Aer Rianta will become a semi-State body and will pay local authority rates and Corporation Tax for the first time, under legislation introduced yesterday by the Minister for Public Enterprise, Ms O'Rourke.
The Minister said the Air Navigation and Transport (Amendment) Bill was "simply a long-overdue measure to regularise the current agency position of Aer Rianta and put it on the same footing as other commercial State-sponsored bodies, such as the ESB and Bord Gais".
Fine Gael gave a cautious welcome to the Bill while Labour said the Minister was "setting up Aer Rianta for full privatisation". Ms O'Rourke rejected this and said the Bill had "absolutely nothing" to do with privatisation.
"It provides Aer Rianta with a measure of commercial freedom and responsibility, while at the same time regulating those areas in which the exposure of the Exchequer and thereby the taxpayer is greatest," she said.
The Minister pointed out that in 1969 the then Minister for Transport and Power, Mr Erskine Childers, planned to regularise the status of Aer Rianta "at the earliest possible opportunity". In 1996 the company and its subsidiaries employed more than 2,700 people with a turnover of £231 million, a profit of £39.4 million and a dividend to the Exchequer of £12.9 million, the Minister said. It dealt with almost 12 million passengers, 146,000 tonnes of freight, which represented a 13 per cent increase in passengers and 18 per cent rise in freight carried.
Fine Gael's public enterprise spokesman, Mr Ivan Yates, said his party supported the change in Aer Rianta's status from agency to a corporation and the transfer of property from the Minister to the new company.
He warned, however, that the legislation needed "careful scrutiny" in order to develop Irish airports and aviation in a vital sector given Ireland's island status.
"If this legislation is an attempt to grab £15 million per annum in taxation from Aer Rianta, it will be sadly short-sighted," he said.
"Heretofore, Aer Rianta has been exempt from local authority rates and Corporation Tax. They will now have a `double whammy' of a rates bill of around £4.5 million and a Corporation Tax liability of over £10 million, based on their present level of profits.
"If the company is expected to pay this tax, the same dividend to the Exchequer and lose duty free status in Europe, the job security of its 2,000 employees and its survival will come under serious threat."
Mr Emmet Stagg (Labour, Kildare North) warned, however, that the Bill would allow the company to be sold without further reference to the Dail. "Aer Rianta could sell the airports, and nothing in the Bill as it now stands could prevent that," he said.
He sharply criticised the Department of Finance and said that a number of the Bill's sections, as previously drafted when his party was in office, had been deleted. "All of the changes made were dictated by the Department of Finance," he told the Dail. "The Bill fulfils the agenda of the Department of Finance which is usually to tidy up and sell off. The Bill is a charter for privatisation."
He said that instead of strengthening public enterprise the Minister was "caving in to the demands of the Progressive Democrats to put in place a mechanism whereby Aer Rianta would be off-loaded to the highest bidder."
He complained there was no provision for worker-directors on the board of the new Aer Rianta, but Ms O'Rourke rejected this and said worker-directors were included in the Bill.
All deputies pointed out how crucial duty-free status was to Aer Rianta, given that 40 per cent of its profits were from the sale of duty-free goods.
Ms Deirdre Clune (FG, Cork South Central) said duty-free "plays a major role in keeping down the cost of air travel and if it is removed it is the low cost airlines would be the most detrimentally affected". She expressed concern about the possible closure of regional airports and said that Cork airport depended on duty-free sales for profits.
