Wednesday, 26 April 2006
State Airports: Motion.
That Seanad Éireann:
—noting the commitment of the Government on 10 July 2003 that following the break up of Aer Rianta, "Shannon and Cork are being given a new debt free start" and that "the existing debts associated with both airports, including the debt associated with the major new investment programme at Cork, will not be assigned to the new companies";
—alarmed by the current equivocation of the Government on the debt status of Cork and Shannon airports;
—aware that the threatened debt burden threatens the future viability of both Cork and Shannon airports;
—calls on the Government unequivocally to renew the commitment entered into on 10 July 2003 and allow Cork and Shannon airports to "commence business free of debt".
During my time in this House, I have rarely moved motions that have a local resonance for the area in which I live. It has not been my style. However, sometimes one is confronted with such a blatant act of misgovernment which applies locally that one has no option. I rarely bother wasting my time reading out a motion. This motion is essentially concerned with a commitment given by the Government. I could take up the whole of my 12 minutes citing the succession of occasions on which the Government committed itself to a specific course of action regarding Cork and Shannon airports, but I have more to do.
When it first announced its decision to break up Aer Rianta, the Government stated that the existing debts associated with both airports, including the debt associated with the major new investment programme in Cork, would not be assigned to the new company. It also stated that Cork and Shannon airports would be allowed to commence business free of debt and so on. I do not think anyone believed the Government at the time, except the ideologues in the business press who always believe that doing something with a State company is an improvement because they believe State companies are no good, therefore, if one does anything, it must improve them. Following the Eircom debacle, and the skilful capacity of that company, recognised by the international financial press, to outmanoeuvre our regulator, one would have hoped that we might have learned that sometimes State companies, however slow-moving, can at least be told to do things.
I could recite more quotations but I do not wish to do so. The Leader of the House said that the legislation which brought about the break-up of Aer Rianta was rushed, premature and not so good. As leader for the Government, she had to be restrained, but what she said was a good brief summary.
However, one statement deserves to be put on the record:
This is unnecessary legislation which is badly conceived and badly thought out. I very much regret that it will inevitably pass in this House this week and eventually become law despite the many reservations about it on all sides of the House. If we pass this Bill, it will be a bad day for Ireland, and a very sad note on which to end this session. I believe the Minister has some reason that he has not told us about. I hope he will break it to us before the end of this session.
This is a politically charged statement, which is pointed and blunt. It sounds like something I would say. The Minister, Deputy Cullen, is used to me saying such things, and worse. However, that statement was made by my colleague, Senator Quinn, who is a very successful figure in the Irish business world. He is a champion of private enterprise and a great believer in the value of competition. Nevertheless, he is profoundly wary of this policy. I do not think the Government should be guided always by Senator Quinn but it would have been worthwhile to have a specific response which would satisfy the business judgment of a person of such proven record and ability. No such response has been given.
What most characterises the Government's position since the putative break-up of Aer Rianta is that there was no response other than an assurance that it should be trusted because it knows what it is doing, and somewhere along the way it will get better. We still do not know what motivated the Government. The policy was inherently contradictory from the moment it was announced. I would not have agreed with it but I would have understood a decision to privatise our airports. I would have seen the logic of it. I would have thought it was daft and ideologically driven, but I would have seen the sense of it.
However, the Government imposed a series of constraints on our three international airports and fiddled around with a significant amount of debt to attempt to create an impression that two out of the three airports, which are relatively small, are commercially viable and that the third is so commercially powerful that it could sustain the debt of all three. It ignored advice already available that company law would make what was promised impossible. It talked good and decent people in the Cork region into becoming directors of a company which they now fear is not viable. However I might disagree with it, it would be nice to believe that the decision was based on some kind of forward-looking sense of the role of the private sector, private investment and a thrusting competitive market economy. I could deal with this because I would know if it was successful or unsuccessful. However, this was an attempt to create an impression of thrusting competitive individualised airports, while at the same time dealing with the fact that in terms of crude commercial reality, the scale of the debt and the scale of the turnover meant that the policy was internally contradictory.
Cork Airport has approximately 2.5 million passengers a year. A figure of 2.7 million passengers is predicted for the coming year, but let us look back to when the Minister made his announcement. Cork Airport could be saddled with a debt of €140 million. The Minister may not mention debt at all in his script — it is not mentioned in the amendment. Seanad Éireann needs to amend its Standing Orders so that amendments should at least have something to do with the motion. That is the least service the Government could do to Seanad Éireann, regardless of who is moving the motion. If the Government wants to amend a motion, the amendment should deal with the topic under discussion, because none of us doubts there is significant growth in air traffic. Who argues against that? We did not say there is not such growth. None of us wants to do anything other than commend the board. Its members are doing their best and are public servants in the best sense of the word, for limited reward, because they want to make something successful. We all know there is a need for continued investment and that Cork would benefit from new investment. We also know what the Government said in 2004. However, that is not the issue. The issue is what the Government is doing now. It is an extraordinary fact that the Government ran away from the opportunity to clarify the question most preoccupying business, trade unions and anyone interested in the future of Cork and Shannon airports, namely, what the Government is going to do about the debt.
The Government considered this motion and agreed an amendment which ran away from it. That is what we have had to deal with since this topic first came on the agenda, the running away from the contradiction there from the start. It is not true that the Opposition did not notice it, despite what some journalists might say. We could see there were contradictions. We dealt with the legislation, voted against it, tried to amend it, sought clarity and were refused.
Consider the landing of a debt of €140 million or €150 million on Cork Airport. In the business and commercial world with which I am familiar — the chemical-pharmaceutical processing industry — one would expect to have an investment repaid in two to three years. That is if one is talking of commercial realities as distinct from infrastructural investment, which is the role of the State. In my capacity as a chemical engineer, I would not approve of any investment which would not be repaid within two or three years. If I were to suggest Cork Airport should pay back €140 million in three years, that would be impossible. One would be talking of charging passengers an extra €15 or €20 per passenger per journey, and the airport would close down. So what are we to do? One can reduce the debt but is still tied into company law. One can either reduce the debt or spread it out over a period of time, which will in effect amount to some kind of subsidy to Cork Airport by the Dublin Airport Authority. Either choice will contradict the fundamental plank of public policy, which was to give Cork Airport the autonomy and the commercial space to operate independently. The debt will make it impossible for it to operate commercially. The tie-in to Dublin will prevent it from operating independently, which has happened over the years. Cork Airport was not allowed to open up routes unless Aer Rianta, essentially Dublin Airport, approved. That is what is now handed to Cork Airport, with the prospect for its directors of a major overhang of debt. That debt may well be converted into some sort of lease-back arrangement but will amount to the same thing. The airport will be commercial because it will have to be — if it is not commercial, all the issues to do with corporate governance will arise. If it is commercial it will have to meet commercial criteria, which will represent a premium on the borrowings, because otherwise it is a subsidy rather than a commercial loan.
That is the mess the Government has gotten us into, and it threatens the futures of Cork and Shannon airports. That mess should not be resolved by threatening the future of Dublin Airport. It is no solution to treat that airport, because of its effective monopoly in an area of booming economy with potentially 30 million passengers within a short period of time, as some sort of cash cow to be instructed to fund the other airports.
I hoped the Minister for Transport would attend and I deliberately left out the word "condemn" because I thought the issue was too important to get involved in silly politics. I wanted to hear what the Government intended to do to get us out of a mess into which it got us. Instead we have been given an inept amendment. I could vote for it, but will not. There is nothing in the amendment with which I would disagree. Who could disagree with any word of it? It is quite inept and offers no defence of Government policy, no response to the Opposition. It shows a running away from responsibility.
