State Airports (Shannon Group) Bill 2014: Report and Final Stages

Before we commence, I remind Senators that a Senator may speak only once on Report Stage, except for the proposer of an amendment who may reply to the discussion on the amendment. Also, on Report Stage each amendment must be seconded.

Amendment No. 1, in the names of Senators Barrett, Crown and Quinn, arises out of Committee proceedings. Amendments Nos. 1 and 2 are related and may be discussed together by agreement.

I move amendment No. 1:

In page 19, line 39, after "direction." to insert "The direction shall be published on the website of the Department of Transport.".

As the Minister's amendment is much superior to the one that I proposed, I will not press my amendment. The issue was about directives that the Minister might wish to publish and it arose following events in the past when directives were given in relation to Dublin Airport, but that is history. We discussed it at the earlier Stage. The Minister's formula to deal with the problem is much better than the one that is in my amendment and I will not push mine.

The issue, as the Minister's amendment shows, was about security issues. My amendment is less sophisticated, that is, let us publish it some place, but the Minister has tackled the problem in a much more thorough way. I will withdraw amendment No. 1.

I second the amendment.

Amendments Nos. 1 and 2 are being discussed together. Does Senator Barrett also wish to speak to amendment No. 2?

The Minister has dealt very well with issues of security, which was his concern. We were concerned with economics issues. He is concerned with both. That is part of the reason his is a better amendment than the one put down in the names of Senators Quinn, Crown and myself. I welcome amendment No. 2 and endorse it.

Amendment No. 2 is a Government amendment. It follows on from the discussion that we had previously in this House. It requires of the Minister, if making a direction to Shannon Airport, that such direction must be laid before the Houses of the Oireachtas save where there are security concerns. It is an amendment that seeks to facilitate the points made by Senators Barrett and Darragh O'Brien on the previous occasion.

Amendment, by leave, withdrawn.
Government amendment No. 2:
In page 19, between lines 39 and 40, to insert the following:
"(2) Subject to subsection (3), a direction under subsection (1) shall be laid before each House of the Oireachtas as soon as may be after it is made.
(3) Subsection (2) does not apply to a direction which the Minister considers relates to the security of the State or the security of, or safety at, Shannon Airport.".
Amendment agreed to.

Amendment No. 3, in the names of Senators Darragh O'Brien, Byrne and the Fianna Fáil Senators, arises out of Committee proceedings. There is nobody here to move the amendment.

Amendment No. 3 not moved.

Amendment No. 4 is in the names of Senators Barrett, Crown and Quinn. Amendments Nos. 4 to 6, inclusive, are related and may be discussed together by agreement.

I move amendment No. 4:

In page 21, to delete lines 13 to 24.

The point arising is the last minute appeal on behalf of Cork Airport. We discussed the matter with the Minister and he has drawn our attention to the disadvantages, etc., that could arise.

The case we were making, the Minister may recall, is that Cork Airport is substantially bigger than Shannon Airport in terms of passenger numbers. I suppose there was an inherent hope that Cork Airport on its own could operate as a successful competing airport versus scepticism that, run as an appendage to Dublin, it would ever achieve the kind of freedom to which Cork people, as an independent republic of Cork, always aspire.

Cork Airport would rank in the top 20 airports in the United Kingdom, many of which operate independently. As the Minister explained to us on the previous occasion, there is the problem of what to do with the value of the terminal, at €168 million. I suppose we would hope that the Cork Airport Authority would not be dissolved, that the problem of the terminal might be resolved in a number of years and it could get on with being an independent airport competing against Shannon. In other words, I compliment the Minister on what he has done for Shannon. He has given it its independence. Senator Conway, in particular, is a great advocate of Shannon's independence in this House and we wish it well. I would like something similar for Cork.

I recognise the problem of what to do with a terminal which was built and opened at the wrong time, and is a millstone around somebody's neck. The DAA can take that millstone because it is a larger organisation. Could it remain with the DAA? Can we find somebody who might use it for some other purpose? Not being entirely facetious, when there was surplus terminal capacity in Kerry airport at one stage, the Klinge company of Killorglin used it for storage. I would seek to avoid it sitting there as a white elephant preventing the development of Cork.

That is the purpose of these amendments. It is as it were to ask the Minister, as he has been so skillful in accommodating the amendments in regard to the publication of directives, if he has a magic formula which would allow Cork the same administrative structure as Shannon, develop itself, attract new airlines and promote itself rather than be a branch of Dublin Airport.

