to subvent services. Of course it should be provided if it is absolutely necessary, but I believe there is a more appropriate, balanced and structured way of achieving the same result. It will require the input of the NTA as well as a little change in direction. The competitive environment should be considered in a holistic way rather than simply in the point-to-point way it is being considered at the moment.

That is a suggestion from the Deputy to which I will give some consideration. All of this is in the context of a bus market that is growing. More passengers are using the services now than last year. Buses and services have been made available. The evidence of my commitment to the need to expand public transport in our country is the fact that, of the Supplementary Estimate of €110 million that I brought to the Dáil before Christmas, a little over half went to public bus transport companies, Dublin Bus and Bus Éireann.

I will give consideration to the point regarding the need to look at how licences are being granted to see if it is contributing at all to the challenge that we are facing.

I think it very unlikely in dealing with the services needed by villages and communities below a certain level, although I wish it were the case, that these can be provided without some support from the State. The point is that if they could be supported and delivered in a viable manner, we would not be in the situation where these services are being withdrawn in the first place.

We are working on a model to respond to the issues concerning routes 5 and 7 and we will look at how this broader matter can be dealt with.