Wednesday, 28 January 2004

Questions (5, 6)

Denis Naughten

Question:

123 Mr. Naughten asked the Minister for Transport his plans for the commercial viability of the three State airports given the threatened industrial action at Aer Rianta last week; and if he will make a statement on the matter. [2421/04]

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Róisín Shortall

Question:

127 Ms Shortall asked the Minister for Transport the position on the Government's proposals for the division of Aer Rianta; the thrust of the advice to date of the consultants employed in this regard; when he expects to receive their final report; the estimated cost of their contract; when he expects to publish the legislation; and if he will make a statement on the matter. [2425/04]

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Oral answers (34 contributions) (Question to Minister for Transport)

I propose to take Questions Nos. 123 and 127 together.

Work on the implementation of the restructuring of Aer Rianta, including the drafting of necessary amending legislation, is proceeding in my Department. This work is led by a steering group comprising officials of my Department and the Department of Finance, Aer Rianta management and advisers retained respectively by my Department and the company.

I will shortly announce the remaining members of the boards designate for Dublin and Cork airports. As in the case of the Shannon board, which I announced in October, the new boards for Dublin and Cork will bring together people of the highest calibre combining international, national and regional expertise. The new boards designate for the three airports will be closely involved with the work of the steering group in bringing about the transition to independent and autonomous authorities for the three State airports.

Following a public tender process conducted in accordance with EU public procurement procedures, my Department engaged a consortium of advisers comprising PricewaterhouseCoopers, Matheson Ormsby Prentice and a UK based transport consulting firm, Steer Davies Gleave, to advise on all aspects of the preparation, procedures and implementation of the restructuring of the State airports. The matters being addressed by the advisers include advice on corporate finance, accounting and tax issues, economic regulation of airports and associated legal advice.

The advisers have not been engaged to produce a report but rather to provide expert advice on the options for giving effect to the establishment of the three new airport authorities, including the optimum mechanisms for allocating airport assets among the three airports. While the precise cost of the advisers will ultimately depend on the level of expert resources necessary to bring this important project to fruition, the consortium tendered an estimated cost of €1.555 million, inclusive of VAT and expenses.

As part of the ongoing work on the implementation of the Government decision, detailed financial projections for the three airports will be prepared over the coming weeks. Clearly, it is essential that each of the new airport authorities will have sound opening balance sheets and that each will be able to trade successfully on a commercial basis in future.

The proposal that the new airport authorities for Shannon and Cork will both commence business free of debt will have a major positive impact on the commercial viability of the two airports. It is proposed that the debts associated with them, including the debt associated with the major new investment programme under way at Cork Airport, will remain with Dublin Airport. I am also giving detailed consideration to the implications for Dublin Airport of absorbing the debt of Shannon and Cork, as envisaged. In this regard, the issue of other significant assets of the Aer Rianta group, such as Great Southern hotels and Aer Rianta International, is being carefully examined. The preparation of revised and updated financial projections will not inhibit the commercial freedom and responsibility of the new airport authorities, when formally appointed, to develop strategic and business plans, including marketing strategies, for each of the three airports.

In tandem with this ongoing work, senior officials of my Department and I will maintain the process of full engagement with the Aer Rianta unions to deal with issues of concern to workers in the company arising from the implementation of the Government decision. In correspondence with ICTU and the Aer Rianta unions over the past fortnight, I have conveyed assurances and clarifications on the protection of the tenure and terms and conditions of employment of Aer Rianta workers in the context of the three new independent authorities. I have also reaffirmed my willingness to underpin this undertaking by including a provision in the amending legislation being drafted which will ensure that the existing workers in the company will not be brought to lesser terms and conditions of employment than they enjoy. I am pleased that SIPTU decided to call off the threatened industrial action at the airports on Thursday last and look forward to a resumption of the discussions between the unions and my Department and under the chairmanship of the Labour Relations Commission at which these and other issues of concern to the unions can be further debated.

I have stated in recent correspondence with trade union representatives that the appropriate way to reflect my commitment to maintain the security and quality of employment of Aer Rianta workers in the aftermath of restructuring remains to be finalised between my Department and the trade unions. I have suggested that the talks being chaired by an official of the Labour Relations Commission provide the appropriate forum for this.

In light of the Minister's commitment last week to the employees of Aer Rianta guaranteeing them jobs for life, today's leaked decision regarding Ryanair at Charleroi which has implications for Cork and Shannon airports as State companies independent of Dublin Airport, and the Minister's comments in the House on 20 November last when he stated that the airports would, at worst, be in a break-even situation, does the Minister still believe it is financially viable for Cork and Shannon airports to stand alone? Does he revise his estimate of the impact of the announcements last week andthis week on the future viability of the two airports?

"Jobs for life" is not a phrase I used at any point, nor to my knowledge did anyone in the trade union movement use the phrase. I do not believe they would use such terms. As was common when State companies were restructured in the past, it has been suggested that employees' terms and conditions remain the same as before. This process has been gone through many times and terms have been negotiated successfully. I do not see why we cannot do the same on this occasion. That is the Government's commitment. It does not help to have it expressed in the more colourful language which has been used in some quarters. I do not suggest Deputy Naughten did so.

I have not seen the final details of the Commission's decision regarding Charleroi. I gather it is due next week. From what I have seen in the newspapers and from the briefing I received this morning in Brussels where I spoke with the Commissioner before lunch when I attended meetings there, I gather that the effect of the issue on companies such as Aer Lingus and other airports, including regional airports, will have to be assessed. It is too early to be negative. This morning I heard there might be some positive aspects to the ruling. Regardless of ownership or structure, ultimately all airports must be well managed to allow them develop, seek maximum profitability, service passengers and increase numbers. I do not see a connection between the Charleroi decision and the Government's decision to restructure Aer Rianta. Regardless of the structure, there will be a level playing pitch and the same rules will apply to everybody.

