I am delighted to welcome Mr. Noel Hanlon, chairman of Aer Rianta; Mr. John Burke, chief executive; Ms Margaret Sweeney, deputy chief executive; and Mr. Vincent Wall, director of communications, to today's meeting. I thank them for accepting the joint committee's invitation. Before I ask them to commence their presentation, I draw to their attention the fact that while members of the committee enjoy absolute privilege, the same privilege does not extend to witnesses appearing before the committee. Members are also reminded of long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official by name in such a way as to make him or her identifiable. I ask Mr. Hanlon to make his presentation.
Aer Rianta Future Developments: Presentation.
Mr. Noel Hanlon
I thank you, Chairman, for giving us the opportunity to meet this important joint committee. As it knows, Aer Rianta is a successful company, both in Ireland and overseas. It has always made a profit. Over the past 20 years it has returned more than €400 million to the Exchequer in dividends. Since 1995 it has invested more than €600 million in infrastructure at our airports and funds all its investment without recourse to the Exchequer.
Cork, Dublin and Shannon are among the fastest growing airports in the world. Passenger numbers at Dublin Airport have grown, on average, by one million each year for the past ten years and exceeded 15 million in 2002. Passenger numbers at Shannon and Cork Airports have each grown by one million since 1996. Total passenger numbers for the three airports last year reached almost 20 million. In the eight years since I became chairman of Aer Rianta the volume of traffic has increased at our airports by more than ten million passengers.
We have invested considerable sums in Birmingham, Dusseldorf and Hamburg Airports, where we are part owner. Aer Rianta is one of the five biggest airport duty free retailers in the world. It also owns the Great Southern Hotel chain which now has ten hotels, including one at Dublin, Cork and Shannon Airports. We have completed long-term master plans for Cork and Shannon Airports while the master plan for Dublin Airport will be completed within the next two weeks. Dublin and Cork Airports need substantial investment to meet growing passenger demand. Shannon Airport has adequate capacity for the foreseeable future. Securing the necessary funding for this investment in both Dublin and Cork Airports is a key issue for the company. Another major issue is ensuring we continue to have high standards of customer service.
As part of the programme for Government, the Minister is considering how Cork and Shannon Airports might have greater autonomy. He has also invited proposals on how it might be possible to provide a terminal at Dublin Airport independent of Aer Rianta. These are significant policy decisions which might have a major impact on the company. However, a shared concern of the Minister and Aer Rianta must be to ensure the necessary investments are not delayed as happened in the mid-1990s for similar reasons. Any delay or failure to provide the necessary infrastructure at Dublin Airport will be damaging for the future development of the airport, the country and the economy.
I will now ask our chief executive to make a short presentation to the joint committee.
Mr. John Burke
I thank you, Chairman, for giving me this opportunity, on behalf of Aer Rianta, to address the joint committee. I will make a brief presentation which will elaborate on some of the points covered by the chairman. I will start with an overview of the company and then give a brief outline of the scale of our operations. I will mention the governing legislation and give some background on the aviation industry as it impacts on airports. I will also refer to a report on the future direction of Aer Rianta submitted to the previous Minister in April 1999 and give the committee an update on the regulation and outline our position on the future development of the three airports. As the chairman said, I will draw the committee's attention to a number of public policy issues which could affect the future development of the airports and Aer Rianta.
Aer Rianta owns and operates Dublin, Cork and Shannon Airports and has significant investments in Birmingham, Dusseldorf and Hamburg Airports. We are regarded as one of the five biggest duty free retailers in the world. We have locations in approximately 15 places, including Russia, Canada, the Middle East, the Ukraine and Cyprus. We also own the Great Southern Hotel chain which has ten hotels, one of which is a new hotel in Derry in which we have a 25% shareholding. We own 100% of the other hotels. The group has more than 3,200 employees. We have an excellent industrial relations track record. There has been continual restructuring of the company to meet the rapidly changing and challenging business environment. We have done this through partnership with staff and trade unions. It has involved major reorganisation of work practices and the extensive application of modern technology.
In the past seven years the company has invested €600 million in the three airports. Passenger numbers over the period 1995 to 2002 grew from 10.6 million to 19.3 million last year, an increase of more than 80%. More than 70 airlines fly in and out of the three airports to 130 destinations in the United Kingdom, Europe and the United States. On a busy day Dublin Airport can handle more than 650 flights and carry 70,000 passengers. No other airport in the United Kingdom or Europe has such a level of traffic relative to its local population.
Group turnover in 2001 was €453 million with a profit after tax and exceptional items of €11.6 million. The underlying profit for the group was €31 million. The company funds the development of airport infrastructure and facilities at the three airports from its own resources and borrowings and profits from its international activities. It does not receive any Exchequer support. We have been a net contributor to the Exchequer in recent years. We have contributed €400 million at today's values over the past 20 years.
The functions and responsibilities of Aer Rianta are set out in legislation. The principal governing Act is the Air Navigation and Transport (Amendment) Act 1998 which transferred ownership of the three airports from the Minister to Aer Rianta and also dispensed with the agency relationship with effect from 1 January 1999. Under the Act, Aer Rianta has statutory responsibility to take all measures for the safety, security, management, control, regulation, operation, marketing and development of Dublin, Cork and Shannon Airports. We must provide such facilities for aircraft, passengers and cargo as we consider necessary. We must conduct our affairs on a fully commercial basis and regulate operations within our airports.
I do not have to tell the joint committee about the significant changes taking place in the aviation sector. We do not believe this is the typical cyclical aviation downturn but a permanent change. We see a switch from the business to the leisure market. There is a huge demand for the leisure market and traffic is continuing to grow. While business people are still travelling, they tend to travel on economy tickets. Low cost airlines are increasing their market share. Ireland is well ahead of the rest of Europe in that 30% of the market is already catered for by the low cost sector. The figure is less than 8% in the rest of Europe. We have a lot of experience in dealing with low cost carriers.
As regards airports, many airports in Europe are being part or wholly privatised to facilitate the huge amounts required to invest in airports. We are concerned about maintaining service level standards as airlines cut their costs and eliminate services. Since 2001 we have increased security measures at airports. While these make life more difficult for everyone, they are necessary. We are in a business which will continue to grow worldwide at approximately 5% per annum.
In 1999 we were asked by the then Minister for Public Enterprise to do a report on the future strategic direction of the company. We did this and the report was endorsed by the Government appointed advisers, Warburg Dillion Read, AIB Capital Markets and SH&E. It looked at the emerging trends in the business, many of which predate 11 September 2001.
A number of developments have taken place in the company since the report was written. We have implemented a major internal change programme and raised significant debt, including the placement of €250 million in Eurobonds. We have also drawn down €125 million from the EIB and achieved an A plus credit rating from Standard & Poors which assists us in borrowing. The present level of borrowings is approximately €370 million. The maximum we can borrow under current legislation is €571 million. We have completed pier C and the Dublin Airport terminal extension and doubled the shopping space at the airport, called the shopping street. The Commission for Aviation Regulation was set up. While we did not set it up, we looked in the report for independent economic regulation. A new terminal has been opened at Shannon Airport and we have completed the master plans for Cork and Shannon Airports. We have also made major progress on the Dublin Airport master plan which will be finished shortly. The plan aims to provide an airport at Dublin capable of catering for 30 million passengers.
The current regulatory determination provides for a cap on aviation revenue at Dublin Airport of €5.26 per passenger. This means the maximum we are allowed to earn from airport charges is €5.26 per passenger. If we exceed this, we must give it back to the airlines. The cap for the three airports is €6.99 per passenger. This is theoretical because to earn it, we would have to charge double what we charge at Dublin, Cork and Shannon Airports.
The Aviation Regulation Act provided for an appeals process and a judicial review, of which we have availed. We have been granted leave to have a judicial review in the High Court. The case is ongoing. The central issue is the company's role in developing the airport vis-à-vis the role of the regulator. When we got the first determination, the regulator only allowed us to recover from airport charges capital expenditure equivalent to €346 million, whereas our plan provided for an investment of €1.3 billion over six years.
As regards the future development of the airports, by 2020 it is expected that volume of traffic at Dublin Airport will double its current level to reach almost 31 million passengers. This is not an aggressive forecast because it would be 5% cumulative or less over the period. Passenger numbers at Shannon and Cork Airports will reach 4 million each in the same period. We have completed the master plans for Cork and Shannon Airports and are now working on the Dublin Airport master plan, the key elements of which are that a second parallel runway will be needed before 2010; an additional terminal and pier facilities will be needed within the next five years to be followed by ongoing development; extensive cargo terminal facilities will be required; a metro rail link from the city is urgently needed - we are the only airport of our size in Europe which does not have such a rail connection; transportation on the airport site must be provided to link up with whatever off airport rail service is provided; car, bus and coach parking facilities must be made available at the airport - 22% of passengers go to the airport by bus, which is quite high; and road and surface access in car parks is critical - there are almost 20,000 car park spaces at Dublin Airport.
The public consultation process on the new parallel runway has commenced. We have received planning approval from Fingal County Council for a temporary pier D facility to be in place for summer 2003. We have also received grant of approval for a permanent pier D facility which must be in place by summer 2004. However, Ryanair has appealed both projects to An Bord Pleanála, which will hold up the process, particularly as regards the pier which is needed for next summer. As regards the summer 2004 deadline, we have a little more time but not much. The tenders for the construction of the new terminal at Cork Airport are currently being evaluated. We hope to be able to place that contract soon.
As part of the Government programme, the Minister for Transport has undertaken a number of initiatives which could impact on the future structure and funding requirements of Aer Rianta. These relate principally to greater autonomy for Cork and Shannon Airports and the possibility of a terminal or terminals independent of Aer Rianta at Dublin Airport. While Aer Rianta continues to plan for the future development of Dublin, Cork and Shannon Airports, as we are required to do by statute, the outcome of these policy decisions may significantly affect these plans.
Aer Lingus attended our last meeting. What is your reaction to the public statement by Aer Rianta's two biggest customers, which carry 60% of all its passengers, that they do not agree with the development of pier D and that a new runway is not needed as quickly as you say? Why are you pushing ahead with it when two major customers think that?