As I said before in this House, I am tiring of the fact that the occasional motion from the Government side thanks the Government for making a decision, because such decisions are apparently now so rare that it is worthwhile standing up and cheering when they are made. Will somebody make a decision and tell the directors of Cork, Shannon and Dublin airports what the commercial future is, what commercial constraints they must operate within and what restriction will be imposed on them either by the Government, Dublin Airport, or whoever?
I second the motion. If we were to talk of political promises made and not fulfilled, and various commitments made by the Government, particularly with regard to the 2002 manifesto, we would be here for the night. It is important to focus on the matter before us. Particularly with regard to the greater Cork region, where Fianna Fáil had its biggest success in the last general election, winning ten seats out of 20 in Cork city and county, this particular decision stands out well above every other unfulfilled commitment because it has a capacity to seriously undermine the economy in Cork and the competitiveness of Cork Airport.
It is almost three years since the then Minister for Transport, Deputy Brennan, famously made the statement in which he pledged to dismantle Aer Rianta and set up three fully independent autonomous airports, the Dublin, Cork and Shannon airport authorities. I am repeating what he said in his press statement at the time. The promise was of fully independent and autonomous airports under State ownership within a year, yet three years later we are not quite sure what the future holds for those airports. Cork Airport is not guaranteed independence and autonomy, but it now looks almost certain that the decision made by Aer Rianta, within a month of the decision made by Deputy Brennan when Minister for Transport, will mean that the cost of a €140 million terminal in Cork Airport will be borne in part if not in full by Cork Airport Authority.
Senator Ryan made the good point that to get out of this mess, to discover all of a sudden that company law now prohibits the Government from fulfilling its obligation, clearly outlined in a number of statements by Deputy Brennan when Minister for Transport, means the Government is hiding behind company law.
I want the Minister for Transport to address a number of issues. Who in the Department of Transport was advising the then Minister, Deputy Brennan, in July 2000, and what was that advice? From a Cork perspective in particular I find it difficult to swallow the notion that the issue of company law was only discovered subsequent to a decision. This was one of the biggest decisions taken in recent years by any Minister for Transport. It was a major decision, and to be fair to the then Minister, Deputy Brennan, one would have to return again to the manifesto of 2002 and look at the party which pushed for separation of the airports, namely, the Progressive Democrats. That is how far back this issue goes. That was well established and well known by commentators, apart from Opposition politicians.
It is very difficult to accept the reality of the situation when for example Ryanair, as a result of this debacle, has decided to shelve its Cork to Liverpool service. It now flies from Kerry, where costs are significantly lower. Much of the time, I would not agree with anything said by one particular individual in that airline, but I can accept that decision in the context of the statement by Michael Cawley, Ryanair's deputy chief executive, that the increases were having a detrimental effect. It was Michael Cawley rather than Michael O'Leary who said that. That has resulted in the loss of up to 20,000 tourists. The Minister knows full well the location of the airport and its critical importance to the economy of Cork and particularly the tourism economy of Kinsale, including the Beara Peninsula and Mizen Head. There is also a loss of €13 million to the Cork economy.
A certain spin is being pursued by Fianna Fáil in Cork. The spin is precisely this, when the then Minister for Transport, Deputy Brennan, gave his commitment in regard to debt-free status, it related to the debt on the books of Cork Airport Authority in 2003. That is absolute rubbish. To hit that myth on the head I shall read from the Minister's press release when he announced the break up. To say that the debt-free status only applies to the 2003 accounts is incorrect. The then Minister for Transport, Deputy Brennan, said:
When I establish the independent Shannon and Cork authorities on a statutory basis they will both commence business free of debt. The existing debts associated with both airports, including the debt associated with the major new investment programme at Cork, will not be assigned to the new companies but will remain with Dublin Airport.
Clearly that was the thinking of the then Minister for Transport, Deputy Brennan, at that time. It puts to bed the myth that is being spun in the Cork region by Fianna Fáil. Of all the decisions made in regard to Cork and all the commitments made by Fianna Fáil and the Progressive Democrats to the Cork region in recent years, this is one from which Cork will suffer most. Cork Airport will not be autonomous and will not be independent. It is unfair to expect Dublin Airport to consume the debt arising from the new terminal at Cork Airport. We are left with a political mess entirely of the Government's making.
Who advised the then Minister for Transport, Deputy Brennan, in 2003? I presume the same people are advising the Minister in 2006. When was the issue of company law first discovered? Is it inevitable that Cork Airport Authority will have to shoulder all that debt, which is probably upwards of €160 million? I look forward to the Minister's reply.
I move amendment No. 1:
To delete all words after "Seanad Éireann" and substitute the following:
—commends the recent significant growth in traffic at all three State airports and looks forward to further forecast traffic growth that supports Ireland's economic development;
—commends the boards of the three State airport authorities in bringing new dynamism to the development of our State airports;
—recognises the need for continued investment at the State airports to enable all of the airports to grow and expand to meet the needs of the Irish economy;
—notes the benefits to Cork and its hinterland of the major investment in new facilities there and due to come into operation shortly, to include a new terminal building, car parks, and new internal road systems, that will transform the role of the airport and its service to its customers; and,
—notes the Government policy of restructuring the State airports under the State Airports Act 2004, which is designed to enable independent State airports to provide cost competitive services and appropriate infrastructure to meet user requirements, while operating to a commercial mandate and on a basis that underpins each airport's financial sustainability.
I welcome the Minister for Transport, Deputy Cullen, to the House and also the opportunity to speak on the motion. This matter has been in the public domain for some time. It is good the Minister is present to discuss the issue from a Cork and Shannon perspective. The motion is set against a backdrop of significant growth at Cork and Shannon since the passage of the legislation, most of which was of critical importance. The idea of creating more autonomy at Shannon and Cork was welcome at the time. It was welcome because the management structure in place in Aer Rianta prevented basic decision-making at Shannon and Cork which resulted in a lack of movement in the sector to allow for greater use of these airports. There were no decision-making opportunities and no power afforded to the management other than the basic operation of the infrastructure.
It is widely accepted that the establishment of the independent boards has had a significant positive effect not only on Shannon and Cork but on the entire region. Like Senator Ryan, I do not wish to harp on the local element but I am familiar with what is happening at Shannon Airport and I am aware that the number of passengers has increased during the past 12 months to in excess of 1 million. The number is somewhat more when the military traffic is included. Shannon Airport has been very successful. The decision to allow the boards to set their own prices and approach airlines in their own way has been very successful and must be continued. It has also created better conditions for the management to go after new business. In this context I refer to the military business. There has been a significant increase in military traffic through Shannon Airport. My investigations suggest there has not been any more activity across the Atlantic during the past 12 months in the number of troops ferried to and fro.
Rendition is a separate issue. We have talked about that and it is totally separate from the movement of troops. The volume of business is the same but Shannon is winning a greater amount of that business from our friends from Germany, England and other airports because it is able to offer a better service. Management has more control and has greater capacity to react to the needs of the airlines ferrying the troops. That is a positive development. The quality of the service being offered is better. The management team is more adaptable and easier to work with and is able to offer a more affordable service. The Minister has been at Shannon on a number of occasions and will be aware that enormous progress has been made there in terms of growth.
