This topic has found its way onto another thread, and given that it has occupied lots of newspaper space and airtime over the last few days it is probably useful to discuss it here in terms of the economic issues. This has been a bit like a tennis match with the ball going back and forth for some time so it is hard to keep track of all the points.
On the one side we have Michael O’Leary who claims he wants to (re)create 300 jobs, but needs Hangar 6. On the other side we have Mary Coughlan and the DAA who say Hangar 6 is not available, as Aer Lingus has a lease on it.
While Michael O’Leary appears happy for other airports to build a facility for him, he does not seem to want the DAA or, given that he appears to prefers not to deal with them, the IDA to build a new hangar for him at Dublin airport. It would appear that the reason for this is cost – he claimed on radio that hangar 6 would be available at a low cost. No doubt Aer Lingus is also getting it at a low cost. In the debate some have argued that Ryanair is pursuing a different agenda – to open Hangar 6 as a terminal. Ryanair say they would be happy to sign a legal agreement preventing them from doing so. So what is this all about??
In a letter to the Irish Times the chairman of Aer Lingus, Colm Barrignton, makes the point that hangar 6 is the only hangar at Dublin airport capable of accommodating wide bodied planes, and that it is extensively used. Could the ability to accommodate wide bodied planes be the key to this scrap? At the moment Ryanair do not have any such aircraft, but might Ryanair have plans to get into the medium- and long-haul business? Aquiring hangar 6 would allow them to build a base in Dublin while at the same time discommoding Aer Lingus, which would be a competitor in that market?
78 replies on “Hangar 6”
Someone recommended this letter by Colm Barrington today, I must read it later on.
Thanks for raising this. This is my view:
The Dublin Airport Authority are Aer Lingus before Ryanair arrived. No wonder they are so paranoid he might turn the hangar into a low-cost terminal. He has said he is happy to put legal undertakings in the lease ruling this out. But suppose the DAA’s worst nightmare happens – competition. The DAA have just built a brand new terminal at presumably lowest cost and maximum efficiency. Surely they should be well able to compete? If they aren’t, we MUST give Ryanair a terminal. The minimum wage and social welfare have been cut. Don’t we want to lower all costs? That’s not the way it works in Ireland though. The DAA is an insider patronage pork barrel. Only outsider peasants get their living standards reduced. The aristocracy’s DAA estate must be protected at all costs.
P.S. I prefer to avoid Ryanair unless absolutely necessary but thanks to them it’s a lot cheaper to fly Aer Lingus.
P.P.S. Various calamities.
You seem to be inviting a bit of speculation at the end of your post. I think it is widely accepted that Ryanair’s attempted takeover of Aer Lingus was partly motivated by a desire to get into the medium/long-haul segment. DG COMP vetoed this mainly on the farly narrow “textbook” grounds that the combined operation would have an 80% share of Dublin Airport traffic and this would not be “a good thing”. This ruling could be, and was attacked, on a number of grounds. For example, it’s not clear whether this was based on an appropriate definition of the “relevant market”, it took no account of Ryanair’s track record as a no-frills, fare-cutting, aggressive player and the fact that any price-gouging on Irish routes would be almost certain to attract inroads by competitors.
Needless to say, DG COMP’s decision provoked speculation it was motivated by other factors designed to spike Ryanair’s guns. It may be that the same factors are in play again.
@Oliver Vandt – but Ryanair have said that they do not want to turn hangar 6 into a terminal – so what is it they really want?
Ryanair want Aerlingus.
@Paul Hunt – “It may be that the same factors are in play again.” – maybe, but Aer Lingus hold the lease and are using the hangar. If my speculation were correct, and you are lending some support to it, there might be more than 300 jobs on the line.
Another Micheal O’leary Kite flying exercise. He never had the any intention of opening a maintanence facility in Dublin Airport. Just creating cover for a decision made long ago and he can point the finger of blame at others.
There is something about getting ‘value for money’ from our public service, which is central to this entire Ryanair Hangar no. 6 debacle. If you look at it, companies such as Ryanair, formed their business plan and company philosophy totally around the concept – do not be like one of the Irish state owned companies, which Lemass set up, all those years ago. Because Ireland was in danger of missing out completely on the global boom, post WWII. (great documentary on RTE web site, about Lemass btw)
Take Bord na Mona as an example. Eddie O’Connor, the guys at NTR etc, all reckon, it was from the difficulty of having to do business with Ireland’s civil service, they decided to grab together some family seed funding, and go and do Airtricity. Airtricity’s strengths and ability arose from a difficulty of doing any business on the island of Ireland. Like Ryanair, it seems that these companies and individuals involved, do extremely well outside of Ireland, arising from this initial frustration. Even, there was an article about ‘aircraft leasing’ this week in the Irish Times, by Fiona Reddin journalist.
I mean, it was the same with Zoe developments I know – totally caught out the establishment and the system in general, in one quick charge – because the existing system didn’t know what was up or down. What the latest comments about Hangar no. 6 do suggest, is that responsibility for decisions have again, dispersed throughout so many different state departments, agencies etc, etc. That is not something that any minister for Trade, Entreprise and Employment can sort out. The problem is embedded into our system, and goes beyond any individual elected representative, good, bad or indifferent.
Same with ministry for energy, and that for environment. Two green ministers who speak together (one would expect) very well. But their departments are completely different cultures, who use separate consultants and experts etc for all their business, and do not mix. Again, there is nothing that either minister Ryan or minister Gormley can do about that. It seems that ‘value for money’ is hard to obtain from the state bureaucracy on almost any project. It seems to be a huge risk to try and ask them to do anything.
Ryanair, Airtricity, Zoe developments, you name it – they all figured this out, and exploited it, for everything it is worth. BOH.
This article by Sarah Carey, from last December, also springs to my mind for some reason, given the points I have made above.
You have slightly misread Barrington’s letter.
He does not claim that this is the only hangar that can be used for wide-bodied planes. What he claims is that it is the only hangar that can be used for two wide bodied planes at once. AL has seven wide bodied planes and only does light maintenance in the hangar. I’d be surprised if two of them end up in the hangar together very often.
AL is using this hangar, but it doesn’t actually need it. It could use the other hangars if it needed to.
Obviously, AL does own the hangar. From the information I have seen so far, it is a little hard to understand how AL ended up with a lease on this hangar without Ryanair having a chance to bid for it. Maybe I am wrong in thinking this.
The crux for me is that AL couldn’t afford to take the lease on this hangar, the same way I can’t afford to buy a Bentley. They just don’t seem to have the cash to be spending on such a massive piece of infrastructure that they don’t actually need.
Maybe Aer Lingus is planning to open a terminal?
They should give him the hanger he will have Aer Lingus within the next two years. What exactly would be wrong with building a low cost terminal at the Dublin Airport? Seems to make perfect sense to me, granted it would bankrupt the quango that own the airport at the moment. We would get the jobs and a more competitive airport and DAA would no longer be able to piggyback on Ryanair and its customers.
