Should Aer Lingus be privatised:Poll

arcadegame2004

Should Aer Lingus be privatised? I believe so.

In the event of a future crisis (the latest of many at the airline), the Government would not be allowed to bail it out as things stand. Air France has been ordered by the EU Commission to pay back state-aid it received as a bail-out from the French Government, as it was unfair state-aid. National Governments can only invest in a company when they are profitable, and not when they are in trouble. As such, Air Lingus needs to be privatised so that it can raise money from share issues.

And your view is....

Sparks

Well, no.
Two reasons:
1) Why? We already have several ryanair clones and the original.
2) How would the management find the cash to repay the taxpayer for all the money the taxpayer has put into the company over the years? Or are you advocating that we give them a blank slate and let them sell off hardware belonging to the state for nothing, as we did with Eircom?

arcadegame2004

How would the management find the cash to repay the taxpayer for all the money the taxpayer has put into the company over the years? Or are you advocating that we give them a blank slate and let them sell off hardware belonging to the state for nothing, as we did with Eircom?

They can pay back the taxpayer through the proceeds of the privatisation, that's how.

AngelofFire

Originally posted by arcadegame2004
They can pay back the taxpayer through the proceeds of the privatisation, that's how.

Them proceeds are more likely to end up in Berties tent at the galway races or in the Fianna Fail/Progressive Democrat election fund.

alleepally

This is the national airline. It's been turned around and it's making money. The people that turned it around are the workers and management, all of whom were paid in accordance with their responsibilities and some are paid rather handsomely. Why should it be privatised when it starts making a profit and can return dividends to the state. Make hay while the sun shines.

Quote from Willie Walsh on last set of annual results

"We look forward to the future with confidence. Our focus in 2004 will be to continue to drive the organisation to deliver low fares with a consistent service. We have set demanding performance targets for the year. Working together in a determined manner we can continue to build a sustainable and profitable business."

Let the focus remain on delivering for the current shareholders (i.e. you and me) rather than a few monied people and the banks.

Flukey

We are in effect shareholders in it at present. Over the past few years, under semi-state ownership, it has been perfroming quite well. It could continue to do so under the current position. If it was privatised, while it may get better, we don't know what might happen to it. At least as things are, some control can be exercised over it Let Willie Walsh and his team run it, but under state ownership.

monument

arcadegame2004, with privatisation, where would you stop?

The full privatisation of… Phone lines? woops… (oh, but don't worry the government are now paying for new communication networks, ie the MANs)... the power lines? Schools? the roads and streets? airports? railway? ports? Maybe you might stop at our airspace or territorial waters?

Just imagine it… welcome to RyanAirspace… or Ryan Territorial Waters… oh, some can only dream.

Some probably do dream of a country where the state owns nothing. Everything is making profit for the few, and ****ing over the many.

Typedef

Can anybody offer any tangable proof that profits from Aer Linugs go back to the the coffers of the State?

If so, then when it's making money, it should 'continue' to do so, for the welfare of the State, else, recoup the taxpayers money and sell the thing.

Like someone else said, when the sun shines make hay, a downturn in the airline industry would probably just end up costing the taxpayer.

arcadegame2004

The full privatisation of… Phone lines? woops… (oh, but don't worry the government are now paying for new communication networks, ie the MANs)... the power lines? Schools? the roads and streets? airports? railway? ports? Maybe you might stop at our airspace or territorial waters?

So favouring privatisation of Aer Lingus has to mean favouring privatisation of everything? Don't be silly.

The concept of a "national airline" is outdated as far as I am concerned. We no more need a splash of green pain on the tail of an aircraft to feel Irish than we needed Lady Lavery on our Irish punts.

We are in effect shareholders in it at present. Over the past few years, under semi-state ownership, it has been perfroming quite well. It could continue to do so under the current position. If it was privatised, while it may get better, we don't know what might happen to it. At least as things are, some control can be exercised over it Let Willie Walsh and his team run it, but under state ownership.