It is widely accepted by management, unions and staff that there is still a requirement to restructure at Shannon. However, we have gone a long way in proving the viability of the airport in terms of identifying ways of increasing the business. There was little point in talking about restructuring until such time as it was made clear to the workers that there was a viable business. In my view that has been achieved. Notwithstanding that, the board and the management must recognise that the workers are protected in legislation. There can be no mandatory redundancies. The best way to deal with that issue is to ensure the business grows sufficiently to accommodate the workers and ensure they have a viable future. That can be done. That there are no compulsory redundancies is not sufficient to stand on that premise. It is critical that the business is grown.
The board and management at the airports, particularly at Shannon, need to engage more with staff on the issue of outsourcing. The catering section has been under fire for some time. The management has been suggesting, through the board, that the only solution is to outsource that component. I disagree. I am not a business expert but having discussed the matter with a number of people who have an interest in this area it is clear there is a viable business in the catering section and the management and the board must be more open to ideas on how that business might be part of a restructured operation. Given that there can be no mandatory redundancies the board will have to work with the hand of cards it is dealt. I hope that happens without delay. There is a need to look at all the alternatives in this area.
The debt-free issue which has been raised by Senator Ryan and others is of critical importance to the development of the business plan. In Shannon it is probably not as big an issue because the board does not believe it will end up with anything other than a debt-free facility. I understand the debt at Shannon is approximately €70 million, which is an historical debt, unlike that at Cork where the debt is more recent. However, that is not to minimise its impact on Cork. My concern in regard to Shannon is that there has been relatively low capital expenditure during the past two or three years. Those who understand the aviation sector will be aware there must be planned upgrade and maintenance of lighting facilities, runways and all the ancillary services to ensure the asset is maintained in order that one does not have to spend a huge amount of money some years hence. Capital expenditure of approximately €8 million is needed annually to maintain the facilities.
Senator Ryan has identified the reserves issue. There is no doubt that is creating the bulk of the problem. The inability of Dublin Airport Authority to spin off into the two separate companies, without the necessary reserves under company law, has created a problem. There is no point dwelling on the reason this was allowed to occur or whether better or different advice should have been obtained. The intent at the time was to ensure the airports had sufficient capacity to manage their business, expand their market, generate increased numbers of passengers and provide better facilities for customers.
A review of the progress achieved in realising the aims set down in the legislation is required. Policy could then be examined in light of the outcome. It is possible, for example, that the spin-off of assets to three individual companies will prove unnecessary. I propose such a review on the basis of the position at which we have arrived as opposed to the original aim. Given the substantial progress achieved to date, perhaps the establishment of three independent, statutorily constituted companies operating under the provisions of company law is no longer required. It is this proposal that is causing the problem. The airports are working well in the current hiatus. While I am not an expert in this area, I suggest that the Dublin Airport Authority be restructured to act as an umbrella encompassing all the State airports.
When the legislation was first debated in the House I indicated that three independent companies would not be necessary and proposed the establishment of an umbrella organisation consisting of three boards, each with some degree of autonomy. While questions on the division of responsibility and control would arise, these could be resolved. The manner in which the airport boards have worked together in recent months has demonstrated they are capable of achieving the growth levels originally sought. We should review plans for the three major airports because any such examination might conclude that the transfer of debt or assets is not necessary.
I would have been pleased to cede part of my time slot to Senator Dooley as he may have eventually informed the House whether he is in favour of his Government fulfilling the promise it made in 2003. That is the crux of this debate and the reason I support the motion tabled by Senator Ryan and his Labour Party colleagues.
I have never read such a meaningless amendment. Every Senator is in full agreement that the House should record its appreciation of the growth in airport traffic, note how important airports are to the regions and welcome new investment. In 2003, the then Minister for Transport, Deputy Brennan, promised that Shannon and Cork airports would start out as independent airports without debt. We want to ascertain from the Government side, particularly the Fianna Fáil Party Senators and Minister for Transport, the Government's position on the debt-free start for Cork Airport.
The House has two hours to debate the motion and amendment. The question the Minister must answer is whether he intends to fulfil the commitment given by his predecessor. This was central to the legislation and future plans for developing Cork and Shannon airports. Airports play a crucial role in the regions, not only in terms of tourism and passenger traffic but also in generating inward investment. It is vital, therefore, that Cork and Shannon airports continue to grow.
It is universally recognised that Cork and Shannon airports have significantly enhanced their status in recent years. The Fine Gael Party welcomes plans for further expansion and, in particular, the new terminal at Cork Airport, and looks forward to further developments. Politicians, workers and the business and commercial interests of Cork want answers and it is incumbent on the Minister to provide clarification and certainty with regard to the next steps. The previous Minister for Transport gave a solemn promise. While this commitment has not been explicitly withdrawn or contradicted, grave doubts have emerged about whether it will be kept. I hope the Minister will provide clarity and finality on the issue.
If the estimated debt of €160 million is assigned to the new Cork Airport structure, the company will find it impossible to carry the burden, with the result that the airport and region will move into reverse gear. This would be disadvantageous from everyone's perspective. The Minister will be aware, for example, of the importance of Cork and Shannon airports to his Waterford constituency. Certainty is required if these airports are to expand and develop. The commitment given by the previous Minister to ensure the airports would commence independent operation with debt-free status provided such certainty. It is crucial and urgent, therefore, that the Minister not only clarify the position but ensure the Government meets its obligations at an early date.
I noted comments made recently by Mr. McGann, chairman of the Dublin Airport Authority, following the welcome announcement that the authority's profits jumped 57% last year. Referring to the establishment of three independent airports, Mr. McGann stated this would not take place for at least a year, adding that the question of the debt-free status of Cork Airport could make the break-up of the authority even harder to achieve. Someone must take control of this matter. I trust the Government, rather than Mr. McGann and the Dublin Airport Authority, determines policy on airports, airlines and transport in general.
It is in the interests of all concerned that we bring this saga to a conclusion. I appeal to the Minister to ensure the future of Cork and Shannon airports reflects the fashion and formula proposed by the Government in 2003, that is, that the new independent airports will start afresh with debt-free status. That is the crux of the motion and the Minister must provide clarity as to whether Government policy, as enunciated in 2003, has been changed. If it has changed, he must explain how and for what reason. I hope its policy remains intact and the Minister will respond favourably to the motion.
As Senator Ryan and I both indicated, the Government amendment is meaningless. If the Government proposes to fulfil the commitment it gave, the Labour Party motion should be passed.
Like many other Senators, I was present for the debate on the relevant legislation. Members entered choppy waters in the early days of July 2003 when we tried to get the Bill through the Seanad and the Other House. I am familiar with the commitments entered into in the legislation.
Senators have lauded the increase in traffic at our airports. When the Bill was introduced the Government was ambitious as regards the future of Cork and Shannon Airports and confident they would survive and grow. We have been proved correct. We would like the commitments entered into for Cork and Shannon Airports to be adhered to. Cork Airport cannot pay the debts due to its current payload for infrastructure and the same is true for Shannon Airport. Commitments were given with regard to the debts. Not alone should Cork or Shannon not have to pay them, but neither should passengers flying through Dublin.
The Dublin Airport Authority has interests other than airports that are not strategic interests vital to the running of airports. The authority is involved in a hotel chain that cannot make a profit in an industry that has increased a hundredfold in the past nine years. It is sitting on an asset.
Yes, and we want to see it sold as quickly as possible. The authority also has interests in airports outside of the country. Do they need to be involved in those interests? If they were realised, would there be enough money available to pay the debts? How much would be available to provide a way forward? Dublin Airport Authority is a company with certain assets and these must be examined.