With the break-up of national airport authorities - the British airports authority used to run seven, eight, nine or ten of them in the United Kingdom - airports are becoming separate stand-alone businesses competing with each other. This is happening in an environment, as the Minister mentioned on the previous occasion, where airlines are much more competitive than they used to be under the non-competing national airline model. I and many Cork people would like to see Cork participate to the full extent in that regard.

That is the purpose of our amendments, to not proceed with the dissolution of the Cork Airport Authority in the hope that sometime in the next couple of years we might work out a formula by which it could be a separate independent airport and help the entire economy. With it and Shannon Airport competing it would ensure that neither of them would have the kind of productivity problems that they had in the past, and they might be a little more careful about their investment plans as well.

That is the problem we were trying to solve. I see a much better future for Cork as an independent airport on the Shannon model, that the Minister has so persuasively advocated here and that we support. Could something be done for Cork along similar lines?

I second the amendment.

Senator Barrett expressed the concept well. I am a believer in independence in such matters. I have had the chance in the past year to visit Ireland West Airport Knock to see the enthusiasm for what can happen there and what they can do. I note they are raising a charge on flights where everybody departing has to pay €10 or €20, but it seems to be working. I do not know whether they are making money yet, but there are so many other aspects to this. One of the actions we took when we were working on that was to go to the John Lennon Airport in Liverpool to see what it has done and how it changed when, having been part of a bigger structure, it got independence. Recently I visited Southend Airport in the south of England to see the efforts it is putting in on that basis as well.

If one has the commitment of the local area to independence, I believe much can be done. It would be a shame to end up involving Cork Airport with a much larger institution where it will always be a second-class citizen. It is much better if one can give the airport its independence and set up a team there that will make that work.

Briefly, I wish to support the previous speakers and to move formally amendment No. 3.

Amendment No. 3 was missed and cannot be moved.

Has amendment No. 3 gone?

This section is not about the merits and demerits of separating Cork Airport. At a time in the future, when Cork Airport is stronger, when its operating costs match its income and when a solution has been found to the terminal debt, it may well be possible to separate Cork Airport. While this may make sense at that time, it must also make sense in terms of the Dublin Airport Authority's balance sheet. This section is about dissolving the Cork Airport Authority plc, which is a company that has existed for quite some time but which has no assets and no real power. It really is merely an edifice and I see little point in continuing that. Even for the directors who served on it, many of whom were excellent directors, it simply did not make sense for them either to have in place this shadow company that did not actually have an airport to run. This section dissolves that company but allows for its re-establishment at a point further down the road when it is for real. The purpose of this section is to get rid of the pretence but it does not preclude the re-establishment of the Cork Airport Authority if and when the time is right to opt for the separation of Cork.

However, on an administrative basis what I can do is to change the title of section 31 from "Dissolution of Cork Airport Authority" to "Cork Airport Authority", just for clarity. I believe Senator Barrett had proposed something along those lines previously. However, I can discern no case in keeping in operation a shadow company with no airport to run and doing nothing. Until the Government figures out what to do with Cork, it makes sense to close it now and then re-establish it at a later point when there is a clear plan.

I thank the Minister. I believe an earlier amendment I had tabled proposed to delete the words "Dissolution of" before "Cork Airport Authority". In the formulation the Minister has given to Members, there is a plan. It may be happening a bit more slowly than I would wish but as the Minister indicated, the Cork Airport Authority can be revived if the circumstances permit. I hope this happens quickly - I believe it would happen faster were it an independent body, but at least the Bill's wording now provides for a future for the Cork Airport Authority, rather than for the dissolution thereof. Consequently, I welcome the Minister's proposed change in this regard. All of us who have Munster connections wish this would happen sooner rather than later, as I am sure does the Minister as well, because it would mean the debt burden would be reduced by attracting more airlines and more passengers. I again thank the Minister for his response and will not move the amendments we had tabled regarding the Cork Airport Authority. I will withdraw amendment No. 4, by leave of the House.

Amendment, by leave, withdrawn.
Amendments Nos. 5 and 6 not moved.

I move amendment No. 7:

In page 23, to delete lines 7 to 15.

I second the amendment.

Members discussed this issue at some length previously. The purpose of the text in question is to rename the Dublin Airport Authority as "DAA", because it is not just Dublin, it does not simply pertain to airports and is not an authority. Consequently, the name is inappropriate and I wish to change the name to "DAA" instead of the Dublin Airport Authority. The reason DAA was chosen rather than an entirely new name simply was to avoid being obliged to incur expensive rebranding costs. It is somewhat like companies such as CRH, IBM or KPMG, in that those initials used to stand for something but no longer do.

