Airline latest victim of economic quackery known as privatisation

WHEN the bill that enabled the privatisation of Aer Lingus was introduced to the Dáil, it was debated over four days.

Those four days were spread over the period October to December 2003 and every deputy who spoke in the debate, from the Government and the opposition, assumed what they were discussing was the flotation of Aer Lingus. Except one. The minister who moved the bill, and who had written it, was Séamus Brennan. At no point in his speech did he admit Aer Lingus was on the point of being sold.

In fact, in the opening line of his speech, he said: “The main purpose of this bill is to give effect to the employee share ownership plan, ESOP, agreed by the Government and Aer Lingus unions and to provide for a legal framework to facilitate a process of external investment in the airline in the event that the Government embarks on such a process.”

And again and again throughout his speech, he said the Government had made no decision to sell the national airline.

And he ended his speech by saying: “No Government decision has been taken to dispose of Aer Lingus — let me make that very clear. I have a recommendation from the company, giving me its opinion… There are arguments on both sides of this question and, no doubt, those will be expressed in the House. There are arguments to the effect that Aer Lingus is a strategic company… and that, as such, it is best in State ownership. I understand that point of view. There is also the view which the company put to me, as I have just mentioned, that, into the future, it is best to have access to the marketplace… It is what is good for Aer Lingus that counts and it is on that basis we should study the future options for the airline, casting our minds forward, perhaps five or 10 years, to consider what type of Aer Lingus we will have at that time.”

When you read the debate in full, it’s clear that not one deputy on the Government side of the Dáil believed the minister. But that didn’t matter. Every single one of them spoke in favour of the bill and in favour of privatisation — including several from the Shannon region.

Not a single Government deputy in that debate, over the four days it was discussed, mentioned any possible risk.

It’s not as if they weren’t warned. A lot of us, at the time, expressed concerns about the strategic issues that were arising.

In October 2003, for example, as the bill was being debated, I wrote here that “the moment this bill passes and becomes part of our law, the Government will have the right, without telling any of us anything except to mind our own business, to sell as much of Aer Lingus as they want to, for whatever price they want to, to whoever they want to… Is that a good idea?

With our dependence on tourism and international investment, do we need a national airline for vital strategic reasons?

“Will the sale of Aer Lingus result in the airline being broken up, its valuable assets (such as its transatlantic routes and its long-time strong position in Heathrow) being sold off individually? Will the new buyer maintain the route network built up over many years by Aer Lingus, or will any of those routes in conflict with the buyer’s own operations be swiftly shut down?

“Who will the buyer be, and to what extent will they have a commitment to Ireland? How many jobs will be threatened? How much of the investment made by the people of Ireland in our national airline will be returned to us following the sale?”

We’re beginning to find out some of the answers to those questions now, aren’t we? And don’t get me wrong here — the harsh truth is that the moment Aer Lingus stopped being our national airline, we lost the right to tell the company what it should do. The decision to increase the number of Belfast slots has to be seen against the background of a much bigger picture.

But what it throws into focus is not so much the issue of privatisation, but how we go about it. Whatever my own feelings about privatisation of State assets in principle, what is surely fundamental is that each individual act of privatisation has to be approached strategically.

The fact is that no matter how it’s dressed up, the day Aer Lingus was sold, so too was control of the Heathrow slots. Although their importance was stressed time and time again in the debate by the opposition, not one deputy on the Government side referred to the Heathrow slots. Except, oddly enough, the minister himself. In winding up the debate, he said, referring to a number of opposition concerns: “There are also concerns about the Heathrow slots and the commitment of any new owners to regional development. I share these genuine concerns.” Sadly, he never elaborated.

The point is this. They knew what they were doing when they privatised Aer Lingus. And they didn’t care.

But there wasn’t anything new in that — and it’s probably not the last time either. Every time we have discussed privatisation in Ireland in the past 10 years or so, we have done so in terms that have become a byword for economic quackery and charlatanism. Competition, deregulation, efficiency, development, growth, the interests of consumers. These are the words that are always thrown about when we want to privatise something else. Time after time, these are the objectives that are never achieved.

TAKE Dublin city, for example. Dublin is a city that receives its TV reception through cable to a far greater extent than most other European cities.

The extent of cabling ought to have meant that every household in Dublin had access to cheap broadband and much cheaper (if not free) telephony years ago. Instead of setting about that as a strategic objective, we sold the company, Cablelink, that had put Dublin in that position. And now throughout Dublin we have hundreds of TV channels, most of them showing endless repeats of junk. And the true cable potential has been lost.

Take our taxi business, at least in the capital city. Utterly deregulated, bursting with competitive elements. Without wishing to denigrate individual taxi drivers (many of whom I know from conversation agree with me), we now have thousands of extra taxis. They are often dirty, frequently unsafe, many overcharge as often as they can get away with it, and you still queue all the time. As a monument to competition, it’s a disgrace.

And we’re still at it. We’ve taken the first steps towards the privatisation of our airports, in the break-up of Aer Rianta. We’re preparing firstly to break up the ESB (in fact that’s already started), and then to privatise some, if not all, of it. When are we going to learn to stop and think about the implications of these rushed, ill-considered public policy decisions? When are we going to make the privatisers stop and think before they destroy everything?