Seanad Éireann debate -
Thursday, 25 Jun 1998

Vol. 156 No. 5

Air Navigation and Transport (Amendment) Bill, 1997: Second Stage.

Question proposed: "That the Bill be now read a Second Time."

Minister for Public Enterprise (Mrs. O'Rourke)

I am pleased to be in the Seanad for the Second Stage debate on the Air Navigation and Transport (Amendment) Bill, 1997. Committee Stage of this Bill in the Dáil took a great deal of time as many amendments were tabled, including several substantial ones which were debated at length. All parties are anxious to pass this legislation before the recess.

This Bill deals principally with the management and operation by Aer Rianta of the three State-owned airports — Cork, Dublin and Shannon. The Dáil has already considered this Bill and examined it on Committee Stage. There was a most useful debate in that House and several beneficial additions resulted from the Committee Stage interventions. A total of 108 amendments were considered on Committee Stage and 41 on Report Stage during the passage of this Bill through the Dáil and I will refer to these again. Some of these amendments were debated and not accepted. The resourceful Deputy Stagg has tabled them on Committee Stage in this House.

The main purpose of this Bill is to end the present State airport management arrangement in which the Minister owns the airports and Aer Rianta operate the airports as an agent of the Minister. To end this arrangement it is necessary to transfer the assets at Cork, Dublin and Shannon airports from me, as Minister, to Aer Rianta and to assign to the company certain functions previously undertaken by myself and my predecessors in relation to the management of the three State airports.

The opportunity is also being availed of to amend and update miscellaneous provisions in civil aviation legislation generally. In particular, a new offence of unruly behaviour on an aircraft in flight will be created under this legislation. This measure was proposed in an amendment tabled by Deputy Yates on Committee Stage. It was redrafted by the draftsman and will close off a loophole in the law as it stands at present.

The Bill has been a long time in gestation. Apparently, work began on drafting the heads as long ago as 1969. The principle of what is proposed has been agreed by all sides of this House and recommended by joint Oireachtas committees and several working parties over the years. It is said that the wheels grind slowly — eventually they ground exceedingly well in this case. However, various events intervened, the first being the oil crises of the 1970s which led to a major economic downturn and a decline in civil aviation. Later it was funding issues which forced a rethink. The measure was deferred by successive administrations until, finally, the previous Government approved the scheme of the Bill in October 1996.

The principal impact of the Bill is that the current agency status of Aer Rianta will be ended. For the first time in its history, the company will own the assets it manages. This will put it on the same footing as all the other commercial State-sponsored bodies. There are no implications in this Bill for the ownership of Aer Rianta itself. The Minister for Finance has held 100 per cent of the shares in the company since it was first incorporated under the Air Navigation and Transport Act of 1936, and that continues to be the case under this Bill. Aer Rianta, which was established as a limited company in 1937, was a holding company for Aer Lingus and its objective was to promote aviation generally. Its airport management functions evolved over time and it became a public limited company in 1985.

Being the agent of the Minister for Public Enterprise means effectively that Aer Rianta is, theoretically, merely a name under which the Minister acts. The company as of now has no assets, functions, activities or revenues in its own right in the field of airport management. While Aer Rianta has itself funded all airport investment since 1988, the company simply holds these assets in trust for the Minister of the day, who is their legal owner. Clearly, this arrangement is outdated and outmoded and the object of the Bill is to bring that situation to an end.

To put this in context, it may be appropriate to recall briefly the development of the management structure of the three airports. Neither Cork nor Shannon airports were managed by Aer Rianta when they opened. Cork Airport, which opened in 1961, was managed directly by the Department of Transport and Power. Likewise for Shannon Airport, which began construction in 1936 and was managed initially by the Department of Industry and Commerce and later by the Department of Transport and Power. Aer Rianta was given responsibility for the management of Dublin Airport from its construction in 1940 and has exercised that duty ever since.

In 1969 an administrative arrangement was entered into which extended Aer Rianta's responsibility to include the management of Shannon and Cork Airports. At that time the late Erskine Childers, the then Minister for Transport and Power, indicated that it was his intention to regularise the status of Aer Rianta at the earliest possible opportunity. Almost 30 years later the Bill is at last before this House. I cannot account for those delays. As well as the oil crises they may be due to the various elections and changes in Government.

Aer Rianta has a long history stretching back to the foundation of the aviation industry in this State. It has been highly successful in its core job of ensuring good quality airport facilities at the three airports it manages. It has also built on that success abroad where it is involved in airport related business in many countries, acting as an ambassador of Irish enterprise and opening the door for others to follow.

This Bill regularises Aer Rianta's corporate and commercial mandate. It challenges the company to continue to be competitive and innovative in securing its place as the prime provider of air access gateways to and from Ireland. The Bill provides a basis for sharing the benefits of its competitiveness with its customers, the airlines and the travelling public, as well as rewarding the shareholder.

The text before this House follows closely on that general scheme brought forward in October 1996. The main effect of the Bill will be to transfer all of the assets held in the Minister's name at the three State airports to Aer Rianta's balance sheet. Because all of the assets are currently vested in me, as Minister, neither corporation tax nor local authority rates were payable by the company, though a small amount of corporation tax was paid by subsidiaries. So a side effect — and, I am sure, an unwelcome one — of this legislation is that following the change of status of the company, full corporation tax and rates will be paid by Aer Rianta.

At present the authorised share capital of the company is 60,000 ordinary shares of £1 each. Some 51,000 of these shares have been issued and have been allocated to the Minister for Finance. He is well off.

For the purpose of meeting the requirements of the Companies Acts regarding the minimum number of members of a company, a further nine shares have been issued to each of the members of the board of Aer Rianta and one each to the Secretaries-General of the Departments of Finance and Public Enterprise.

This level of issued share capital is far too low for a company which will have more than £200 million in assets. Therefore, the Bill provides that the old shares be surrendered and a new share issue be made which will be equal to the value of the assets on the company's balance sheet, less the liabilities. It also provides that the Minister for Finance may transfer a share to one or more persons for the purpose of compliance with the Companies Acts.

