asked the Minister for Tourism and Transport if his attention has been drawn to the fact that there was a recent exclusive agreement between Aer Rianta and Aer Lingus on the handling of passengers and luggage from foreign airlines at Dublin Airport; if the purpose of this exclusive agreement is to prevent independent Irish airlines from being involved in these functions; and if a derogation has been sought from EC competition policy for the agreement.
Ceisteanna—Questions. Oral Answers. - Ground Handling Arrangements.
9.
New arrangements in relation to ground handling at Dublin Airport were introduced recently. The main features of the new arrangements involve:
(i) a formal agreement between Aer Rianta and Aer Lingus under which the latter have been granted sole rights to engage in ground handling for third party carriers for a period of three years;
(ii) a substantial reduction ranging to over 30 per cent depending on aircraft type on the published charges for ground handling which previously applied;
(iii) a formal mechanism under which carriers who are unhappy with the standard or cost of the service offered or provided by Aer Lingus can appeal to Aer Rianta. The responsibility of Aer Rianta in this regard is to ensure that the Aer Lingus service is efficient and reasonably priced and their findings on any appeal are binding on Aer Lingus;
(iv) continuation of the right of any carrier to engage in handling its own aircraft;
(v) permission for a carrier already engaged in self-handling to handle for any carrier for whom he acts as general sales agent;
(vi) carriers engaged in self-handling may be allowed by Aer Rianta to co-operate in relation to the sharing of equipment, etc.
The purpose of the new arrangements is to ensure the availability of an efficient and reasonably priced ground handling service for all the carriers using Dublin Airport and to maintain the high operational and safety standards of the airport.
Many of the features of the revised arrangements are entirely new. In particular I am satisfied that they represent a significant improvement on the situation which existed previously and that the changes will substantially benefit all the carriers using Dublin Airport, including the independent Irish airlines involved.
It was not necessary to seek a derogation from EC competition policy in respect of the new ground handling arrangements. The Council of the European Communities has already decided that certain categories of agreements and practices in the air transport sector, including those relating to ground handling, should be exempted from the competition provisions of the Treaty of Rome and the Commission is at present drawing up regulations in this regard.
Was there competition for these handling rights?
As far as I know the arrangements was made between Aer Lingus and Aer Rianta, and submissions from other private airlines were received.
Would I be correct in saying that there was no competition? I suspect that there was no competition. Considering this is a very lucrative operation and that activities on the ground at airports account for 25 per cent of the overall ticket price, surely the Minister should be extremely concerned that there would be competition to ensure that the most competitive operator gets the contract.
I agree with the Deputy that this is a very important matter. It is so important that we had a detailed and comprehensive examination of the whole area of ground handling which concluded in December 1987. The two other independent airlines and their position with regard to the provision of full ground handling service was discussed and assessed at that time. The revised arrangements I have outlined in detail in my answer resulted from that examination and the Deputy can be assured that in enforcing the 30 per cent reduction we were fully conscious of the points he has made.
The point I make is that this seems to be a nice cosy arrangement between two State bodies and that other Irish airlines are not being given an opportunity to tender for this type of operation, which, as I pointed out earlier, is very lucrative and must assist an airline in making profits and in operating. I would appreciate if the Minister bears this in mind and sees that everybody is given a fair crack of the whip. Competition has led to lower air fares to and from this country. If the handling charges are not competitive it will lead to inflated prices because of their input into the overall fare structure.
I accept what the Deputy says, and that it is important to get the very best value from the particular service. It was because of its importance that I had a detailed examination and review made, out of which these new rules came. If it were a cosy arrangement before, then it is 30 per cent less cosy now.
That speaks for itself.
The other air companies in the country were assessed as to their capability of providing the full service and the conclusion was that they were not.
Have there been objections from any of the other airlines to this arrangement, which seems to have been made privately?
To my knowledge there was no objection to the new arrangement but there were certainly objections before the new arrangements came into force.
The charges were brought down by 30 per cent.
Question No. 10 has been disposed of. Let us now deal with No. 11.