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Sinn Féin TDs reject privatisation plans for Aer Lingus

24 May, 2005


Speaking during this evening‚s debate on Sinn Féin's Private Members Motion on Aer Lingus Seán Crowe TD, the Party's spokesperson on Transport said "privatisation will not work for Aer Lingus." He said, "It has been amply demonstrated in the cases of Eircom and now the ESB that privatisation leads to higher costs, increased prices and a complete absence of the promised benefits of competition."

Deputy Crowe highlighted the fact that while Eircom chiefs paid themselves handsome dividends of €500 million through what he described as "innovative ways", the company needed over a billion euro invested in it to update its infrastructure. He said, "This is the reality of the privatisation of Eircom. A lucky few have been enriched while the original infrastructure is in decay."

Addressing the issue of Aer Lingus itself Deputy Crowe said the airline exists in the first place because "there were no private sector investors willing to take the risk in setting up the company" at the time. "There was no-one with the long-term strategic view of how important the airline industry would become to the Irish economy, in terms of not just tourism but importing and exporting goods." As a result he said, "Aer Lingus became a vital part of the economic infrastructure of the State which it still is today."

Rejecting the notion that the State cannot invest in Aer Lingus Deputy Crowe pointed to the „disclosure that €27 million of our taxpayer‚s money has been invested in airlines around the world through the pension reserve fund." He said, "So, it's ok to invest in Air France, BA or even Ryanair" but not our national airline.

Cautioning against rejecting the motion Deputy Crowe went on to say, "Unless you support this motion we will have instead the quick sell off the glossy ad campaign, but no real thinking about the long term." "So get ready for another bumpy ride, lots of turbulence, jobs lost and ultimately a crash landing," he warned.

Full text follows

Sinn Féin, in proposing this motion tonight, are conscious that up till now there has been no real opportunity for TDs to actually discuss the case for and against the privatisation of Aer Lingus, and the ramifications it will have for Irish tax payers, the airlines workers and our Island Economy.

So it is in this spirit that Sinn Féin proposes to open this debate and give everyone, regardless of the dogma of the party leaderships, a chance to put their position on the record as to whether they support the privatisation and sell-off of Aer Lingus or not.

Let me be clear on the Sinn Féin position. We believe that privatisation will not work for Aer Lingus. We have listened carefully to the arguments of those in favour of the privatisation route, but believe that they have got it wrong once again.

In the long run privatisation costs the taxpayer more money - it loses jobs throughout the economy not just in the company that ends up being asset-stripped and sold off, but in other economic sectors too.

It has been amply demonstrated in the cases of Eircom and now the ESB that privatisation leads to higher costs, increased prices and a complete absence of the promised benefits of competition.

In the Eircom case we are witnessing a slow decline towards failure. Today, more than five years after the privatisation hype that accompanied the Eircom share launch, we have a company clearly in difficulty. For the customer privatisation has meant a more costly service, particularly in line charges and handsets and being levied for any sort of maintenance by Eircom.

The company has been on and off the stock exchange as its new owners found innovative ways to cash in on its value. They sold off the Eircell mobile phone licence to Vodafone. This is a company whose profits now run to hundreds of thousands of euro daily and whose Irish customers pay more money into Vodafone's coffers than mobile users in any other Vodafone market.

Eircom's new management then sold off the Golden Pages and the company's websites. They paid themselves a €500 million dividend - but were unable to find the money to invest in a nationwide broadband roll out.

When the government opposite begged them to run the broadband service, not being a public sector company they were able to say No. When the Taoiseach and other cabinet ministers offered to subsidise a state broadband roll out programme, the privatised board of Eircom were again able to say No. They also tried to say "No" to their public service obligation to provide fixed line services to all households which was costing them €40 million a year.

Last year leaked documents, prepared by Eircom‚s own consultants and senior managers, showed the firm needed to spend at least €1 billion on upgrading its network, which was reporting up to a million line faults annually.

This is the reality of the privatisation of Eircom. A lucky few have been enriched while the original infrastructure is in decay and new investment in broadband is only emerging in a piecemeal way.

I will give the government and Eircom one thing though, the ads are good, pity about the service.