The government is totally out of touch with reality. Ms. Coughlan did not even have a clue as to how many people Ryanair employ, go and look at the embarrassing “Hard Talk” interview I thought she was going to break down in tears if he asked her another ‘hard’ question. Mary O’Rourke’s contribution to the debate was “I think he has a problem dealing with powerful women”. Who would that be I wonder? The insiders hate O’Leary because he is a man of action dealing with a shambolic government who’s life blood is borrowing from the future every single day, year in, year out. If FF were running a business it’s shares would be de-listed and its board of directors under investigation. He is not in anybody’s pocket and that is the real problem.
There are three reasons why he is not getting hanger 6 politics, politics, and more politics. The jobs were not as important as politics, so lads go sign on the dole.
“Ryanair, Airtricity, Zoe developments, you name it – they all figured this out, and exploited it, for everything it is worth.”
Maybe to qualify that some more:
What it means also, is that Irish companies are grown in order to exploit massive gaping holes, left by the ineffective-ness of the state. Rather than concentrating on build-ing robust, sustainable business models to fuel company growth and development over the long term. There is too much cash to be made, in exploiting the inefficiency of the ‘system’ in Ireland. This leads to gigantic companies in Ireland, such as Zoe, which then fail in a spectacular fashion – passing the bill back onto the Irish people. BOH.
@Brian O’ Hanlon – are you saying Ryanair is going to fail spectacularly??
More seriously, I raised the issue of infrastructure financing less than 2 weeks ago, but there were few takers on the topic. I heard some of the (sloppy) arguments from the Sunday Independent repeated this morning by the new head of RIAI today.
Clearly airport charges (that are affected by the ownership and financing of the airport) are something that explain a lot of the Ryanair moves.
I don’t want Aer Lingus taken over by Ryanair. It would be naive to believe that Irish consumers would benefit. Even if O’Leary was a beneficial dictator there is no guarantee his successors would be. Also, I don’t fly Ryanair unless it’s unavoidable. What would I do?
Likewise I don’t believe we can afford the DAA’s monopoly any longer. We need masses of tourists now and giving O’Leary a terminal – the old terminal perhaps, or part of the new terminal, or a dolled up hangar – is the easiest, quickest way. We have a hotel mountain and a house mountain. FF/PDs solution is to cut the minimum wage for hotel staff and let the megadevelopers keep their hotel taxbreaks while closing the hotels they built them with. Enough of the madness. Give O’Leary a terminal and assist him in every way to fill it. And if it works try to sell him Shannon Airport – at the moment it’s just a US military refuelling station.
I accepted the challenge to prove a prediction of Ryanair’s failure.
As for the new head of the RIAI, I hadn’t anything too clever prepared, but most of it was said in the ‘Gaps that should not exist’ blog entry, before this one:
Anyone ask Fingal Co. Co. how they felt about going from 700k to 350k in terms of rates received, per the letter from O’Leary to IDA?
O’Leary is looking for a free lunch and to screw Aer Lingus in the process – who are already employing workers at Dublin and it’s likely the rationale for signing the Hanger 6 lease in the first place is that some maintenance outsourced by his predecessors to France will come back to Dublin as contracts expire.
If O’Leary wants a shed with a runway, sell him Baldonnel and move the Air Corps to Shannon.
“…it’s likely the rationale for signing the Hanger 6 lease in the first place is that some maintenance outsourced by his predecessors to France will come back to Dublin as contracts expire.”
I hope so and that explains Aer Lingus’s rationale. What was the DAA’s rationale in negotiating the lease of this giant facility secretly? Aer Lingus is a private company. The DAA is a public body. Surely they should have maximised the return on this mega asset by putting it out to tender?
“If O’Leary wants a shed with a runway, sell him Baldonnel and move the Air Corps to Shannon.”
Not a bad idea. But we now have two terminals underused. We have a useless monopoly in control of both. Why don’t the DAA sell O’Leary the old terminal and give the cash to their owners, the Irish citizen. The DAA keep their superefficient new terminal. We get the money and competition – it’s Win Win.
Area 6? Isn’tthat where they keep dead aliens, flying saucers and €250 million worth of BOI ordinary shares (you know, those ones they gave us in lieu of a cash payment)?
I may be losing it, but do I not remember a statement by MOL that he was henceforth devoting his efforts to bringing down this Government?
If I’m right it might put the economic aspects of the case in a slightly different perspective. It is very worrying that nobody has referred to this statement in the current debate.
If I’m wrong I should retire gracefully, again 🙂
Like Willie O’Dea, and the finance fraternity, the government believe they are the real victims in the Irish Great Depression. Not those 200,000 unemployed, or the tens of thousands of emigrants, or the disabled, or the public servants, or taxpayers, or those who have lost their house or……
No, the people who are really suffering are the government.
That should have read, “200,000 extra unemployed since Brian Cowen took over”. We were far away from full employment even then.
Colm Barrington went straight from the board of the DAA to chair of Aer Lingus in Aug 2008.
“AER LINGUS has appointed experienced Irish aviation executive Colm Barrington as its new chairman…
Mr Barrington will now step down from the board of the Dublin Airport Authority, where he has served since 2004.”
And a resident of the famous Sorrento Terrace in Dalkey:
“However, after the flotation of GPA was aborted in the early ’90s, the Bank of Ireland, which had lent him $1.5m against the value of his shares, froze $500,000 in Colm Barrington’s bank account. He took the bank to court…The High Court ruled in Colm Barrington’s favour and, fortunately for his neighbour-to-be, granted him full legal costs.
Very interesting, to see how this discussion has developed – i.e. that it is about AerLingus and Dublin Airport Authority competing tooth and nail, with the evil force of Ryanair. That is quite interesting. If you read my blog entry, Ryanair to Fail which looks at a hypothetical situation really, it presents a different kind of perspective. One in which disruptive Irish companies, do depend on less efficient state run enterprises, to exist in the same market, for the low cost business model to even work. For instance, supposing AerLingus folded in the morning – how would coffins arrive home to Ireland by air? Obviously, Ryanair do not want to carry that kind of responsibility. It pays them to keep AerLingus in the game. It is sweet that Michael O’Leary can keep up the charade of a ‘battle’ with AerLingus, because the minute they are gone, his profit-making machine takes a big hit. BOH.
There is a lot in what you say. Ryanair’s treatment of their customers, especially in the old days, was reminiscent of the Irish strong farmer attitude to the hired hands. They are better now but if fuel prices went through the roof then all bets would be off.
Of course regular users of Dublin Bus get the Ryanair experience every day, for a much higher cost.
The 10.20pm no. 18 bus didn’t come the other night. We waited around for the 11.00 bus, but it didn’t come until closer to 12.00. That is a long time to stand in the cold waiting for nothing I can tell you. You would feel like a bit of a sap. BOH.