Question, "That the words proposed to be deleted stand", put and declared carried.
Amendment declared lost.

I move amendment No. 8:

In page 23, to delete lines 16 to 37, to delete pages 24 and 25, and in page 26, to delete lines 1 to 15.

These simply are consequential amendments relating to the preceding sections and given that Members have not made the previous amendments, there would be no purpose in going ahead with this amendment.

Question, "That the words proposed to be deleted stand", put and declared carried.
Amendment declared lost.

I move amendment No. 9:

In page 26, to delete lines 16 to 40 and to delete pages 27 to 31.

This relates to the superannuation schemes and to Irish aviation pensions. When Members debated this issue on Tuesday, I welcomed the assurance the Minister gave to the House that the expert panel would meet the deferred pensioners before drawing up its report. I then received correspondence from the deferred pensioners who stated they were concerned that while they had been given a meeting date, which was today, they had heard on RTE news that the report would be published tomorrow. Obviously, this gave them some cause for alarm because they were wondering whether the report already had been pretty much written before they had had their meeting. However, just before coming into the Chamber, I received a telephone call from one of the pensioner representatives who attended the meeting this morning with the expert panel. The pensioner representatives were told quite clearly by the representatives of the expert panel that the report, which is to be published tomorrow, next week or whenever - the Minister might indicate to the House when precisely he expects this to be - will not refer to pensioners or deferred pensioners in any way because the terms of reference for the expert panel referred only to the Labour Court and Labour Relations Commission recommendations. Because the pensioners are not part of that process, the report will not refer to them, to their entitlements or to changes thereto and how they will be affected.

This is incredibly unfair. Senator Darragh O'Brien and I have raised in the past the issue of the role of the pensioners and deferred pensioners as part of this process. It is important that an agreement is reached that is fair to everyone. However, for this to happen, every group must also have its voice heard as part of that process. This is extremely unfair and I ask the Minister to ensure the report is not published until a way is found to make sure it will take into account and will reflect the concerns of the pensioners and the deferred pensioners. If this requires the Minister to contact the expert panel to request it to take those concerns into account, I ask him to so do. I welcomed the Minister's comments the other day when he stated the panel would meet the deferred pensioners and would take them into account. However, it now appears as though that meeting merely was a cosmetic exercise because, straight away, they were thanked for coming but told the panel could not take into account their concerns and that they would not be referred to in the report. This is incredibly unfair and it is incumbent on the Minister to act before the report is finalised to ensure these issues are addressed properly.

I second the amendment. I certainly do not wish to rehash the argument the Minister and I had on Committee Stage. I have put on record Sinn Féin's opposition to this section of the Bill, which we believe should have been a stand-alone section, but I will not go over that ground again. I wish to make the point on Report Stage that it is wrong for Members and premature for the Minister to be proceeding with this when the expert panel still has not concluded its work and published its report.

The deferred pensioners are not happy with the meeting they had because they were not given the assurances they wanted. The concerns we expressed on Second and Committee Stages are justified and for that reason I will be supporting the amendment and opposing the Bill in its entirety. The way in which the Minister is trying to tack this section onto the Bill is bad parliamentary practice and I do not agree with it. I will be opposing the Bill on that basis.

In regard to Senator Power's question, the aforementioned meeting between the deferred pensioners and the export panel was their second time to meet. It certainly was not a cosmetic meeting arranged for the day before publication of the report. The report is not going to be published tomorrow. I do not know when it will be published. It may be next week. As I was not briefed by the expert panel while its work was ongoing, I do not know whether the Senator's observations are correct. However, my officials and I will have sight of the report before it is published.

The section allows the existing staff in the airports and Aer Lingus to withdraw from the pension scheme if they so wish. They will be permitted to stop making contributions and to withdraw voluntarily. This is something they have sought for quite some time and they should be allowed to do it. The section also allows for any agreement that may be made on foot of the expert panel's report to be implemented by providing the necessary legislative provision. Finally, it provides an alternative to wind up if the Pensions Authority chooses to wind up the pension fund. It makes sense to provide for these matters in legislation.

I accept that the Minister was not present at this morning's meeting and does not know what was said. I am simply relaying to him the message I was given by someone who attended it. I am seeking an assurance from him that he will contact the expert panel to ensure that the issues affecting pensioners and deferred pensioners are considered in the report. If all they get is a meeting in which they are told their concerns cannot be taken into account, it will be a cosmetic exercise. I ask him to ensure there is no difficulty with the terms of reference and that when the expert panel issues its report, be it tomorrow, next week or at some other date, it takes into account the entitlements of pensioners and deferred pensioners.