This is not a Bill to privatise Aer Rianta. There was much debate on this point in the other House and no small amount of confusion. Lest it be thought that that is the end of thinking about Aer Rianta in any other guise, except that envisaged by the legislation, since we came into Government — as I told the board of Aer Rianta recently — the winds of change are blowing through the semi-State companies. There is no secret and we all know it. The change is coming form all sorts of viewpoints. There is the worldwide need for competitiveness, trading in a global economy demands that one is competitive. There is the EU compulsion because we are now subject, and properly so, to ideas on liberalisation, deregulation and competitiveness. Therefore, if there was no compulsion from Europe, there is a compulsion on all of us to have constant regard to our competitiveness. Aer Rianta does that admirably. I salute the company's staff members who are present in the Public Gallery, including the new chief executive. He is giving great service, as does everybody who works in the company.

There is no ideological push in this Government to knock off all the semi-State companies one by one and say: "Ha, ha. That's you gone, now on to the next". That is not the way we do business. In the Programme for Government issued last June we laid out clearly that each semi-State company would be viewed in a pragmatic fashion as the company's and customers' needs unfold. It is not a matter of wholesale privatisation, which, when applied in one fell swoop in the UK, led to many unhappy situations because it was privatisation from an ideological point of view. The UK authorities did not look at State assets and decide what was best for the company, the consumer and the country.

There has been a gradual unfolding. Telecom Éireann led the way when the previous Government brought in a strategic partner. Last year there was Esat and there will be IPO next year. There will be a loosening of the ties, whether it happens through a strategic alliance, privatisation, through public and private sector involvement, or by way of employee share ownership. It is correct that it should happen that way. If we are to supply goods and services which are viable and sustainable then we must obey the global rules of trade, commerce and competitiveness which are at our door.

While the winds of change are blowing, they are not doing so in an ideological or threatening way company by company. I think that would be wrong. They are blowing in a practical fashion. During the week I attended a conference on semi-State companies and I quoted the former Taoiseach, Seán Lemass, who when he was setting up a semi-State company in 1959 said he was doing so from a pragmatic and practical point of view, not for any ideological purpose. Forty years on the emphasis is still the same.

The Bill is silent on the matter of disposing of the shares of Aer Rianta to any third party other than transfers for the purpose of complying with the provisions of the Company's Act, where the Minister for Finance remains the beneficial owner. The Bill does not change the current rights and responsibilities of the shareholder.

Whatever position colleagues may wish to take on this issue, and there has been some recent media speculation on Aer Rianta as a privatisation candidate — although I hate that phrase — it is not the subject of the Bill and it should not cloud our discussions on the issues raised by the Bill. Clearly, anybody is entitled to raise the issue on the floor of the House and discuss it as much as they wish.

There is also provision in the Bill for the payment of dividends to the Exchequer by the company where profits allow and for the regulation of the borrowings of Aer Rianta and its subsidiaries. Controls of this type are fairly standard among semi-State companies.

The core element of the Bill transfers to the company all of the land and property vested in the Minister of the day. All new assets were, in fact, acquired by the company and are held in trust for the Minister. However, the original lands and some property were acquired and paid for directly by the Exchequer. It is good to recognise that fact.

Aer Rianta has to pay for any assets being transferred. The amount in question will be a matter to be finalised by myself and the Minister for Finance on vesting day, but I expect we will talk about it beforehand. The intention is that it will closely reflect the written down value of the property in question.

I plan to vest the lands in the company on 1 January 1999. The first payments of corporation tax, rates and normal dividends will not arise until the year 2000, so there will be no question of Aer Rianta having to pay on the double in any one year. That issue accounted for a whole day on Committee Stage. Deputies Stagg and Yates mounted opposition to the "double whammy". I do not know which Deputy coined that phrase but it is a good one. I do not know if I am allowed to talk about what arose in Cabinet, but when this matter came up I recognised the danger and got a tail put on the Cabinet decision which allowed that if difficulties emerged we could all talk about it. That is what we did. The officials went to the Department of Finance, and the Minister for Finance, Deputy McCreevy, and I worked out a formula avoiding the "double whammy".

I was buoyed up not only by the Cabinet decision but also by the debate on Committee Stage which put forward in a logical way how we could get around the problem. The end result was a far better Bill and a better deal for Aer Rianta. That shows what can be done if one is prepared to listen. We have worked that out.

The Bill is also concerned with the ending of the outmoded agency arrangement between Aer Rianta and the Minister. Accordingly, in addition to transferring the assets to the company, the Bill transfers a number of powers such as the right to establish airports and to acquire or enter onto land. These are powers which up to now were exercised by the Minister of the day but would more appropriately reside with the company.

Similarly, there are a number of general provisions in existing legislation in regard to the administration of commercial State companies which should be provided for in respect of Aer Rianta. The Bill sets down the principal objects and general duties of the company and it deals with the appointment or removal from office of the chairperson, directors and chief executive, reporting procedures to me and requirements in respect of the conduct of directors and employees of the company. These provisions bring the company up to date as regards corporate governance and individual responsibility.

The Bill also provides that the Minister will retain certain rights, including the power to approve changes in airport charges. Access costs are a key issue in maintaining Ireland's competitiveness and airport charges are a component of those costs. I hope that all factors will be taken into consideration in deciding on any adjustments.

The day to day regulation and control of airport users, including the making of by-laws and the appointment of authorised officers, is transferred to the company in this Bill. Other aviation related legislation is also amended in this regard. These changes are necessary either because of the knock-on effects of the provisions of the Bill or because a lacuna has been discovered in the legislation in question.

I pay tribute to Deputy Yates who brought forward a new provision to cater for the growing problem of unruly behaviour on board aircraft in flight. Current law adequately provides for serious offences in the air but has not provided for public order type of offences, which are on the increase. The Irish Independent carried an article last week about a person who, while not intoxicated, got the notion into this head that he wanted to pilot the plane on which he was travelling. He stormed up the aisle and had to be restrained and brought back to his seat a number of times. The individual in question continued to believe he was the pilot and the cabin crew were almost obliged to tie him down. It must have been a difficult situation with which to cope. On the next occasion that person takes such a notion into his head he will be fined heavily but I do not believe he will be allowed to travel on aircraft in the future in any event.

The Bill was amended on Committee Stage in the Dáil. I took on board many other substantive amendments proposed by the Opposition and many technical amendments. If Members wish to peruse them, these amendments are attached to the supplied script. I already mentioned the new section dealing with unruly behaviour on an aircraft. I have also inserted a clause which ensures that the chief executive is automatically a member of the board. The position of the three worker directors is strengthened by an explicit reference in the Bill. The power of the Minister to direct the company has been modified and a basis for revising the ceiling on borrowing has been added. A procedure for avoiding an excessive charge on the company, or double whammy, on vesting day has been agreed.

