Dáil debates

Wednesday, 7 November 2007

8:00 pm

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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I welcome the tendency of the Minister of State to ad lib some of the reply to the question. This may keep the reply relevant because the reply often consists of a list of things that have nothing to do with the issue.

Photo of Noel AhernNoel Ahern (Minister of State with special responsibility for the Office of Public Works, Department of Finance; Dublin North West, Fianna Fail)
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The Deputy should not hold his breath.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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I feel like a broken record raising this matter. The Cork Airport issue is an embarrassment. It is holding up the separation of Cork Airport, in terms of ownership and management, from the Dublin Airport Authority. We have a brand new terminal that has been operating for more than a year but we still have no idea how it will be paid for. A debt of €220 million is attached to the development and no one knows who will pay for it. That is a farcical situation and it has serious implications for the Dublin Airport Authority and its counterpart in Cork.

The Cork Airport Authority was asked by the Government to draw up detailed business plans regarding how it intends to carry the airport forward. However, the authority does not know the level of debt it will be obliged to shoulder as part of that proposal.

This is a political decision. I remind the Minister of State of the history of the Cork Airport debt. The decision, with which I agreed at the time, to split Aer Rianta and separate Cork, Shannon and Dublin airports from each other in an effort to promote competition and a degree of independent thinking and decision-making among them so that all three could prosper, was controversial for Cork because the Government had made a commitment, through Aer Rianta, to build a new terminal there. The authorities at Cork only agreed to the proposal on the understanding that the airport, when it became independent of Dublin, would not be saddled with a huge debt that would place it in a competitively disadvantageous position.

A political deal was done and it was confirmed by the Taoiseach in the Dáil, and in writing by the then Minister, Deputy Brennan, and on the record. The basis of this deal was that the new Cork Airport terminal would be given, on a debt-free basis, to the new airport authority. This would mean that the authority would commence operations without being obliged to shoulder significant debt.

Dublin Airport, which was Aer Rianta's cash cow at the time, agreed to take on the debts attached to both Cork and Shannon and was compensated by being given the asset bases of the Great Southern Hotel Group, which it subsequently sold for €230 million — more than the entire debt attached to Cork Airport — and Aer Rianta International, which owned a number of airports and duty free shops abroad.

Anyone who suggests that this issue is as simple as asking Dublin to pay for Cork does not know what they are talking about. That is not the crux of the matter. A deal was done that was fair to both sides. The Dublin Airport Authority was to take on the debt attached to Cork and Shannon and was more than compensated for doing so by being given the assets to which I have referred.

As a result of lobbying by the Dublin Airport Authority, which has convinced the Cabinet that Cork can shoulder a fair share of its own debt, the most recent proposal from the Government is that Cork should carry €100 million of the debt while the Dublin Airport Authority will carry €120 million. That is a blatant breach of a political commitment made to the Cork Airport Authority and the people of the area. A resolution has not been reached and we have reached a stalemate as regards independence for Cork, Dublin and Shannon. I hope the Minister of State will provide a timescale in respect of the resolution of this matter.

Photo of Noel AhernNoel Ahern (Minister of State with special responsibility for the Office of Public Works, Department of Finance; Dublin North West, Fianna Fail)
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I thank Deputy Coveney for raising this matter. The State Airports Act 2004 provides the framework for the establishment of Shannon and Cork as independent airports. As part of the airport restructuring process, the boards of Cork and Shannon airports are required to prepare business plans for eventual separation. Due to the fact that they are interlinked, the production of the three airport business plans will have to be co-ordinated by the Dublin Airport Authority, DAA, to ensure overall coherence, before they are submitted to the Ministers for Transport and Finance for approval under the Act. In their examination of the plans, both Ministers will have to be satisfied that the airports have the capacity to operate on a sound commercial basis before giving final approval to them.

The Minister for Transport understands that the Dublin Airport Authority has been advised by consultants on an appropriate financing proposal that would facilitate the statutory objective of the separation of Cork Airport from the DAA in a timely manner, consistent with the requirements of the State Airports Act 2004 and the Companies Acts. The Minister is aware that the outcome of this analysis was that Cork Airport could sustain a certain level of debt while remaining a very viable enterprise.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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That was not the deal.

Photo of Noel AhernNoel Ahern (Minister of State with special responsibility for the Office of Public Works, Department of Finance; Dublin North West, Fianna Fail)
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The Deputy stated that the airport has a new terminal which was provided at a cost of over €200 million.

The Minister understands that the board of the Cork Airport Authority also engaged consultants to examine further the issue of the Cork debt. Clearly, the debt issue is crucial to the business planning process and there will have to be agreement on this point between the Cork Airport Authority and the Dublin Airport Authority before the Cork business plan can be completed and submitted to the two Ministers.

The Government's position is that the funding of the new terminal and other works at Cork Airport will have to take account, not only of what is commercially and financially feasible for Cork Airport, but also what is commercially and financially feasible for the Dublin Airport Authority. If the Cork Airport Authority is to achieve autonomy in the foreseeable future, it will have to accept responsibility for a reasonable portion of the outstanding debt in return for the substantial assets to be transferred to it on separation.

As already stated, the agreement of the DAA will be central to the conclusion of the business planning processes for both Shannon and Cork.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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In other words, the Dublin Airport Authority will make the decision.

Photo of John O'DonoghueJohn O'Donoghue (Ceann Comhairle; Kerry South, Ceann Comhairle)
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This is not the time for debate. The Minister of State, without interruption.

Photo of Noel AhernNoel Ahern (Minister of State with special responsibility for the Office of Public Works, Department of Finance; Dublin North West, Fianna Fail)
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Accordingly, the Minister has encouraged the Cork Airport Authority to engage with the DAA on its business plan and, in particular, on the issue of the debt in order to pave the way for eventual autonomy for Cork.

The Minister for Transport recently met with Mr. Joe Gantly, chairman of the Cork Airport Authority, and reiterated the Government position that the procedure for the separation of Cork and Dublin airports is laid out in the State Airports Act 2004. That is the important point.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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When will it come into force?

Photo of Noel AhernNoel Ahern (Minister of State with special responsibility for the Office of Public Works, Department of Finance; Dublin North West, Fianna Fail)
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The relevant process and procedures are contained in the legislation and everyone is bound by them.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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What about the commitment that was made?

Photo of John O'DonoghueJohn O'Donoghue (Ceann Comhairle; Kerry South, Ceann Comhairle)
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This is not the time for debate.

Photo of Noel AhernNoel Ahern (Minister of State with special responsibility for the Office of Public Works, Department of Finance; Dublin North West, Fianna Fail)
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The Minister looks forward to a pragmatic and constructive engagement by all concerned which will facilitate an agreed business plan being submitted to him. When this occurs, he, along with his colleague, the Minister for Finance, should be in a position to consider the Cork Airport business plan. It is the responsibility of both airports, bearing in mind the provisions of the legislation, to arrive at an arrangement regarding a reasonable package that the two Ministers can approve.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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However, the Dublin Airport Authority holds all the cards.

Photo of P J SheehanP J Sheehan (Cork South West, Fine Gael)
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Is the Minister of State going to stand up for what the then Minister for Transport said when he turned the sod on the extension project in 2004, namely, that Cork Airport Authority would start out debt-free?