I used that route myself at one time. I hope that one day everyone in Dublin Bus connected to the No. 18 is sucked straight into hell. When I used to get the 17 from UCD at night I would check the time of the bus after the next one due. It was a much better predictor.
Those late buses really need to be better. I don’t depend on them too much. But other people I know do, and the go through that crap every evening. The gap of one hour between buses at that late hour, really means, if a bus doesn’t run, you are left in the cold for 2 no. hours. A lot of folk, who stand on those stops work long hours on minimum wage also, but aren’t treated very well at all. Keeping the wheels of commerce running etc. BOH.
I apologise for asking an off-topic question, but your discussion of buses is pretty far off as it is. So here goes. Why do persons involved in building (and related activities) write “no” after numbers? Is it not clear that “2” is a number? What extra information is conveyed by adding “no”?
“2” could be a value of any kind, but “2no.” means a physical quantity of two, not two inches, mm or anything like it, I believe!
MOL is quite capable of taking on the establishment. More power to him. I do not know the ins and outs of this, but fullest use of assets is vital these days. Building more is pointless if there is under use of existing facilities. Government involvement in commercial facilities has been successful, in a less competitive market than exists nowadays. The DG Comp ruling, as represented, seems bizarre.
There is something rotten in Dublin airport, I recall the McEvaddy matter, too. Sell it off! Most of the employees are near retirement? Take time but competitiveness may be worth it. The post about the plethora of hotels and tourism facilities should be re-read!
The suggestion about Baldonnel has great merit! It might even be made into a private airport. I have already suggested disbanding the armed forces as the admin of three services that provide no actual service is utterly unnecessary as is the purchase of weapons etc. Unless we intend to go to war? We certainly cannot defend ourselves with what we have and now is a good time to economize. North Korea could be planning to take Kerry but so what?!
1. Following George Lee’s media blitz last week, we had the Ryanair media offensive this week and again it appears too many took claims at face value.
2. It would be strange if Ryanair was interested in filling most of the positions with former workers from the highly unionised SRT/Team Aer Lingus operation.
3. As for the number of jobs, “up to” is the operative term.
There is a reason why IDA Ireland does not release statistics on realised jobs after 3 or 5 years compared with initial announcements.
4. Discussions with the IDA appeared to have ended last September and the PR offensive began on Sunday, days after the announcement of 200 planned jobs in Glasgow.
5. A hangar of the dimensions of Hangar 6 could be built at Dublin Airport and Ryanair would likely get a very good deal.
6. It is still unclear whether Ryanair is seriously considering Dublin as the location for the service rather than reminding other contenders in Europe, via massive scale free publicity, that they better sharpen their pencils.
7. IDA Ireland would likely be funding a largely Eastern European workforce in Dublin.
8. Ryanair’s penchant for bullying is a reminder what would happen if it controlled most Irish aviation.
We had another example of corporate bullying this week with the report that Tesco was auctioning off its shelf space.
The Irish Independent is reporting today that O’Leary wants Hangar 6 to become Ryanair’s new Hq and would not accept a hangar without office space.
The Indo says he denied yesterday, however, that this was the sole reason for originally seeking the premises last year.
@Michael Hennigan – good summary. Presumably the IDA could build a new hangar with office accomodation, so that in itself can’t be the stumbling point.
Most of the Ryanair actions revolve around costs and they are masters at minimising those. Apart from airport charges there is also the €10 tourist tax which Michael O’Leary has been targetting for some time.
The MSM are easily involved in order to sway public perception.
This link discusses the coverage of court decisions. Where some matters are suppressed by the MSM. The art of PR is also to keep material hidden. This sort of thing also happens in Ireland. The courts should be made available on line, so the public may see justice done. Or is it only to be available when whitewash is applied? The DIRT enquiry.
@ Brian J Goggin,
Good question. I found it weird myself the first time I started to get project briefs in Bolton Street as a student. I remember a while back, a client was too miserable to add a fifth steel beam to his roof structure beside the sea. The wind wipped the roof off in a storm. The drawings specified 5 no. steel beams spaced evenly apart (the purpose of the fifth was to strengthen gable end, where the wind would lift up the flat roof).
The last really bad mistake I was involved in, was to assume a steel fabricator would use 3 or 4 mm steel plates on another roof. I changed steel fabricator for that job, and assumed he would read my mind. I never specified the gauge of the metal. What arrived on site was 1.5mm plate, and couldn’t be used. The steel plates were on a critical path, and if screwed up the program of about 5 no. other trades who were waiting to start. After a million other phone calls, and roughly 3 no. weeks later, the steel contractor was gone of the site, and not coming back to do my bit. I finally got the roof contractor to ‘jimmy’ together something with cold pressed metal (his insurance didn’t cover hot torch welding at heights). It was a desperation solution and not ideal from a durability point of view. But it reminded me again, if I had faxed the steel gauge to the fabricator, I could have avoided 3 no. weeks worth of program loss.
When you read those 2 no. examples above, you see how numbers in construction, can jump up and bite you, if you aren’t aware. The young guys are generally reckless, until they learn the hard way. I have learned myself, a good few times now. BOH.
Just when you thought Cowen Coughlan couldn’t get any worse…
“RYANAIR has written to the Taoiseach demanding he correct “false claims” he made in the Dáil this week in relation to the dispute over job creation at Dublin Airport.
In one of two letters sent to the Government yesterday, the airline’s chief executive told Brian Cowen that the claims he made in the Dáil were damaging and defamatory towards his company.”
Not only that:
“In a second letter Mr O’Leary wrote to Tánaiste Mary Coughlan: “I understand from today’s newspapers that you wrote to Ryanair yesterday,” he wrote. “In your haste to circulate this letter to the media, perhaps your office ‘forgot’ to post or fax the letter to Ryanair since we still have not received it.”
@ Michael Hennigan,
“Discussions with the IDA appeared to have ended last September and the PR offensive began on Sunday, days after the announcement of 200 planned jobs in Glasgow.”
I do like that observation, very astute.
“We had another example of corporate bullying this week with the report that Tesco was auctioning off its shelf space.”
The thing about Tesco, I think, it is about one set of (Irish) people bullying another set of (Irish) people. That is the oddest thing about it. That is why I wrote the blog entry linked above, Ryanair to Fail, which might be a perfectly ridiculous kind of hypothesis to work with. But it did lead me, by coincidence, to the look at the legacy of Sean Lemass’s companies in Ireland. How the ill-function-ing of them, created the opportunity or space, in which many of Ireland’s leading entreprises over the past couple of decades flourished. We didn’t quite go so far in Ireland, as the full oligarch class type of thing, as they did in Russia. But if you think about it, what we do have in Ireland is a more subtle, balanced and more sophisticated kind of approach, than simply robbing the state owned companies outright.
The approach we have, is to get the state owned companies to do loss-making, grunt work at taxpayer expense, while the private sector gets to pick and choose as it pleases. Narrow bodied as opposed to wide bodied. In the power sector, the ESB chuggs away providing the nasty, un-clean, high Co2 rate of emission base power load to the power grid. While someone else gets to be ‘clean’, forward thinking and innovative.