Neither the Senator nor I attended the meeting and what one person can relay from a meeting is not necessarily what happened. I would prefer to hear from the expert panel and read its report.

What if there is a difficulty?

Its report will not be gospel. It will have to be discussed by the various parties involved, including the companies. I find it hard to understand how the expert panel could come up with a solution that does not refer to the pensioners and the deferred pensioners but I would like to know all the facts first. I will await the next report of the panel.

Question, "That the words proposed to be deleted stand part of the Bill", put and declared carried.
Amendment declared lost.

I move amendment No. 10:

In page 37, between lines 6 and 7, to insert the following:

“Statistics of airport performance

44. The Minister shall cause to be published statistics of the international price competitiveness of Irish airports, the efficiency of their capital and operating expenditures and such other performance indicators as the Minister deems appropriate.”.

This amendment arose from our discussion on Committee Stage of the terminal in Cork and the earlier reviews of issues, such as low labour productivity in Dublin and Shannon airports and the tendency to invest ahead of needs, thereby leaving the airports with capital debts. We discussed the kind of data that the Department and this House require to determine whether airport investments are efficient. Such data might include passenger numbers and workload units per employee; operating costs and capital costs per workload unit; aircraft movements per employee and per runway; and passengers per airport gate and per square metre of terminal. In our previous discussion, the Minister indicated that he saw a need for these data. We were keen to locate the data centre in the Commission for Aviation Regulation but we did not insist on it. The Minister indicated that he might locate it in his Department and he mentioned improvements that have been made to his Department's data, particularly in respect of the independent bus sector. We might also have required the port companies to include some of these measures of efficiency.

Part 7 of the Bill is titled "Miscellaneous Amendments - Airports". This is why we propose inserting the amendment into this Part. The Minister has made interesting proposals on parking, clamping and the duties of directors. He also acknowledged the need to ensure that airports are efficient performers in a world where airlines compete strongly. We recognise there is a need for statistics. He referred to the aviation strategy on which his Department is working. Given that the data could have helped us to avoid the kind of Celtic tiger mistakes that were made in the airports and the legacy with which he is now wrestling, we should collect these statistics. The amendment allows the Minister to cause to be published statistics on whether airports are price competitive with their international counterparts, whether they invest efficiently and whether their operating costs are efficient, as well as "such other performance indicators as the Minister deems appropriate."

Since we commenced this debate, which I have found most useful, the Commission on Aviation Regulation reported on 29 May. It has required a substantial reduction in the maximum charges levied at Dublin Airport. One might argue there were inefficiencies that had to be wound out of the system. I estimate there will be price cuts of slightly under 22% in the next five years because of the excess costs found in the airports. Would these excess costs have been identified in advance if we had the data bank that we propose in the amendment? The report states that only €773 million of the €925 million cost of the new terminal in Dublin would be allowed and that €31 million in capital expenditure and just over half of the DAA's proposals were disallowed. In another case €183 million was disallowed. The report suggested that the production of this infrastructure seems to have taken over as the object, with the result that goodies were offered to the airlines without telling them that it was going to cost much more to run the airport. All of us would like marble halls.

The report identified a legacy staff problem in terminal 1 at Dublin Airport and that staff costs increased substantially between 2007 and 2009, while the rest of us were in a recession. Information technology costs amounted to 5.8% of revenue, compared to the European average of 4.3%. Operating costs were 25% higher than all airports according a sample study by Booz which was commissioned by the airport.

The Minister, the Oireachtas and the public need to beware of people bearing airport terminals, high expenses and high operating costs because they damage the competitiveness of the Irish economy. As we found in the Shannon case, with the precipitous drop in traffic - the Minister mentioned 61% - it damages tourism. Where a market is dominated by one company, and this one is dominated somewhat less because the Minister has given Shannon its freedom, we still need to know here, at Cabinet and in the Minister's Department how efficient these airports are. We also need to know whether their labour and capital productivity are up to the mark.

The Minister has recognised the data requirements for that. I think the case is strengthened by the report on 29 May 2014 from the Commission for Aviation Regulation. The data would be useful in decision-making but we will leave it to the Minister as to where he might like to publish them. The need for more data was accepted by all sides on the last occasion. The Central Statistics Office was also mentioned as a possible place to publish the data.