The Bill is long overdue and I look forward to the debate. I commend the Bill to the House.

Mr. O'Dowd

I welcome the Bill which, as the Minister stated, has the support of all parties. This Bill will give Aer Rianta autonomy to run its affairs and manage and develop our airports in an efficient manner. Aer Rianta is a major employer and it promotes business and enterprise in Ireland. The company needs the freedom to operate airports in an increasingly competitive manner.

Aer Rianta dealt with more than 13 million passengers in 1997, breaking all previous records. That is a staggering figure, given that Ireland is such a small country. Aer Rianta's total revenue for 1997 was £247 million, which represents an increase of 7 per cent on the previous year. Profit after taxation was £42 million and the company paid to the State the sum of £14.9 million. As it stands, Aer Rianta is an efficient and effective company and the Bill will provide it with the opportunity to develop its business on a larger scale.

Aer Rianta engages in significant activities abroad, particularly under the auspices of Aer Rianta International, and it has invested in Birmingham and Düsseldorf Airports. In terms of duty free shopping, the company has outlets in Russia, the Middle East and the Far East. Aer Rianta is an extremely active company.

I was surprised to note that 23 different airlines, providing services to 61 scheduled destinations, currently use Dublin Airport and a total of 19 scheduled destinations are served from Shannon Airport. Aer Rianta's objective is to provide safe and efficient facilities and services at the airports in Cork, Dublin and Shannon at the lowest possible cost to airlines and passengers. Airport charges in this country are consistently among the lowest in Europe. In a league table of 40 European airports, Aer Rianta ranks 47th lowest in terms of charges. Per passenger, airport charges decreased from an average of £5.18 in 1993 to £3.07 in 1997. These charges have not been increased for 11 years. Extensive work to provide new facilities in our airports is continuing. At Shannon Airport, a major development costing £28.5 million is underway.

I welcome the constructive approach taken by Aer Rianta to industrial relations, particularly the compact for constructive participation in the company which involves staff and management working on a true partnership basis in respect of all matters affecting the company. This is a unique approach and it is the first occasion on which a radical transformation in organisational relations has been attempted in Ireland. Aer Rianta is showing the way and other companies could learn from its modern dynamic approach to employment and employee relations. Maintaining effective communications with staff continues to be a major priority for Aer Rianta and it received international recognition for excellence in internal communications in October when it was awarded the Irish Independent communicators business award for Ireland's best staffed terminal.

I welcome Aer Rianta's commitment to equal opportunities for its employees. A recent audit was completed within the company, the purpose of which was to compare employment patterns of men and women and establish a detailed profile of company employees. This support was based on renewed equal opportunities within the company. I also welcome the employee assistance programme which provides a confidential advisory counselling and referral system for staff.

Customer service continues to be important in terms of every aspect of Aer Rianta's business. Upgraded flight information display systems, together with baggage indicator display systems, have been provided at Dublin Airport. Aer Rianta has also embarked on a major environmental improvement programme which includes the phasing out of noisy aircraft, the construction of an acoustic facility designed for engine test run-ups, the introduction of new compactors to reduce the amount of waste being recycled and an increase in the number of air quality monitoring stations. Additional ground outlets for aircraft were also introduced and exhaust emissions from aircraft engines and noise from auxiliary power units have been reduced.

Aircraft noise is one of the problems faced by residents living near airports. I understand that residents living near Dublin Airport make complaints, particularly during the month of August, about the amount of noise which seriously affects their quality of life. As Deputy Haughey stated in the Dáil, these people often cannot listen to their televisions or hear each other speak. I hope Aer Rianta will continue to put in place the most modern techniques aimed at reducing aircraft noise levels. When travelling on the Ashbourne road, I have frequently seen signs objecting to aircraft noise. We must listen to the case put forward by residents in that regard.

I welcome Aer Rianta's community relations initiatives, particularly the Dublin Airport arts festival which is a wonderful innovation and which is now in its tenth year. The festival has given a new dimension to the airport. Having read the company's annual report, I welcome its placing information on CD ROM. This will prove useful to those of us who do not have an opportunity to read everything the company publishes and I found it excellent in terms of considering the company's results and programmes.

Aer Rianta is a dynamic modern company and this Bill will help it to become more efficient and effective. One of the major problems it faces is the question of how it will react when duty free shopping is abolished in June 1999. This will pose major difficulties for all airports, not merely those controlled by Aer Rianta. If duty free is abolished it will have a significant economic impact on transport and tourism and will also lead to substantial job losses in other sectors. Aer Rianta has indicated it may have to cut 300 jobs in its duty free sections, but that is only the tip of the iceberg because it will radically affect how the company is run and will cause other problems such as increases in landing fees.

In Business and Finance last May, the chairman of Aer Rianta, Mr. Noel O'Hanlon, said the new powers given to the European Parliament under the Amsterdam Treaty might mean that the Commission's decision to abolish duty free could be reviewed. The Parliament now has specific responsibility for social and economic affairs. All our political parties and representatives in the European Parliament should — and I believe they will — make the case for not abolishing duty free, or at least delaying the abolition with a view to saving jobs. The Parliament is against abolition.

This move will also have a major impact on our smaller regional airports because they rely even more heavily on duty free income to stay viable. The sale of duty free goods allows Farranfore and Knock Airports to operate viably — Knock Airport breaks even solely because of duty free. This issue will affect not only employment at those airports but the local economies. We need these regional airports but we should consider whether we have too many. If they are not going to be viable how can they continue? These airports are important for our tourism infrastructure — tourists can quickly and easily reach remote parts of Ireland through the airports, which is important for local economies and services such as bed and breakfast accommodation and car hire. We must think seriously about this matter.

The Minister accepted the proposal to legislate for disruptive behaviour on flights. A person acting abnormally can have a profound impact on an airline trip. Section 69 deals with this matter and I welcome it because for the first time there will be a clear legal follow up to drunkenness and hooliganism, which is unfortunately increasing on our aircraft. Bringing people from other countries to Dublin for parties, etc., has become a big business; this is causing many problems on the ground and is probably also doing so in the air.

