Planned cut to CIE subsidy will see ‘increase in fares’

THE CIE Group of companies is projecting a combined loss of €25 million this year, with passenger numbers expected to drop by 5% in 2011.

The projected loss is disclosed in an internal Department of Transport review that has found that the planned 20% reduction in subsidy announced for the CIE group would lead to “a radical increase in fares and significant service reductions”.

Last week, the Minister for Transport, Tourism and Sport, Leo Varadkar announced an 8% or €21m reduction in subsidies for the CIE group next year and confirmed an additional €32m reduction between now and 2015 resulting in the overall 20% subsidy reduction.

However, a Department of Transport report to the Dept of Public Expenditure and Reform on the Government’s Comprehensive Expenditure Review has found that the 20% reduction between now and the end of 2104 “would necessitate a radical increase in fares and significant service reductions”.

The projected combined €25m loss this year follows operating losses in 2010, 2009 and 2008.

The report found: “Given the level of losses in the CIE Group in 2008-2010 and further expected losses this year, together with significantly reduced subvention for following years, the financial sustainability of the Group will be a key issue to be addressed by the new chairpersons.”

The report also records that LUAS is expecting to report a loss this year.

Last Friday, in response to Transport Minister Varadkar cutting the subsidy, Dublin Bus, Bus Eireann, Dart and Luas announced fare increases and Irish Rail is due to announce a fare increase later this month.

In its submission to the Dept, Irish Rail state that in response to the 20% subvention, fares will increase by 8% next year and 4% per annum thereafter.

According to Irish Rail, the 20% subvention cut will contribute towards the company recording combined losses of €61.8m between 2011 and 2014 with Irish Rail recording a net profit of €3.4m in 2015.

The figures show that Irish Rail will pay out €49m in voluntary redundancy costs over the period with payroll costs reducing from €198.5m to €178.7m over the period.