Mr. Burke
They account for 70% of traffic at Dublin Airport. Most people agree that a second runway will be needed at some stage and that it is only a question of when. I understand that Aer Lingus at senior level is saying it will be needed within the next ten years, but that we should look at ways in the meantime of putting off that date. We would be happy to do that. The only problem is it takes a long time to get planning permission for a runway. It took Manchester Airport, which recently opened a runway, ten years to do it from start to finish. We will continue to work with the airlines and we will look at the type of changes we can make in the short-term. There is room to introduce new procedures which would involve air traffic control, separation between aircraft, determining the length of time it takes for aircraft to get off the runway when they land and spreading the peaks. The peaks determine the capacity at an airport. We can handle 44 aircraft per hour at present. We could extend that up to 50 movements per hour, but after that Dublin Airport would experience delays. It would be irresponsible of us not to plan. Airports tend to have a longer time horizon than airlines which are more concerned with the short-term.
As regards the provision of facilities generally, if two airlines account for 70% of the traffic, they will be concerned about any facilities which are provided because they could result in additional costs for them. Usually the reason an airport wants to expand is to bring in new entrants, but that means competition. As regards pier D, Aer Lingus supports the temporary facility. Ryanair looked for it, but has now objected to it. Aer Lingus went through the full consultation process with us on the permanent pier D facility. It is happy with the operation of it, but it is worried about the cost.
Another issue which has an impact on runway usage is that Dublin Airport is the only airport of its size in Europe which is not fully co-ordinated. That means we have a voluntary system which determines the schedules for the airlines. An airline can come and go as it pleases. That could not happen at the big airports in Europe where airlines must have a slot. Airlines do not need a slot at Dublin Airport. That could affect the usage of the runways. If there was bigger aircraft or other airports in the vicinity of Dublin, it would postpone the need for a second runway. We are only talking about time. There is not any doubt that two parallel runways will give maximum capacity. Anything less than that is sub-optimal. The timing is crucial. I do not think we will have a problem with Aer Lingus or even Ryanair.
Given that most people who drive to Dublin Airport at present get caught in traffic and that the new car park is located between the road network and the terminal, is it realistic to think that there will not be major infrastructural problems if the number of passengers increases from 16 million to 30 million? Most people do not understand how the airport will cope with 30 million passengers without building a second terminal away from the existing terminal.
Mr. Burke
That is being considered by the Minister and an expert panel. It could be an option.
Why has Aer Rianta not considered it?
Mr. Burke
We have not come to a final decision as we are in the final stages of the master plan. We could have a new terminal west of the airport, but it would require major support in terms of new roads, motorways and other infrastructure. On the east side, the M1 northbound will open this year. The Port Tunnel will eventually be opened and the M50 is being extended. The entrance to London Airport is through a tunnel. A rail link will be important in that regard. Your comments, Chairman, would be true if we did not have a rail link. Terminal 1 at Heathrow Airport caters for more than 30 million passengers.
They are not coming in on one road.
Mr. Burke
They are.
There are drop-off points for Aer Lingus, British Airways, etc. We have one spot where people are dropped off for every airline. It is practically impossible to cater for 16 million passengers at present. How will Aer Rianta cater for 30 million passengers?
Mr. Burke
There is not any doubt that there will be additional terminal capacity in the next five years. We agree with that. It is just a question of where it will be.
Where will people be dropped off?
Mr. Hanlon
Some of the top master planners in the world have been looking at the airport for the past two and a half years. They have looked at the options of terminals on the west, south and east sides. We will have a completed master plan for Dublin Airport in the next two weeks which will include road infrastructure, rail links, etc. That master plan will be ready for our board meeting in March. They have looked at every option for Dublin Airport, including private development, public private partnerships and the development of other land. These master planners have carried out that function for a number of large airports throughout the world. It will involve a number of roadworks and entry and facilitation works, but that is part of the master plan process.
I welcome the Aer Rianta delegation. I am sure other members of the committee will discuss this issue from a global perspective, but I would like to be parochial about it. Perhaps the delegation could give me a clear response about its obligation to the communities adjoining the campus at Dublin Airport or Collinstown, as it is known locally. I am sure the delegation is aware of the complaints about air traffic noise being in excess of the permitted limits. As regards the issue of engine testing and testing outside the stipulated hours, is Aer Rianta happy with the measures available to deal with offending airlines? Is Aer Rianta happy that it is adequately fulfilling its neighbourly duties to the communities living in the immediate vicinity of the airport? I was at a meeting recently with some of my colleagues who are here today at which one of Aer Rianta's representatives denied there was any difficulty with aircraft noise. However, he had to stop speaking when an aircraft flew overhead at 10 p.m.
Aer Rianta has a major credibility problem with the communities immediately bordering the campus and further afield in areas such as Portmarnock. Aer Rianta's plans to extend the runway are causing considerable alarm to these communities. One of the major obstacles to a rational discussion about the runway, which will be necessary at some time in the future as demand dictates its development, is the lack of credibility to which I have referred. There is great unease in these communities and little, if anything, that Aer Rianta puts into the public arena is accepted by the people. Having listened to them and having considered both sides of the argument, there is justification for what they are saying.
Has consideration been given to alternative sites for Dublin Airport? The chairman mentioned that in his contribution. That would take some of the pressure off the Collinstown campus in the short-term. I am thinking of the State owned site at Gormanstown, although I know there are difficulties with it. There is a great deal to be said for developing the existing State owned site at Gormanstown which, when the M1 motorway is completed in a few months' time, will not be any more than 20 minutes from the existing terminal, or any other site in the greater Dublin area which will not create the difficulties associated with an additional runway. I emphasise the importance of Aer Rianta's credibility with its neighbours, particularly on the question of engine testing within the hours specified and outside them. I ask the delegation to give clear and specific answers to those questions.
I join my colleague in welcoming the delegation here today and I thank it for its presentation. As regards the ongoing case with the regulator, it was suggested that Aer Rianta was involved in the gold plating of airports. Perhaps the delegation could refer to that and give us some examples of airports with which Aer Rianta draws comparisons. Perhaps it could tell us the cost per square foot to fit out the new terminal as that might help us to determine if the charges mentioned in the media are realistic. The delegation might outline if parallels can be drawn between our airports and European and US airports.
Like Deputy Glennon, I want to concentrate on parochial issues as I come from County Clare. I was disturbed yesterday by numbers which are based on end of year results and which show a 2% reduction in passenger numbers through Shannon Airport, while passenger numbers increased at Dublin and Cork Airports. Perhaps the delegation might outline its plans or proposals to rectify that. I accept that 2% is better than the 4% prediction for the seven month period of trading.
The delegation alluded to potential policy decisions by the Government and particularly by the Minister. Perhaps the delegation might outline its view on the future of our airports and how Aer Rianta should be structured in the future. The delegation mentioned the runway and the delegation of slots. It stated that slots are not operational in Dublin Airport. Perhaps it could explain how it envisages slots being used to solve the problem.
I welcome the delegation and thank it for its presentation. The trend in passenger numbers over the past ten years has been healthy. Perhaps the delegation could give me some details about passenger numbers for 2001 and 2002 and the projections for the current year. It may not have the figures, but it might be able to give me an idea of the trends in each of the three airports over recent years.
As regards passenger or traveller comfort at our airports, particularly Dublin Airport, there is a fair degree of dissatisfaction among the travelling public about the facilities available at Dublin Airport. Has Aer Rianta set any targets for itself in relation to quality control and waiting times for baggage? People are often aggravated when they return from holidays and face chaos in Dublin Airport as a result of long delays for their baggage and unsatisfactory facilities. What are Aer Rianta's proposals in that regard?
The delegation mentioned access to the airport and the need for a rail link. As we know, there are several different options under consideration at present. Does Aer Rianta have a preferred option in terms of how that access would be provided?
As regards Aer Rianta's financial position, it is in a healthy state at present as a result of current profits. As regards its core business of operating the three airports, perhaps the delegation could give us some information about its financial position relating to that business and the trends in the past two or three years.
What was the basis for the recent decision by Aer Rianta to turn down a proposal from Ryanair to operate new services at Shannon Airport which it estimated would generate passenger numbers of 200,000 per year? Why did it make such a decision in the current climate, given that it is expected to operate commercially in the marketplace? It is hard to understand the logic involved in that decision.
I also wish to ask about the proposals for pier D. What will be the approximate cost of providing the temporary and permanent facility? What are the implications of such a facility for the proposed second terminal? In the event, which seems likely, that the Government will award the contract to a private company, what are the implications for the facility Aer Rianta is hoping to develop? What will the demand for it be in the event of a second terminal being provided, supposedly on the west side? The Minister has made clear his intention that Aer Rianta will not be involved in the operation of the second terminal. Perhaps Aer Rianta will outline its concerns, in respect of its position, in the event that the contract is awarded to a private company.
The Great Southern Hotels are a profitable venture, even though they are not part of Aer Rianta's core business. Given that they are so profitable, what was the reason for selling the Torc Hotel in Killarney? It is hard to understand this. What are Aer Rianta's future intentions in respect of the other ten Great Southern Hotels?
I wish to ask about the collision course Aer Rianta is on with the Government in respect of the Government's plans to set up separate companies to run the three airports. What are Aer Riantas concerns in that regard? In many ways - provided they stay in public ownership - there are commercial grounds for supporting the proposal of three companies or operators competing against each other. This does not necessarily happen under the current arrangement. What are Aer Riantas concerns if the proposals proceed?
I have a number of questions. We saw the reports in the media last week about Aer Rianta operations at the airports which highlighted the fact that the three airports were losing money in their core business. The loss was €5.7 million, post the exceptional costs involved in 2001. What losses or profits were made when these exceptional costs are removed? Does it put Shannon Airport in a profitable position? I believe it was marginally profitable in 2001. How does it affect Cork Airport? The joint committee would like to know the profit and loss position of the three airports in an average year, excluding the exceptional costs included in the report published in the media.