It was the same in telecommunications, when Esat Digifone first came on the scene. I haven’t looked into agriculture properly as yet. But if I did, I bet I would find the exact same parallels. Here is the thing, Colm McCarthy has commented in the past, that the ‘growth’ in the economy we witnessed in Ireland, might have been fabricated. It wasn’t really there. I am beginning to understand the same, about Irish start-up companies in communications, power, transport, construction and the Lord only knows what else. It all amounts to a false kind of private sector entreprise – simply an accounting ‘trick’ to move numbers from column ‘A’ to column ‘B’. BOH.
“PRESSURE is mounting on the government to explain why a €13m Ryanair offer to take over an airport hangar and create 500 jobs was turned down.
New revelations raise questions about why the proposal was not pursued and Aer Lingus was instead granted a legally binding lease on hangar 6 at Dublin Airport…
The letter was sent to the chief executive of the IDA, Barry O’Leary, before SR Technics pulled out of Dublin Airport.
The proposal from Mr O’Leary offered the “largest job creation success story in Ireland in 2009″.”
Ireland is the Vatican of mature, small, north European democracies. The real question is whether the opposition want VATICAN 2 TIMES 1000, or just a few changes to the liturgy.
Hangargate is going nuclear.
Poster MPB on another forum:
“O Leary has demanded an apology from Cowen for telling lies about Ryanair in the Dail. He said that the lies undermine and harm Ryanair. He has the documented proof that Cowen lied.
If Cowen apologises he is admitting he lied to the Dail and must resign.
If he does not O Leary will hound him out with the proof that the Govt. turned down the offer of 500 jobs at Dublin Airport for reasons to do with the vanity of FF.”
“FF are going to claim it was the DAA and nothing to do with them. Will the Greens swallow that?”
“O Leary was clever. He never dealt with the DAA. he dealt directly with the IDA and Mary Coughlans Dept. and he printed all the correspondence in last Sundays Indo.
He has them by the short and curlies and they know it, that is why they are ignoring it. They are hoping by doing this it will all go away.
I only hope that the opposition are on top of this.”
Look at the quality of appointments to State boards. Recently Dempsey appointed one Gerard Collins of West Limerick to the board of DAA. And DAA still has some sort of overlordship with respect to Shannon and Cork airports.
What does Mr Collins know about the airport business?
It could be worse – he has been on a lot of airplanes. FF originally wanted to appoint Denis Bergkamp.
This is O’Leary’s milder statement on 18th Feb.
Check out the one from the day before:
@Tony Demello – the posters to the other forum ought to put their comments here themselves.
It seems that this story is going to rumble on.
I will truthfully come forward as a self-confessed Green politics advocate any day of the week, to just about anyone I meet. But, on one condition. I do not believe it is sufficient to go rolling out a ‘green economy’ and aiming to create so many ‘green collar jobs’, unless, we can support all of that with solid economic underpin-ings. I spoke about it off and on, at IE blog site in recent times.
I appreciate what minister Eamon Ryan is trying to do, saying 2 no. words all of the time – innovative solutions – about mortgage arrangements, or whatever else. They certainly are 2 no. words that impress me a lot. The way he says the words too, suggests that he believes in them. In fact, I will go so far as to say, I do not doubt the sincerity of Taoiseach Brian Cowen in his embrace of green-er ideas and solutions, and that of the ‘smart-er’ economy. But time is certainly against the coalition. Too little, too late. It is interesting to see both Fine Gael and Labour, taking the opportunity on this fine Saturday to exploit what are obvious cracks appearing in the partnership of Greens and FF. I did offer some of my own analysis of the problems in my blog entry yesterday, ‘Gaps that should not exist.’
There is one thing I would like to add about Green policy, while they were in government. I want to look briefly at the so-called ‘Waste Wars’ through the lense of the economic model I developed and expressed in my blog entry, Ryanair to Fail. In the instance of the waste industry, as in airline transport and travel – we see the same pattern. The government agency operates the wide body fleet, the private company, the narrow variety. In the waste industry, we see the job of the state is to provide the incinerator. The job of the state is to take on the big risk. The job of the state is to spend the large amounts attempting to establish the infrastructure. It then becomes the job of some else, in the private sector, to be the clean, innovative and friendly face of waste management and treatment. It is there you hear minister Eamon Ryan’s catch phrase, Innovative Solutions appear again.
That is the rub I am afraid. Green policy, if you really scratch the surface and look at the economics, the accounting, is no more than the same model – a modification of the oligarch model used in Russia. I have all the respect in the world for private companies who pioneer-ed in wind energy and green waste management techniques to help the environment. But all I am saying is this: Lets try to do some more than using the state, the taxpayer to support an economic opportunity, where the clean, innovative solution gets an easy ride. It might be green in one sense, but in an economic sense, it leads us to produce the Esat Digifones, the Ryanairs, the NTRs and Airtricitys. Who are all great companies, but could become so much better – if they were not simply filling a void – left by the ineffective operation of the state’s own bodies. If we are to achieve a convincing merger of green priniciples and good, sound economic, robust business, we need to work a little harder than, ‘innovative solution’ sound bytes. BOH.
Myself and Oliver are heading off for good – if we can kick the addiction!
You are right on both of your points. I suppose this is a blacktie establishment whereas the other forum is more like a pub. Thank you for your moderating and thanks too to the man who funds the forum, Mr Philip Lane. Apologies for any offence caused to him and I am happy to acknowledge his patriotism and his integrity. He has used his huge professional skills and sacrificed much of his time in trying to assist the country at a difficult time.
The ESRI is a fine body. It would be interesting to see it debate its own role. One option is that in the future it would be publicly (from tax revenues, not by subscription!) but not government funded. We would then have a national policy making body that is completely independent, responsible to the people of Ireland. Governments would then implement the policy. But that is only a suggestion. For the rest I will say no more.
Irish economists need to dialogue more with Irish green people. It would enrich both. Most other interests don’t care about anything except themselves whereas green people have an admirable passion for so many things. Unfortunately they regard economists as a problem, rather than people who provide tools to allow policy aims to be achieved at lowest cost. They don’t like it either that economists will argue with many of their goals but:
A. We live in an open society
B. Honest debate is good for policy
C. They can be surprisingly flexible if others engage them.
Irish economists should take note of a point you yourself made. Given Ireland’s crony capsocism, and the rampant corruption common across the parties and the administration, especially at local level, sometimes the most efficient solution still seems hugely unfair and wrong, given the context in which it is made. Ireland is a dynamic system that is miles from being an honestly administered world of perfect competition. The widespread nature of political corruption is the reason why so many in the GP see FF as no worse than any of the others. Unfortunately the GP’s propping up of this nightmare government will doom them but something will replace them. For the rest I will say no more.