However, I agree with my colleague, Deputy Yates, that the fine for a person convicted under this section is small — persons found guilty under section 69 (1) and (2) are liable, on summary conviction, to a fine not exceeding £500. The fine should be in thousands rather than hundreds of pounds. The Minister said in the Dáil that she was following the Attorney General's advice on this matter; but a person being drunk on the streets is a relatively minor matter, whereas it is far more dangerous to be drunk on an aircraft and it affects everyone on board. The fines should therefore be tough. Other provisions of the Act provide for imprisonment for four months.

Perhaps in her reply the Minister could deal with the issue of worker directors — specifically, whether employees of the Great Southern Hotels and of Aer Rianta International can vote for worker directors of the main company. The history of Aer Rianta shows that it is a company which welcomes such developments and we should facilitate it as much as possible. The question is whether it should be put in the Bill or done by order of the Minister.

What is the present status of the report commissioned by the former Minister, Deputy Quinn, on the enterprise development task force for Dublin Airport? I understand its proposals included an enterprise centre for Swords, advanced factories and, closer to County Louth, a pilot training technical school in Gormanstown. Airports have a significant effect on the surrounding community and there was an interesting debate recently about the land held by Aer Rianta. The company is wise to keep that land for future development of the airport and it should be cautious in selling it.

Aer Rianta and Ryanair are both successful companies and I do not like to read that they are in conflict, although that may be exaggerated by local newspapers or those who make speeches at lunchtime events. I have great respect for the enterprise, initiative and dedication of the employees and board of Aer Rianta and for the management of Ryanair. It would make a lot of sense if there were more communication between them. Ryanair is a dynamic airline, the European leader in the low fare sector, and it should co-operate with Aer Rianta. Differences of opinion are healthy but in this case there is too much conflict. Ryanair has considerable difficulties with the operation of Dublin Airport and would like to change many things. This problem should be tackled and a meeting between the parties would be a positive move for the industry. I look forward to the Minister's reply.

Mr. L. Fitzgerald

This is the first Bill the Minister has brought to this House in this Seanad session and I compliment her for the manner in which she has facilitated the birth of the legislation, which has been 30 years in gestation. She has notched up another piece of history which will be remembered in years to come, because it is defining legislation. I also compliment her for the open and refreshing approach she has taken to bringing the Bill through both Houses. The record shows the number of amendments she was prepared to consider and incorporate in the Bill — Senator O'Dowd has mentioned those accepted from his colleague in the other House and more were accepted from other Deputies. It is a mark of the maturity of our political debate that there is such an openness of approach to matters to which the Minister and her officials, with the best will in the world, might not have given due emphasis.

I compliment her on that and I compliment Senator O'Dowd for the very positive and constructive approach he adopted. I share some of his concerns regarding the tensions that exist. I recall late, great and famous politicians often talking about creative tension being very healthy. I am sure the Minister is mindful of that expression. Creative tensions can be healthy whether they are between politicians or companies, but I agree with the Senator that it appears what emanates in the public arena goes beyond creative tensions. They can be complementary while the opposite can be damaging and destructive. I fully endorse his sentiments that greater co-operation, communication and a greater level of commitment to collaboration between two successful companies, one semi-State and one private, would be very much welcomed.

The Bill deals with our State airports and their operation and management into the next millennium and beyond. It provides a new framework for their operation by providing Aer Rianta with a measure of commercial freedom and responsibility. The Minister outlined the many needs for that and why the time has come to give a company with such a record more of a head. One of the fundamental principles in the Bill is the establishment of Aer Rianta as a normal State commercial body on the same footing as other semi-State companies. The Bill also regulates areas of its activities in which the exposure of the Exchequer is greatest. This combination strikes a fine balance between the need for promotion and facilitation of greater innovation and freedom while at the same time protecting against undue risk to the public purse and the rights of taxpayers.

The Minister has the balance right in this respect and I agree with Senator O'Dowd that the Bill is long overdue. The long period of gestation has already been referred to. The Minister postulated, reflected and considered the many reasons it took this Bill to come into the public arena. However, the Bill deals with the current agency status of the company and transfers to it assets, properties and responsibilities currently under the aegis of the Minister and her Department.

Aer Rianta was incorporated in 1937 as the holding company of the national airline and it was given responsibility for the management of Dublin Airport in 1941. This was enshrined in statute by section 23 of the Air Navigation and Transport Act, 1950. The Air Companies Act, 1966, separated Aer Rianta from Aer Lingus and left the company responsible for the operation and management of Dublin Airport. In 1969 responsibility for the management of Cork and Shannon Airports was transferred from the Department of Transport and Power to the company without legislation. The late Minister, Mr. Erskine Childers, had drafted the heads of a Bill but, unfortunately, for various reasons they never saw the light of day. However, the company continued to operate on the basis of being an agent of the Minister.

In 1992 a joint Oireachtas committee report and an interdepartmental committee strongly recommended a change of status for Aer Rianta. It was only in 1997 with the publication of this Bill that the late Minister Childers' intentions were finally carried out and the period of gestation came to an end. Despite the lack of statutory funding and with no underpinning legislation, Aer Rianta has operated as a commercial semi-State body since 1969 with its agency relationship and, indeed, without owning the assets involved. Despite its agency status it established itself as a successful and progressive company in its own right.

Up until 1986 the Government spent £57.1 million on capital investment at the three airports but since 1987 all new capital expenditure has been funded by the company out of its own resources. Up to and including 1997 £282 million had been so invested. The capital projects undertaken by the company included the new runway at Dublin Airport, which I welcome very much, major extensions to the terminal building in Cork and an extension of the pier at Shannon. Many other projects have started or are in the pipeline which will involve an investment programme of more than £200 million in airport facilities over the next few years. Between 1969 and 1997 Aer Rianta contributed £222.44 million to the Exchequer. The growth in passenger and freight traffic in recent years has been spectacular — for example, total passenger traffic through the three airports in 1996 reached 11.9 million and this figure represents a 13 per cent increase in passenger throughput — and there was an 18 per cent increase in freight traffic over 1995.

It has been a phenomenal success and inevitably it put a great deal of strain on the company's development and expansion programme. While these programmes must be subject to periodic review, there is no doubt the evidence available supports the continuance of the planned programme. I join with the Minister in paying tribute to the retired chief executive officer, Mr. Tadhg Keogh. His skills, management style and vision played a huge part in the steering of the company to such great achievement from the time he moved there from the Department of Transport and Power in 1969 and his innovative style played no small part in the development and promotion of the now famous compact for constructive participation, which involves management and staff on a partnership basis in all matters which affect the company. I wish Mr. Keogh well in his retirement.