I know from discussions I have had with directors involved in Cork and Shannon airports that when they took on their onerous task, they did so in the belief that the commitments entered into at the time would be adhered to. Notwithstanding the recent problems that have surfaced, we must do everything in our power to ensure they will. We have seen growth take place on the presumption that these airports would be debt free and on that basis decisions have been taken to introduce extra flights. How can we ensure these airports still get a blank canvas and that the commitment is kept? We have seen the growth that has taken place since they became independent. It would not have taken place under the old regime. The Tánaiste said at the weekend that there is no turning back. We must find a way forward.
I welcome the Minister for Transport to the House. I recognise that his is a difficult portfolio as the issue of airports is so political and local that it raises the hackles of many. However, it is fair to say that we were sold a pup in this regard. When the legislation was going through the Houses I asked for clarification on two areas. I asked for clarification that the then CEO of the airport authority would be unaffected by the change, but this turned out to not be the case and we saw the back of her shortly afterwards. Senator Dooley sought the same assurance in that regard. I also raised the matter of the commitment to debt free status. I did not have a difficulty with the break up provided it was done along the lines suggested at the time, but I asked for the debt issue to be clarified and I left the debate with the clear impression that both Shannon and Cork airports would start off debt free under the new regime. The debt is a desperate manacle to place on them. It is unfortunate and bad for politics.
When the break up was discussed here there was an element of political manoeuvring and politicking on the issues. There was genuine interest in discovering what would work and be best for each locality, particularly from those of us from the areas involved, including the Minister who has shown special interest in Waterford Regional Airport over the years. The issue for Munster is that the airports at Shannon, Cork, and to a lesser extent Kerry and Waterford, have something to offer. I did not object to the various interests or take on those arguments.
When, for example, people from the Shannon area came here to lobby four or five years ago many said they would get nowhere because the issue then was all about the Shannon stopover. I met them and advised them to forget what had been said so far and go to the Minister and tell him they were prepared to sign off on becoming independent and ending the stopover etc., on the day he opened the rail head into Shannon. I felt that once they got the rail head into Shannon, it would have opened up the freight area. Shannon would have been the only airport in the country with a rail link and this would have provided significant possibilities. The Ennis-Limerick line was only three miles away and people were open to that kind of thinking at the time. Now Shannon has been left out on a limb, although it is in a better position than Cork, which appears to be left with a huge burden of debt.
Cork Airport should not be left in this position and no fair-minded person would agree it is a fair start. Cork Airport did not hit the ground running like Shannon, which got extra flights from Ryanair. At the same time, however, Cork Airport is building up business and next week is announcing new weekly flights to Hungary, Vienna and similar places. The airport is beginning to build links and the new facilities there will open soon. Nobody would disagree that we should give Cork Airport the fair start it expected. If the Department of Finance is not prepared to cough up in this regard, it should be exposed. Nobody will object to Cork getting a free run on this.
The debate on privatisation versus nationalisation and keeping facilities in safe hands is another issue. The country has gone beyond this. People want a good service that gives taxpayers good value. There is no problem in introducing competitive elements, but neither is there anything wrong with a company being owned by the State if it works well, and this is my view on Aer Lingus. There is nothing wrong either in considering privatisation if it is in everybody's best interest. I had doubts about the break up of the airports and I expressed them at the time. Now that it has happened let us make it work and give the individual airports a good chance.
Let us show people that we can have trust and confidence in recommendations such as these. In other words, if the Minister wants to sell the idea of the privatisation of Aer Lingus later in the year — on which I will argue against him — he will want people to have trust and confidence in what he will have to say. As matters stand, if he stands up on the issue, we will think that the last time we had a discussion on the airports we were sold a pup. We walked out of the debate with a different understanding of what was going to happen. It is important that we have trust and confidence in what we are told before we argue over crossing the t's and dotting the i's.
What needs to be done? We need investment in these airports. Currently they are not being marketed. The authorities are working hard at getting additional routes, which is crucial, but they are not marketing them. I use Cork and Shannon airports. I used Shannon Airport three times within the past six months and find it a great airport as it is so easy to get through. This is attractive to passengers. People from as far north as Mayo, who would be almost equidistant from Dublin and Shannon, now prefer to get to where they want to go from Shannon. Some people in the south west only consider holiday destinations they can reach through Cork or Shannon.
There is a surge of support for these airports and there are significant possibilities that can be made work. Tourism bodies should be more closely linked with airport authorities but this is not happening. It happens in places such as Knock, which enjoys a significant number of flights. The importance of these regional airports is not marketed. In fact, the description of these international airports as "regional" should be dropped. They provide a service to many destinations.
Although I am a critic of Mr. Michael O'Leary, at least he pays his taxes in this country and he has a sense of humour.
He has given life to Shannon, albeit only because he is playing one airport off against another. He played Shannon Airport off against Kerry Airport and the latter against Cork Airport, moving routes around like pieces on a board. That is the game he plays and we should take him on. He lost the war at Dublin Airport but he is still expanding the routes from it. After telling us he will not put another flight through it, he announces a new route the next week.
The value offered to those flying through Cork and Shannon is of major importance. Both are traveller-friendly airports that I wish to see promoted. I agree with Senator Ryan's points at the outset of this debate and I wish both airports to be debt free so they can hit the ground running. This will allow them to market themselves, expand and provide a service to the communities.
It is early days to have a broad, critical discussion on the future of the three airports. They were set up a couple of years ago and have not yet got down to business. We are debating this matter on a day when Shannon Airport was awarded a prize for being one of the best airports in Ireland. Dramatic figures indicate Dublin Airport will have to erect tents on top of car parks to accommodate people over the summer season. We should not be so negative and critical of something that has not yet established itself.
There was always the view in Shannon that the airport was dominated by Dublin and that Aer Rianta looked after Dublin first and then Shannon and Cork. Shannon Airport's facilities were not utilised to the full extent because Dublin Airport dominated, denying Shannon the opportunity to expand and develop as it would have done if it had an autonomous board. I had reservations about breaking up the central authority with a common till, which is a better way of managing the airports. The competition arising from breaking up the airport authority will not help matters and may, in fact, create more difficulties.
On the other hand, some felt that Shannon Airport needed an autonomous board to undertake the work necessary to provide more facilities and attract more airlines. There was underlying anxiety about what would result from the open skies policy and what would happen to Aer Lingus and workers at Shannon. The chambers of commerce, local commentators and politicians in the region believed the airport would be better served by an autonomous management board with State airport status. The Minister's predecessor made it clear that these three airports would remain State airports.
I will not express it in terms I would use outside the House but if things got difficult the State should support any airport that got into difficulty. Although the cost base problem at Shannon must be addressed, I cannot see these airports getting into difficulty. Much work has been done to reduce the cost base and the Minister's predecessor gave an undertaking that people would not be forced from their jobs. It was hoped that if there was overcapacity of personnel in the airport, some arrangement could be made to facilitate workers having a say in how this is addressed. I am satisfied that the difficulties highlighted this evening can be resolved because these are State airports.
Shannon, Dublin and Cork airports are expanding to the point of having capacity problems. This was not the case for a long time in Shannon. Runways and terminals were empty and, as the Cathaoirleach is aware, we were pleased to welcome Aeroflot long before the Iron Curtain collapsed. At the time the airport was in danger of closing. A transformation has taken place and the large numbers that passed through last year are an indication that the current policies are working. I wish to see the Shannon authorities allowed to undertake work at the airport. The board is comprised of very competent people and expert professionals are available. Some have managed airports for years and know what must be done to attract more business and address shortcomings. Major investment has made Shannon the ideal airport, as other Senators have mentioned.
