Dáil Éireann - Volume 437 - 15 December, 1993

Air Companies (Amendment) Bill, 1993: Committee Stage (Resumed).


Debate resumed on amendment No. 4:

In page 4, line 38, after “£175,000” to insert “provided that the consent of the European Commission is obtained to such subscription”.

—(Deputy O'Malley).

Mr. O'Malley: I welcome the points made by the Minister about the transparency of the accounts and operations of the proposed company, Aer Lingus Express, and the fact that Aer Lingus will not be able to engage in certain practices in the future. If it is not going to be allowed to act in this way in the future can the Minister arrange for the company not to act in this way at present? At present it is possible to fly from Dublin to London, where there is competition, at a cost of approximately £60 while the minimum cost of flying from Dublin to Bristol, where there is no competition and where the distance is much shorter, is between £175 and £250. The same is repeated in respect of flights to all destinations throughout Britain. The fares are extremely low where there is competition from either Ryanair or British Midland or both but they are extremely high where there is no competition. Would the Minister agree with me that that is entirely unsatisfactory, that it is unfair to the consumers, it is unfair to the competitors and if the Minister is to put a stop to that in the future, after the Commission have agreed to this proposal, [739] why in principle would he not put a stop to it now?

Mr. Cowen: I am aware of Deputy O'Malley's views in relation to these matters. I am satisfied that Aer Lingus is acting in a way which is in its own commercial interests. It is a national airline, it covers many routes. It is not a regional airline and it obviously has a fares policy to meet its full range of products. One can identify specific issues which I would have to examine but the Deputy can be assured that under the new management team, and the direction the board is receiving from the shareholder, commercial principles will be primary in terms of how it conducts its business. I believe the decision that has been made, which takes £50 million out of the cost base of the company, allows it to provide fares which may be similar to those in the past but which now, because the cost base has been much reduced, remain competitive. The Deputy may not be comparing like with like when he compares present fares policies with previous ones because the cost base factor has been seriously addressed. I would have to take up issues of a specific nature with the management directly and come back to the Deputy in due course.

Mr. Gilmore: I suppose we will have to wait until 22 December to see whether the Minister is as adept at convincing the Commission as he is at entertaining the House.

Mr. N. Treacy: He will be equally adept at that.

Mr. Gilmore: In relation to the queries that have been raised by the Commission. No. 2 states that the second and third tranches of the investment would be subject to the company achieving well specified and quantified targets. Are they the targets that have been agreed with the unions in Aer Lingus or is the Commission suggesting some alternative targets? Is the Minister satisfied, from what [740] he knows about the agreements that have been made, that those targets will be met and is he confident that when the legislation is passed, Aer Lingus, on the basis of the agreements that have been made to date, will receive the full £175 million?

Mr. Cowen: I am satisfied that the targets to which the Deputy refers and which are in the plan are attainable. I am satisfied also that the plan represents a credible integrated approach, that it provides the best prospects for viability and that based on the extensive work that has been done by management and the unions in addressing the cost issue, it is in a good position to meet those targets which will enable us to make the second and third tranche equity injections in due course.

An Ceann Comhairle: How stands Deputy O'Malley's amendment now?

Mr. O'Malley: In view of what the Minister has said and the assurances that he has given in regard to the future, I withdraw amendment No. 4.

Amendment, by leave, withdrawn.

Amendment No. 5 not moved.

Progress reported, Committee to sit again.