I welcome the appointment of Mr. Burke, the new chief executive officer, and I know with the new challenges and opportunities afforded him through the Bill he will bring the company to greater heights in the years ahead ably assisted by the board, the company secretary, Margaret Sweeney, and staff, all of whom I compliment on a job extremely well done through the years. The management and development of the three State airports is Aer Rianta's core business, yet it has been spectacularly successful through its associated industries and subsidiaries in branching out and diversifying in many different ways. Indeed, it has shown a tremendously innovative and enterprising spirit in promoting such diversity of product. The same commercial ethos has propelled the development of the highly successful and lucrative duty free retail network at home and abroad and this area of its operations is a significant part of the financial strength of the company.

The proposals to abolish the intra-EU element of this are frightening and are a serious matter for the company. The principles upon which the decision to abolish intra-EU duty free was arrived at in terms of the EU Internal Market and while it seemed logical and sensible at the time subsequent events, with the failure to harmonise taxes in so many other ways, have rendered this decision almost irrelevant in economic and fiscal terms in regard to the Internal Market. Excise duty rates are widely divergent and there is no sign of movement towards convergence. VAT rates range from 0 to 25 per cent and there is no definitive VAT régime in sight, let alone in place. Against such a background the economic and monetary arguments advanced for the abolition of duty free for intra-EU travel become irrelevant and to persist with it amounts to a monstrous manifestation of bureaucracy. Duty free retailing is one of the EU's most dynamic industries. For example, the current EU turnover is in excess of £4.5 billion. Intra-EU duty free sales in Ireland exceeded £115 million in 1996. Commissioned studies which have been published point to the serious and significant impact not alone on direct employment but also very significant damage to indirect employment generated as a result of this business. For example, it will have an impact on air fares, charges, access cost, export costs for manufacturers and the pricing structure of the services provided at airports by Aer Rianta. That will inevitably have a serious impact on the current tourism boom.

Since taking office the Minister has embarked on a personal crusade to confront the EU decision to abolish duty free sales by June 1999. She has availed of every possible opportunity to confront, debate, cajole, convince and win over her EU counterparts to her conviction that the final abolition of this service is in no one's interest. The more one analyses this, the more one is convinced the Minister is right that no one will benefit from this — the only outcome, under the present single market tax climate, is direct and indirect widespread damage. Unlike Senator O'Dowd, I believe the Minister can win this fight, which she is determined to take down to the wire. I commend her for that and urge her to continue with that challenge, in which she is ably assisted by the Taoiseach and the Minister for Finance. She has played a spectacular leading role in this area.

I welcome the Bill. Its enactment will undoubtedly enable Aer Rianta to rise to even greater heights under its new chief executive and board of management in taking on the ever increasing and highly competitive challenges of the market place. The Minister has made history as the Minister who facilitated the birth of this legislation after 30 years of legal pregnancy.

Mr. Ross

I also welcome the Minister, although I do not welcome her Bill. I have never in my time in this House heard such undiluted gobbledygook as I had to listen to from the last two speakers. When there is a consensus of opinion, with Members on the Government side congratulating Members of the Opposition on their attitude, it is time to raise one's hand and say "Stop, there is something wrong here".

There is something very wrong when we have to listen to these extraordinarily euphemistic platitudes about a company which has had the softest run of any company in the history of this State. We have not heard a word of criticism of Aer Rianta in any of the speeches made today. That is amazing because there must be something wrong with this body — it must have made some mistake at some stage in its career, despite its greatly advantageous position. I contend that Aer Rianta is beyond criticism because it does not have to compete with anyone, it is in the easiest position of any company in this State.

The Minister is introducing a Bill to change its status from a State agency to a semi-State body, which will still leave it under State control. That is playing with semantics. She is introducing a new patient to the sanatorium of semi-State bodies which is already full of sick patients. It is an extraordinary spectacle to see people welcoming this. It is going to join CIE, which is a disaster; Aer Lingus, which went bust three years ago; the ESB, Telecom Éireann, An Post and all the other State monopolies. Perhaps that is where it belongs, but let us not be starry eyed about what we are doing. We are putting it into the least successful area of Irish commercial life. People who call these commercial State sponsored bodies are guilty of a misnomer because they are mostly the opposite of commercial with a non-commercial ethos.

The problem with Aer Rianta is that it has a non-commercial and uncritical ethos. It is very easy for Aer Rianta to increase its passenger numbers to 13.4 million people leaving the country; how else will they leave — by swimming? However, Members are congratulating it for exporting 13.4 million people. Those people were queuing at Dublin Airport with no other exit. It also increased its turnover by 7 per cent, which is not spectacular in these times. These figures are meaningless in the context of a monopoly situation. It would be extraordinary if Aer Rianta did not make a profit or increase its turnover. It would be extraordinary if money was not coming out of its ears because it charges what it likes and has no competitors. Let us be realistic about this company rather than taking these figures as if they were produced in a normal competitive environment, which they were not.

The Minister should come to this House to say Aer Rianta has served its purpose, is making an enormous amount of money and is ripe for privatisation. The Government could raise money in that way which could be used to pay off the national debt and to pay for more social services and some Government capital expenditure. That is what we should be hearing, rather than it being launched into this particular sector of the State apparatus. If this is such a successful company, it is exactly what we want for privatisation. However, we are frightened of privatising it because, due to its monopoly situation, we do not know how good it really is. We do not know whether it is any good at all because it has never had to compete.

Aer Rianta is a victim of a very sick psychology. When one goes to change money in Dublin Airport one encounters the Bank of Ireland. I have no quarrel with the Bank of Ireland having foreign exchange facilities at the airport but I do have a quarrel with the fact it is the only bank with such facilities. The reason Aer Rianta will not allow another bank to have foreign exchange facilities at the airport is that this monopoly psychology has infiltrated the minds of all the people who run it. As a result, the Bank of Ireland, like Aer Rianta, fleeces tourists for as much as it can get out of them because it has no competition in the airport. If there was competition, the margins between the buying and selling prices of foreign exchange at the airport would be immediately slashed. However, that does not happen because Aer Rianta will allow only one bank to have operations in the airport.

The bogus crusade on duty free, in which all politicians in this House are guilty of participating, is part of that culture. Aer Rianta itself is protected and it is now asking that its profits also be protected. Most people know perfectly well — I will place a wager on it with any Member of the House — that the argument about duty free is a dead duck.

