I move:
That Seanad Éireann hereby confirms the Transport Act, 1950 (Additional Powers) Order, 1964.
Report of Joint Committee on Standing Orders (Private Business). - Transport Act, 1950 (Additional Powers) Order, 1964: Motion of Confirmation.
The purpose of this motion is to confirm an Order entitled the Transport Act, 1950, (Additional Powers) Order, 1964, which was made by me with the consent of the Minister for Finance under the powers conveyed by section 14 of the Transport Act, 1950. The Order requires to be confirmed by a Resolution of each House of the Oireachtas. Subject to confirmation by the Oireachtas the Order will enable CIE to establish a subsidiary company under the Companies Act to promote the development of air freight.
CIE established an air freight for the handling of air cargo during the year ended 31st March, 1962 and provided an office and a warehouse at Shannon Airport for the purpose of developing the activities of the agency. The Board's decision to enter the air freight business was influenced firstly by a desire to play an active part in the collection and delivery of air cargo both import and export, secondly to earn revenue from agency commissions in respect of air cargo and thirdly to be in a favourable position to provide the necessary Customs clearance, documentation and other facilitation measures ancillary to the handling of such traffic. In this way the Board set out to provide an international "door-to-door" service for air cargo to and from any point in the State—a move in line with developments in other countries.
In the light of experience since the establishment of its air freight agency over two years ago, the Board has decided that its interests in this field and indeed the interests of the air freight industry as a whole would best be served by the establishment of a separate subsidiary company to cater exclusively for this business. The carriage of goods by air is growing steadily in importance. At the present time, the volume of air freight between this country and other countries is not more than a small fraction of the volume of freight moving by land and sea but, in terms of value, air freight is not inconsiderable and as between this country and Britain, for example, it represents about 7 per cent by value of the total value of import/export trade. CIE by virtue of its commercial contacts and the widespread transport network which it provides throughout the country, is especially well placed to provide an effective collection and delivery service for air freight for the community at large. In addition to the facilities originally provided by the Board at Shannon Airport, the Board now has an office for the handling of air cargo at Dublin Airport, and is also participating in the promotion of air freight traffic through Cork Airport where the Board would also be interested in opening an office for this purpose if and when that step would be warranted by the volume of traffic arising.
In order to participate effectively in the business of air freight forwarding, it is necessary to be in a position to consolidate cargo on the air transport services of the airlines who are members of the International Air Transport Association. Consolidating simply means the bulking of a number of small consignments into one larger consignment which, by virtue of its overall weight, qualifies for a much lower freight rate. This is an important incentive to the development of air freight, and any company wishing to play a full part in the air freight forwarding business, must be in the position to take full advantage of the opportunities offered by consolidation.
In order that CIE's air freight forwarding business may qualify for the recognition by the International Air Transport Association which is necessary to enable it to participate effectively in the air freight forwarding business, it is desirable for CIE to disassociate its air freight forwarding business. For this reason CIE finds it necessary to establish a subidiary company to deal with the air freight forwarding business. This, however, is but one of the reasons governing the Board's decision to establish the subsidiary company. The business of air freight is a specialised business differing in various respects from surface transport and the Board considers that by divorcing the air freight activities from its normal day-to-day operations, the air freight business will have greater flexibility and will thus be enabled to make a quicker response to changes in an industry where changes in the pattern of development demand flexibility.
In the light of the foregoing, I am satisfied that the decision of CIE to establish a separate subsidiary company to deal with the promotion of air freight is very much in the best interests of the air freight business. As I have already mentioned, the new company will be established under the Companies Act. Its powers will not, however, be any wider than the powers already being exercised by CIE in relation to air freight. The new company will be subject to official control in many respects. For example, the Memorandum and Articles of Association of the new company will be subject to the approval of the Minister for Finance and of myself and no alterations may be made in the Memorandum and Articles of Association without my prior approval. Furthermore, the exercise of the company's borrowing powers will be subject to my consent after consultation with the Minister for Finance. This procedure is in line with that adopted in relation to the Ostlanna Iompair Éireann Teoranta, the CIE hotels subsidiary company, set up in 1961. To the extent necessary to provide a statutory basis for control of the affairs of the new air freight subsidiary company, the appropriate powers will be incorporated in future amending legislation.
The capital of the new company will be nominal in character, 100 shares of £1 each, which will be taken up entirely by CIE. The directors of the subsidiary company will be four members of the Board of CIE including the Chairman who will also act as Chairman of the subsidiary company; neither he nor the ordinary directors will be paid any remuneration for their services to the company. In the event of the appointment of a Managing Director, however, he may be paid such remuneration as the Board of the company, subject to my approval, may determine. The name chosen for the new company is "Aerlód Teoranta".
At the present time in order further to encourage the development of air cargo through the airport, the Shannon Free Airport Development Company is providing warehouse accommodation at the airport. Initially, eight warehouse units each of 3,750 sq. ft. are being provided and these units are expected to be completed later this year. The Development Company is undertaking a promotional campaign in the United States and in Europe to stimulate interest in Shannon as a warehousing and distribution centre and the taking of fuller advantages of the airport's strategic position in this respect.
The total quantity of air freight terminating or originating at Irish airports, as distinct from transit traffic, rose from 19,325 tons in 1962 to 23,854 tons in 1963, an increase of 23 per cent. The entry of CIE into this business in an effective way through the formation of a special subsidiary company should maintain and stimulate this rate of increase in the volume of terminal air freight handled at Irish airports.
I accordingly recommend that the House should give its approval to the motion confirming this Order.
The House should find no difficulty in giving approval to the motion confirming this Order because it would seem that this is a normal development for CIE into the air freight business now that it has been carrying on the business of transport on the ground. We could easily make a speech here on the future of air transport and so on but the Minister's statement has pretty well covered the ground and I do not propose to keep the House by repeating what has been said already. I agree that this is a desirable development and we all hope it will meet with success.
I thank the House for their friendly acceptance of this motion.
Question put and agreed to.
- Report of Joint Committee on Standing Orders (Private Business). - Royal College of Surgeons in Ireland (Charter Amendment) Bill, 1964: Joint Committee—Chairman of Joint Committee.
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- Report of Joint Committee on Standing Orders (Private Business). - State Guarantees Act, 1954 (Amendment of Schedule) (No. 2) Order, 1964: Motion of Approval.