So we are shareholders in it are we? I don't recall ever receiving dividends from "our" shareholding in it. Unless your definition of "we" is Bertie, Mary, Charlie and Seamus etc. It's current performance is ok but far from spectacular when compared with Ryanair. The latter airline made a turnover of 1.79 billion euro last year compared to just 888 million euro. Ryanair lfies 160 routes, compared to 60 by Aer Lingus. Aer Lingus employs 4,000 workers compared to 2,000 employed by Ryanair. So Aer Lingus remains inefficient. To compete with the low-cost airlines in the absence of state-bailouts it will need to both continue to cut costs drastically (along the lines of Willie Walsh's latest proposals), but it will also need to have access to private-capital, which it does not at present. And as long as Aer Lingus remains in the public-sector, the unions will continue to obstruct the necessary efficiency savings. Their outlook is fundmentally short-termist. The airline sector is extremely cyclical - far more so than most industries. The sale of a stake in Aer Lingus was part of the rescue package last time in 2001. I also find the argument that "now is not the time for privatisation when the company is profitable" rather odd, considering that the deferral of an earlier privatisation plan for Aer Lingus resulted from the downturn in the company's fortunes in 2001. In other words, you want it both ways:when Aer Lingus is making a profit, it's not the time to sell it, yet neither is it the right time when it is making losses.

Them proceeds are more likely to end up in Berties tent at the galway races or in the Fianna Fail/Progressive Democrat election fund.

Even you can't believe that. The 5 billion raised from the Eircom privatisation ended up in the National Pension Reserve Fund - a very worthy destination. And privatisation is a way of raising money for essential services, road-building, pay off national-debt etc. without raising our taxes, and that too counts in its favour.

At least as things are, some control can be exercised over it

Meaning what exactly? Aer Lingus needs to be allowed to act on a commercial basis, and not be hemmed in by bureaucratic interference from Government. They need access to private-capital. Why are the semi-state companies so racked with trade-union militancy, compared to the private-sector?

AngelofFire

The profits that aer lingus pay to the exchequer could do more benefit in the long term than selling them for a quick buck.

arcadegame2004

The profits that aer lingus pay to the exchequer could do more benefit in the long term than selling them for a quick buck.

No they wouldn't. They only made 98 million euro in profits, out of which some is paid in dividends to the holders of the minority stake that was sold 3 years ago or so. The vast majority of that profit will remain for Aer Lingus to re-invest in the company. 98 million is a drop in the ocean nowadays considering the size of the Irish economy and the 24 billion euro budget each year. Lack of resources has less to do with the problems of the public-sector than engrained inefficiency caused by the absence of profit-motive.

oscarBravo

Originally posted by arcadegame2004
So we are shareholders in it are we? I don't recall ever receiving dividends from "our" shareholding in it. Unless your definition of "we" is Bertie, Mary, Charlie and Seamus etc.

[ ... ]

Even you can't believe that [them proceeds are more likely to end up in Berties tent at the galway races or in the Fianna Fail/Progressive Democrat election fund]

I'm confused. How come it's unbelievable that the pols could contemplate pocketing the proceeds of privatisation, but you reckon they're pocketing the dividends?

Boggle.

Originally posted by Typedef
Can anybody offer any tangable proof that profits from Aer Linugs go back to the the coffers of the State?

Where else would they go?

Champ

Hmmm, i think its good in theory.

If they do get privatised; they wouldn't have a strangle hold of a monopoly on the market... unless your opposed to flying with anyone else;) So we hopefully we wouldn't end up with another privatised mess like the telecomms debacle.

Then again Aer Lingus is functioning well as it is; and if anything that i've learnt in life that in most cases you should leave well enough alone..unless it's not particularly risky.

I think it could be a success; then again if it goes down hill there's no back door out from the privatiation route... (correct me if i'm wrong)

Ireland is a pretty small country; so i'm not entirely confident if a typical privatisation model would prove successful in most applications...:dunno:

alleepally

Originally posted by arcadegame2004
No they wouldn't. They only made 98 million euro in profits, out of which some is paid in dividends to the holders of the minority stake that was sold 3 years ago or so. The vast majority of that profit will remain for Aer Lingus to re-invest in the company. 98 million is a drop in the ocean nowadays considering the size of the Irish economy and the 24 billion euro budget each year. Lack of resources has less to do with the problems of the public-sector than engrained inefficiency caused by the absence of profit-motive.