If the day of reckoning comes, management at Shannon Airport can approach the Minister to remind him of his responsibility to a State airport, owned by the people of Ireland. The new formula can transform Shannon Airport, thereby making a major impact on industry, tourism and business in the region.
Despite the concern that transatlantic flights may be lost as a consequence of an open skies policy, sufficient business can be generated to copper-fasten and expand on current business. Yesterday I spoke to my neighbour who could not get an Aer Lingus flight to Shannon because of capacity problems. I appeal to those who take a negative view of the situation to give these airports a chance to become established.
I referred to rates on Committee Stage of the Bill that created the airport authorities. State airports should not pay substantial rates. Instead, the State should pay these bills and remove this burden from companies. Many such issues could be addressed, allowing the authorities to provide a service to airlines, customers and people in the Shannon region.
The view of the Progressive Democrats is that competition, in the same way as it has transformed the airline business, can transform the aviation sector generally for the benefit of consumers. Competition between airlines has worked and it will work between terminals, between service providers within terminals and it should work between airports.
The Minister's predecessor correctly stated when Aer Rianta was being broken up that Dublin, not Cork, would bear the cost of the new terminal, which is €140 million to €160 million. The objective was to have Cork Airport independent and debt free so it could compete, to the benefit of consumers. As an independent authority, the Cork Airport Authority is based on a commercial mandate and its board has a fiscal duty only to absorb costs that, in its opinion, are reasonable and sensible. I trust the Minister agrees with this view.
Placing a burden of cost on the Cork Airport Authority defeats the purpose of the break-up. Does the Minister accept that the charges in Cork are already the highest of the three airports? Increasing charges to repay debt on the terminal will merely result in Cork becoming more uncompetitive in comparison to Shannon, not more competitive. The people of Cork took great comfort from the words of the then Minister for Transport, Deputy Brennan, on 13 July 2004. I listened carefully to the debate and to the words of the Minister when he gave the explicit commitment Cork was awaiting. He stated:
I am just leaving the existing debt where it is. It belongs with Dublin and nowhere else and I am not moving it. The debts belong in Dublin and will stay there. Does [anyone] believe I should leave Cork Airport to pay it off while still developing the airport? The burden of those debts must be lifted from their shoulders to allow them properly develop for the future.
In light of recent debate, the people of Cork are now left wondering what has changed. Cork Airport's passenger figures are up 20% at 2.7 million and heading to 3 million in 2006. The airport already has the highest charges and, if saddled with a significant portion of debt, will have to increase charges to service debt. Airlines will not open new routes and existing routes will be threatened. Where do we go from here?
If it is now accepted that Cork Airport will not be debt free, our attention must move to the debt — how much will it be, how the repayments will be structured and so forth. A capital structure must be put in place so as not to create a position of insolvency in Cork Airport at any time. Such a position must be subordinate to the rights of employees. The workforce must be protected regarding future pay deals, pension rights and so forth. Repayment must be structured in such a way that it is based on ability to pay and it must not compromise future development. It must be linked in some way to, for example, increased passenger turnover.
The Dublin Airport Authority cannot place the Cork board in a position where it is at a competitive disadvantage. Shannon cannot be given preferential treatment, as in the past. This is meant to be an open, competitive race, not a handicapped hurdle.
The Dublin Airport Authority, consultants and, regrettably, the Department of Transport are obsessed with Dublin Airport and its future at the expense of Cork and Shannon. It is unthinkable that while the Dublin Airport Authority retains its assets in Birmingham and Dusseldorf airports and the Great Southern Hotels — and it is considering the sale of the latter — it plans to place a crippling debt on Irish airports and place Dublin at a competitive advantage over Cork and Shannon.
Despite the various talks that are taking place, there is a tense stand off between customers, staff and the airlines simply because they do not know what is happening. I was shocked at the comments of the chairman of the Dublin Airport Authority after the recent AGM. He gave the definitive reply, prior to the completion of talks or consultants' reports, that Cork would carry the debt. Is it right that a party with a clear vested interest controls the decision-making process, appoints the consultants and interprets their reports? It is disturbing that a chairman whose remit is to carry out Government policy would make such a comment. This appears to have been a unilateral decision.
We now live in an era of 30-year mortgages and interest-only mortgages. If we need fantasy accounting to get over a technicality in company law, let us do it. The Minister knows the issue can be addressed. The new board in Cork has no power and is extremely frustrated. Frankly, it is working with its hands tied behind its back. All this suits Dublin and its own agenda.
Dublin is putting the screw on Cork and increasing charges to ensure a competitive advantage when it ultimately operates independently. It has no interest in the consequences for Cork.
Cork Airport is well known as a productive operation. Its customers have shown great tolerance. The airport was voted airport of the year in 2002, 2003 and 2004 by the Chambers of Commerce of Ireland, despite the congestion. Passenger numbers are 2.7 million. However, we are not sure the proposed opening date for the new terminal, 10 May, will be met. Public relations people are defending the chairman of a State-owned company who is defying Government policy. What is the agenda? From whom is he taking direction?
What action does the Minister propose to take if the boards of Cork Airport Authority and Dublin Airport Authority cannot agree on a repayment scenario? If I have said something incorrect, I will be glad to hear the Minister clarify the matter. We need answers and assurances. In particular, specific commitments must be honoured.
There is much indecision on the part of the Government parties about air transport and the Dublin Airport Authority. If Cork Airport, Shannon Airport and the regions are to grow, they must be given the freedom to do it. When the then Minister, Deputy Brennan, said that Cork and Shannon Airports were to be debt free, he must have had a reason for saying it and must have meant it. However, it appears this Minister has changed his mind and the position of the previous Minister on it.
On 17 January 2006 a spokesperson for the Minister said that any resolution would have to be considered in the context of the other airports and aviation policy. That means the Minister will take Dublin Airport's situation into account when he makes his decision——
I hope the Minister will clarify the position this evening. Senator Minihan pointed out that Cork Airport was voted the best airport in 2002, 2003 and 2004 and now has 2.7 million passengers per year. It is a very important part of the infrastructure of Munster. Likewise, Shannon Airport is a very important part of the infrastructure of the west and mid-west. People from my constituency prefer to travel from Shannon rather than travel all the way to Dublin to leave the country.
It is important to have the two airports at Cork and Shannon to cater for transatlantic flights. If the two airports are to be allowed to grow, the approach of the previous Minister, Deputy Brennan, is the one we should follow. My party's view is that neither airport should be carrying any debt. As Senator Minihan said, the boards of both airports are currently frustrated because they do not know whether they are coming or going. If any airport is able to carry the debt of the airport authorities, it is surely Dublin Airport which caters for nearly 20 million passengers per year. That number is predicted to grow to 30 million over the next ten years. Most people consider that, by and large, the Dublin Airport Authority has created the debt. I know that a large development is taking place at Cork Airport but the DAA is best placed to carry that debt.
If the Munster and western regions are to be allowed to grow we will need proper infrastructure, including airports, roads, sewerage and water facilities. Some 15 or 16 different carriers are flying into Cork Airport, which is unbelievable. It is great to see that such companies can provide a service from the south to various parts of Europe and the UK. Hopefully, in the not too distant future transatlantic flights will also operate to and from Cork. It is important, however, that Cork is not straddled from the start with a massive debt in the region of €160 million. If such airports are to compete they must be allowed to grow without any initial debt, otherwise they will lose some carriers which operate on the basis of low landing charges. If an airport is straddled with debt from the beginning, it will be at a complete disadvantage and will not be able to compete. We will then be left with one airport in Dublin and will be back to square one.