The duty free battle was lost in 1991. A large number of politicians in other countries are posing on this issue for electoral purpose, giving hope to politicians in this country that, somehow, this battle can be reversed. It will not be reversed and any objective observer knows that. It is a great battle to fight because one can say duty free does nobody any harm. That is even stated in the Aer Rianta report. However, it does much harm to off licences selling down town and to those who would be selling it if it was not available at the airport. Like insider dealing on the stock exchange, it is difficulty to pinpoint the person who is damaged. However, an entire industry is hurt.

Duty free is one of the most bogus crusades I have seen been fought by politicians in this country for a long time, but it has been led by Aer Rianta who was warned — the Minister will correct me — in 1991 that it was coming to an end. Since then, but only belatedly, it led a crusade for the retention of duty free knowing this and has spent a fortune on a fruitless campaign to protect its profits because it does not want to enter the competitive world. It wants to continue to make profits at the airport where it competes with nobody because it is part of its ethos that it can only make profits when it has prisoners in its duty free areas.

This is utterly inconsistent with the general philosophy of all parties we belong to and are committed to the EU. I am one of the most critical eurosceptics in this House. Yet, apparently those most enthusiastic about Europe do not think this should apply to them. For some reason they believe there should be exceptions. The European market is about similar rules for all. There cannot be protection in one place and not another. However, apparently the europhiles believe in Europe until it begins to hurt in one or two small areas when they request protection for their profits. This is gross hypocrisy and it exposes the commitment to the European ideal as hollow.

I find it difficult to accept any Bill of this kind without commenting on the fact that the boards of these semi-State bodies are studded with appointees from political parties and Aer Rianta is no exception. While I will not select individuals, it is clear that RTÉ, Aer Rianta and the other semi-State bodies have people appointed to them because of their loyalties to political parties and not because of their abilities. It may be, indeed it is a coincidence, that some people loyal to political parties have ability.

Mrs. O'Rourke

I wondered if the Senator might mention that.

Mr. Ross

It is the only concession I am prepared to make. When the Minister retires I hope she is nominated to the board of a semi-State body. She deserves to be.

Aer Rianta is an exceptionally political semi-State body. It is very difficult to judge the performance of a body of this kind without looking at the board membership and how it is appointed. By no stretch of the imagination could anybody maintain that the board of Aer Rianta is an independent body; it is not. At present it is full of Fianna Fáil Party members and of people who are loyal to Fianna Fáil. In the past it has been different.

Mrs. O'Rourke

Unfortunately, they are all Fine Gael.

Mr. Ross

Unfortunately, some of them are.

Mr. Cassidy

The Senator's former party.

Mr. Ross

That is correct.

Mr. L. Fitzgerald

Is the Senator saying they are all morons?

An Cathaoirleach

Senator Ross, without interruption.

Mr. Ross

The role of Aer Rianta, praised by everybody here for being so constructive, has been utterly obstructive in certain areas. It has a monopolistic empire which it is building all the time. It has objected to planning permission at Dublin Airport to people seeking to build a second terminal, to efforts to build a terminal at Baldonnel and to all competition, whether on planning or other grounds. Given this, it will be unable to prove its own worth as a commercial body.

Aer Rianta says it has spent so much on pier three, the car parks and new terminals. When driving through the car park at Dublin Airport I wonder at the kind of efficiency tests it has been put to. I am sure Aer Rianta does not compare its operations with those overseas because it does not need to. Throughout its history and in this legislation it appears to be guaranteed some kind of eternal monopoly in Ireland which will ensure the figures it provides are meaningless because there is nothing to compare them with.

Mr. Cassidy

Senator Ross made a worthwhile contribution. However, it is readily apparent he does not know how business operates and survives. Heathrow Terminal One has in excess of 20 million passengers per annum. Dublin Airport does not have such numbers but it hopes to achieve them within the next five years. It is bad business to consider building airports elsewhere when the targets necessary to make them viable have not been met.

I am a concessionaire and I worked closely with Aer Rianta since 1983. Apart from another gentleman, I was the first concessionaire at the airport to start the growth of the company before the aviation business took off in the past few years. A large investment had to be made, including long hours of trading. Work would begin at 6 a.m. and not conclude until 3 a.m. the following morning. Anybody running a business knows — I am sure Senator Quinn will agree — that when account is taken of the rota basis, the regulations and principles, including trade unions, four and not three shifts per week are required. It is not easy to make money running a business at an airport. It may be a monopoly but if only one business can survive and succeed it makes sense that there should be only one. Coming from the midlands, I have the alternative of flying out of Belfast but Dublin Airport offers cheaper flights and that is why I use it.

I congratulate Aer Rianta on being one of the best semi-State organisations. A previous Minister who also represented the constituency of Longford-Roscommon, the late Erskine Childers, when setting up the company 30 years ago hoped to introduce this legislation. It is nice to see Minister O'Rourke bringing it before the House today.

Senator Ross is a good journalist, you can debate an issue with him and he will concede when he is wrong. He is wrong to compare Aer Rianta to CIE. That is an exaggeration. Aer Rianta is one of the top performers in the State and should not be brought down to the level CIE has found itself in recent years. I disagree with the Senator's statement that Aer Rianta has detracted from trade in Ireland. I travel at least 20,000 miles per year and I know that a sale at an airport is an added sale. It is made with whatever money the customer has left as he leaves. Furthermore, the duty free shop is a convenient place of sale for the A and B classes who are not accustomed to shopping because they do not have the time to do it.

Mrs. O'Rourke

Because they have wives to do it for them.

Mr. Cassidy

Research carried out at the airports indicates that 80 per cent of sales are added sales. Manufacturers know the value of this. Few people are aware that many Irish brand names were created by the guaranteed sales. The chief executive of Bailey's told me that if the company had not secured agreement from Aer Rianta to promote its products it would have been unable to survive to become the world renowned brand name it is today. Bailey's is a great source of employment and an ambassador for Irish industry.

An enormous number of jobs in the private sector and in small business exist because of Dublin Airport — companies such as Wright's of Howth and Lir Chocolates. I want it put on the record that when you arrive at Dublin Airport you realise you are in Ireland, you see the goods on sale are Irish made. If you walk down Grafton Street, you could be in Birmingham, Manchester or London. When I arrive in Nashville there is a sign which reads "Welcome to Nashville — the Home of Country Music". When I arrive in Dublin I know I am in Dublin Airport because of all the Irish products on sale there. You are proud to be Irish when you are shopping at the duty free shop in Dublin Airport and the purchasers realise that the products on sale are good value for money.

