neidin
10th Oct 2004, 21:52
Alan Ruddock has almost got it right here today. Sad that he does not realise that FR does not want pay more than EURO 1 at SNN - how do you feed the troops on a EURO.
Comment: Alan Ruddock: Aer Rianta could afford to be arrogant: Ahern allowed it
You can imagine the advertisement: “Five Cartier watches: €45,000; Mercedes for self: €50,000; payoff to acting chief executive: €750,000; thrill of spending the taxpayers’ money? Priceless.” Except for Noel Hanlon, the mercifully outgoing chairman of Aer Rianta, there would not have been so much a thrill as a sense of entitlement.
In his eyes, he and his favoured few had devoted years of service to the state, giving up their time and energy to nurture the fortunes of state-owned companies like Aer Rianta, the now defunct airport operator.
A token of our appreciation, for himself and others, was the least that the taxpayer could afford. It was both comical and deeply depressing: in his final acts we got a glimpse of the mentality that has frittered away our money on stupendously wasteful projects while all the time presiding over a company that, in his own words, gave Dublin a “Third World airport” after 10 years of Hanlon rule.
His Aer Rianta spent hundreds of millions tinkering with Dublin airport and sanctioned a truly astounding €140m to build a new terminal at Cork. But then it wasn’t his money, it was ours. He may have offered to pay for the Cartier watches out of his own pocket, but I doubt he’ll offer to cover the cost of the Cork terminal, or pay back the wasted millions in Dublin.
Instead of being shamed by the state of his flagship airport, Hanlon believes he has been “totally vindicated in everything I said and stood for over the years”. Translated, it means Hanlon devoted the latter years of his chairmanship to the subversion of government policy rather than the creation of airports that would best serve their customers: the airlines and their passengers. His goal was to frustrate and humiliate Seamus Brennan, and in Brennan’s demotion he saw both victory and vindication. Cue Cartier watches all round.
Hanlon represents all that is wrong with the stewardship of Ireland’s state-owned companies. A political placeman picked to serve as much for Fianna Fail connections as his business skills, Hanlon created a fiefdom, not a company. Ahern should have sacked him and his board as soon as they got in the way of reform, but the taoiseach is not a man to pick a fight. So Brennan was forced to work around Hanlon, devising a convoluted break-up of Aer Rianta that was unnecessary commercially, but which was essential politically.
Not surprisingly, not much has happened. Aer Rianta has been broken up, but its individual airports are no closer to being revitalised than they were when the government took office. The key decisions — expanding Dublin’s capacity so that it can handle new routes from low-cost carriers; agreeing a bilateral open skies agreement with America so that Aer Lingus can expand its transatlantic operations; and ending the Shannon stop-over so that it, too, can learn to live without an artificial life support system — have yet to be made.
Since all are potentially contentious and are certain to arouse opposition from trade unions and local interest groups, the chances of decisiveness between now and the general election are slim. Brennan’s reward for challenging the unions and the placemen was to be humiliated by his taoiseach.
Ahern’s reluctance to take tough decisions means that he is unsuited to running commercial operations, yet rather than edge himself away from state control of airports and airlines, buses, trains and even electricity generators, he seems to be moving back towards a belief in the value of owning “strategic” assets. He has not said it directly — the taoiseach is never the most direct of men: inference is as good as it gets — but the signals emanating from government are that privatisation will not be contemplated before the election.
There is no doubt that pragmatism plays a large part in his thinking — privatisation would put his government in direct and noisy conflict with his beloved social partners in the trade union movement — but there is also a suspicion that Ahern actually believes that state ownership is a good thing.
Underpinning the notion of strategic assets is the fear that if the state loses control of them then the state will suffer: if Ireland did not own an airline, so the argument runs, then there would be no guarantee that anybody would come and visit, and we’d all be stuck here. It is obvious nonsense, but it finds much favour across the political divide. If you doubt it, then ask RTE for a tape recording of last week’s Oireachtas subcommittee meeting where Willie Walsh, Aer Lingus ’s chief executive, had to sit patiently through lines of questioning that were often nothing short of moronic.
The cause of this rediscovered belief in the value of state assets stems, apparently, from the flotation of Eircom. The state-owned telephone company was sold, at a very good price, to the private sector. The bottom fell out of the telecoms market, the shares collapsed and the company was sold on the cheap to another group of private investors, who have since made a killing from their investment.
Strategically, however — so the argument runs — the state has suffered because it no longer controls the pace and scale of investment in our telecoms network, hence all the mutterings about broadband and its lack of availability. While it is possible to see where this argument is coming from, it makes little sense.