I wish you all the best in all your endeavours and I will keep an eye on your blog. Myself and Tony are heading off for good.
@Tony – this blog is open to anyone to comment on, so rather than push you away my point was to encourage others to contribute themselves.
The value of this blog is that we can discuss issues with the benefit of research, which hopefully results in better policies and decision making. I also think that it is a good vehicle to have interaction between specialists in various fields and the general public.
On your second point – interesting, but I am not sure what mechanism would result in implementation of policy recommendations. One thing has to be borne in mind – what might be an optimal policy from an economic point of view might be completely unacceptable to the public and hence to politicians (I don’t have to get elected).
Policy formation is most definitely important. I was in the audience the other evening at a lecture given by BENE, Better Environment with Nuclear Energy. They were talking about the perception of the nuclear industry in Ireland. I couldn’t help to wipe the smirk off my face, throughout the lecture. I was thinking to myself, you fellows think you have it tough. But try looking for sympathy and support for the construction industry in Ireland now! My industry went through a period, in which we could do no wrong. There wasn’t enough man hours available to cater for Irish peoples’ insatiable appetite(s) for property. I hated that. I knew that would leave me without an occupation in life, sooner rather than later. And it did. I am disgusted now with just about everything. The construction in Ireland, should have run whatever course it had to run, within some sort of policy containment. Instead, we had a construction Chernobyl. A no trespass fall out zone for the next couple of generations. That is why I couldn’t stop smiling at BENE’s presentation. I tried to elaborate on it here:
I also rambled the following (much to Karl Whelan’s annoyance I have no doubt).
“I suppose, the point I am making, is that from an economic point of view, if we were producing arms to win back the Ukraine from the Axis powers – then the model we used for house building in Ireland during the Celtic Tiger, would have been the ideal model to adopt.”
I have no idea why Ireland adopted that sort of ‘war time’ ramp-up production of property and development. I have no idea why we did that. When I wrote my blog entry, Ryanair to Fail yesterday, all I realised was, private entreprise in Ireland has been shelter-ed. Not in a good way either. I assume the construction industry had to maximise on it’s particular ‘shelter’, or something. It doesn’t lead to good, long term private entreprise. I.e. The stuff that will give a guy an occupation, instead of a pink slip. In my blog entry, The Shoe Box King, I tried to argue the need for better sequential planning. If the Green-tech guys in particular do not employ the low periods of growth in the Irish economy, to foster the best models and policy – then no one has any control, over anything, when the pressure to ramp-up begins. By that point, industry will grab whatever darn model it can, off the shelf (even if it was conceived for the 1950s). and deploy it. We have to learn to ‘ride the waves’ better in Ireland. We are so focussed on very large things, like Europe, NAMA and so on, we could easily miss this.
Sub-note: Architect James Pike spoke at the Feasta conference last summer ’09 about his research into ‘Equity Partnerships’. I just throw it out there, as an example. They appreciate better now, the need for some strong economic under-pinning to whatever the draw on paper. To enable a formation of a good urban society. The current head of the RIAI is getting smart-er about urban planning policy generation. But it is important to remember, these guys spent the last ten years, in a mobile phone link-up, to the construction equivalents to Michael O’Leary. They are start-ing with to learn the baby steps today. BOH.
“Ireland is a dynamic system that is miles from being an honestly administered world of perfect competition.”
That rings a bell with me. I know I found myself tackling that point recently, in some discussion. I managed to find a quote about economics and urban planning policy, made by Tom Dunne recently:
“Also, it appears to me that many economists think in terms of a model that tends towards equilibrium and this model is not good at handling the housing market where the supply cannot be withdrawn and where demand comes from both investors and occupiers.”
I had picked up on that statement, and had attempted to make some sort of response here:
Todays Sunday Independent newspaper writes:
“Also significant is the fact this letter was dropped in the Tanaiste’s in tray a full nine months before Aer Lingus inked a deal with the Dublin Airport Authority last November last to take over SRT’s former facility, signing a lease which Ms Coughlan insists cannot now be undone to facilitate Ryanair.”
Whatever about DAA, lets not leave out DDDA either. Another state owned, non-state funded (important) organisation.
“Former Green Party Senator Déirdre de Búrca has accused the Minister for Environment of delaying the publication of a report on the Dublin Docklands Development Authority.
Speaking on RTÉ’s This Week, Ms de Búrca said John Gormley delayed publishing the report on controversial planning at the DDDA because it would cause ‘serious discomfort’ for Fianna Fáil.”
I have a lot of appreciation for the fine project work undertaken by the Dublin Docklands Authority, let it be known to all. If I had anything to say about it, I would not restrict DDDA’s involvement with urban planning in Ireland’s capital city, to just the docklands area. I would further expand their remit to develop policy and directions for much of the city, and even surrounding region. There is a lot to salvage out of both DDDA and DAA, and perhaps even those 2 no. organisations in collaboration. What is lacking is management and foresight – and guys who understand the strengths and weaknesses of both of those organisations.
My old boss Liam Carroll was certainly not one, who had enough training to appreciate them – either for his land(s) at Harristown, or North Wall Quay. But like Michael O’Leary’s frustration with Hangar 6, I believe Liam Carroll was justifiably disgusted by DDDA’s handling of North Wall Quay, and other sites, which left more than 500 no. Royceton and Danninger employees without a livelihood. It is high time for the government to be called to account. BOH.
Last December I wrote at IE blog:
“It is unfortunate and inappropriate that DDDA adopted the same business model as DAA. Because DDDA doesn’t have a continuous and sustainable income stream like DAA enjoys. Indeed, Turner and Townsend main priority in DAA’s capital investment program, was to program construction work dates sos that DAA’s continuous project investment stream would be able to release funding at ‘major milestones’ so that construction could be bought at the lowest possible price.”
You will find stuff about CHQ shopping centre in there also, which appeared in the Irish Times newspaper recently, because it has dropped below 50% occupancy. I guess, we could call it DDDA’s version of Hangar no. 6. In July 2009, I also wrote something for the Archiseek Irish Architectural forum, called A New Knowledge Campus for the Customs House Area. Which looks carefully at the DDDA’s lack of effective management of spatial resources at the centre of Ireland’s capital. (At the time both Royceton and Danninger all lost their jobs, and I was trying to make some sense of it all) DDDA as an organisation isn’t robust enough to fulfill its actual purpose. It seems as though DAA, has its faults too. Although I stand by both organisations, in terms of the skill levels they have managed to build up, in the last decade. BOH.
@Brian O’ Hanlon – we are straying from the hangar 6 debate but I don’t agree with the Tom Dunne quote. Many economists (except those employed by banks) going back quite some time warned that the housing market is not sustainable. Nobody wanted to listen then and now they don’t want to admit that the warnings were given.