In 1991 when it was agreed to end duty free, taxation was to be harmonised throughout Europe. This has not happened, taxation has become more disparate. I congratulate Minister O'Rourke for bringing Ireland's case before her European counterparts. I hope that everyone else in the present Government works as hard as the Minister to bring this issue to a successful conclusion. I congratulate the Taoiseach on his stance and I know the Minister for Finance is doing all he can, but the manner in which Minister O'Rourke fought the case for duty free was an example to the rest of Europe. Other EU member states are now taking a serious interest in what will happen to duty free.

I was in Kuala Lumpur airport on my way to Australia a week ago. There is a duty free shop in that airport through which it would take ten minutes to walk. All international airports have massive duty free shops. There are flights to 63 destinations from Dublin Airport. That is a greater number than Heathrow Airport, with its four terminals, offers. We can read about this in a Sunday newspaper but what is really happening will be broadcast on television tonight.

The opening of Pier C and the future opening of Pier D offer a fantastic opportunity for Aer Rianta to develop and expand over the next seven years. It will be more profitable, create more jobs and give a greater service, but according to Senator Ross that is not in line with the Ireland of the future. Someone once told me that a good socialist was a person who wanted to share everything with everyone when he had nothing. I know Senator Ross is a man of substantial means but that is the philosophy for which he is arguing.

When we examine the reports which come before us as Members of the Oireachtas the bottom line is profitability. This company is profitable, it is investing and reinvesting and should be supported. I welcome the legislation before us today.

Mr. Quinn

I congratulate the Minister for taking hold of this issue and introducing this Bill. I believe this is a first step toward privatisation. That may not be the Minister's intention but it is why I welcome the Bill. Aer Rianta is a prime candidate for privatisation and unlike some in this House I have no ideological hang up about privatisation.

Mrs. O'Rourke

Neither have I.

Mr. Quinn

This Bill travels in the right direction and I am delighted with it. I hope the next step will be to see if Aer Rianta can compete in the commercial world. Airport management requires a huge amount of money but that funding should not come from the State. It should come from investors who are willing to put money into it and for that reason the State should not be involved in running the company. Aer Rianta is the perfect body for privatisation because it can compete and succeed. I disagree with Senator Ross. My experience is that not only can it succeed in running duty free shops but also in airport management outside Ireland. That is why I welcome the Bill which does not restrict it to this country only. I am not sure how one can regulate a monopoly.

Money is a huge issue. A report in today's Financial Times refers to the difficulties involved in privatising the United Kingdom's air traffic service. It seems that will not happen for three or four years because of computer problems, although Mr. Gordon Brown, Chancellor of the Exchequer, spoke last week about the ability to privatise it. That is an issue for the Irish Aviation Authority but it is the correct direction to go.

I am delighted that the chief executive will ex officio be on the board. I do not understand why the Food Safety Authority debarred the chief executive from the board, although that is not the Minister's remit. I am concerned, however, that we have not put an onus on the Minister to publish the accounts within a reasonable period of time after receiving them. When I was in An Post many years ago I remember the accounts being given to the Minister who had to be urged to publish them. When we looked last November for RTÉ's accounts for the previous year, we discovered they had not been published. They were then published within the following week. The onus is on the Minister to publish these accounts. I have asked for this to be included for every State board since I came into this House. I gather that in recent years a provision has been included in almost every Bill to ensure that details of accounts are published within three or six months of the end of the financial year. I ask the Minister to consider that on Committee Stage.

I want to speak about the challenge facing airports. Senator Cassidy referred to Kuala Lumpur. I was in Singapore some years ago and I remember being impressed with its airport. As we came in on the jumbo jet, two more landed beside us and I thought it would take all day to get out of the airport. However, we were impressed with the service at the immigration desk, baggage desk and customs control.

When the young man who came to collect us went to get his car in a car park, I noticed there were no cars parked outside the airport. When he returned within two minutes he said that Singapore was anxious to win the airport of the year award because it came second the previous year to Schipol Airport in Amsterdam. He wanted to know if the immigration service was good. I told him it was, that the man in charge wanted to know the purpose of our visit and then he wished us well and called me by my name. He then wanted to know if the bags had arrived before we had. I said they had, although three jumbo jets had come in at the same time. He was delighted because they had lost points in the best airport of the year award the previous year on both those counts. When he asked about customs control, I told him that the lady was efficient and strict. She asked me if I was aware that the death penalty existed for the importation of drugs and if I had any with me. The answer to the first question was yes and no to the second one. One better not get those two questions wrong.

The young man who came to collect us said they had lost marks the previous year because of the difficulty in getting out of the airport. Everyone in Singapore used to double and treble park outside the airport, as they do in Dublin. He said that when they decided they wanted to win the competition, the mindset of the nation changed and that was why there were no cars parked outside the airport. The airport had provided facilities so that people could drive to the airport, park their cars, pick up their guests and then drive them away.

Dublin Airport needs to lift the pride of the nation, the city, those who work there and those who use it to make it the best airport in the world. That means people's attitudes must change. We are not just talking about money. Elderly American friends of mine are frustrated when they travel here because they always have difficulty finding a green cap in Dublin Airport. A sign states that green caps are available but they have told me that no one wears a green cap and they are unable to find anyone to carry their luggage, which does not happen at other airports. Little touches such as these make an airport a success.

The people running Aer Rianta have the skills and enthusiasm to make Dublin Airport a success. They could run the best airports in the world. I would welcome its privatisation and competition from other countries, which would prove Senator Ross wrong. I would like to believe that Aer Rianta is capable of flying the flag for Ireland and achieving success not only in duty free shops but also in airport management.

I welcome the Bill. I ask the Minister to consider my suggestion that the Minister should publish the accounts within three months of the end of the financial year.

Dr. Henry

While most aspects have been covered, nobody mentioned employing people at Dublin Airport who speak foreign languages. This would be particularly useful at the lost baggage desk. I spent time there recently trying to help French people with my limited knowledge of French. I was horrified that foreign languages were not catered for at the airport. Perhaps the Minister could consider this in her reply.