Perhaps Aer Rianta will elaborate on the refueling taking place at Shannon Airport and whether it has a significant impact on the profits or losses of the airport. From an Aer Rianta point of view, it is generating significant income. What additional security costs are involved due to refueling American aircraft? Can Aer Rianta elaborate on the precautions put in place in recent months with the increase in the number of flights refueling at Shannon?
There is a proposed directive which might not directly impact on Aer Rianta but will have an impact on its core business. It is the directive on noise classification of civil subsonic aircraft for the purposes of calculating noise charges. It will have an effect on the consumer and the usage of airports and air travel in general. Does Aer Rianta have a view on it?
I also have a question about the Great Southern Hotels and the sale of the Torc Hotel in Killarney. Perhaps Aer Rianta will clarify the reason the hotel in Killarney was sold when the company was at the same time investing in a new hotel in Derry. That seems to be contradictory. While it is not part of Aer Rianta's core business, the group made a significant profit of €42 million in 2001, which is not to be sneezed at. Can Aer Rianta elaborate on the future role of the Great Southern Hotel group under its umbrella?
Most of the questions so far have focused on Dublin Airport, access to which is crucial if Aer Rianta is to proceed with its plans for the second runway and the expansion of facilities at the airport. Congestion is a key issue. Projections envisage an expansion from 15 million to 30 million passengers. It is important to develop a rail or metro link to the airport to ease congestion. Is it not the case that such a link will only cater for a maximum of 40% of passengers using the airport? Given the projected increase in the number of passengers over the next few years, there will still be significant congestion because the rail link will not be able to cater for the majority of passengers. Perhaps you will elaborate on this. While it is important to develop the metro link, it will also be important to maximise its use by passengers. How will Aer Rianta cater for other passengers using the airport?
Aer Rianta is looking at the development of additional parking spaces at the airport, which is significant. In 2001 the company earned €23.5 million from parking charges. Can you explain why it objected to a new long-term car park being provided at the airport by a private operator, even though it sees a need for additional car parking facilities and an application has been put forward for the provision of 3,500 car parking spaces? Mr. Burke said delays in the planning process can delay the completion of Aer Rianta projects but they have also delayed the opening of the new car park because Aer Rianta appealed to An Bord Pleanála. Will he elaborate on this?
I understand the figures now involved in tendering for the developments at Cork Airport are significantly in excess of the costs projected by Aer Rianta. This is putting a large question mark over the investment at the airport. The facilities are urgently required if the airport is to expand. Given that the Minister is considering the break-up of the three airports, is Aer Rianta getting cold feet about providing this investment? This has serious implications for the viability of Cork Airport. I also ask about the current case Aer Rianta is taking against the regulator. Mr. Burke has already stated that Aer Rianta looked for an independent regulator to be established. It is extremely unusual in this State for one State agency to take another to court. There will be significant costs involved. No matter who wins the case, the taxpayer will have to foot the bill. Would it not have been possible to find an alternative mechanism rather than dragging this through the courts and making taxpayers foot the bill? While it is a significant issue in terms of the expansion and development of airports, especially Dublin Airport, it remains the case that it is the taxpayers who will foot the bill at the end of the day, and alternative mechanisms should have been found. Even at this late stage an alternative mechanism should be found to see if this issue can be resolved without going to the courts. My understanding is that there has not been any dialogue between Aer Rianta and the regulator to see if this issue could be resolved outside of the courts.
I also wish to raise the issue of airport levies. I know the check-in by-law has been challenged by Ryanair in terms of the number of check-in desks which must be available depending on the number of passengers checking in for flights. Has that by-law been implemented yet by Aer Rianta? Aer Rianta collects €6.50 from every passenger that goes through Dublin Airport, or €7.85 for every passenger going through Cork and Shannon, through passenger service charges and the security levy. If the passenger does not depart, Aer Rianta does not collect that money, yet the airlines seem to be retaining those funds. It is estimated that Ryanair alone may have collected up to €6 million from passengers who did not depart on flights from our State airports. While Aer Rianta is not directly involved in this, the airline companies are collecting these funds on the basis of returning them to the State company and the managers of the airports. That is not happening at the moment and it seems to be the passengers who are losing out. Is there any mechanism within the management and control that Aer Rianta has over the airports to see this money being returned to the passengers rather than being absorbed by the airline companies as additional profit? It seems to be a nice little earner for some of the airline companies.
On the breaking up of the management and control of the three airports, I am sure the witnesses have strong opinions on this and perhaps they could elaborate upon them. While the three airports would remain under State ownership, they would, as Deputy Shortall has said, be in competition with each other. From a customer's point of view, this will, I hope, lead to an improvement in the range of services provided throughout the country, not just at Dublin Airport, and help to ease congestion.
Will our witnesses address some of those questions before we move on?
Mr. Hanlon
I will deal with some of the policy issues raised. The chief executive will deal with operational issues and our deputy chief executive will deal with the regulatory issues. There is a limit to what we can say on the regulation issue because it is currently before the High Court and we do not wish to prejudice that case by anything we might say here. There is no taxpayers' money involved in our challenge to the regulator. Are Rianta has not received one penny of taxpayers' money. Any money it uses comes out of its own profits and the regulator charges Aer Rianta directly for its costs. It levies its costs on Aer Rianta, so there is no taxpayers' money at stake in that court case.
It is my understanding that Aer Rianta is a State company owned by the taxpayers. Someone is going to have to foot the bill and the State loses out at the end of the day. The only people who will win out of this are the lawyers involved.
Mr. Hanlon
The only method of appeal within legislation is judicial review and that is the route we have taken. If we were to accept the regulator's determination then we would go bust. Margaret Sweeney, our deputy chief executive, was involved in that case from the beginning and will deal with it in turn. I will address the issue of an alternative to Dublin airport. We have no problem with that and would support an alternative to Dublin Airport if it was in the right location. It would make no sense to have such an alternative at Gormanstown. It is too close to Dublin Airport and within the same catchment area. However, we would fully support the development of Baldonnel as a second airport in Dublin. It is in the right location on the south side of the city and has a different catchment area. That is a policy decision for the Government and is not for the board of Aer Rianta to decide.
In December 1999, the Minister for Finance and the Minister for Public Enterprise commissioned a huge report by Warburg Dillon Read which stated that they see no reason the Government should inhibit such a development at Baldonnel if it seeks appropriate planning permission. In regard to an independently owned second terminal at Dublin Airport, it concluded that it makes no economic sense and its analysis suggested that a competing private terminal would have to levy such high charges in order to generate an adequate commercial return for its owners that it would not be sustainable.
Who made that statement?
Mr. Hanlon
It was made by Warburg Dillon Read in its report to the Minister for Finance and the Minister for Public Enterprise. Professor Doganis, in his report to the Department of the Taoiseach in January 2002, said exactly the same thing. He said that an independent second terminal at Dublin Airport would make no economic sense. The same has happened in London, where the MMM examined the same proposition for terminal 5 at Heathrow and reached the same conclusion there and with regard to other airports in London. We support the idea of a second airport for Dublin provided it is in the right location.
What does Aer Rianta think of the idea of a joint venture with an independent operator in Dublin Airport?
Mr. Hanlon
That is part of the national planning process at the moment. We are examining every proposal in relation to that.
Have you spoken to them about it?
Mr. Hanlon
Our planners have spoken to all the people around Dublin Airport, the landowners, the McEvaddy brothers, who own other land, and other people in the area. That will come in the report that will be presented to the board. To move on, a policy decision has been taken with regard to the Great Southern Hotel in Killarney. We are also investing in a hotel in Derry, which is a good opportunity for us. We only have a 25% share in it, the rest of it being owned by three individuals in the Derry area. We were asked to come to provide management expertise, which we are doing. Some €4 million in grants were given to this hotel by the authorities in Northern Ireland and we invested in a 25% stake.
The reason for the sale of the Torc Hotel was quite obvious; it was part of our programme for the Kerry hotels, both of which needed large investments. The one in Killarney, the main one, required €15 million to be invested, which we did and it is now completed. The Torc Hotel would have required about €8 million to bring it up to standard. The board of the Great Southern Hotels, which I chair, in addition to chairing the board of Aer Rianta, came to the conclusion that under the present circumstances we were not in need of two hotels in Killarney and, as such, the decision was taken to sell the Torc Hotel and the adjoining lands on completion of the main hotel refurbishment and to use the money for the development of the other hotels, namely, the main Killarney Hotel, Parknasilla and the Galway Great Southern Hotel where there is currently a restructuring programme ongoing.
We have no problem with regard to separate boards for Shannon and Cork Airports. That is a policy matter for the Government. The board of Aer Rianta does not have any problem with whatever decision may be taken in that regard. Separate operation of the airports is another policy decision for the Government. The economic circumstances of those airports will also have to be taken into account.
Someone brought up a point about Cork Airport. There is no question of any delay in the development of its new terminal. It is in the final stage of negotiations and while the figure may have been higher than originally anticipated, it will proceed and the board is fully committed to it. Subject to all the i's being dotted and all the t's crossed it is hoped that the contract will be awarded in the next couple of weeks.
Mr. Chairman, on a point of order. Mr. Hanlon talked about the company's position vis-à-vis the proposed break up of the company. I do not think it is quite true to say that he has no difficulty with it. There have been various newspaper articles in recent times containing strong comments by Mr. Burke in regard to this proposal. Serious concerns were expressed about the future of the company if the Minister is to go ahead with his plans. That may be the view of the board. I do not know. Does the chief executive have a view on it?
Mr. Hanlon
I do not think Mr. Burke has a different view on it to that of the board.
It has certainly been reported in the media that he has.
Mr. Burke can comment on it when Mr. Hanlon has finished.
Mr. Hanlon
The issue of congestion problems at Dublin Airport was raised. It is true that there is congestion at Dublin Airport at times, which is mainly caused by baggage retrieval. People have had to wait for up to two hours to get their bags after a flight. Another problem area is the large queues at the check-in desks.
Aer Rianta does not have control over either of these matters. The baggage retrieval is the responsibility of the airline or ground handling agent. The licence is granted to them for both of these duties by the regulator, who does not set any standards with which they must comply. Aer Rianta has been trying for more than a year and a half to resolve the difficulties. We recently introduced a by-law in regard to the check-in areas obliging the airlines to open them two hours in advance and to have two desks when there is a large group of people, which is the same standard that these airlines comply with abroad.