I hope the Minister will clarify the position because it seems there has been a shift in the Government's position on the debt attached to some of those airports. I was disappointed with what Mr. McGann said and I hope he is not advocating the Government's position, which was the view expressed by the previous Minister for Transport, Deputy Brennan, two years ago.
I hope I will be able to put all my points on the record within 15 minutes. I am glad to attend the Seanad for what has been an interesting debate. It saddens me that, unfortunately, substance and fact have had little to do with any such recent debates.
I want to allow Cork Airport — as with Shannon and Dublin — to be strong, commercially viable and successful. I am not sure what speech of my predecessor's the Opposition Members have quoted from but I wish to quote from his exact speech of 24 June 2004. Senators will see that the position has not changed one bit. The former Minister for Transport, Deputy Brennan, stated:
The State Airports Bill has been carefully designed to deploy the necessary mechanisms under company law to provide maximum flexibility to effect the restructuring in conformity with the capital maintenance provisions of the Companies Acts. It provides a framework to allow for an orderly approach to the distribution of assets and facilitates the phasing which will be necessary in respect of the distribution of Cork and Shannon because of the insufficiency in Aer Rianta's reserves. The Bill proposes an enabling framework for the restructuring which is in line with existing provisions of company law. Aer Rianta will effectively transfer the assets relating to the airport businesses at Cork and Shannon to the new airport authorities established under the Bill in return for the issue of shares by the new companies to the Minister for Finance. For company law and accounting purposes the transfers will be regarded as distributions made by Aer Rianta to its shareholder, the Minister for Finance. Consequently, Aer Rianta will be able to make the transfers only when it has available distributable reserves equal to the net value of the assets transferred. As the distributable reserves available to Aer Rianta are insufficient for this purpose, a phased approach is provided for in the Bill which will allow for one of the new airport authorities to be vested relatively soon after enactment, namely Shannon Airport, while the second will be vested once sufficient further distributable reserves have been built up within Aer Rianta, namely Cork Airport. A portion of the Cork Airport assets will remain in Aer Rianta and will be subject to a finance lease between Aer Rianta and the Cork Airport Authority.
That statement was made on 24 June 2004. It is utterly untrue to suggest that there is suddenly a problem with company law, that I have decided to do something utterly different from my predecessor, or that Government policy in this area has changed. All this was set out in great clarity and detail and no ambiguous language was used in the 2004 statement. My position today is precisely what the Government decided at that time.
Neither I nor the Government has any interest in somehow establishing Cork, Shannon or Dublin Airports in a financially unviable position. It would be nonsense to do so. As a Minister representing a county next to Cork, I am happy to say I have used Cork Airport recently, in addition to using Shannon. I find both of them to be excellent airports. I have never referred to either Cork or Shannon as regional airports because they are major international airports——
——along with Dublin and should be seen as such. We need to avoid the ether and deal with the facts of what we are trying to achieve. I hope I can demonstrate clearly to the House that there is no equivocation on my part. There are issues that must be dealt with fairly to the advantage of Cork, Shannon and Dublin airports. That is where we currently stand.
Senators have referred to the fact that the three airports have made significant advances in this Government's period in office. All three airports showed record traffic growth last year with passenger numbers of over 18.5 million for Dublin, 3.3 million in Shannon and 2.7 million in Cork. That represents a growth of approximately 8% for Dublin, 38% for Shannon and 21% for Cork. It is clear that the new boards at Shannon and Cork, in conjunction with the DAA, are bringing a new impetus to the development and growth of their airports.
The State Airports Act 2004 provided a new opportunity to the State airports to grow and develop with an invigorated commercial mandate. It paved the way for the establishment of three State airports. I believe in State airports, by the way. I have a clear view on fixed assets in this country remaining in State hands. I have stated that repeatedly and it is a view I hold dear. Others may have different views but my view should not be confused in this regard because it has been unequivocal. My track record on the development of Dublin Airport clearly demonstrates my view in that respect.
The Act provides a framework to allow for an orderly approach to the distribution of the assets of Shannon and Cork airports in conformity with capital maintenance and other provisions of the Companies Acts. I am surprised that some Senators may say we will ignore the Companies Acts when we talk about our business but we will make them apply very strongly to the private sector. That is a nonsense and would be unacceptable by international standards. We do not want another WorldCom or whatever coming into this country. I will not, and would not, preside over some way of bypassing or getting around the Companies Acts. National and international law is clear. I will ensure that State and private sector companies adhere to the highest standards of international practice of company law. There is no separate company law for State companies and private sector companies. As long as this Government is in power company law will apply across the board and the standards will be the highest possible.
The boards of Cork and Shannon airports are charged with preparing to assume responsibility for the ownership and development of the airports. They are also empowered to undertake certain management and operational functions which they have done successfully. Under the Act, before any assets can transfer to Shannon or Cork, the Minister for Finance and I must be satisfied as to the financial and operational readiness of the airport authorities.
I have no interest in going forward with a proposal that would in any way undermine Cork Airport. The opposite is the case. My job is to ensure that Cork and Shannon airports are set off with the strongest possible, viable commercial mandate for their future development. That is the only agenda that the Government and I wish to pursue. Therefore, each authority is required to prepare a comprehensive business plan and obtain our approval for these plans before any assets can be transferred.
The three State airport authorities continue to work on the preparation of their business plans with the Dublin Airport Authority. I accept that this entails difficulties. Everybody has a view and seeks the best outcome from his or her perspective, which is reasonable and understandable. We must reach a point at which we focus on the reality of what we are trying to achieve and make sure we have good outcomes for all the airports.
A range of issues need to be considered, including the unsustainable cost base at Shannon which has been acknowledged by all involved there; the recent airport charges determination for Dublin Airport by the Commission for Aviation Regulation; and the optimum mechanisms for the financing of the new terminal in Cork. The Commissioner for Aviation Regulation made clear that he will not allow a charging regime at Dublin Airport to cover the costs of Cork or any other airport. That is the law within which we must operate. Some might argue that of course he would say that because it would be unfair for passengers in Dublin Airport to pay for passengers in other airports. We must, however, strike a balance of fairness, based on good commercial outcomes for all the airports.
The airport authorities must consider these complex issues. I have not set any artificial deadlines for the completion of the process. My Department will continue to liaise with the boards on the business planning timetables, taking account of the key issues I have mentioned. I look forward to the finalisation of the business planning process because of its importance to facilitating the development of dynamic, independent and financially sustainable State airports.
A core principle of the Government objective in airport restructuring is that this must be achieved in a manner which underpins the financial sustainability of all three State airports. Cork Airport is being transformed by the development project nearing completion which will effectively deliver a new landside airport for Cork. This is the first major upgrading of all its facilities since the airport was built in the late 1950s.
The figure of €140 million has been bandied about here tonight. This is a new figure to me. I have never articulated it but it has suddenly emerged. The debt for Cork Airport will be approximately €200 million, inclusive of the new terminal, which is a great deal more than €140 million. I have never said and nobody in my Department or the Government has said €140 million or that Cork Airport was being saddled with the full cost of the terminal. That is not the position.
I am only putting the facts forward. One of the first meetings I had after being appointed Minister for Transport was with the board of Cork Airport. I made the facts and the demands clear at that meeting and have not changed my position. That board has been in no doubt of its position and responsibilities since the first day I met it on taking office. I have quoted what that position was as set out when the State Airports Bill was brought to this House and to the Dáil. It is clear what the Minister said and what the procedures were. There is no point playing games around these issues. The facts must be dealt with and the outcomes achieved.
