Fergus O'Dowd (Louth, Fine Gael)
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Question 35: To ask the Minister for Transport if the failure to decide on a charge for passengers using Terminal two is having an impact; and if he will make a statement on the matter. [27259/10]

Noel Dempsey (Meath West, Fianna Fail)
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The Dublin Airport Authority has statutory responsibility for the operation of Dublin Airport.

While the Government mandated Dublin Airport Authority to develop terminal 2 and undertake the other elements of the current investment programme as part of a long-term strategy for investing in the airport's capacity, airport operational issues such as the number of airlines that will use terminal 2 are the responsibility of the Dublin Airport Authority.

With regard to a charge for passengers using terminal 2, the Commission for Aviation Regulation regulates airport charges levied at Dublin Airport.

Fergus O'Dowd (Louth, Fine Gael)
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The key problem is that terminal 2 cost over €600 million to build. The Minister commenced an operation in his Department to have competitive tendering for the right to run the terminal. In that context, Dublin Airport Authority did not have to go through the initial phase. It entered at the second stage and was in a position to compete against any player successful in the first phase. At least three significant international players in airport management, many of whose airports are much bigger than Dublin Airport, entered the first phase but none of them came through the process. This meant Dublin Airport Authority had no competitor to take on the running of terminal 2. Will the Minister clarify whether he then decided that if a sufficiently strong business case could be put to the authority by the Department, he would fix or agree on an operational cost? The key point is this there is no clarity about how many international airlines will use terminal 2 and we must get a return for our money. How can the Minister drive that agenda forward given the monopoly position of Dublin Airport Authority which, without competition, will decide what it will charge?

Noel Dempsey (Meath West, Fianna Fail)
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There is a fundamental misunderstanding in that Dublin Airport Authority, much as it would like to, does not decide what it will charge.

Fergus O'Dowd (Louth, Fine Gael)
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It must present a plan.

Noel Dempsey (Meath West, Fianna Fail)
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It presents the plan. The regulator forensically goes through the plan and decides, on the basis of it, what he will allow to be charged against the cost, what expenses are allowed, whether it is being operated in an efficient manner or whether there is "fat" in the system, etc. After every determination - I have been in this position for a couple of them - the airport is never satisfied and the airlines are never satisfied. At this stage, it is probably reasonable to argue that the regulator gets it reasonably right. If Dublin Airport Authority is inefficient or ineffective, the regulator is there to ensure that it does not get rewarded for that.

In fairness to Dublin Airport Authority's management and union, they have sat down and agreed new fairly radical work practices, changes, etc., which make their operations much more effective and they will carrying those practices into terminal 2. In a situation where there is only one airport, it is regulated and the regulator looks after the competition element.

On the competition that was run, the method chosen was to ask the Dublin Airport Authority to give its price, to ask others to bid and if another's price was cheaper than the Dublin Airport Authority, if the other had a legal bid in, then the other would get it automatically.

We did not get beyond the first stage of that, as I explained previously in this House. Deputy O'Dowd is correct that there were quite a number of operators who applied for this, but none of them met the financial or other criteria laid down. I had no choice but to make the decision to allow Dublin Airport Authority confirm to me that it could do this within the regulated price, and at this stage it has done so.

Fergus O'Dowd (Louth, Fine Gael)
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The point is encapsulated in what the Minister stated. He acknowledged, as we all do, that there were international players and it does not make sense that they failed the test they were put through. I am not saying there was anything but a bone fide assessment of that. It does not make sense that people who run multiple international airports right around the world did not pass an assessment. None of them passed it. That does not make sense when they are already doing the job elsewhere. I am not suggesting there was anything mischievous or wrong in the assessment or the tests themselves.

It does not make sense that none of these guys could get through. We do not know the prices they quoted. We do not know whether or not these major international companies would have been cheaper than the DAA. That is the crux of the issue, that after all of this process there is no competition and we do not know why these major international companies fell at a particular fence. As I understand it, although I do not have full knowledge of this, it was not on their ability to run an airport, their financial structure or their organisational capacity that they did not pass. It does not make sense.

I would be concerned at the present situation. Notwithstanding the regulator, how can one benchmark a company that is a State monopoly? Against what is the regulator benchmarking the DAA, except the operation of these private companies in other international airports? It is a mess and the problem is there is an inadequate number of other airlines who would use it for international travel and they are not committed to going into it as a result.

Noel Dempsey (Meath West, Fianna Fail)
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To my knowledge, there are no legal contracts entered into in the case of terminal 2 but that is only because discussions have not terminated.

On Deputy O'Dowd's other point, this process was an unusually one, not one on which people have a firm grasp. We had independent advisers advising us on this. We set down a certain number of criteria which bidders had to meet in order to be able to submit a tender. It did not get to the tender stage. They had to satisfy what was like an expression of interest for the tender.

While some of the companies of which we speak were involved in running airports in other countries, in some cases the financial backup was not being provided by these international companies to the companies or sub-companies which were bidding, and financial criteria did play a large part in this in that we were not satisfied.

Fergus O'Dowd (Louth, Fine Gael)
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Some of them were among the biggest companies in the world.

Noel Dempsey (Meath West, Fianna Fail)
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It is no good that they are the biggest companies in the world if one has no recourse to their finances. If one of the big international operators submitted an expression of interest in this, and it was the international branch of the firm that did so, I am sure it would have met the financial criteria, but that is not the way they did it. They had subsidiary companies bidding and some of them did not meet the financial criteria. The criteria they had to meet were clearly laid out and none of them met the criteria. There was no choice in this. Deputy O'Dowd is not privy to the detail of it, but they did not meet the criteria. Particularly with the strong advice that I got, there was no way that I could ignore criteria set down that were independently adjudicated on. Once the criteria were not met, one could not go ahead with the tender.