We will make better and more informed decisions if we are able to answer the kind of questions that are posed in various reviews of Irish airports as regards the tendency to over-invest and incur operating costs which are in excess of those elsewhere in a very competitive aviation market. Having the data somewhere, either in the Department's annual report, in the aviation strategy, or through using the CSO or the Commission for Aviation Regulation, would enhance public decision-making in an area where it is needed. One of the reasons for the Bill is to deal with certain legacy problems of excess expenditure and costs in the past.

I second the amendment. I do not think I can improve on what Senator Barrett has said. There is little doubt that it is an incentive to any organisation to have the knowledge of publicly comparing one's efficiency with that of other organisations. The openness of that knowledge would act as a great incentive. This proposal is worthy of consideration.

I certainly support the intent behind the amendment. We need to have better aviation statistics which should be collected and published regularly. I am not convinced that the way it is done now needs to be put in legislation. In the context of aviation policy, I would like to take some time to decide what sort of data should be collected and whether the CSO, the CAR or the Department should do it.

The CSO already has a role in collecting the basic statistics. In February, the Taoiseach signed statutory instruments under the Statistics Act reaffirming that the Central Statistics Office is to be the recipient of returns submitted by ports and airports. The first statutory instrument dealt with air traffic and the second one with sea traffic. This is something I will obviously have to discuss with the Taoiseach and also with the CSO, as there is already a provision for the CSO to do it.

It is something that I support in principle but I cannot support the amendment because it needs to be considered more fully. I will need to have some consultation with the potential bodies as to who might collect the statistics and how.

I thank the Minister for his openness concerning several amendments we have tabled. If there is anything we can do on this side of the House when the Minister is having the discussions, we will be glad to help. We do have a problem because, left to themselves, airport architects and engineers would gladly spend the entire GDP on building new airports. We are attempting to put some kind of restraint on their activity by requiring the numbers.

For instance, the growth of Charleroi in Belgium to a 5 million passenger airport was because it was independent from the main Brussels airport. It was able, one presumes, to assist the Belgian authorities by saying that it could do all those things without that many terminals or the high level of labour costs. The information we are trying to get before policy-makers would have arisen in that kind of context.

There is unlikely to be a competing Dublin airport to restrain it from excesses, so there has to be an administrative solution involving the publication of numbers that the Minister mentioned. I am glad he is open to that development. We will assist him in that regard if we can be of any great use.

It is important to recognise that we got into a serious problem of high cost airports and over-investment because we did not have those kind of numbers. There was nobody to say we already had far too many runways or terminal buildings for an airport of that size and that our costs were too high. That may be why airlines do not want to fly to a given airport. It is not because the Minister for Transport, Tourism and Sport has not been promoting the destination enough, but one has to get into the marketplace and meet these airlines.

I will not push the amendment but I am glad it is in the Minister's thoughts to do something like that as aviation policy develops. I thank him for his interest and for his response.

Amendment, by leave, withdrawn.
Bill, as amended, received for final consideration.
Question put: "That the Bill do now pass."
The Seanad divided: Tá, 25; Níl, 13.

  • Bacik, Ivana.
  • Barrett, Sean D.
  • Brennan, Terry.
  • Burke, Colm.
  • Coghlan, Eamonn.
  • Coghlan, Paul.
  • Comiskey, Michael.
  • Cummins, Maurice.
  • D'Arcy, Jim.
  • D'Arcy, Michael.
  • Gilroy, John.
  • Hayden, Aideen.
  • Heffernan, James.
  • Henry, Imelda.
  • Higgins, Lorraine.
  • Keane, Cáit.
  • Kelly, John.
  • Moloney, Marie.
  • Mullins, Michael.
  • Naughton, Hildegarde.
  • Noone, Catherine.
  • O'Neill, Pat.
  • Sheahan, Tom.
  • van Turnhout, Jillian.
  • Whelan, John.

Níl

  • Byrne, Thomas.
  • Cullinane, David.
  • Daly, Mark.
  • MacSharry, Marc.
  • Mooney, Paschal.
  • O'Donovan, Denis.
  • O'Sullivan, Ned.
  • Ó Clochartaigh, Trevor.
  • Ó Domhnaill, Brian.
  • Ó Murchú, Labhrás.
  • Power, Averil.
  • Walsh, Jim.
  • Wilson, Diarmuid.
Tellers: Tá, Senators Paul Coghlan and Aideen Hayden; Níl, Senators David Cullinane and Diarmuid Wilson.
Question declared carried.