Another point made here tonight reflects a perception that Dublin Airport Authority holds sizeable assets worth large sums of money. That is not true. All of those assets must be cashed in but they will not go near providing for the separation of Cork and Shannon, the pension issues and the development of Dublin Airport. There are few of them. The Great Southern Hotels group is being sold but there is a heavy debt attached to that. The only other major asset is the stand at Birmingham; the one at Frankfurt is not equivalent to that. They are good assets to cash in but they are also a serious part of the income which will be lost in order to develop the airports.
The project in Cork comprises not only the new terminal building but the multi-storey car park, surface level car parks, new fire stations, new internal road systems and the upgrading or replacement of all utility services such as water, gas and electricity. When completed the new Cork Airport will have a passenger capacity of over 3 million with a facility to expand to 5 million. It is important that the debate about Cork's future does not obscure this major development for the airport.
This development will impact not just on the airport and the general Cork area but also on the regional economy in which it will be a major driver of growth. The new terminal should be seen as a key component in delivering on Cork's status as a gateway city under the national spatial strategy.
This airport investment complements the other major transport infrastructural projects that the Government has earmarked for Cork under Transport 21. This includes the railway in Midleton, the strategic area plan, the investment in public transport, road transport etc., all of which will greatly benefit the interconnections with Cork, as at Shannon and all the developments taking place there too.
I acknowledge the efforts going on at Shannon. I welcome the fact that the Labour Relations Commission is meeting with people there, which I hope reaches a positive conclusion for all the stakeholders in order that we can move on. That will be an important contribution to the success of Shannon Airport. Some of the Senators are right, the opportunities for both airports are significant on the European, transatlantic and other long-haul routes.
The previous Minister said that it would take a sequential effort to distribute and give these airports their independence. The confusion arises because Cork Airport wants to speed up the process. It is right to want its independence now because it wants to start its own planning but that requires working within the circumstances available. We can wait seven to ten years if we want, until all the distributed reserves are available and then move out but that would be the wrong decision. We must place this debate about Cork in the context of what exactly was said rather than bits extrapolated from what was said.
I believe there is a very good formula on the table. I have articulated that to the sub-committee, as Members from Cork will be aware. I met them again recently. We are having some final figures examined. I am aware there are concerns in Cork about the charging regime and legitimate questions are being asked, as is the case on some of the other issues. Senators Dooley, Daly and others have raised issues on the Shannon aspects and how they are to be resolved but they are all resolvable. We are all mature people and we are all business people. The people on the board understand what they want to do.
As a regional Minister I want a strong Cork Airport and a strong Shannon Airport. Equally, I am mindful that we need a strong Dublin Airport. It is the major gateway into the country and we must move ahead in that respect. Between €1.2 billion to €1.5 billion must be found for developments at the airport. We have an unsustainable position in an airport now trying to carry in excess of 21 million passengers, and that figure will increase to 30 million. Achieving a balance in all of these issues can deliver a very good outcome.
Senators should accept that small regional airports have debt but they can manage it. The small corner shop at the end of the road has some kind of debt but it manages it. We must be realistic as to what we are saying. There is no question that we can send Cork Airport off to independence without any real debt. We can put an arrangement in place between the two boards. That will be very strong from Cork Airport's point of view in terms of its ability to develop its commercial mandate, as we can with Shannon, but equally it will allow Dublin, working within the rules and regulations and the law of the land, to develop as well. When we take all those issues into consideration, there is the prospect of a very good outcome for Cork, Shannon and Dublin airports. We should all focus on that and get on with it.
I agree with the assessment of people on the Cork board to whom I have spoken that rather than wait, as originally anticipated, for a number of years to take its independence, the opportunity in aviation development presents itself now and let us find a mechanism to do it more quickly. I agree with that and I have told them they are right. That is a good judgment call but to do that we must consider how to manage these issues in a much shorter timeframe than might have been the case previously when the Bill was introduced.
It is in everybody's interest to get a good outcome. I am in a position to deliver a very good outcome for Cork, Shannon and Dublin airports which will leave them free to focus on the real challenge — developing services for their passengers with the airlines into those airports to strengthen them for the future. That is where we all want to go.
I welcome the Minister. I have absolute confidence that he is committed to all the State airports to ensure they are able to develop.
I had the pleasure in the past fortnight of travelling three times to and from Shannon and a fourth time from Dublin. If people realised what a pleasurable experience it is going through Cork and Shannon airports — obviously if it is a transatlantic flight one is talking about Shannon — in comparison with struggling with long security queues, long distance car parks and the like in Dublin, the traffic would grow even faster.
I assume a little of the growth of traffic in Shannon has to do with the throughput of GIs. I spoke to some of them who were stopping over for an hour and a half on their way to Kuwait and Baghdad. I have never had any problem with that traffic and I am glad we are able to assist in conformity with the United Nations resolution of June 2004 to facilitate the multinational force in the establishment of democracy in Iraq.
The reason we are having this debate is that the impression was given that Dublin Airport, being infinitely the strongest of the three airports, would take care of the debt for the other airports. I did not appreciate the way the chief executive in Dublin spoke out almost in defiance of previous Government policy. I am in favour of chief executives making measured contributions to public debate. If they have difficulties with decisions that have been taken they have many channels of communication with the Government but it is not a satisfactory spectacle, whether one is talking about debts of Shannon and Cork airports or the Great Southern Hotels, to fairly trenchantly lay down a position in public without much caring whether it is consistent with Government policy. The Minister who has just left will remember that recently at a south-east region chamber of commerce meeting, the chief executive of another State body was quizzed about the question of a university for the south east. Very properly, he played somewhat to touch on that given the state of formulation of Government policy on that area. I do not believe that was a satisfactory approach by the other chief executive.
The Government is fortunately in a very strong financial position. My estimate, on the basis of the Exchequer returns, is that there will be a comfortable surplus this year instead of a significant deficit. When all is said and done, assets realised and so on, if it is necessary for the Government to assist in putting Cork and Shannon airports on the right footing, it should not hesitate to do that. I was one of those who on balance was in favour of splitting the three airports because traffic growth had been occurring in a lopsided manner and there had been a shift in the balance, particularly away from Shannon towards Dublin. There had to be a way of levelling the playing field and I had the impression, for a time anyway, that Dublin was the big player and that was what Aer Rianta was mostly interested in developing.
There are great possibilities for Shannon and Cork airports because they offer a much more pleasant experience. I was very pleased to see in Shannon Airport the morning I travelled out that there were about six or seven flights crossing the Atlantic to various destinations in North America. That is the way it should be.
Picking up on what Senator O'Toole said, there is a nice new dual carriageway into Shannon Airport, which was still being built this time last year. That is a very welcome development but the rail link into Shannon is also necessary. On one of my journeys I did not have the car and I got the bus into Limerick and then waited for a train to Limerick Junction. As Members know, I am quite a user of public transport; I like to see how it is operated and experience using it.
I look forward to the day when Shannon is served by a direct link, as Ennis is currently served. This should be part of the equation of Government decisions on this subject.
I thank the Minister for his very comprehensive speech in which he clarified a number of what he termed "misunderstandings" by the Opposition in respect of Cork and Shannon airports. I welcome the Minister of State to the House. As Senator Mansergh noted, the experience of travelling from Shannon, Cork or even Donegal is more pleasurable than travelling through Dublin Airport. Donegal does not have a dual carriageway going to the airport but I am sure it will by the time the Minister of State completes his tenure in the Department of Transport.