Both the major airlines have challenged this in the High Court despite the fact that they comply with such directives at other airports. We await the outcome of the judicial review application, which came before the High Court this morning. We are unable to enforce the by-law until the issue has been judicially resolved. The decision will have to be made before the summer because, otherwise, there will again be chaos at Dublin Airport. It is unacceptable to have a queue of up to 100 people with only one person checking them in. This does not happen in any other airport in the world.
As I said previously, we do not have any control over this area as the licence is granted by the regulator to the ground handler giving it responsibility for check-in and baggage distribution on arrival. I get letters of complaint from people to Aer Rianta, as the public at large does not understand that we do not have any control over these matters. Our only control at Dublin Airport is through the Friskim system; the airside to landside facility and the checking of passengers for security reasons, in addition to the airport police with regard to outside traffic. Runway control is operated by the Irish Aviation Authority, which decides on the separation of aircraft and the number of aircraft that can land. Traffic coming from the west of Ireland has a five-mile separation. It is the only airport in Europe known to me that currently has a five-mile separation. I understand that this is a matter to which the aviation authority is currently giving serious attention. If it can be reduced then that will increase the capacity of the runways.
What is the subject of the judicial review which is currently in the High Court?
Mr. Hanlon
Ryanair and Aer Lingus are challenging——
Both of them?
Mr. Hanlon
——our right to make a by-law at the airport. In one case there is one reason for objection while in another case there is another one. Ryanair claims it is unfair and unreasonable and we are picking on them. Aer Lingus has another series of reasons. However, in the past 24 hours we have reached agreement with Aer Lingus with regard to its check-in procedures and the number of staff, which will render it unnecessary for us to enforce a by-law against it. This has been agreed voluntarily by Aer Lingus but so far no agreement has been reached with Ryanair. Mr. Burke will take the other points.
Mr. Burke
The Minister has embarked on a debate as to Cork and Shannon Airports having greater autonomy and the wider issue of the concept of an independent terminal that is not subject to the control by the existing operator. The Government has not made any decision on Aer Rianta.
I was participating in that debate, which is the point raised by Deputy Shortall in regard to the notion that Shannon and Cork Airports could not compete with Dublin Airport. Belfast Airport could not compete with Dublin Airport, which has critical mass - a significant number of routes. Some 30% of the passengers who come to Dublin Airport come from outside the greater Dublin area, which is an issue for the rail link as well.
The other point I made, apart from that regarding competition, and the obvious ones of economies of scale and expertise, is that we are living in a world of consolidation where airlines are forming alliances. Airport groupings are emerging in Europe and the rest of the world. We are already a group and that is our strategy. If the Government decides, as it is entitled to do, to make any decision then we will go along with that. No decision has yet been made. The Minister has visited Shannon and Cork and asked us for our views, which I gave. If the Minister or the Government makes a decision then, obviously, I will accept it.
Does Mr. Burke think that the break up would be in the interests of the company?
Mr. Burke
We will have to live with whatever comes out of that decision. If one starts to break up the company then we may end up with no Aer Rianta. It is hard to know where that would end.
How do we get from where we are now to some future state? That would, obviously, be an issue of concern for us. As I mentioned, we have the euro bond and liabilities with our bankers. We are a company subject to normal corporate governance. Our euro bond is quoted on the Dublin and London Stock Exchanges and we are bound by Stock Exchange rules. It is not like taking a Civil Service Department and doing something to it. They were the points I made but I did not mean to be confrontational. I was just giving my view.
The first question asked by Deputy Glennon is complicated. Aircraft noise is a problem throughout the world. In some cities and airports, believe it or not, they have worse problems than we have. Dublin Airport is unique in that in the 1960s plans for the new runways were made and got the support of Dublin County Council, as it was then. The first runway was built in 1987. The second runway has not yet been built, but development of the city took place with those two possible runways in mind and the approaches to the runways were kept largely free of development. Dublin Airport is therefore unique in that it has the possibility to expand and that is an issue for some although not all of its neighbours.
We accept absolutely the principle of sustainable development. I do not have to tell the people who are here from Fingal that Dublin Airport is not only the biggest industry in Fingal but the biggest economic unit in the country and supports a huge number of jobs. We estimate that 65,000 jobs depend in one way or another on Dublin Airport. The attitude of people to it depends on where they live. Portmarnock people are worried about the second runway. People in Swords who are worried about the cross runway which is in use, are worried about the impact of a second runway. I write to many of them. We have people who are willing to meet them and find out what their concerns are, and we share those concerns because unless we can deal with the noise problem it will affect the development of the airport. There is no question about that. At a different level we are working internationally to try to deal with the noise problem at source. We believe that is the primary way to do it because, technically, even though the planes flying today are much quieter than their predecessors, they could be less noisy.
We have also installed noise and track monitoring at Dublin Airport and are working with the airlines and ATC to at least get planes to fly on track and not fly unnecessarily over housing areas. We have a self-imposed curfew on engine run-ups between the hours of 11.00 p.m. and 6.00 a.m. This is borne out in the environmental impact assessment, and I would be very surprised if that was being abused. There is pressure to have engine run-ups banned until 7.00 a.m. and we are talking to the airlines at Dublin Airport about that. That would have a huge impact on the early morning wave out of Dublin Airport where planes have been in for service overnight and would then not be able to test the engine before they take off. However, all of these things will be dealt with as we go along in the planning process. There is probably an opportunity to have some kind of formal council between local areas and the airports to ensure that all views are dealt with. The community plays a huge part in almost every airport, whether it is Shannon or Cork. The community is normally looking for new routes, new services, for jobs, leisure, business and so on. It is a question of getting that balance right. I saw advertisements in the papers recently in Deputy Glennon's local area which mention that it is only ten minutes from the airport. That is a selling feature for houses. However, there are problems.
They say there is a good train service as well.
A solution, Mr. Burke, might be to send them to Shannon instead.
Mr. Burke
We deal with Shannon. The local community at Shannon would evict anyone who complained about noise. We are seriously committed to the environment. Dublin Airport has, almost uniquely in Europe and elsewhere, the ISO 14000. We take that seriously and we know that if we do not it will impact on the airport. It is not just lip service. We just have to keep trying.
The Chairman dealt with the alternative airports. Senator Dooley and Deputy Shortall dealt with the gold plating of airports. We have spent very little. The biggest problem facing this country is the lack of infrastructure. The airports were a bit ahead in terms of planning. The problem is in implementing the plans. Everybody needs infrastructure. The question is how to pay for it. We, because we are funding it all from our own resources, have to spend as little as we can. Some of the complaints are that the facilities are too small, but we did not have money to gold plate. Benchmarked against other airports, we have spent about €5 or €6 per passenger, whereas other airports have spent €8 to €10. Regarding pier D, by coincidence, Stansted has a very similar development which cost almost €90 million. We are talking about €50 for the pier itself. The extra €20 million has to do with access to the pier.
Is that a temporary facility?
Mr. Burke
No. It is permanent. A temporary facility would cost about €5 million and would be demolished after 30 months.
The cost of square footage is probably the best way to give comparisons because obviously there are issues in relation to the number of passengers at different airports. From my experience of going through international airports it does not seem that Dublin is in any way better kitted out than many other airports with which I am familiar. To allay some of those concerns, Mr. Burke might refer to cost per square foot, if we have those figures.
Mr. Burke
I do not have them with me, but we have done the benchmarking exercise and we come out much lower than comparable airports. I am referred to the Warburg Dillon Read report.
Ms Margaret Sweeney
In 1999 Warburg Dillon Read, for the Minister for Finance and Public Enterprise, undertook a detailed review of Aer Rianta's capital expenditure plans. The report deals with Aer Rianta's historic and planned expenditure compared with other peer airports and what it spent on infrastructure for the period 1993 to 1998. It examines spend per extra passenger. It states that Aer Rianta has a very low level of historical spend compared to its peer airports, roughly $60 per extra passenger as opposed to an average of $104.4, which is about 40% below the average spend. The report benchmarked Aer Rianta against Schiphol, Hamburg, Milan, British Airports Authority, Vienna, Manchester, Copenhagen, Frankfurt, Aéroports de Paris, and compared Dublin, Shannon and Cork and concluded that we were roughly 40% below the spend of other airports over that period. The report said that going forward we were really in catch-up, and even with catch-up we were still below what the spend in other airports was.
Mr. Burke
What has not come out in the figures we produced recently was that terminal traffic at Shannon grew by 3%. That is very positive. We are forecasting 10% growth next year for Shannon. New services will be starting. We are talking to Skynet which tried to set up a service recently but ran into difficulties which will postpone it. However, it is planning to start in late February or early March. There is the new US Airways service from Philadelphia starting in May. Shannon will do very well this year.
On the question of slots, it is interesting that some of the airlines say an extra runway would not be necessary if better use were made of the facilities, but they all want to go at the same time - early in the morning, midday and in the afternoon. However, there is no doubt that with better management of the slots we could get better usage out of the runway and the other facilities.
Is that an Aviation Authority decision?
Mr. Burke
That would be a matter for the regulator. We have requested each year that Dublin Airport be fully co-ordinated, but each year we are turned down.
By the regulator?
Mr. Burke
Yes.
Was that decided by the regulator in association with the Irish Aviation Authority?
Mr. Burke
No, purely by the regulator.
In terms of the distance between aircraft arriving from the west - in the context of the distance of five miles to which Mr. Burke referred - is that an aviation authority issue?
Mr. Burke
That is an IAA issue. Ms Sweeney will deal with the regulation side.
Ms Sweeney
Deputy Naughten referred to the case against the regulator. The Act provided for a judicial review or an appeals review in regard to the determination. With regard to the judicial review, the principal substantive issue concerns the clarification of our role and that of the regulator under the 1998 and 2001 Acts in relation to the development of the airports and the amount of the spend. The principal issue is that the company put forward a capital development plan, based on master plans for the next ten years, to the regulator. However, his consultants, in the space of the three month review, decided to put those aside and come up with their calculation, which was significantly under the level of investment that Aer Rianta would determine the airports need. He accepted fully the demand in terms of passenger throughput at the three airports and the significant difference in terms of the amount of investment available.