Does Ahern honestly believe that his government, or any other, should prioritise investment in telephone lines and aircraft? Does the government, faced by public anger at the state of schools, hospitals and public transport, really want to spend a billion a year on telecoms and another billion in the next few years on a new transatlantic fleet for Aer Lingus? And does the government honestly believe that the best way to run an airline in a viciously competitive market is to shackle it with the role of job- husbander and airport protector? We know, from painful experience, that government is not a good manager; it fails to run its day-to-day operations efficiently and it fails to manage its capital spending. The result is waste on a massive scale. How can anybody in government believe that it really needs more businesses to run, rather than less? Because, apparently, the market is not to be trusted.
Privatisation may not be a perfect answer for every state-owned enterprise, but if state- ownership is to be held up as a political ideal then it must be accompanied by a commitment to run those businesses properly. If Ahern wants to be a managing director in chief for those companies, he must act like one.
The airline industry moves at an alarming pace. The consultants’ report on Aer Lingus, which goes before cabinet next week, is already out of date. Regardless of the ownership structure, Aer Lingus has to be free to take the decisions necessary for its survival, and it has to be able to take them without political meddling. Can Ahern deliver? If Ireland’s airports are to develop, they need the injection of routes and passengers that can only be provided by Europe’s low-cost carriers. Ryanair, the second- biggest and most profitable airline in Europe, has said that it alone will deliver 20 routes, 5m passengers annually and 5,000 new jobs if it is allowed to build (and pay for) a competitive second terminal at Dublin airport. It has also made equally significant proposals for Shannon airport.
It should be a no-brainer for the government: no new public money required, 5,000 jobs gained, and that’s just in Dublin.
If Ahern truly believes in protecting Ireland’s strategic interests then he has to grasp the fact that those interests will be best served by providing the conditions in which the tourism industry can flourish, in which its airports can compete and win business and in which Aer Lingus can be freed to prosper, rather than shackled to fail.
The solution is to start letting go; to let professionals manage and to let the market invest. Otherwise the professionals will disappear (and who could blame Willie Walsh for jumping ship) and the state’s strategic assets will atrophy. The only winners will be the unions, who will see their power protected and their influence unchecked, and placemen like Hanlon, who will continue to build fiefdoms, not companies.
Comment: Alan Ruddock: Aer Rianta could afford to be arrogant: Ahern allowed it
You can imagine the advertisement: “Five Cartier watches: €45,000; Mercedes for self: €50,000; payoff to acting chief executive: €750,000; thrill of spending the taxpayers’ money? Priceless.” Except for Noel Hanlon, the mercifully outgoing chairman of Aer Rianta, there would not have been so much a thrill as a sense of entitlement.
In his eyes, he and his favoured few had devoted years of service to the state, giving up their time and energy to nurture the fortunes of state-owned companies like Aer Rianta, the now defunct airport operator.
A token of our appreciation, for himself and others, was the least that the taxpayer could afford. It was both comical and deeply depressing: in his final acts we got a glimpse of the mentality that has frittered away our money on stupendously wasteful projects while all the time presiding over a company that, in his own words, gave Dublin a “Third World airport” after 10 years of Hanlon rule.
His Aer Rianta spent hundreds of millions tinkering with Dublin airport and sanctioned a truly astounding €140m to build a new terminal at Cork. But then it wasn’t his money, it was ours. He may have offered to pay for the Cartier watches out of his own pocket, but I doubt he’ll offer to cover the cost of the Cork terminal, or pay back the wasted millions in Dublin.
Instead of being shamed by the state of his flagship airport, Hanlon believes he has been “totally vindicated in everything I said and stood for over the years”. Translated, it means Hanlon devoted the latter years of his chairmanship to the subversion of government policy rather than the creation of airports that would best serve their customers: the airlines and their passengers. His goal was to frustrate and humiliate Seamus Brennan, and in Brennan’s demotion he saw both victory and vindication. Cue Cartier watches all round.
Hanlon represents all that is wrong with the stewardship of Ireland’s state-owned companies. A political placeman picked to serve as much for Fianna Fail connections as his business skills, Hanlon created a fiefdom, not a company. Ahern should have sacked him and his board as soon as they got in the way of reform, but the taoiseach is not a man to pick a fight. So Brennan was forced to work around Hanlon, devising a convoluted break-up of Aer Rianta that was unnecessary commercially, but which was essential politically.
