Dáil debates

Thursday, 16 February 2012

4:00 pm

Photo of Willie O'DeaWillie O'Dea (Limerick City, Fianna Fail)
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Question 10: To ask the Minister for Transport, Tourism and Sport his views that Aer Lingus is a strategic asset; his further views that the Heathrow slots are a strategic asset; and if he will make a statement on the matter. [8567/12]

Photo of Leo VaradkarLeo Varadkar (Minister, Department of Transport, Tourism and Sport; Dublin West, Fine Gael)
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The question refers to Aer Lingus and whether it is a strategic asset, as well as my views on the Heathrow Airport slots. Aer Lingus is a PLC, a public limited company, and the Government only holds a 25% equity stake in the company. Consequently, Aer Lingus as a company cannot be considered to be a State asset. The minority stake is, however, an asset but is not considered to be a strategic one. The Government does not control the company, nor does it appoint the chairman or a majority of the board members.

Historically, much connectivity was provided to Ireland via Heathrow airport because routes from Ireland to Heathrow were among the earliest to be developed. However, many other options are now available.

The importance of the Government's minority stake in Aer Lingus has also changed over time and market developments, including the dissolution of the employee share ownership trust, ESOT, have had an impact. The Government stake is not sufficient to block either the sale or lease of a Heathrow slot by Aer Lingus to another body.

The McCarthy report recommended that the Government dispose of its shareholding in Aer Lingus "as soon as is opportune". No decision has yet been taken by Government in this regard.

Photo of Timmy DooleyTimmy Dooley (Clare, Fianna Fail)
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I am amazed by the Minister's response. I am truly taken aback that he does not see the important connectivity between this country and the United Kingdom as being of strategic interest. I accept that Aer Lingus is now a private company but I certainly do not accept that the portion owned by the State is not of strategic importance. Neither do I accept that the slots at Heathrow are not of strategic benefit to this State because they most certainly are.

Photo of Seán BarrettSeán Barrett (Ceann Comhairle; Dún Laoghaire, Ceann Comhairle)
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I am sorry Deputy, but you have a time limit.

Photo of Timmy DooleyTimmy Dooley (Clare, Fianna Fail)
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I might remind the Minister that during the last Dáil's term, his party made life difficult for me and others in the mid-west region when Aer Lingus took a business decision to remove the Shannon-Heathrow connection, which was of major importance. A lot of people worked to ensure that that route was reinstated. If, however, the Minister is now suggesting that there is no strategic importance in retaining the Heathrow slots, which facilitate access both from Dublin and Shannon, it is a massive U-turn on the part of the Government and will be of significant interest to many people.

Photo of Leo VaradkarLeo Varadkar (Minister, Department of Transport, Tourism and Sport; Dublin West, Fine Gael)
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With respect, the Deputy is now trying to change the question, but I have answered the question he asked. When Aer Lingus pulled the services from Shannon, the 25% shareholding was not sufficient for the then Government to change that decision. Therefore the holding of that 25% stake was not strategic because the Government of the day could not do anything to change the decision. The Deputy is now indirectly asking whether the 25% stake allows us to prevent Aer Lingus from disposing of those slots at Heathrow or leasing them to another airline. I am telling him that it does not.

Aer Lingus can lease or sell the Heathrow slots if it wants to, regardless of the Government's minority shareholding. Leasing the slots to another airline, which is normal practice in the aviation industry, does not require a special resolution and therefore the State's shareholding is not sufficient to prevent it. Because of the dissolution of the ESOT, the Government no longer has a blocking minority to block the sale of those slots. In many ways, however, the sale is irrelevant because they could be leased anyway regardless of a special resolution. That is probably something that was not understood or anticipated by the previous Government at the time of privatisation.

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I accept that having only a minority shareholding in Aer Lingus affects the Government's ability to maintain the air link with Britain as a strategic State-owned asset. It is difficult not to see, however, how in an island nation transport links to our nearest neighbour cannot be described as a strategic asset. Can the Minister say what in his area is considered a strategic asset? I wonder whether our ports and harbours are considered to be strategic assets.