Does the Minister now accept he has seriously mishandled the proposed changes to Aer Rianta? His behaviour and attitude to the different interests in the company has brought us to the point of industrial relations chaos. All trust has broken down between him and the workers in Aer Rianta to the extent that they will not accept any undertaking by him unless it is underwritten and guaranteed by the Taoiseach. In that regard, what is the Minister's view of the need for the Taoiseach to intervene on two occasions in the recent past to avoid industrial chaos?

Following from that, does the Minister now accept that the Minister for Finance was right in recommending legal advice before agreeing the heads of legislation? In my question, I asked about the main thrust of the advice the Minister has received from the three groups of consultants he employed after the event. Does he accept it would have been better to have consulted the interests in Aer Rianta and obtained legal and financial advice to determine the possibilities for the future of the company?

The legislation on Aer Rianta was promised in December and the Taoiseach later promised it this month. It is unlikely to appear before the weekend. Will the Minister furnish a rough timescale for when the legislation might appear? Have the consultants advised whether it is possible to legislate for what the Minister has decided to do on the basis of a hunch?

Last week the board of Aer Rianta took the initiative to try to break the impasse that had developed between the Minister and the unions and undertook to be involved in drawing up a business plan for each of the airports in conjunction with officials from the Department of Transport. How does the Minister view the fact that the two chairpersons designate appointed by him and who are members of the board of Aer Rianta agreed with the other members that this was the right way forward? The board took a unanimous decision that it should have a central role in drawing up the business plans for each of the airports.

The Deputy has asked many questions. The Taoiseach and the Minister for Finance were involved in the Government decision on restructuring the airports. As such both have shown full support. The Cabinet is collectively responsible for our decision. I welcome the support of the Taoiseach and the Minister for Finance. The latter has a duty to ensure that every Department complies with his financial guidelines. He is doing no more or less than that in ensuring we go through proper procedures, which we are doing.

I have no wish to make changes with which the Department of Finance would not be fully satisfied. Before we sign off on the legislation, the Minister for Finance must be satisfied that the decision meets national accounting rules and represents value for money for the Exchequer. We have had a number of meetings with the Minister for Finance and good progress has been made. I believe he, along with the rest of the Government, will be in a position to sign off on the legislation soon.

The Deputy asked whether I should have obtained consultants' advice before the policy decision. We are often criticised for not making up our minds. On this occasion the Government made a decision. The consultants were not hired to advise whether it was a good idea.

They were hired to determine whether it was possible.

They were hired to help us unravel the technical issues surrounding the Government decision.

There are major technical issues.

The Deputy is right in saying there are major technical issues. However once the Cabinet took the decision to follow this route, we needed good professional advice on how to deal with it. Aer Rianta is a public liability company and there are plc rules as well as EU regulations surrounding the maintenance of capital. We are working our way solidly through those complicated issues and the consultants are helping us implement them. The advisers are not engaged to decide or even advise on the policy but to implement and unravel some difficult technical issues. We are making good progress and I am satisfied that the Department of Finance and the Government are comfortable with the pace and quality of the work.

When will we see the legislation?

I hope to be able to introduce it as soon as I possibly can. It will be after we deal with these issues.

It will certainly be in this session.

What happened to the January deadline?

As the Deputy pointed out — perhaps she should give herself some credit — there are serious technical issues, which resulted in me not being able to meet the deadline. There are serious issues relating to capital maintenance. However we have been working our way through them and are nearly done with them. I am pleased that the legislation now appears quite solid. If this process means slipping by a month or two, so be it. When I give a time estimate, it is merely an estimate. If I run into an unanticipated issue——

Such as the unions.

—— I must deal with that.

This issue should have been anticipated.

When the Government made the decision last July, it said it should be implemented by July 2004. We are well within that timeframe

Does the Minister expect to meet that deadline?

I fully expect to meet that deadline.

Would the Minister put money on it?

Whose money? This is my expectation at this stage. We have to complete the work with the consultants and I have undertaken to share more information and have further discussions with the unions, which I will do. I believe we can do all that and complete the legislation as soon as possible

How will the Minister ensure capital investment will be available for each of the three airports? It seems he is only hoping to generate that capital from passenger numbers, which will be insufficient. On 20 November he stated that a decision on a second terminal for Dublin Airport would go before Government within a couple of weeks. As that has a significant impact on the viability of Dublin Airport, will he elaborate on it?

What are the Minister's views on last week's proposal by the Aer Rianta board, which includes the two chairpersons designate?

I welcome the general thrust of last week's decision. The company has financial projections and the new chairpersons will be involved in updating those. The new chairpersons, along with the outgoing board, undertook to assist and produce broad financial projections and I thank them for that effort.

What about a business plan?

It is up to the new authorities to decide on future business plans. This was where I had a difference of opinion. I disagreed with the outgoing authority presenting fully-fledged business plans, which would have to be implemented by an incoming authority. The incoming authority must be at the centre of that. Subject to that I have no difficulty with the board or Aer Rianta.

The Minister should have a business plan.

We must proceed to the next question.

What are the answers to my questions about the terminal and the capital adequacy?

I am confident that the airports without the debts attached to them will be viable. Those figures are being concluded. From that, capital will be made available to develop the airports. Cork Airport will have a brand new terminal. Shannon Airport can handle approximately 4 million passengers but only caters for approximately 2.2 million or 2.3 million at present. Enormous capacity exists and I am satisfied that capital investment will be available if difficulties arise.

We must proceed to the next question.

I cannot deal with the other issue raised by the Deputy as time has run out.