Not surprisingly, not much has happened. Aer Rianta has been broken up, but its individual airports are no closer to being revitalised than they were when the government took office. The key decisions — expanding Dublin’s capacity so that it can handle new routes from low-cost carriers; agreeing a bilateral open skies agreement with America so that Aer Lingus can expand its transatlantic operations; and ending the Shannon stop-over so that it, too, can learn to live without an artificial life support system — have yet to be made.
Since all are potentially contentious and are certain to arouse opposition from trade unions and local interest groups, the chances of decisiveness between now and the general election are slim. Brennan’s reward for challenging the unions and the placemen was to be humiliated by his taoiseach.
Ahern’s reluctance to take tough decisions means that he is unsuited to running commercial operations, yet rather than edge himself away from state control of airports and airlines, buses, trains and even electricity generators, he seems to be moving back towards a belief in the value of owning “strategic” assets. He has not said it directly — the taoiseach is never the most direct of men: inference is as good as it gets — but the signals emanating from government are that privatisation will not be contemplated before the election.
There is no doubt that pragmatism plays a large part in his thinking — privatisation would put his government in direct and noisy conflict with his beloved social partners in the trade union movement — but there is also a suspicion that Ahern actually believes that state ownership is a good thing.
Underpinning the notion of strategic assets is the fear that if the state loses control of them then the state will suffer: if Ireland did not own an airline, so the argument runs, then there would be no guarantee that anybody would come and visit, and we’d all be stuck here. It is obvious nonsense, but it finds much favour across the political divide. If you doubt it, then ask RTE for a tape recording of last week’s Oireachtas subcommittee meeting where Willie Walsh, Aer Lingus ’s chief executive, had to sit patiently through lines of questioning that were often nothing short of moronic.
The cause of this rediscovered belief in the value of state assets stems, apparently, from the flotation of Eircom. The state-owned telephone company was sold, at a very good price, to the private sector. The bottom fell out of the telecoms market, the shares collapsed and the company was sold on the cheap to another group of private investors, who have since made a killing from their investment.
Strategically, however — so the argument runs — the state has suffered because it no longer controls the pace and scale of investment in our telecoms network, hence all the mutterings about broadband and its lack of availability. While it is possible to see where this argument is coming from, it makes little sense.
Does Ahern honestly believe that his government, or any other, should prioritise investment in telephone lines and aircraft? Does the government, faced by public anger at the state of schools, hospitals and public transport, really want to spend a billion a year on telecoms and another billion in the next few years on a new transatlantic fleet for Aer Lingus? And does the government honestly believe that the best way to run an airline in a viciously competitive market is to shackle it with the role of job- husbander and airport protector? We know, from painful experience, that government is not a good manager; it fails to run its day-to-day operations efficiently and it fails to manage its capital spending. The result is waste on a massive scale. How can anybody in government believe that it really needs more businesses to run, rather than less? Because, apparently, the market is not to be trusted.
Privatisation may not be a perfect answer for every state-owned enterprise, but if state- ownership is to be held up as a political ideal then it must be accompanied by a commitment to run those businesses properly. If Ahern wants to be a managing director in chief for those companies, he must act like one.
The airline industry moves at an alarming pace. The consultants’ report on Aer Lingus, which goes before cabinet next week, is already out of date. Regardless of the ownership structure, Aer Lingus has to be free to take the decisions necessary for its survival, and it has to be able to take them without political meddling. Can Ahern deliver? If Ireland’s airports are to develop, they need the injection of routes and passengers that can only be provided by Europe’s low-cost carriers. Ryanair, the second- biggest and most profitable airline in Europe, has said that it alone will deliver 20 routes, 5m passengers annually and 5,000 new jobs if it is allowed to build (and pay for) a competitive second terminal at Dublin airport. It has also made equally significant proposals for Shannon airport.
It should be a no-brainer for the government: no new public money required, 5,000 jobs gained, and that’s just in Dublin.
If Ahern truly believes in protecting Ireland’s strategic interests then he has to grasp the fact that those interests will be best served by providing the conditions in which the tourism industry can flourish, in which its airports can compete and win business and in which Aer Lingus can be freed to prosper, rather than shackled to fail.
The solution is to start letting go; to let professionals manage and to let the market invest. Otherwise the professionals will disappear (and who could blame Willie Walsh for jumping ship) and the state’s strategic assets will atrophy. The only winners will be the unions, who will see their power protected and their influence unchecked, and placemen like Hanlon, who will continue to build fiefdoms, not companies.