Airport Development Projects.

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.

Public Transport.

Questions (7, 8, 9)

Róisín Shortall

Question:

124 Ms Shortall asked the Minister for Transport the position in regard to his proposals for the restructuring of the CIE group of companies, in particular his proposal for the franchising out of Dublin Bus routes; if this proposal includes the franchising of the buses also; the position in regard to his Department's discussions with the CIE group of unions; if he remains committed to the principle expressed in Sustaining Progress that public enterprise should be managed in a spirit of social partnership; and if he will make a statement on the matter. [2424/04]

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Oral answers (37 contributions) (Question to Minister for Transport)

I met the general secretary of the Irish Congress of Trade Unions and the CIE trade unions on Monday, 26 January 2004 on the reform of public transport. There was a frank exchange of views in talks which lasted more than two hours. The trade unions and I agreed to reflect on the views expressed at the meeting and consider if there was a basis for resumed discussions on public transport reform.

The objective of regulated market opening in bus transport was accepted in principle by the public transport partnership forum, which included the trade unions and other social partners. This objective can be achieved in the context of market expansions and negotiations, without undermining the terms and conditions of employment of existing employees. In this context, I expect Dublin Bus to play a significant role in meeting the future transport needs of Dublin.

As stated on a number of previous occasions in the House and in meetings with the trade unions, I am firmly of the view, which is supported by a number of professional studies and experience in other countries, that franchising is the most effective way of achieving genuine market opening to new entrants. However, I remain open to additional suggestions provided they are directed at achieving the same objective. Likewise, I am open to reasonable proposals relating to the pace of the introduction of competition as long as this objective is achieved in an acceptable timeframe.

I hope that the understanding of each other's firmly held positions, which characterised my recent meetings with the unions, can provide a productive basis for resumed intensive dialogue on public transport reform. It remains my intention to proceed with legislation on public transport reform in 2004.

Does the Minister accept that his approach in respect of dealing with the issue of public transport reform has not been consistent with the spirit of social partnership, as promised under Sustaining Progress, and that he needs to reconsider his approach to industrial relations issues as a matter of urgency? Does the proposal to franchise out 25% of bus routes include the franchising out of buses? Will the Minister make a statement on the undertaking he has given to the unions in respect of what he is prepared to discuss in talks during the coming weeks? Will those talks include discussions on reforms and changes to the bus market other than his proposal to franchise out 25% of routes? Is the Minister prepared to discuss, in a spirit of partnership, the proposals that are likely to come from the unions in respect of how the bus market can be expanded in a way that will result in additional services being provided for the travelling public? Is he open to proposals on how that can be done?

The objective of making progress can be achieved in the context of market expansion and negotiations and this can be done without undermining the terms and conditions of employment of existing staff.

That was not the question.

I am also of the view, which is firmly supported by a number of professional studies and experience in other countries, that franchising is the most effective way to proceed.

I remain open to additional suggestions provided they are directed at achieving the objective of facilitating new entrants to the market. I am also open to reasonable proposals relating to the pace of the introduction of competition as long as this objective is achieved in an acceptable timeframe. I do not want to use the House as a means to negotiate details on other facts, figures or percentages. I am open to additional suggestions and reasonable proposals and these can be discussed as they arise.

Does the Minister intend to franchise out buses as well as routes?

My proposals are well known.

Perhaps the Minister could outline them.

I cannot go through them all at this stage.

Does the Minister intend to franchise out buses as well as routes?

The mechanisms which could be used to achieve the objectives we have set ourselves are many. In the recent talks, which were not concluded before the breakdown occurred, a number of formulae were discussed as to how we might deal with the issue to which the Deputy refers. A number of formulae are available. I do not believe it would be helpful if I tried to outline a particular formula at this point. I am happy to talk with trade union representatives about the different formulae available to allow us to reach the objective I have laid down.

The Minister has an open mind on the matter.

I have chosen my reply carefully. I am open to additional suggestions provided they are directed at achieving the same objective. I am also open to reasonable proposals relating to the pace of the introduction of competition as long as this objective is achieved in an acceptable timeframe. The objective is an orderly and managed opening of the markets in a way that new entrants can take part in it.

James Breen

Question:

125 Mr. J. Breen asked the Minister for Transport the reason Bus Éireann has not been given permission to incorporate Shannon Airport on its hourly service from Galway to Cork, having made an application in April 2003; and if he will make a statement on the matter. [2165/04]

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On 25 September 2003, my Department received a notification from Bus Éireann proposing to divert all its existing hourly services between Galway, Limerick and Cork to operate via Shannon Airport. Bus Éireann informed my Department that it was evaluating the timetable for the proposed route and would forward it in due course. On 10 November 2003 my Department received the revised timetable for the proposed service.

Following an initial examination of the notification, my Department identified one licence application from a private operator for services on and along the same route which was received prior to the Bus Éireann notification. Applications and notifications are dealt with on a first come first served basis and, accordingly, a decision must be made on the prior application first. That application has been processed and a decision is expected shortly. My Department has been in contact with Bus Éireann to advise it of the position and the Department will revert to Bus Éireann as soon as a decision has been made on the application concerned.

Does the Minister agree that a private operator will not be able to provide the same level of service as Bus Éireann? Does he agree that, if Bus Éireann is given the contract, there will be 13 services a day from Galway to Shannon and 13 from Cork? This would link the west, the mid-west and the south with an international airport and would make Shannon quite viable. Will the Minister confirm his commitment to Shannon and sanction this service without further delay? I am surprised that his Department is taking so long to make a decision on this matter.

