I propose to take Questions Nos. 553 to 555, inclusive, together.
The intention of the free travel scheme is that it should not confer any real financial advantage on participating undertakings. Moreover, the scheme’s objectives are of a social character and the benefits involved are targeted at individual consumers. The mechanism used to deliver those social character benefits to passengers requires participation by transport undertakings. Commission Regulation (EC) No 794/2004 of 21 April 2004 mentioned by the deputy, refers to changes in State aid and is therefore not applicable in the context of a scheme which does not constitute State aid.
It is the clear understanding of successive Irish Governments that the free travel scheme is compatible with Article 107 of the Treaty on the Functioning of the European Union (TFEU). In this regard:
a) Undertakings participating in the free travel scheme have a clearly defined responsibility to provide free travel to beneficiaries of the scheme whereas non-participants have no such obligation;
b) Compensation under the scheme is calculated in advance on the basis of fares foregone at a reduced rate to take account of travel generated by the free travel scheme. The objective is that compensation payable should not exceed what is necessary having regard to the costs incurred;
c) Those operators which participate in the scheme receive a payment significantly below the standard fare whereas those operators which do not participate in the scheme are free to charge the full fare for all passengers.
As the free travel scheme is not intended to provide a profit to operators, payment under the scheme is not an “advantage” in State aids terms but merely compensation for the additional costs incurred. For these reasons the free travel scheme is not considered to be incompatible with Article 107. It pursues a social objective of the type identified in Article 107(2) (a) TFEU.
In any event, the scheme has been in operation since 1967, before Ireland joined the European Communities in 1973. Therefore, even if the scheme did amount to State aid (which, of course, is not accepted by successive Irish Governments) it would be “existing” aid under Articles 17-19 of Regulation 659/1999. The question of informing the EU Commission does not therefore arise.
The contractual arrangements in place with participating transport operators, including CIÉ companies, are on the basis of agreements set out in exchange of letters, rather than a formal contract. This practice is not uncommon, and indeed is used by the EU itself. Participating companies are obliged to accept passengers in possession of a valid free travel pass. There have been no changes to this obligation since 1997. The Department carries out surveys to ensure that companies meet their obligations.
Last year a letter was issued to all transport operators participating in the free travel scheme prior to the launch of the Department’s public services card incorporating the free travel variant. This letter required them to submit the following documentation:
1. Current Tax Clearance Certificate;
2. A National/International Road Passenger Transport Operator’s Licence as issued by the Department of Transport;
3. Regular service Licence as issued by the National Transport Authority for all bus routes in the Free Travel Scheme;
4. PSV licences in respect of each of the buses on which they carry free travel pass holders;
5. Motor insurance policies which indemnified the Minister for Social Protection against any claims, causes or actions arising out of any accident involving free travel pass holders while embarking, travelling on or disembarking from their buses;
6. A Public Liability Insurance Certificate;
7. Fares structure/s and timetables.
Companies were reminded of their requirement to notify the Department of any change in the level of service which they provide, ensuring at least one month's prior written notification of their intention to cease or modify their bus operations on any route. On foot of this, a range of operators across the State were inspected on the ground by Department officials. To ensure that the service as agreed is available, each operator was communicated with for confirmation (by signed declaration) of routes and timetables as agreed with the Department. Any operator found in the course of the inspection not complying fully with the terms of their agreement, will be inspected further and action will be taken to stop their payments and recover any overpayment from when they actually ceased to operate a particular route.