Photo of Seán BarrettSeán Barrett (Ceann Comhairle; Dún Laoghaire, Ceann Comhairle)
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We are not straying from the question.

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Are they up for consideration in terms of possible sale after the recommendations of the McCarthy report and the troika?

Photo of Dessie EllisDessie Ellis (Dublin North West, Sinn Fein)
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I was always opposed to the sale of Aer Lingus and the way in which it was sold off. We have a 25% stake but I do not accept that the Government has no influence. The Minister is playing with words given the way the question was put.

Photo of Seán BarrettSeán Barrett (Ceann Comhairle; Dún Laoghaire, Ceann Comhairle)
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A question please.

Photo of Dessie EllisDessie Ellis (Dublin North West, Sinn Fein)
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Does the Minister agree with selling off the Heathrow slots? It has also been said that the Dusseldorf slots could be sold off to fund the pension deficit. Will the Minister comment on that because there is a substantial amount of money involved?

Photo of Seán BarrettSeán Barrett (Ceann Comhairle; Dún Laoghaire, Ceann Comhairle)
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That is a separate question.

Photo of Dessie EllisDessie Ellis (Dublin North West, Sinn Fein)
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It is part of it and I think it is very relevant.

Photo of Seán BarrettSeán Barrett (Ceann Comhairle; Dún Laoghaire, Ceann Comhairle)
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This is about Heathrow.

Photo of Dessie EllisDessie Ellis (Dublin North West, Sinn Fein)
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Aer Lingus is a brand name of which we are all proud. It has represented this country for many years.

Photo of Timmy DooleyTimmy Dooley (Clare, Fianna Fail)
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The Minister might be aware that he has the capacity to appoint two or three people to the board of Aer Lingus. My understanding is that, in the past, the Government gave a particular mandate to those directors as regards strategic decisions by the board, requiring them to take into account the notion of regional development. While I accept it is not possible to encumber board members on their appointment - they must put the company's interests to the fore - it is very much part of their remit to ensure that decisions are taken by the board in a manner that examines the strategic interests and needs of the country. I recall that a decision was taken by the board that any decisions similar to those on Shannon or any with an impact on strategic connectivity would have to be made by it rather than management. The Minister might recall that, on that occasion, the Government said a decision taken at management level could not be overridden by the board, and that the Government had no means of forcing this to happen other than through the bringing about of an emergency general meeting. It was not clear how the latter would pan out.

The Minister has the capacity to influence the usage or trade in key strategic slots. It should be exercised through board appointments.

Photo of Leo VaradkarLeo Varadkar (Minister, Department of Transport, Tourism and Sport; Dublin West, Fine Gael)
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The question relates to assets. To have an asset, one must own it. The Government does not own Aer Lingus or the slots and, therefore, the company cannot be considered to be a strategic asset. Of course, links between Ireland and Britain, and specifically between Dublin and Heathrow, are of strategic importance, but they are not strategic assets. One does not have to own something for it to be important. The sea link between Rosslare and the United Kingdom is of strategic importance but the Government does not own it. It is possible, therefore, to have something of strategic importance without actually owning it.

Board members can have some influence on decisions but Aer Lingus is a public limited company. Therefore, their primary responsibility must be to the company's fiduciary interests and not to the person who appoints them. It is important to bear in mind that not only is Aer Lingus not selling slots, it has actually leased additional ones from BMI to enable it to increase its capacity. That is where the market is. It is not about selling slots but about leasing new ones.

On Düsseldorf airport, Deputy Ellis is probably referring to the minority stake that the DAA holds at that airport rather than the Düsseldorf slots. I read a story in The Sunday Business Post, which I am sure Deputy Ellis also read, which suggested that SIPTU or its representatives were interested in selling that asset to recapitalise the pension fund. I do not know if it is accurate. I welcome the support of the largest trade union in this State for selling non-strategic State assets, but there may be a better way of using the money to the benefit of the public than by replenishing a pension fund.