We also base it on the outputs from Warburg Dillon Reid which stated that the airports had suffered significant under-investment in the past. There are issues of congestion and poor quality services at the airports. That is the principal issue between us in relation to the determination.
Other matters related to significant errors in the determination in respect of which there was a hearing two weeks ago. Those matters will not be dealt with as part of the determination, but the judgment in relation to them states that the impact on the airport would be roughly over €100 million over the period of determination, having regard to the level of errors set out in it. The detail of the matters is part of the judicial review, the hearing of which is currently taking place.
Was it not possible to explain to the regulator that there were errors in relation to this, rather than spending €3.5 million on a legal case with one arm of the State taking another other arm of the State to court? That is a significant amount tied up in a legal case and a significant cost for which somebody will have to pick up the tab. From media reports, there seems to be little dialogue between Aer Rianta and the regulator in relation to this. In comparison to ComReg or any of the other regulators, a great deal of discussion seems to take place between the private companies and the regulator in relation to decisions prior to a case going to court and even after such discussion a case may have to be brought to the courts. Surely the significant errors in the determination could have been brought to the attention of the regulator, rather than those matters having to be thrashed out in the courts.
Ms Sweeney
I agree with the Deputy. We tried to have a discussion on that with the regulator. During the process we have on record a number of letters to the Commission for Aviation Regulation in September 2001, the month following the determination, setting out that the numbers and details did not correspond with our numbers and records and that we could not explain the differences. We were basically told that there would be no further decision on them. The regulator was reluctant to engage in any discussion.
Equally, there was no engagement or discussion between the regulator and the company in relation to the capital expenditure programme for the airport. We sent in our plans, but there were no meetings. The regulator was reluctant to have meetings because of the need for his office to be independent. I agree with the Deputy that what he suggested would be a better way to deal with the regulation issue.
It would be a more sensible way than giving money to solicitors and lawyers.
Mr. Hanlon
I wish to deal with the temporary facility at Dublin Airport. This was demanded by Ryanair. After a good deal of pressure being exerted on the Government which, in turn, put pressure on Aer Rianta, the company agreed to provide this facility and to have it ready by summer 2003. Following our agreement and our offer to the Government, we agreed to proceed with it. Putting down the extra concrete and building the facility would have cost us about €15 million, but we agreed to proceed with it and the concrete has already been laid. We did not need planning permission for that part of it.
Ryanair then sent a demand to Aer Rianta for what it would need to operate such a facility. Effectively, it would have cost Aer Rianta €30 million to meet those demands. Ryanair wanted all the aircraft using the proposed facility to have certain facilities. It wanted its current discount programme extended for four years. I do not have the detail of the cost of those demands, but it would have cost €25 million to meet them at Dublin and a further €5 million at Shannon.
Did the regulator have a role in that?
Mr. Hanlon
No. He has a role in setting the charges, but no role in providing free access for Ryanair or any other airline.
In the event of pier D going ahead on a permanent basis, what implications would that have for the second terminal when it is set up? Is this is a stop-gap measure?
Mr. Hanlon
Pier D is needed to provide what is now required by airlines, a walk on/walk off facility. None of the airlines want to land aircraft in remote areas of the airport and transfer passengers to the terminal by bus. Aer Lingus started to fly 12 new routes and Ryanair started to fly one new route to Aberdeen in the past 12 months. We have promised that we will provide Aer Lingus with the facilities. Ryanair does not transfer any passengers by bus at Dublin Airport. It has walk on/walk off facilities for its passengers. Aer Lingus transports approximately 40% of its passengers by bus.
We agreed to provide walk on-walk off facilities by summer 2003, at the temporary facility. We will not now be able to have that temporary facility ready by 2003, but we will have the permanent facility ready by 2004, subject to the outcome of the appeal currently before An Bord Pleanála being in our favour. That permanent facility will provide the walk on/walk off facilities needed and eliminate the need to transfer passengers by bus, which is what Aer Lingus wants. It has indicated to us that it will initiate another five new routes in 2003, which would bring the total number of new routes it would have initiated to 17 in a two year period. Part of the economics of its operation is that it should also have facilities where its passengers can walk on to and off aircraft and that it should be able to turn its aircraft around in a short period instead of having to transfer passengers two or three miles by bus to and from the aircraft, which represents a major cost to it at Dublin Airport. We are endeavouring to provide that facility. Pier D is not related to the provision of another terminal, it is merely a pier.
I wish to refer to a point the Chairman raised. As one approaches the airport terminal, there are three entrances, which will be shortly marked with the names of the different airlines. This will enable passengers to be set down at the correct entrance. That will be done within the next few months and it will be ready by the summer.
Mr. Burke
Deputy Shortall asked about passenger trends. As everyone is aware, 2001 was a bad year for the industry, but numbers for the three airports increased by about 3.5%. Numbers increased by 4% in 2002, with numbers in Dublin having increased by 4%
On 2001 figures?
Mr. Burke
Yes. Numbers in Shannon declined by 2%, which was a good result considering the impact of the fall off in passengers on transatlantic routes. Numbers in Cork increased by 6%.
With regard to why we turned away business at Shannon, we would welcome any airline. We do not charge Ryanair any fee at Shannon for operating to Paris, Brussels or Hahn. However, there is a limit to what we can do. Ryanair was placing great demands on us at Shannon and Cork in terms of long-term deals, free office accommodation and a free check-in desk. It would be economically questionable and also illegal for us to meet those demands. We would welcome Ryanair expanding its routes from those airports, but that would have to be agreed on an equitable basis.
Is Mr. Burke saying that decision had nothing to do with the Government's proposals in relation to——
Mr. Hanlon
No, it had nothing to do with that. It was a purely commercial decision. We offer Ryanair services for any new route it wishes to operate. We offered it marketing support and free landing charges for the first year, plus graduated charges over the next three years. However, it refused to accept those terms. It has told us recently that it has operated for the past three years on a free of charge basis. It indicated that, were we to start charging it at the end of the three years, it would pull out of the route. It wants the facility but does not want to pay for it.
On the other point about the price of tickets and airport charges when people do not fly, that is not a matter for Aer Rianta but the Director of Consumer Affairs. Last year Ryanair sold approximately 900,000 tickets on which it collected the charges and on which customers did not fly. Aer Lingus did the same, although I understand it has undertaken to refund the charges. However, Ryanair has stated it will not. Apart from airport charges, it also retains Government taxes and insurance, which are charged separately. If one adds them together on the basis of €3 for insurance, €6 in Government taxes and €5 for airport charges and multiplies the total by 900,000 - the number of passengers who did not fly - one can see that one can have free seats and still make a profit.
Is the figure 900,000?
Mr. Hanlon
Some 900,000 tickets were sold last year on which customers did not fly.
How many were with Ryanair?
Mr. Hanlon
That was Ryanair.
What were the total charges?
Mr. Hanlon
Total charges are about €30 on a return ticket to the United Kingdom.
Does that mean it is making about €27 million?
Mr. Hanlon
On non-showings, yes.
It is making €27 million by not returning these charges.
Mr. Hanlon
We do not know what it is making but they are the charges. By its own admission, it sold 900,000 tickets on which people did not travel. The average in charge is about €27 to €30 per ticket which comprise Government and airport charges——
This means Ryanair makes €27 million by not returning charges to customers. Is that what you are saying?
Mr. Hanlon
You could say that but we do not know the exact figure.
Ryanair is making more money from not flying passengers than it is from flying them.
I have no doubt that it will respond to this.
Mr. Hanlon
It is well known that free seat sales make a great deal of money. Many book seats because they are €1 and pay the charges but do not fly. The Ryanair website states it does not give refunds. It is a matter for the Director of Consumer Affairs to take it up with Ryanair.
Are you saying the same figures apply to Aer Lingus?
Mr. Hanlon
Yes, Aer Lingus admitted this but it is refunding the charges.
Chairman, someone else should be entitled to an opportunity to ask questions.
The witnesses are answering questions.
Do we want to be here until 12 midnight? This is becoming a joke.
Mr. Burke
We would like private concerns to build car parks around Dublin Airport. The problem with the proposal referred to was that it was so close to the runway that the approach lights to the runway would be in the car park were it to be built. We had to appeal. Otherwise, we would not have done so.
Did Aer Rianta not appeal a number of applications in recent years from people who wanted to provide warehousing in north County Dublin?
Mr. Hanlon
We appeal against anything in the red zone.
Some of them were on the runway.
Mr. Hanlon
When we come to develop the second runway, those who will have received permission to build in the red zone will be the first to object. We appeal any decision to build in the red zone.
Did Aer Rianta not appeal against people building something which it ended up building itself?
Mr. Hanlon
No.
Was that programme incorrect?
Mr. Burke
It was.
Mr. Hanlon
Absolutely incorrect. It was a totally biased programme. We have lodged a complaint with RTE.
Mar a dúirt daoine eile, tá fáilte roimh an bhfoireann ó Aer Rianta. Ní baill den choiste mé ach tá suim faoi leith agam faoin ábhar atá i gceist. Is Aer Rianta covered by freedom of information legislation?
Mr. Hanlon
No, it is not.
I will have to phrase my questions carefully because I will not obtain the information otherwise. A number of comments were made that Aer Rianta always made a profit. It would perhaps be more correct to say Dublin Airport makes a profit and that Cork and Shannon Airports sometimes do not.
I am trying to get to the bottom of the other statement made that most agree to an additional runway at Dublin Airport. That is quite a subjective phrase. To be equally subjective, I could say most people to whom I have spoken disagree with the building of another runway at Dublin Airport. What they would agree to is a cap on development at the airport. They would also agree that this must be faced up to and planned for. Perhaps then people in Shannon and Cork would begin to see some of the results Dublin Airport has seen. That is the focus of my question. Will the witnesses respond to the idea of a cap, something which operates in other countries, and the contention that we need to face up to the fact that Ireland is centralised and that Dublin Airport cannot handle additional growth?