In the State Airports Bill 2004, the Government set out its wish that the three airports be structured in a way that best equips them to deal with the new challenges and opportunities of the 21st century facing the entire aviation sector. The Government believed that commercially successful airports in Shannon and Cork would better assist in the economic and tourism-related development of their catchment areas. The Government took the view that autonomous regional boards in Cork and Shannon with the necessary commercial expertise and background would give strong and visionary regional leadership to the new airport companies so that both airports could adapt more quickly in a rapidly changing aviation environment.
In so far as market dynamics permit, the establishment of Shannon and Cork airports as separate commercially focused entities placed them in a position to promote and expand their range of services, thereby leading to greater competition with Dublin Airport.
As the country's major airport, Dublin Airport continues to expand to meet Ireland's requirements for tourism and industrial growth. The three State airports, operating as separate successful commercial State companies, have the potential to expand their business and enhance shareholder value.
The Minister's speech makes it clear that this policy has worked. He pointed out that all three airports showed record traffic growth last year, with passenger numbers of 18.46 million at Dublin Airport; 3.3 million at Shannon Airport; and 2.73 million at Cork Airport. I understand that last year, passenger numbers increased by 1 million at Shannon Airport and that passenger numbers also increased at Cork Airport.
In a speech to this House, the former Minister for Transport, Deputy Seamus Brennan, stated that the three State airport authorities would consult with unions in respect of the preparation of their business plans. I would like further clarification because the Minister did not indicate whether this has happened. It is important that this consultation takes place in order to ensure continuing harmony at these three airports.
Senator Ryan, for whom I have great respect, and Senator McCarthy should be more concerned with——
Senators Ryan and McCarthy should be more concerned with the content of the Minister's speech today. According to the Minister, the new Cork Airport will have a passenger capacity of 3 million when completed. The airport has almost reached this capacity. If I were Senator Ryan or Senator McCarthy, I would be more interested in increasing this capacity to 5 million immediately.
The plan set out in the State Airports Bill 2004 introduced by the former Minister for Transport has worked and the Opposition knows this. While we all appreciate that an election is looming and that the Opposition would like to take one or two of the ten Fianna Fáil seats in Cork, it will not do so by spinning untruths in this House or in Cork.
Among the qualities given to me by the good Lord is my sense of humour, which has survived in spite of the vicissitudes of politics. I am also an engineer and, therefore, comfortable dealing with numbers. Fortunately, having spent long and tedious hours here dealing with legislation, I am also comfortable dealing with legal matters.
When I hear a Minister give a speech comprised of hot air alleging that the Opposition's argument is nothing but hot air, I tend to heckle but also listen very carefully. The Minister said essentially that there was no difference between his position and that of his predecessor. According to a statement dated 10 July 2003 on the Department of Transport's website, the former Minister stated that 12 months from 10 July 2003, Shannon, Cork and Dublin airports would be established as fully independent authorities. He also stated that he would establish independent airport authorities in Cork and Shannon Airport on a statutory basis which would commence business free of debt. According to the former Minister's statement, the existing debts associated with both airports, including the debt associated with the major new investment programme at Cork, would not be assigned to the new companies but would remain with Dublin Airport and absorbing the debts for Shannon and Cork would not place an unreasonable additional burden on Dublin Airport.
The current Minister for Transport attempted to deal with this issue in his speech here today. In a copy of his speech received by Members, the Minister acknowledged that during the early stages in the airport restructuring process, it was intended that both the independent Cork and Shannon airports would commence operations on a debt-free basis. However, he omitted to deliver this part of his speech to the House. Perhaps, we persuaded, converted or confused him but he did not deliver this part of his speech.
The Minister then went on to state that this would always be subject to determining the optimum mechanisms for allocating airport assets among the three airports in compliance with the capital maintenance rules and other provisions of the Companies Acts. This provision came later and was not part of the former Minister's original announcement. Later in his speech, the Minister stated that an adjustment to the approach was required as the matter was examined further, in consultation with the Department's advisers, before the State Airports Bill 2004 was debated in the Houses of the Oireachtas.
On Second Stage of the State Airports Bill in the Dáil in June 2004, the former Minister stated that under the terms of the restructuring, both airports would commence operations debt free. This meant that a debt of €70 million would be removed from Shannon Airport and approximately €120 million from Cork Airport. This is where I obtained my mythological figure of €120 million, which the Minister informed me was wrong although he neglected to tell me the correct figure.
We do not know what the correct figure is anymore. The Minister told Cork Airport but he will not tell anybody else. He will obviously wait until after the next general election. He informs this House that it was a readjustment that was necessary before the legislation was introduced in the Houses of the Oireachtas. This is in spite of the fact that part of his speech referred to the intention in the early stages in the airport restructuring process that both the independent Cork and Shannon airports would commence operations on a debt-free basis. Presumably, he did not deliver this part of his speech because even his neck would not extend that far. It now transpires that the readjustment process began once the Government was out of the gate and there was no plan for a readjustment beforehand. The Government either did not examine company law properly beforehand or ignored it.
It is clear that the former Minister, with the full knowledge of the Government, gave a speech which was inherently contradictory. Parts of the speech complied with company law, while others were full of sweeteners to keep Cork and Shannon happy. The former Minister and the Government knew at the time that they could not achieve both aims but they knew they would not get away with the restructuring process if they did not state that Cork and Shannon airports would commence operations on a debt-free basis. The Minister's statement was among the most brass-necked attempts to pretend that nothing has changed. After reading his script, he said an adjustment was required. He began his speech by telling the House that there was no difference between the former Minister for Transport, Deputy Brennan, and himself. "Adjustment" is a carefully chosen word.
We now know that the Government knew it could not do what it said it would, it made promises in respect of this that it could not keep and it could only have kept its promise on debt by breaking company law. The Minister should not play games about bank debt with me. A lease to Dublin Airport with a commercial obligation to make a repayment is the equivalent of a bank debt. There is no difference. It is an extraordinary exercise in verbal mincing to pretend that the former Minister was talking about bank debt. The basic idea was that the balance sheet of Cork Airport would be free of debt. A mortgage is a debt, borrowing is a debt and an obligation to repay for something is a debt by everybody's understanding except that of one person, the Minister for Transport, Deputy Cullen.
I am about to finish. I have rarely heard a more disingenuous defence of Government policy than I heard tonight when a Minister attempted to say that we were making things up but then discovered he could not deliver his own script because it conceded that our point was essentially true and he was making up a story that bore no relation to reality. This has been confirmed by the amendment in which the Government ducks every single issue raised. The amendment essentially reads that we should give thanks for fine weather.
The Dail Divided:
For the motion: 26 (Cyprian Brady, Michael Brennan, Peter Callanan, Margaret Cox, Brendan Daly, Timmy Dooley, Liam Fitzgerald, Camillus Glynn, John Gerard Hanafin, Brendan Kenneally, Tony Kett, Terry Leyden, Don Lydon, Marc MacSharry, Martin Mansergh, John Minihan, Paschal Mooney, Tom Morrissey, Pat Moylan, Labhrás Ó Murchú, Francis O'Brien, Mary O'Rourke, Kieran Phelan, Eamon Scanlon, Kate Walsh, Diarmuid Wilson)
Against the motion: 13 (Paul Bradford, Fergal Browne, Paddy Burke, Ulick Burke, Noel Coonan, Maurice Cummins, Frank Feighan, Brian Hayes, Mary Henry, Michael McCarthy, Joe O'Toole, Brendan Ryan, Sheila Terry)
Tellers: Tá, Senators Minihan and Moylan; Níl, Senators McCarthy and Ryan.
Amendment declared carried.