Then there is the case of the ESB, not yet privatised but being prepared for sale and the introduction of new private sector power stations. For the customers this has meant four years of year on year price increases. That represents a 40% increase since this government decided to privatise the electricity markets.

These prices increases were needed according to the ESB regulator, to make the market more attractive for the private sector. Now that is a remarkable statement. A successful, profitable and efficient state company has to artificially increase it prices, screwing its customers in the process, so as to facilitate the entry of private profiteers to the market.

This is the reality of the mad march towards privatisation in Ireland, spearheaded by the PDs and their cheerleaders and bankrollers - higher profits for the greedy carpert baggers and higher prices for customers.

So where does that leave Aer Lingus?

Is it all going to be a different story here?

What safeguards have we got that four or five years down the tarmac we won't have a repeat of the Eircom fiasco?

SIPTU tells us that the sale is a "grave strategic error". They have highlighted the promise made to them over a year ago that the company needed a full business plan to grow its routes and passenger numbers and then plan the type of aircraft needed and finally the level of actual financial investment for the company.

At the moment Aer Lingus management don‚t know what is needed because there is no business plan - the new chief executive won‚t even take up his post until August. So if the company don‚t know what is needed in terms of investment then what hope is there that the government knows. The answer is none. But of course this isn't about investment in the airline - this isn't about securing the future of Aer Lingus or the best interests of the travelling public or the Irish taxpayer. This is about giving into the insatiable demands of the privatisation lobby.

The government has a chance here tonight to stand up and say whether they are planning a Ryanair mark II or is if they believe there is a future for Aer Lingus as a national carrier, handling cargo and playing a central role in the future of the Irish economy.

IMPACT has raised the issue of Ireland‚s status internationally in the airline market. They have pointed out that "very few countries of Ireland's size have direct flights to so many important destinations'. According to Impact huge strategic interests are at stake especially in the tourist and investment sectors if Ireland's ability to have direct flights internationally is not maintained.

But as of yet we have had no details, no guarantees from the government, not even a hint that they have even given these crucial issues a moment's thought.

Another issue raised by IMPACT is that Aer Lingus could go the way of Manchester United, bought in a hostile takeover, and saddled with debt to pay for the takeover.

Then there is the disclosure by ICTU that €27 million of our taxpayer‚s money has been invested in airlines around the world through the pension reserve fund.

So it's ok to invest in Air France, BA or even Ryanair. I'm sure the strategic business plans of these airlines were checked out before any investment was made - or maybe not - as €7 million was invested in Ryanair without any dividend yet from this firm.

Perhaps it all got spent on the newspaper ads attacking the Taoiseach.

These are all very cogent arguments as to why Aer Lingus should not be privatised.

Aer Lingus is the airline of choice for Irish people, not just those living in Ireland but throughout the world. For them it is a symbol of safety, of good customer care, of value for money and there is incredible goodwill from the people towards the airline because of this.

Given a choice, this I think is the airline that most Irish people would choose to travel on. This is not to say that you can run an airline on goodwill alone. Aer Lingus is in the successful position it is today much to the sacrifices made by its workforce. It has adapted to the new challenges that emerged after 9/11 and has come through where others failed.

Then there is the question of why does Aer Lingus exist in the first place? It was because there were no private sector investors willing to take the risk in setting up the company. There was no one with the long-term strategic view of how important the airline industry would become to the Irish economy, in terms of not just tourism but importing and exporting goods.

We are after all the most globalised economy in the world.

Aer Lingus became a vital part of the economic infrastructure of the state. It still is today. And as was the case in the 1930s there are still no private sector businesses either domestically or internationally with the long-term strategic view needed to secure the future of this company.

There are the carpet baggers who will gladly asset strip and dismember this company, turning it into a pale imitation of Ryanair.

In fact there is even a greater breath of vision needed for Aer Lingus in the time ahead. It needs to be developed in the context of a strategic direction for all the airline industry in Ireland, that would include on an all-Ireland basis, international and regional airports.

But unfortunately unless you support this motion none of this will ever come to pass. We will have instead the quick sell off, the glossy ad campaign, but no real thinking about the long term, no national strategy about the airline industry. So get ready for another bumpy ride, lots of turbulence, jobs lost and ultimately a crash landing.

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