Regarding the neighbours in Dublin North who are unhappy with the operation of Aer Rianta at Dublin Airport, does the company have measurements of kerosene deposits in the area? I am aware it is conducting noise tracking. I thank it for doing so because it is not obliged under law to do much in this regard. Does the company monitor or have any plans to monitor kerosene deposits?
Is Aer Rianta able to give information on the authorisation or tracking of small aircraft in the region, presumably those taking off from Dublin Airport? I have received complaints from people who say they have not been able to obtain information from either the Irish Aviation Authority or Aer Rianta on the movements of small aircraft. They appear to be surveying or going on leisure flights. I am unsure which but they are not flying normal commercial routes.
Both Deputy Glennon and I listened to a medical doctor the other night in Swords speaking about the effects internationally of noise on children living in close proximity to airports. Following on the large number of cases related to smoking that are becoming newsworthy throughout the world, has Aer Rianta taken into account the knock-on legal effects of not giving due consideration to the health implications of developments at Dublin airport?
What details of reporting of United States military aircraft at Shannon Airport does the company make available to the Government? Does it have any information on what is being carried in the aircraft in question? What authorisation governs Aer Rianta regarding the landing of these given that they are military aircraft?
Is Aer Rianta following a policy of monolingual signs at airports? I see an increasing number of English only signs that would be illegal in Canada because of its language legislation and, apart from Britain perhaps, would be a shame for other countries in the European Union where one sees signs in a number of languages, certainly the national language as well as a number of others. Will this matter be rectified?
While many of the questions have been asked, I will ask a few. I hope it will not take too long to answer them, because they are very direct questions. Aer Rianta owns ten hotels and a 25% stake in a hotel in Derry. Can we get an audited financial report on the operation of those hotels so that we can get the overall picture? This is a very bland report, which does not go into great detail. For example, why did Aer Rianta sell a hotel in Killarney and then take a share in one in Derry? What is the name of the hotel in Derry? How did this decision come about? Was it Government policy? How much did the 25% stake cost? How many employees are involved in the complete operation? It might be a naïve question to ask, but it seems strange to sell a hotel and then acquire a stake in another one.
Deputy Glennon said Aer Rianta objected to farmers who wanted to extend and build warehouses in the red zones. There was a "Prime Time" programme on RTE television about this and Aer Rianta did not come out of this well. Mr. Hanlon glossed over that, but perhaps he could elaborate on it.
In my constituency and that of Deputy Glennon, questions often arise about the inadequacy of security measures at Dublin Airport. I would like to hear about what security measures are in place there. This committee should get to see a complete financial report audited by the Comptroller and Auditor General. We may need to allocate another day to this subject.
We have gone through most of the questions. Does Aer Rianta envisage being privatised or taking in a strategic partner as being the best option? Aer Rianta has been a net contributor to Government most of the time, but the return from investment may not be so attractive to the private sector. Have any approaches been made to Aer Rianta with regard to a strategic partnership for its development? If Aer Rianta continues at its present level of growth, what is the anticipated dividend to be returned to the State in 2010? As Deputy Brady said, considering the information we have been given concerning Aer Rianta's profits, it does not show how much comes from the hotel chain and from interests other than Dublin Airport on which most of us have concentrated. We would like that information and perhaps it could be supplied to us.
Where do we see Aer Rianta being in the future? Will it be privatised in total or will it enter a strategic alliance with some other operator of a similar size to create a viable operation? Aer Rianta has too many tag-ons to be an airport operator at the moment. While hotels and other interests may be very profitable, if the asset base there were to be capitalised, it could be far more profitable to the company rather than having the problem it has with the regulator whereby it needs to borrow €1.3 billion but is only being allowed to borrow €346 million. Does this mean everything will stop if the regulator wins the case against Aer Rianta and that Dublin Airport will not be able to develop? That is the fear all of us have. Some of the Deputies from north County Dublin might be worried about the amount of traffic that goes through it. Some of us might be more worried if that traffic were reduced rather than increased because it services such a large part of the country.
Mr. Hanlon
I will deal with the hotel issue again. For a small sum of money - much less than €1 million - we got a 25% shareholding in a hotel in Derry. We have a quarter share in a hotel standing in the centre of Derry worth £20 million sterling. That is not a bad deal. We invested in that before we decided to sell the Torc. Those two decisions were independent of each other. For 2002 the hotels will just about break even. It was a very bad year in the tourism business. If Dublin Airport were excluded from those, the rest of the hotels would have made a substantial loss. The saviour of the group at the moment is Dublin Airport. We sold some unwanted land at the back of the hotel in Killarney to help with the payment for the refurbishment of that hotel and we are about to sell the Torc to help with the finances of the group.
The question I asked was whether it was Government policy. How did it come about that Aer Rianta got involved in this hotel in Derry?
Mr. Hanlon
The board of Aer Rianta took that decision. We were approached by the people in Derry to see if we were interested in going into that hotel. The proposal was examined in detail. It was shown to be highly profitable. Some £4 million in grants was available from the Northern Ireland Tourist Board and various organisations up there. We are getting a management contract. We have both a 25% share and a management contract in that hotel. In my opinion that is a superb deal and one in which I would not mind being involved.
As mentioned earlier, we have another company called Aer Rianta International. Aer Rianta International is a hugely successful company abroad. It is the fifth or fourth biggest airport retailer in the world. Last year it contributed about €10 million to our profits and will continue to do so in the future. We own a large share of Birmingham International Airport, which is now worth eight times what we paid for it. Aer Rianta International owns a share of Hamburg and Du1sseldorf Airports. Aer Rianta International will continue to be successful even in the very serious downturn in the airport business worldwide. That company is effectively subsidising the operations in Irish airports and helping to keep down charges.
Deputy Ellis asked if the whole capital programme would have to stop if the regulator wins the case against us. The answer is "yes", because we will have no money to do it. Either the Government will change the legislation or the capital development, which is about €1.3 billion over the next ten years, will have to stop. At present we are spending about €3 to €5 per passenger going through Dublin Airport. The average spend in Europe is about €12 and in the UK it is about €14 per passenger. There is no question of us gold plating anything and in fact some people would regard the development at Dublin Airport as akin to the poorest countries in the world. Very little money is being spent at it.
For about three or four years we had very serious problems with huge congestion mainly because developments were held up by consultancies by the Department of Finance and the Department of Public Enterprise. There were consultants all over the place. After three years of consultancy, they came to the same conclusion as we had, but we were three years behind in the development programme, so our hands were tied and we could not move. That was when Aer Rianta was an agent for the Minister. The board of Aer Rianta now has a statutory responsibility to carry out the development. Effectively, in looking at the second runway and the future development of the airport, we are carrying out our statutory responsibility and no more.
Mr. Hanlon stated that if Aer Rianta's case goes wrong with the regulator, it would then have to approach the Minister to change the terms of reference or introduce a new Bill. Did Aer Rianta not think of doing that rather than going for a judicial review? Was there enough time to do that?
Mr. Hanlon
That was not an option at the time. The law was there and it was left to us to come to a final decision. The regulator is not an arm of the State; it is an independent body set up by the Oireachtas to be independent of the State. It does not report to a Minister. Although it must lay a report before the Oireachtas, it is not responsible to the Oireachtas or the Minister and is, therefore, a totally independent regulator.
Is it possible to bring the regulator before the committee? This may be a matter for private session. I understand this issue arose with regard to the telecommunications regulator who felt she operated outside the remit of the committee.
We should also ask Ryanair to come before the committee to explain what it is doing with the €25 million.
We should do so sooner rather than later as it could save Aer Rianta a substantial sum of money. The regulator should come in and explain his reasons for capping the company at the current level, which is preventing customer services from being expanded at Dublin Airport. The most worrying feature of the discussion is that Dublin Airport will be handcuffed with regard to development because of the regulator.
Mr. Hanlon
The problem with the regulator is the most serious operational issue with which the board must contend. I wish to address the question of our involvement in the hotel trade. We are involved in this area at the insistence of the Government. The days of an airport operator washing dishes and making beds are gone and we should withdraw from the hotel business.
With all due respect, without the success of the hotel chain this year, which made in the order of €45 million, Aer Rianta would be in a bad way.
Mr. Hanlon
How did the Deputy arrive at the figure of €45 million profit?
I refer to hotels and other non-core activities.
Mr. Hanlon
The hotels made a profit of €2.6 million, not €45 million.
There is no freedom of information because I did not get answers to my questions.
Have strategic approaches been made by people interested in becoming future partners in the development of Aer Rianta?
Mr. Hanlon
Yes, we have been approached by a very large banking organisation with which we have agreements on other airports with a view to taking a stake in Aer Rianta.
I assume it is a minority stake.
Mr. Hanlon
Yes, a 30% stake. The value of the whole group was estimated at about €2.8 billion.
The stake would be worth close to €1 billion.
Mr. Hanlon
The approach was made before 11 September. Since then we have written to the Government which has made a policy decision not to sell any part of Aer Rianta.
I oppose the sale of Aer Rianta because it has done well. However, if it was necessary and it was still possible to get direct investment of €1 billion for a 30% share, it would make much more sense to pursue that than opt for a direct flotation.
Mr. Hanlon
That is a policy matter for the Government.
Deputy Sargent believes that his questions were not covered.
I did not get replies.
Mr. Burke
On the question of profitability, the €45 million mentioned by Deputy Sean Ryan refers to revenue. The breakdown of the revenue is 24% from aviation and airport charges, 57% from retail commercial activities, 10% from overseas activities and 9% from the Great Southern Hotels. The regulation is framed in such a way that we do not really benefit from the commercial activities because charges are reduced in line with profits from the shops. This means, for example, that if we were to stop our commercial activities tomorrow, the charges would increase. It is very difficult to operate in the current set-up.
I apologise to Deputy Sargent. My earlier reference to support for a new runway was to people who are technically interested in deciding when one——
People who do not live nearby.
Mr. Burke
No, people in the airline business. That was the context of the question. I accept that the views of the airport's neighbours would be a different matter.