Just to prove the point, a note by Davy Stockbrokers (reported on in yesterdays Irish Independent), argues that there was significant misallocation of resources during the boom – too much for housing and not enough for infrastructure. This is not news – in reports I co-edited we made this point e.g. in 2006 and also 2003. My colleagues also had a “wasted opportunities” scenario in their 2001 and 2003 medium term projections.
We underinvested in infrastructure in the mid 90’s, we overpaid in the noughties and now will under invest going forward. However the biggest problem is that we have not adequately considered the appropriate ownership and regulation of our infrastructure which gets us back to the hangar 6 saga. With the wrong ownership and regulation it is easy to end up with underinvestment or overinvestment, out of line costs and peculiar decision making.
Shan Ross in today’s Sunday Indo makes an interesting point – the DAA needs to keep Aer Lingus sweet so that they will fulfil their promise to move into Terminal 2.
Why does Aer Lingus want to keep hangar 6? Could the DAA/IDA not build a new hangar for Aer Lingus and give hangar 6 to Ryanair?? If Michael O’Leary is bluffing why are they not calling his bluff?
Of course that should be Shane Ross
I promise, I’ll make this as brief as I can. I am glad you brought up the point about Davy Stockbrokers and misallocation of resources. I have thought about many of the dimensions of this problem myself. There is a big discussion which could happen about that, which I would like to participate in, though not perhaps through this restricted ‘comment’ medium. In passing, there is a person named Adrian Leaman, who works with Bill Bordass in the UK. They are involved in something called ‘usable buildings’, which aims to do post-construction analysis of projects. Mr. Leaman has plenty of contacts on this side of the water too. He is an interesting guy. The simple fact of the matter, as I see it, organisations such as ESB Networks, Dublin Airport Authority and so forth, do possess a lot of skills required, in dealing with large capital investment programs. They also understand the pitfalls which can occur. I like the quotation in the Irish Times project management supplement by Charles Lindburgh (aviator) about Ford Motor Company in the 1930s.
“Once they got an idea, they want to start in right now and get action tomorrow, if not today. Their policy is to act first and plan afterward, usually overlooking completely essential details. Result: a tremendous increase of cost and effort, unnecessarily.”
The understanding and skills which Ford-like, lean, high volume organisations such as Ryanair, Zoe developments and so forth do not posess. The challenge is to merge in some way, the culture and approach of these 2 no. extremes. I had a look back through the banter and discussion at Irish Economy blog, about investment and about infrastructure. There was, Keynes and floods by Richard Tol. McCarthy on the Green New Deal, Tol on the carbon tax, by Richard Tol. Investing in Electricity Infrastructure and Renewables in Ireland, by John Fitzgerald. A lot of the contexts of those debates is rambling (a lot of it from myself) no doubt, but they do address some of the issue about misallocation of resources in the boom. I have been struggling to get my head around this for some time – the problem of, how does one get value for money, from large investment programs? How does one do that right? Having listened to individuals, such as the head of ESB networks describe the problem, as they experienced it, of managing the spending of billions of euros, over a period of time.
That blog entry, was one piece of text I wrote last August for instance. That would be my contribution basically – you have ESB Networks who actually know, spending €4.0 billion on their medium voltage network, was a crazy project to embark upon – even with good management, and a defined brief. Then you have privately funded companies such as Zoe developments, who embarked with the same amount of cash, on project(s) without good management and without a defined brief. How does one reconcile those extreme cultures? Bearing in mind, there are serious strengths and weaknesses in both. That is the puzzle which occupies my brain, most of the time. BTW, I have done extensive research and study on the design of Terminal 2 myself. I sent it to Frederick P. Brooks, author of The Mythical Man Month, for use in his new book publication of essays. Back when I had involvement with Zoe, I had hoped that our and Dublin Airport Authority could make their joint venture partnership work on the Harristown lands. I was really looking forward to that project, having gone through some planning stages with DAA. It requires an acceptance of culture on both sides. BOH.
Just in case it is of any use to you, I based the following writing on lectures I attended by the DAA in 2009.
As I stated above, we at Zoe were involved in a joint venture agreement with DAA, for the lands at Harristown. My intention, back at that time was to foster an awareness of better program and project management skills at Zoe. So that we could genuinely tackle the issue of our €3.0 billion outstanding debt, and make good on some of our land assets. The trouble as I see it, Frederick P. Brooks, saw it worthy of incorporation into his essays. But there was no Mr. Brooks in Zoe, more is the pity too. We need to watch that, and bank lenders to the private entreprise need to watch that too.
Another reference Mr. Brooks appreciated on my recommendation was Ramo, Simon; Robin K. St.Clair (1998) (PDF). The Systems Approach: Fresh Solutions to Complex Problems Through Combining Science and Practical Common Sense. Anaheim, CA: KNI, Inc. You can download from the link here:
From poster B. on another forum:
“Ken Griffin, Sunday Tribune, Jan 13, 2008.
RYANAIR…British court ruling granting the low-cost airline hangar space at Dublin airport…
…The British ruling on hangar access came last month after maintenance firm SR Technics tried to evict the airline from a hangar at the airport. Mr Justice Gray found that SR Technics had conspired with the DAA to force Ryanair to vacate the hangar and ordered that the airline be granted a 15-year hangar licence.
The judgment was particularly critical of the DAA’s failure to provide documents to the court. Mr Justice Gray noted that chief executive Declan Collier had “unhelpfully replied [to one request from Ryanair] that it would not be appropriate for the DAA to discuss commercial discussions it might. . . be having with third parties”. He also rejected the evidence of former DAA general manager Michael Murphy, who appeared as a witness for SR Technics, and said he was part of an attempt to construct a justification retrospectively for the attempted eviction….”
Read in conjunction with above.
Think about lease agreements for a minute. You will notice in the Prime Time report on the Dublin Docklands Development Authority, journalist for the Sunday Tribune, Neil Callanan did some maths in relation to North Wall Quay tenant, Anglo Irish Bank.
€4.0 million per annum over a 25 year lease period, equals €100 million over the lifetime of the lease. It is not dissimilar in fact to the terms agreed between Dublin Airport Authority and AerLingus for Hangar 6. Bearing in mind, that DAA can use the future rent roll from AerLingus as collateral against the €1.0 billion deficit they began with.
(See John McManus’s piece from Monday’s Irish Times newspaper, Hangar 6 saga reveals flaw at heart of State’s aviation policy.)
That is just Hangar 6. What is AerLingus paying for Terminal 2 one may wonder? It is astonishing really, for a company which seems to be losing money and employees, in no particular order, hand over fist, to be able to pay so much in various leases each year. BOH.
I am watching TD. Frank Fahy chair-ing the transport committee meeting at the Dail. It is weird to see a load of (male) Irish politicians, trying to pretend they know how to run a multi-national airline, better than Ryanair CEO Michael O’Leary. Pathetic. That is what we have sunk to. Bad. BOH.
In particular the Dail deputy who quoted Donald Trump from ‘The Apprentice’ TV show to Michael O’Leary. Talk about wanting to be something you are not. As if O’Leary had to respond to anything Trump would say. O’Leary has clocked up more experience and knows as much or more, as Trump ever will. Pathetic. BOH.