I cannot understand how a private operator could provide a better bus service to Shannon Airport than Bus Éireann. Let us imagine a situation where 26 services, 13 from Cork and 13 from Galway, would be provided each day to Shannon. People from Sligo, Derry, the west coast, Cork, Kerry, Waterford, part of Wexford, Kilkenny and Tipperary would use this international airport. Will the Minister ensure that the contract to provide the service is awarded to Bus Éireann?

I share the Deputy's view on the objective of supplying Shannon Airport with the best possible bus service and the maximum practical number of bus services. This case is well known and has a long history. It is important to state that, until two years ago, with the exception of a small number of services, there was no consistent overall service to Shannon Airport. I share the Deputy's objective of ensuring that the maximum number of bus services are provided between Galway and Shannon Airport. Galway city is now a big catchment area for Shannon. I am committed to developing the road between Galway and Shannon in order that the latter can encompass the former in its catchment area for transatlantic business in particular. We will make a decision on this matter soon.

It is important to note that we operate under the 1932 Act, which, as the Deputy is aware, I am determined to have amended. The legislation must be updated as quickly as possible. It is also important to point out that this is an expressway service. Some 50% of the entire expressway service for the country is open to public and private companies. Bus Éireann has about 50% of the expressway market in Ireland. Incidentally, it is substantially profitable for Bus Éireann and the company does a good job in a sector that is highly competitive.

We will make a decision on this issue as quickly as possible. My aim relates not to the owner of the bus but to ensuring that Shannon Airport has proper infrastructure and a good bus service from the Galway region. There is great business for Shannon in Galway.

Denis Naughten

Question:

126 Mr. Naughten asked the Minister for Transport his plans for competition within the bus market; and if he will make a statement on the matter. [2422/04]

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The reply to this question is identical to the reply to Question No. 124.

I will take the reply as read. The Minister said earlier that he is open to suggestions once the same objective is reached. What is that objective? Does the Minister want 250 additional buses in Dublin or does he wish to change the livery on the sides of the existing buses? In other words, will Dublin Bus buses be handed over to private operators? It is a simple question.

With regard to the franchising of routes, is it the Minister's priority to save money or to improve the quality and level of service provided to the consumer? It was clear from the discussions Deputy Shortall and I attended in London that it is not possible to improve the service with the same level of funding. The Minister also talks about opening inter-city routes to competition. Is it his intention to have a single operator on the inter-city routes between Dublin and Galway, Dublin and Cork and so forth?

I dealt with the inter-city situation. They are, as a result of the 1932 Act, almost fully deregulated now. That is the expressway system.

There will not be a single operator.

There cannot be. The expressway system is operated under the 1932 Act and that has led to approximately 50% of the market being opened. As I have previously pointed out to the trade union movement, if we do not make some progress, the 1932 Act will bring about a completely deregulated situation, which nobody wants. I do not recommend that. However, it has led to a 50% opening of the inter-city and expressway market. The objective of the process is the opening of the market to new entrants.

It is a simple question. Will there be 250 additional buses in Dublin city or will the livery on existing Dublin Bus buses be changed? Will there be more buses or will the Minister hand over or lease some of the Dublin Bus fleet to private operators? There is a significant difference.

As I explained to Deputy Shortall, there are a number of mechanisms and formulae and we have been discussing these with the trade unions recently. We will continue to do that if we can have further discussions. The use of phrases such as "handing over", which I have read in reports, is not helpful to the process in which we are now engaged. One could equally say the same about air routes and the like.

One could use the word "leasing". The Minister can use whatever word he wishes.

It is not a matter of taking from something but whether, between us, we can examine a market that belongs to the public and consider whether different entrants can contribute to growing that market and, in so doing, provide more employment and encourage more people out of their cars and onto public transport.

The Deputy referred to London and I have some figures which might be of interest. London experienced the highest ever number of passengers on buses in 2002——

It was the highest ever cost.

The subsidy per passenger is down and the overall subsidy is up.

It is set to double within the next five years. It is accepted that it must be properly subsidised.

I will not get into that now. I can publish this at the appropriate time but the facts and figures show that the London bus system is considered to be highly successful. The buses run 24 hours a day, seven days a week, and the number of passengers has grown dramatically since franchising was introduced. The subsidy per person has been reduced. If the objective is to get more passengers, the experience in London, although not in the rest of Great Britain, has been hugely successful.

In Helsinki, public transport costs have fallen by 29% and demand for buses has increased by 10%. Passenger numbers have increased by 20%. I have similar examples from Copenhagen, Stockholm and many other countries.

We have all those statistics. If I want statistics, I will contact the Central Statistics Office.

The Deputy asked me about statistics.

No, I did not.

The Deputy does not want figures.

I asked a simple question. By not answering it the Minister has given me the answer. I did not ask for statistics.

When will the Minister appoint the regulator and will that require legislation? When will integrated ticketing be in place? This has been promised since 1994 and the Minister said he wanted it to be in place prior to competition being introduced. What is the timescale for the introduction of competition? Is it not the case that what the Minister proposes will not improve the level of service to the customer? We need additional buses and additional services in Dublin. Handing over or leasing buses from Dublin Bus to private operators will not improve the quality and level of service in the short to medium term.

Legislation is required to appoint a regulator and that will be in the public transport reform Bill which is promised for 2004. Other legislation, namely, the companies Bill, is also promised for 2004. The Rail Procurement Agency is working on integrated ticketing and, by the end of this year, should be in a position to make substantial progress on it. I have referred to the timescale for the legislation. With regard to a better service, my only motivation in this endeavour is to grow the market.

It is to save money.

It is to grow the market. I remain committed to the view that a number of entrants into a market tends to increase its size. That is the international evidence. I look forward to having discussions with the unions.