We monitor the air and water quality and the results are available. I am sure the Deputy will have been told that the water going out of the airport is cleaner than when it comes in.
I accept Mr. Burke's point.
Mr. Burke
On the question of——
Kerosene.
Mr. Burke
Kerosene would be part of the emissions.
Does Mr. Burke have the relevant information?
Mr. Burke
I am sure we do because it forms part of monitoring the air quality. We get complaints about small aircraft now and again, particularly about a certain aircraft. They must relate to an aircraft from a flying club involved in training. It is very difficult for Dublin Airport to handle light aircraft and numbers are continually falling as these types of aircraft move to other locations, such as Weston Airport.
Nothing has changed at Shannon Airport with regard to military aircraft in the sense that it has a transit business and any military aircraft, regardless from which country it comes, must receive approval from the Department of Foreign Affairs.
Does Aer Rianta check the aircraft?
Mr. Burke
No.
All civilian aircraft are checked.
Mr. Burke
No, they are not. The military personnel are travelling on commercial chartered aircraft which do not need approval unless they have munitions on board as they are in transit. They stop, refuel and continue their journey. This kind of business has been taking place at Shannon Airport for as long as I can remember and is not limited to the United States. The Russians, Angolans, Saudis and others have used the facility. We see it as a matter for the Government.
Nobody checks what is on the aeroplanes.
Mr. Burke
Not that I am aware of.
Mr. Hanlon
That is the responsibility of the pilot.
This proves the point that we do not know what is on board.
Mr. Hanlon
On the Irish language, it is policy that all our signs should be in both languages. If that is not being done, we will have to address the matter.
One sees several examples of English only signs when disembarking to enter the baggage handling area.
Mr. Burke
Signs at airports are a problem generally. One often has two languages and we have the additional complication of another one.
It is not complicated in Switzerland.
Mr. Hanlon
We have a policy on the matter. We even print our annual report in Irish.
How many passengers see it?
Mr. Hanlon
We print 250,000 copies of it and distribute a copy to each Deputy.
I am thinking of others, not myself.
Mr. Hanlon
We could distribute it or give the Deputy extra copies.
That is not an answer to my question.
Mr. Burke
Those who talk about airport noise being damaging live very close to the threshold of the runway. In the case of the Portmarnock community, we are four to five miles from the airport as the crow flies. Therefore, we are not comparing like with like. I am not aware of any credible research which would connect airport noise——
Is Mr. Burke aware of the research carried out at Munich Airport which shows that children living close to the airport do not learn as well as those who live further away?
Mr. Burke
I am aware of it, but I am not sure what conclusion one can draw from it.
We will see what the future brings.
The word congestion has been used frequently today. I congratulate Aer Rianta on the fine terminal built in Shannon Airport. As a Deputy who lives about four or five miles from the airport as the crow flies, I have deep knowledge of it. There is considerable spare capacity in the terminal, which can handle up to 5.5 million passengers per year, but currently handles just two million passengers or thereabouts. While I am being parochial, this is a matter of national importance because we are discussing an international airport. Shannon Airport has been vulnerable in recent times, particularly since 11 September. Deputy Shortall referred to the appointment of a new board at the airport and the offer of new routes which management could not take up last year. I do not wish to pre-empt the Minister's plans for the future of the airport but if he appointed a separate board, would the new board have authority and autonomy?
The Chairman mentioned problems with Ryanair regarding the Frankfurt-Hahn route. Ryanair has been good to Shannon Airport. It operates four routes out of the airport and is an important customer in the area. Is there a danger the company will move to Knock Airport and avail of cheaper rates?
Mr. Hanlon
It is not cheaper.
Ryanair may get a better deal. Are there negotiations under way with Ryanair regarding cross-channel routes? The English tourism market is performing well because of the exchange rate difference between sterling and the euro. I am anxious because Ryanair offered to open new routes but that did not happen. Aer Rianta undertook marketing for the company and there are attractions in this regard.
Marketing in the US is important to Shannon Airport. What forms of marketing have been undertaken to market the airport and the west generally? Mr. Burke referred to Skynet, which last year applied to take up the early morning, late night Shannon-Dublin route which Aer Lingus closed following 11 September. Aer Arann took on the route but has since dropped the late night flight. There were difficulties with the Belgian authorities regarding the proposed service as part of the Shannon-Dublin-Brussels-Moscow route. I hope Aer Rianta will facilitate Skynet because it has purchased a new Boeing jet. That route is vital in our area in terms of tourism and industry in general.
A delegation from Aer Lingus appeared before the committee two weeks ago regarding EI 111, the Shannon-New York flight that originates in Dublin and is part of the winter schedule. The time of the flight will not be changed to the original time, it will still leave at 3.30 p.m. A number of constituents have contacted me in this regard because they have been unable to make onward connections. Will Aer Rianta discuss this problem with Aer Lingus?
Shannon is the development hub of the west and access to airports is important. A number of tour bus operators are running direct services to Dublin Airport and that is affecting business at Shannon. Has Aer Rianta put pressure on the Government and the NRA regarding the Ennis bypass, which most people feel is prohibiting the development of the airport? There is a problem transporting people from the west but Shannon is the natural gateway to the west.
I refer to flight catering at the airport, which had a good reputation for providing quality jobs. I hope Aer Rianta will not go down the road of privatising these jobs. Mr. Burke stated that the company recognised the value of Dublin Airport and the jobs it provides for its hinterland. The position in Shannon Airport is similar. Suppliers have a reputation for buying centrally rather than locally and if flight catering is privatised, that will affect employment levels.
Is Aer Rianta satisfied the airport police at Shannon are able to handle the current scenario given the media focus on the airport because troops are passing through? Is security adequate?
I welcome the delegation. I will ask three specific questions. I am concerned about an independently operated terminal at Dublin Airport. Has Aer Rianta made a submission to the Government regarding its position on the proposal and the various implications for security, duplication and so on and, if so, can we obtain a copy? Aer Rianta has taken a desperate battering in the media over the past year regarding a number of issues outside its control, as the delegation outlined earlier. Why has the company not responded effectively to the criticism? It has been a one way attack, even by people the company helped and nurtured over the year. The preferential treatment provided by Aer Rianta to Ryanair initially was highlighted whereby none of its passengers had to walk on the tarmac to board an aircraft while 40% of Aer Lingus passengers had to do so.
Mr. Hanlon stated he has no difficulty with the construction of a second airport strategically located in the greater Dublin region. Is he aware of the groups in north Dublin which are seeking an assessment of the viability of a second airport as opposed to a second runway in terms of how it will impact on their lives environmentally and so on? If he agrees with the need for an assessment, will he help to conduct it? His statement has been thrown out the window because Aer Rianta is preparing an environmental impact assessment, included in which should be an examination of alternatives. Mr. Hanlon knows as well as I do that he cannot look at alternatives other than those currently in the ownership of Aer Rianta. That is my understanding - that Aer Rianta is looking at alternatives that could be located on lands owned by Aer Rianta.
Mr. Hanlon
That is not correct.
I am delighted. We will seek clarification on that.
Mr. Hanlon
We have a statutory power to compulsorily acquire lands not owned by us. Our master planners are looking at all the alternatives open to us at Dublin Airport - north, east, west and south. If the lands are required we have the statutory power to acquire them compulsorily.
I am very pleased to hear that. I am looking for a specific commitment that the possibility of an alternative airport to cater for the west of Dublin and the midlands will be looked at as part of the EIS. Aer Rianta officials have not given information in this regard at public meetings.
Mr. Hanlon
That is an alternative airport, which is a policy decision to be made by Government. Our environmental impact study relates to the impact of the second runway on the environment.
No, I am talking about a second airport.
Mr. Hanlon
We have not looked at a second airport. We have looked at the various options for Dublin Airport in our master plan but not at a second airport. We would support a second airport provided the Government policy was to build one.
Can Aer Rianta help us and the general public to try to evaluate this overall question? Is Aer Rianta prepared to report back to the Minister that there is quite a number of people who would like to see an alternative airport evaluated as part of the EIS?
Mr. Hanlon
With all due respect that would be the Deputy's responsibility.
No, Aer Rianta must play a role——
Mr. Hanlon
The Deputy should go to the Minister——
I will say it to him.
Mr. Hanlon
If the Minister tells us we should carry out this proposal, we will assist in that but it has to be a policy decision by the Government. We cannot undermine Government policy. Government policy may not be to look at a second airport but if it is Government policy then we support it. It is the duty of public representatives, if they receive representations from their area to this effect, to make those representations to the Minister and ask for that to be done.
I will play my role in trying to have that evaluated but someone like Mr. Hanlon has stated clearly he has no alternative to it.
Mr. Hanlon
We are not a policy making company. Policies are made by Government.
Tell Deputy Ryan you want to put it out in his constituency.
Nobody is talking about this constituency. The only person who mentioned his constituency this evening is the chairman.
I did not.
You did. An EIS that looks solely at the environmental impact on lands in the ownership of Aer Rianta will not meet the requirements of those concerned.
Mr. Hanlon
That is a matter for Government. Policy decisions are a matter for Government. We are carrying out our statutory functions at present, which are clearly laid down in the 1998 Act. Part of that is the development of the airport, which is our responsibility, and we must carry out an EIS as well as a topographical study. Before any decision is made regarding a public runway there will be a public hearing at which all these issues can be aired by the local community. I have every sympathy if there is to be extra noise, though I do not believe that will happen. We are prepared to set up a community forum to discuss these issues but policy decisions are a matter for Government. We carry out those decisions as required by law but at present we are carrying out our functions under the 1998 Act.
Does the board have a policy regarding a preferred option for the future of Aer Rianta?
Mr. Hanlon
Yes, the board has a policy.
What is it?
Mr. Hanlon
The board's policy regarding the future of Aer Rianta is that it should develop and grow and continue to be one of the most profitable semi-State organisations in the country.
In the context of part-privatisation? Or privatisation?
Mr. Hanlon
Whatever is required for the future aims of the company.
Does the board have a position on privatisation?
Mr. Hanlon
Our clear stated objective is that a minority share of the company should be privatised.