I scibbled together some notes from the Oireachtas committee meeting in a blog entry:
If the present company will allow me to be this arrogant, (and blow my own trumpet) I would wish to leave you with a quotation from my blog entry, dated Monday, August 10, 2009. Back when I first learned about NAMA, and submitted my curriculum vitae to that organisation. Because I thought I had a better grasp of this, than anyone employed there has. (I still do)
I believe, my suggestion for what ‘NAMA should do’, is what Dublin Airport Authority should have done regarding Hangar no. 6, if they had the foresight, and the personnel on board, who trully understands land and development. I fear, that NAMA without people such as myself working on board, will make a string of the very same mistakes, which Dublin Airport Authority has done. BOH.
What should NAMA do?
We could use profit from developing central and strategic land banks in order to offset the losses in the NAMA portfolio in locations where use reverts to agricultural. I would disagree with that approach. I believe we should take the hit up front where it reverts to agricultural values.
But then use the profits which NAMA can generate in order to ‘buy out’ any joint venture partners, legal deed interests or other charges against ‘abused’ land banks that are in the prime and sustainable development locations.
It would allow us to work with a cleaner canvas, which is what an architect really needs. You would have to work with developers on a daily basis to know how capable they are of ruining a perfectly good asset with all kinds of messing.
But in some cases unfortunately, like a true pyramid scheme of things, the scandalous complexity of ownership and legal rights associated with our land banks may have began with the third last previous ‘owner’ of the lands.
Dail committee hearing on Hangargate discussed from post 336 on page 34 onwards of this thread on another forum. From the sound of things O’Leary incurred the wrath of the insiders from FF and Labour. I would expect that FG kept schtum too. The reason for this is simple. The DAA are the Bord Na Mona of North Dublin; CIE with a runway. This pork monster was always going to squish any threat – even a distant one under a future government – from giving Ryanair a big hangar. They’ve seen what happened to Aer Lingus and it’s not going to happen to them.
“Possible future competition – NO WAY. And stuff the jobs.”
It’s also another victory for our army of Oireachtas committees.
Poster Fat Brian says it best:
“Adjourned until 3:45 March 10th
yes, thats right… MARCH 10th
a 2:45 meeting zaps broughan, fahy and kennedy so much that they need over 2 weeks to recover
That system is a FAIL”
Between them they have managed to discuss this hugely important, massively publicised issue for…..two hours fourty five minutes. Well done lads! You deserve those huge salaries and expenses. Keep writing letters for constituents because you don’t want to set up a national citizens advice and advocacy network. It’s all you aspire to anyway.
Ireland’s insiders would never give up power without a bitter fight. But they needn’t worry because no one is going to even verbally complain about them anyway. The Oireachtas Class are all so tight and corrupt that it would be literally unthinkable. For Ireland the late nineties will be as good as it gets. With our failed establishment it’s all downhill from now on.
I wrote in my blog this evening (the really relevant bit):
In some parallel universe, if I had challenged Mr. Declan Collier for his position as chief executive of Dublin Airport Authority – I would have been in less hurry to proceed with the capital investment program I described in an earlier blog.
Perhaps, to execute the said program at a slower pace.
What I would have done was to use profits which DAA generated (in their bumper years) to at least buy out Royal Bank of Scotland, (owned by the British government) which is ‘landlord’ to AerLingus at Hangar no. 6, for the last 19 no. year(s). BOH.
To put it into perspective, the capital investment program by Dublin Airport Authority, to build Terminal no. 2 and roughly 200 no. other necessary works projects, has cost them about €2.0 billion euro.
(€2.0 billion euro of Irish taxpayers’ money)
In all of that investment, over an intense period of the last say, 5 years, in it, they couldn’t find a few million to buy a hangar worth €15 million.
Those are the facts, and deputy Frank Fahy can dispute them all his wants.
Ireland is losing 500 no. high skilled jobs, at Dublin, to the United Kingdom, because hangar no. 6, worth €15 million is owned by Royal bank of Scotland?
Taoiseach Brian Cowen should be utterly and absolutely ashamed. Make no mistake, this is a shocker – but all we are getting from the present Fianna Fail and Green coalition, is window dressing by deputy Fahy.
Poster W..R. H:
“The time allocated to the DAA was interesting, seeing as they are a major player in this and yet were only in front of the committee for 15 minuets, if even. I would hope they would recall the DAA as the issues around the lease are still not clear.”
Call me cynical but 15 minutes and the issue of the tender still not cleared up by the DAA?
However, I believe that the Aer Lingus CEO’s evidence ruled out a tender:
“”Originally Posted by lostexpectation
missed the bit about the competition what did mr mueller say?”
He wittered on about how he felt that the negotiations were fraught and he had the sensation there were other interested parties, he supposed.
Then he said, there was no tender.
He didn’t actually say “no competition” (or I didn’t catch it if he did) but his answer was clear enough.”
This raises huge questions as Ryanair have already publicly stated the following:
“Ryanair again calls on the Taoiseach to provide evidence of his false claims in the Dáil yesterday that there was a “competition” which Aer Lingus won in order to occupy Hangar 6. How did Aer Lingus win this competition (and who were the judges) when they have no heavy maintenance business (as all their heavy maintenance is undertaken in France), when the Hangar 6 facility is currently empty and when Aer Lingus have created not one new job in the Hangar 6 facility?”
With the exception of Leo Varadkar the other deputies, especially Labour’s Tommy Broughan because you would have expected more, seem to have been DAA cheerleaders.
From poster Bokonon again:
Brian Cowen in the Dail: “There was a competition. Michael O’Leary and Ryanair for whatever reason, which is their own business, did not compete for the hangar, seek ownership of the hangar or seek a lease for it last September, even though they suggested they needed the hangar to go ahead with a heavy line maintenance operation. However, they never negotiated and they never contacted the DAA about that hangar. They contacted the authority in the past about hangars 1 and 2 and they are using them. Ryanair knew it was available and did not apply for it while another company required it because it is the only hangar that can facilitate the maintenance it required for wide bodied aircraft. Other hangars exist in Dublin Airport to do this job. They are vacant and available.”
Middle of this page:
It’s total fiction.”
Poster Realist summarises it thus:
Brian Cowen: There was a competition (Dail debate 17/02/10)
Christoph Mueller (CEO Aer Lingus): There was no tender (Oireachtas Transport Committee submission 24/02/10).
I am afraid, the whole debate today, and especially Michael O’Leary’s contribution, has been a pure waste of effort. Hangar-gate is a total distraction from the issue in my opinion.
The only facts, which deserve to lay on the table now, for everyone to contemplate (most especially the FF/Green coalition) are these: How does a state agency, the Dublin Airport Authority manage to spend €2.0 billion in the last five years – but forget to spend €15 million to buy, as Mr. Mueller himself, CEO of AerLingus described it – a 19 year old hangar building, which doesn’t keep the heat in at night, and is owned by the Royal Bank of Scotland. Which in turn is owned by the government of the United Kingdom.