Minister for Public Enterprise (Mrs. O'Rourke)

I thank all the Senators who contributed to this debate. Senator O'Dowd asked about the report commissioned by the former Minister, Deputy Quinn, on the enterprise development task force for Dublin Airport and surrounding areas. It was set up to examine what could be done about jobs within the airport's remit. The economic upturn meant it was no longer necessary. The Senator also wanted to know what happened to the report. It seems to have concentrated on job training, advice to small firms and other related activities. Employment levels at the airport are high.

Senator O'Dowd also mentioned Ryanair and the frosty relations between it and Aer Rianta, which is not desirable. Combat is no harm for politicians or for people in general. One of the protagonists has a strong combative nature and that is the reason air fares are at their current level. I am glad to note there is combat on the other side as well. I thank the Senator for his contribution which was interesting.

Senator Liam Fitzgerald made a strong speech on the duty free issue and on various other aspects of Aer Rianta. Senator Ross showed his combative nature during his contribution. We went head to head. I welcome that approach because there is a need for a catalyst or someone who stirs the pot from time to time. Lest Senator Ross should be aghast that I am taking such a feminine line, I think he did stir the pot in a real way.

I must correct the Senator, however; Telecom Éireann is no longer a monopoly.

Mr. Ross

Correct.

Mrs. O'Rourke

I wrote that down the minute the Senator said it. I also want to correct his statement that I stuffed the boards with Fianna Fáil people.

Mr. Ross

I did not say the Minister had stuffed the board but that the board was stuffed with Fianna Fáil people. There is a difference.

Mrs. O'Rourke

Unfortunately I found the board stuffed when I got there and I have had little opportunity to do any stuffing. That was the cause of my concern.

I will inquire into the Bank of Ireland monopoly at Dublin Airport because I am unaware of it. I know the bank advertises on the radio where a woman berates her partner at the airport because he forgot to change their money and he says that there is no need to worry because they can use the Bank of Ireland. I did not realise the bank was in a monopoly position there but I will make inquires about that.

Senator Ross said that duty free was a bogus debate and a bogus crusade. He said it was a dead duck. It is not a dead duck because we will not allow the debate to become a dead duck. We will bring it to the wire. I have noticed since the Minister for Finance, Deputy McCreevy, brought France, Germany and Spain with him at ECOFIN that it is now becoming fashionable to deride those who are in favour of retaining duty free. Journalists, members of the media and ordinary folk are saying that duty free is not important because it is only for the elite.

Commissioner Monti told me through somebody that it was only for the elite who travel. Thankfully, in this enlightened age my constituents travel to see a daughter in America or a nephew in Australia get married, etc., because there are lower fares and people are more geared towards travel. Therefore, the idea that it is only the elite who avail of duty free is a nonsense. In addition, the regional airports rely totally on duty free. That can be a bad thing too because if it is abolished, their support is gone. Duty free is an issue of ordinary folk.

I referred to the debates of Mme. Scrivener when she was the Commissioner responsible. The abolition of duty free was proposed against a background of tax and fiscal harmonisation which has not been implemented. It was one element of that, the only one, which they have pursued wholeheartedly. I think Commissioner Monti is behaving in an opinionated and determined way. It is becoming an issue of the will of the bureaucrat versus the will of the politician. In the end I would prefer to be ruled by politicians than bureaucrats.

I do not agree with what Senator Ross said in that regard, but I do not want any acrimony about it. I still found his speech to be a good one because it was interesting and different. I found Senator Cassidy's contribution equally good and different. He gave examples of how he became familiar with the duty free issue and the work of Aer Rianta.

Senator Quinn may not have been here when I addressed the privatisation issue. I spoke about it in a general sense, not particularly with Aer Rianta in mind. The guidelines state that one must comply with the timeframe, but I take the Senator's point. We publish accounts as soon as we receive them; what is the point of hanging on to them? I do not know how we will go about it, but I see the point of bringing the accounts before Cabinet and making them public as soon as possible. I hope to return to Senator Quinn on the matter. I do not deal with RTÉ but I am aware of the delay to which he referred, although I do not know its cause.

Senator Quinn spoke about simple visual matters at Dublin Airport which made sense, such as the provision of people wearing green caps to help with luggage so that one would know who to approach. Those are everyday ordinary matters. Often in the running of a big business the smaller issues are not looked at and these are the ones which make a difference. There are Aer Rianta staff present and I am sure they will take that into account.

Senator Henry made a fine sensible remark. Most young people remain in school until they are 17 or 18 and they are learning not just French but German and Spanish too. It is desirable that one would have the use of another language to converse with visitors who cannot speak English, even if it were just to give directions. The facility of a foreign language, in a conversational rather than an academic sense, is something which should be sought when applicants for those jobs are interviewed. It is an excellent idea and I hope it will be taken on board.

I have the greatest regard for Aer Rianta under Mr. John Burke, Ms Margaret Sweeney, the company secretary, and the excellent chairman, who was appointed by Fianna Fáil. I have found the chairpersons and members of boards, no matter from where they came or from what political party, to be men and women of decency and circumspection. I have no brief with the reign of a previous Minister who thought that in every semi-State body lurked pools of corruption and people of disrepute. I do not hold with that view whatsoever. These men and women are doing a job to the best of their ability within the confines laid down by the State. They are paid a modest salary. They work to an agenda which we lay down. In my dealings with the members of the boards and those who work in semi-State bodies, I have found them agreeable, productive and harmonious people. I hold no brief for running them down and I am aware that nobody in this House did so either. The points made here were of a general rather than a specific nature.

The semi-State sector is changing but it will not happen overnight. We must look to the company, the customer, the workforce and their needs. I agree with Senator Ross on one matter and I wish we could bring that a little further. For instance, next year a percentage of Telecom Éireann will be sold to IPO. We hope it will reap a handsome return to the State. It is my belief that that kind of return should be divided between reducing the State debt and paying for public infrastructural works which still need to be done since Europe is fast receding as the provider of money for such purposes. I believe that debate will begin. I thank all who contributed to this debate. I welcome and congratulate Senator John Cregan. He won the by-election handsomely and I know he will be a fine contributor to the proceedings of the House for many years.

Question put and agreed to.

Committee Stage ordered for Friday, 26 June 1998.

An Cathaoirleach

When is it proposed to sit again?

Mr. L. Fitzgerald

It is proposed to sit again at 10.30 a.m. tomorrow.