That is grand.
Mr. Hanlon
That has been the board's position for five or six years and remains the board's position. It is the only way we will get the funding required for the proper development of Dublin Airport so ours is an airport equal in standing to those in other major capitals of Europe and the world. In 2004 we assume the EU Presidency and Dublin Airport is the entry to the capital for world leaders; there will be an additional ten or 12 such leaders this time. We are a small nation of 3.5 million people and Dublin Airport currently puts 15 million people through its doors; by 2010 that will have risen to 27 million. Infrastructural development is required, not just at the airport but in terms of a rail link and improved roads and access from the north and west. The rail link is the most important development required. Ours is the only capital city airport in Europe without a rail link and we are prepared to part fund that link.
It is very difficult to model and predict for the future. If I knew what would happen in six months' time I would be wealthy, let alone knowing what will happen in 2020 or 2030. If I were a betting man I would bet my house that there will not be a doubling in flight numbers between now and 2030 because fuel prices will treble or quadruple due to our climate change problem and also because fuel is a scarce resource. Has the delegation read the report of the Royal Commission on Environmental Pollution on the environmental effects of civil aviation flight? Is it aware of the main recommendations that there should be a climate protection charge for aircraft taking off and landing imposed throughout the EU? There is also a recommendation restricting airport developments to encourage greater competition and greater use of the current schedules. The commission is looking specifically at the future but does the delegation feel its report is unbalanced or incorrect? Does the delegation feel the commission is right in that we are only starting to recognise the huge implications for stratospheric pollution of air travel and for restrictions on air travel on that basis? There are also restrictions arising from the cost of fuel. Against that background, is there modelling for the year 2020 or 2030? Are the possibilities of climate change requirements or fuel costs being factored into the modelling?
The delegation talked about Shannon and civil or military aircraft and my understanding from the weekend newspapers is that the situation has changed somewhat and that we are aware that civil aircraft are carrying munitions. Is the delegation saying Aer Rianta has no interest, does not check and does not have any role in monitoring? There must be a safety aspect to this. If we know there are aircraft coming in with what, by their very nature, are hazardous materials, does Aer Rianta have any contact with the operators of those planes to check what the contents might be? Are there no special conditions regarding where those aircraft park and whether they are allowed near fuelling facilities? The delegation should confirm whether the fact that we know aircraft are carrying munitions has led to no change in the way those aircraft are managed.
I heard a lovely phrase about the water going out being clearer than the water going in. Is the delegation aware of a problem with raw sewage being dumped from Shannon Airport into the river Fergus, causing a serious local environmental hazard? Does the company have any plans to deal with that local environmental problem?
Mr. Hanlon
I have read the royal commission report and there is a suggestion that £30 or £40 might be added to each ticket to assist this. Another report commissioned by the British Government regarding the future development of airports contradicts the royal commission's findings.
I can understand how car travel will operate in 30, 40 or 50 years' time when oil runs out - hydrogen fuel cells may be used. A jet cannot take off with hydrogen fuel cells. No fuel other than aviation fuel will work.
I do not want a debate on the future of airlines.
The presentation was about whether we should invest in a second runway. A primary consideration is to look ahead——
The same question could have been asked about the motor car 20 years ago. If one looks at how the cleanliness of fuel consumption in the motor car has improved one could say the same thing will happen with airlines.
The royal commission says there is no sign the aviation designers——
We are not here to debate this.
It is very relevant to the subject under debate. These people are making plans with a 30-year horizon——
We do not have the expertise here today to debate a matter like this.
Perhaps Mr. Hanlon will answer my question on Shannon.
Mr. Hanlon
The Government will decide whether it is necessary for aircraft to register if they are carrying armed troops. The Department of Transport has issued licences in previous weeks to such craft. Aer Rianta does not have authority to enter aircraft to check its contents. That is a matter for the operator and the captain of the aircraft. Security at Shannon is a matter handled by the Garda, security personnel at Shannon and the manager of Shannon Airport. It is not a matter I wish to discuss in public. The Deputy can be assured that all reasonable steps are taken to ensure aircraft carrying munitions and with Government clearance are parked in an appropriate place.
Who is responsible? Is it the airport manager or the Garda?
Mr. Hanlon
The airport manager, in conjunction with the Garda, is responsible.
The airport manager is an employee of Aer Rianta.
Mr. Hanlon
Yes.
Do special conditions apply to these aircraft?
Mr. Hanlon
Those arrangements are discussed by the Garda and Aer Rianta management. They are security issues that I do not want to go into here.
What about the issue of sewage at Shannon Airport?
Mr. Hanlon
The sewage is currently going into the sea in a raw state. We are committed to tendering for a sewage treatment plant and that process is ongoing. It was initially agreed that we would link into the Shannon Development sewerage line, but the EPA recently said we could not do that. We will build our own sewage treatment plant and it will be concluded some time thisyear.
What is the rationale behind the sale of 4.67 acres behind the Great Southern Hotel in Killarney? Who took the decision? What was the process? It seems to be a reversal of Government policy.
That has been dealt with.
Was public procurement policy followed, especially in the method of the sale? What consultation, if any, was made with CIE and the local authority? Mr. Hanlon will probably be aware that both were seeking land.
Mr. Hanlon will probably be aware that Killarney has the only train station in the country into which some trains must reverse. There is an argument that there would have been a fine station alongside the Torc. I understand brochures have been issued and the Torc does not feature in it. It seems the decision to sell the Torc, although it is not yet sold, was taken some time ago.
In view of Mr. Hanlon's comment that Aer Rianta is not in the bed and breakfast business, will Aer Rianta sell the Great Southern chain piecemeal or in one lot? Is it Aer Rianta's decision or that of the Government? If this is Aer Rianta's view, the Government should find a more convivial home for the chain.
Mr. Hanlon
It is our view that we should not be in the hotel business. It is not our core business. We asked the Government three years ago if we could sell the Great Southern Hotel chain but were refused. It remains within Aer Rianta and we have developed it since then.
The decision to sell the land at the rear of the hotel in Killarney was taken on a purely commercial basis. Public procurement policy was followed to a tee. It was advertised in all the newspapers and sale was by public tender. Had CIE wanted it, it could have put in a tender at that time but it did not. The local authority tendered for it and offered one quarter of what the land was eventually sold for.
The stated policy of the Aer Rianta board is it wishes to exit from the Great Southern Hotel Group. This is a Government policy decision. It is not a policy decision of Aer Rianta or the board of Great Southern Hotels to sell hotels in the group in a piecemeal way. That will not happen. The Torc was sold because it and the main hotel in Killarney required substantial refurbishment and the decision was taken to sell the Torc to pay for the refurbishment of the main one.
Was it a Government decision?
Mr. Hanlon
No, it was a decision of the board of Great Southern Hotels. The shareholder of Great Southern Hotels is Aer Rianta——
Who is the shareholder in Aer Rianta?
Mr. Hanlon
The shareholder in Aer Rianta is the Government.
Did the matter have to come to Government for a decision?
Mr. Hanlon
No.
Was policy faithfully followed in the public interest?
Mr. Hanlon
Yes.
Regarding future ownership and the concept of privatising an element of Aer Rianta, does Aer Rianta accept that similar experience shows that a key piece of national infrastructure should always remain in public ownership, notwithstanding the developments the company has to make?
Mr. Hanlon
Yes, Aer Rianta agrees with that, but not totally. We believe the best interests of Aer Rianta would be served by having an outside investment company, with funds for our future infrastructural development, holding part of it. It is very important that we have access to funds.
We have provided £60 million in support to Ryanair since it was established. We recently introduced Go airlines on two new routes to Scotland. Ryanair sold every seat on every flight at £5, Go lost £6 million and had to pull out of the market after three months. One has to draw one's own conclusions from that.
My questions have not been answered.
Mr. Burke
Skynet was planning to start on 16 January and operate a Shannon-Dublin-Brussels-Moscow route but ran into a problem with the Belgian authorities on the Brussels-Moscow leg. I believe in time that will be resolved. In the meantime, Skynet will start operating Shannon-Dublin-Moscow three days a week and will use the aircraft to which the Senator referred to fly to some other European destinations for the other two days. That will provide, on three days of the week, the early morning late night flights for Shannon.
There is a problem with Shannon-Dublin connections because whoever goes on that route - Aer Arann was on it - is competing with the regional airports which are heavily subsidised. Aer Lingus is also providing seats on the EI 111 route and other routes, but that is as part of its transatlantic operation. We are working with Skynet and we will support its operations on that route. We are anxious to see Shannon-Dublin flights restored.
That is only three days a week.
Mr. Burke
Three days a week initially.
The other is four days.
Mr. Burke
Unfortunately, there is difficulty at present on that route in terms of the comparison between the PSO on it and that which applies to other routes. We will take up the point about the connections with Aer Lingus.
On the Ennis bypass, when we thought we had that problem solved the chairman and I met the chairman and chief executive of the NRA. We got the Ennis bypass included in the programme and we were assured it would proceed and would be an almost continuous part of the Newmarket-on-Fergus bypass. It seems it has been removed from the current programme.
I agree with Senator Dooley, the Shannon market is the whole——
We will have to be careful with that statement. I am not sure that is the case just yet.
Mr. Burke
Is it not?
I do not think so.
Mr. Burke
I hope it is not because the Shannon——
Perhaps the Senator knows more about the position than ourselves. I hope the chairman will continue to put pressure on the NRA and the Government in respect of this matter.
We will invite them to appear before the committee.
May I ask about marketing?
No.
I asked a question. Two other people came in late to the meeting and their questions were answered even though I had asked questions before them.
I called people exactly in the order that they have indicated to me they want to speak.
Their questions were answered. Usually the Chairman takes three questions together, but their questions were answered individually when they asked the questions.
Mr. Burke
We provide a lot of marketing support to assist Shannon airport. Marketing as in the tourism industry is the responsibility of Bord Fáilte, but we also provide a great deal of funding towards it.
On behalf of the committee, I thank the chairman, Mr. O'Hanlon, and the staff for an informative and excellent presentation. I also thank them for answering our questions.