If Taoiseach Mr. Cowen and Tanaiste Ms. Coughlan had any self respect left, they would be on a Ryanair flight to London right now, to see if they can buy the hangar back from Gordon Brown. And simply cut through all of the rubbish. I dare say, if Albert Reynolds was around, and it was his plane high-jacked, by someone in pursuit of the third secret of Fatima, he would be on a plane journey wherever. BOH.
“…The DAA ultimately owns Hangar 6 and originally leased it to Ulster Bank subsidiary First Active, in a contract that runs to 2017.
First Active sublets it to Shinagh, an Aer Lingus subsidiary, which held the building for the old Team Aer Lingus maintenance business, which the airline sold in 1998. Shinagh subsequently sublet it on to a subsidiary of SR Technics (SRT), which ultimately acquired what had been Team Aer Lingus. SRT pulled out of Dublin early last year with the loss of 1,100 jobs…
The DAA bought SRT’s interest in Hangar 6 last year. It said yesterday that it decided that when the “legal complexities” surrounding the building became clear, it decided that leasing the building back to Aer Lingus was the best course of action.”
This is simply not credible. We are seeing an all too familiar pattern: Insiders behaving contrary to the public interest. This reminds me of the astounding €400Bn blanket bank guarantee that almost brought down the country and the cooperation by all the political parties in the concealing of the truth about the banks and in passing NAMA.
Thanks, I was meaning to get to that IT article to read. BOH.
Poster Bokonon on politics.ie takes issue with two aspects of Brian Cowen’s statements to the Dail:
“”There was a competition.”
False. Aer Lingus Chief Exec Mueller contradicted this today when he said there was no tender. (And) Michael O’Leary (disputes it too).
“Ryanair knew it was available and did not apply for it…”
False on two counts. First, that Ryanair “knew it was available” is an impossibility: it is apparent now it never was available. Second, Ryanair was trying to obtain the hangar since 12 February 2009. It was negotiating with the IDA and trying to use the IDA and the Tanaiste’s office to proxy negotiations for it. It is true that they did not apply for it, in a competition or tender, but Aer Lingus, the IDA, DAA, the Dept of Transport and the Tanaiste were all aware that Ryanair were interested in pursuing the property and providing up to 500 jobs. To argue that Ryanair did not apply for a non-existent competition and therefore this statement is true would surely be bordering on madness.”
He also believes that other aspects of the hearings sounded planned:
“”Originally Posted by darkknight
Mueller did not say that Aer Lingus owns Hangar 6.
It is much more convoluted:”
I wonder who asked about Aer Lingus renting from Aer Lingus? That sounded rehearsed to me at the time.
The summation given by Frank Fahey at the end of the meeting is now also worth scrutinising. He read out a pre-arranged commendation of the DAA, thanking them for getting 20 million Euro rent out of Aer Lingus when they could have paid nothing. It seems clear now that Aer Lingus is not the owner of the property. So what sort of clause in the agreement – in any agreement – would have allowed Aer Lingus to remain as tenants for free? I’m guessing that this was nonsense.
Something isn’t right about this whole deal.”
“The summation given by Frank Fahey at the end of the meeting is now also worth scrutinising. He read out a pre-arranged commendation of the DAA, thanking them for getting 20 million Euro rent out of Aer Lingus when they could have paid nothing. It seems clear now that Aer Lingus is not the owner of the property.”
I would like to scrutinise deputy Fahy’s summation also. But I have to admit, except for a discourse, like the one we saw yesterday, involving all the CEO’s, of private and public bodies – we would still be a million miles from ‘the truth’. At least the Oireachtas inquiry yesterday got us all a little closer to a meaningful picture of things. And it has gone on record, more importantly.
Even if the interrogation by the Dail deputies was a bit child-ish at times, and deputy Fahy does come across as too innocent, by a long shot. I will qualify that if I may. If deputy Fahy had done as much home work as I have done, on the capital investment program by DAA, he would appreciate the ridiculous contrast in scales. We are talking about billion(s) of euro of investment, in the short space of a few years into the airport projects.
DAA could carry out that investment program, by carefully managing the €600 million per year, cash flow they have. (As a state organisation, DAA receives no funding at all from the state. Neither does DDDA btw) That is why you need real top guys such as Declan Collier about, for those few years, when the big capital investment is being undertaken. Even if Michael O’Leary cannot appreciate that.
However, in the matter of Hangar no. 6, O’Leary most definitely has a point. While DAA were spending hundreds of millions on aprons, air bridges, air-side – and on land-side projects too – getting the electricity power infrastructure sorted out etc – and everything performing with new Co2/energy standards – DAA could have driven some investment into Hangar construction. It was peanuts, compared to the other stuff. They should have hangars for both airlines, because it was obvious there were 2 no. strong airlines present on site.
I remember once reading Michael Lewis’s book, Liar’s Poker. Lewis in the concluding chapter noted, he walked away from Salomon bond trading floor with a lot of money in his pocket. During his time at Salomon brothers, he had learned how to invest a couple of million, here or there, and make that investment pay off. But on the other hand, he noted, he didn’t have a clue how to invest a couple of thousand dollars into an SME. In that case, he would probably end up losing the thousand(s) of dollars of investment.
That is the paradox too with Ryanair and DAA. They are a different culture. Ryanair know precisely what to do with a few million. DAA know what to do with a few hundred million. Hence, it is so difficult for Michael O’Leary to come to terms with that. It was the same in my experience, working for Zoe developments. They could not be convinced to take on the skills of the ‘hundreds of million(s)’ class of management. Hence why they lost their shirts in the end. BOH.
My blog entry, Liar’s Poker, is an attempt to explain why Ireland as a country needs long term asset management companies such as ESB Networks, Dublin Airport Authority, Dublin Docklands Development Authority, Sustainable Energy Ireland and so on. It is best read in conjunction with my blog entry, Ryanair to Fail, also available at the same blog. It gives a sort of a full picture of the mechanism involved for management of state assets, long term, on behalf of the taxpayer. BOH.
“Ryanair have said all the 500 maintenance jobs the airline offered to create in Dublin have now been lost to other airports.
The company revealed last month that 200 of the positions were being located at Prestwick Airport in Glasgow.
The airline offered to base the 300 remaining jobs at Dublin Airport if the Government helped the carrier acquire Hangar 6 which is occupied by Aer Lingus.
However Ryanair spokesman Stephen McNamara has said the Government has failed to secure the jobs.”
Poster Nickyn on the pin says it best:
“Another great day for Ireland !!!!
What great politicians we have, I have to admire the way they fought with such vigour and the way they left no stone unturned to secure those jobs. They must be really exhausted now from the ‘tough job of politics’. I think we should send them on all expenses paid trip around the world.”