It is a nonsense to poo poo the turnaround and profits made by Aer Lingus. The company has been reborn and management have the confidence in building on this success and continuing to turn a profit.

How can you say there is an absence of profit motive at Aer Lingus. Didn't the workers get fully behind the re-structuring of the company to turn a profit. They wanted their jobs, they were prepared to work hard and make sacrifice to ensure that the goal was met (i.e. profit made).. Therefore the "ingrained inefficiency caused by the absence of profit motive" does not apply to Aer Lingus.

PhoenixRising

Originally posted by arcadegame2004
Aer Lingus needs to be allowed to act on a commercial basis, and not be hemmed in by bureaucratic interference from Government. They need access to private-capital. Why are the semi-state companies so racked with trade-union militancy, compared to the private-sector?

Agreed, but being a small island nation, our national airline is of strategic importance to the people and the economy. We cannot have as our national airline, an airline which makes decisions wholly on commercial thinking. I can see the benefits privatisation may bring, and I think a balance should be struck between privatisation and public ownership. I think the government should retain part of Aer Lingus so they can use their influence when needed to prevent a commercial decision being made which may be detrimental to the country.

Also, the argument that it should be sold off so the taxpayer won't have to bail it out again should there be a downturn is rubbish, as under EU law the government has been prevented from bailing Aer Lingus out for many years now. So that argument is a non-starter. Should there be a downturn, Aer Lingus will have to sort itself out, just like it did in 2001, with no government aid.

monument

Originally posted by arcadegame2004
So favouring privatisation of Aer Lingus has to mean favouring privatisation of everything? Don't be silly.

The concept of a "national airline" is outdated as far as I am concerned. We no more need a splash of green pain on the tail of an aircraft to feel Irish than we needed Lady Lavery on our Irish punts.

This time, try and answer the question...

arcadegame2004, with privatisation, where would you stop?

Originally posted by arcadegame2004
Even you can't believe that. The 5 billion raised from the Eircom privatisation ended up in the National Pension Reserve Fund - a very worthy destination. And privatisation is a way of raising money for essential services, road-building, pay off national-debt etc. without raising our taxes, and that too counts in its favour.

As I said... don't worry the government are now paying for a new communication networks, ie the MANs.

But that will still leave a lot of the country with an under funded landline system in badly need of repair.

[Remember: if you're replying to my comments, try and also reply my question - thanks!]

cleareyed

I'd love to see the figures for aer lingus since its creation: how much the state put into it and how much it gave back to the state. I'd guess it hasn't retrned a fraction of its investment. If someone wants to buy it they should pay top euro for a controlling interest but the state should keep a significant part of it and scream blue murder if there aren't handsome dividends every year.

arcadegame2004

Also, the argument that it should be sold off so the taxpayer won't have to bail it out again should there be a downturn is rubbish, as under EU law the government has been prevented from bailing Aer Lingus out for many years now. So that argument is a non-starter. Should there be a downturn, Aer Lingus will have to sort itself out, just like it did in 2001, with no government aid.

Aer Lingus is profitable but only because they are continually cutting costs. There is only so far you can cut costs in a company, so they also require access to private-sector capital. However the unions are refusing to play ball with the next stage of that process. I am almost certain that if Aer Lingus were a private-sector company the unions would be rather less vociferous in their obstructions

Aer Lingus needs to be able to access private-capital. Enough of this argument about it being a "strategic national asset" please. All I care about in terms of air-travel is getting from A to B. The profit-motive will ensure an abundance of air-travel from Ireland to the rest of the world. There is huge tourist interest in Ireland. Airlines will continue to want that business. American trade with Ireland is now double that of the US's trade with China. There is every incentive for airlines to continue to service that massive demand there is already there.

No matter how many lefties try to smear Ryanair, the fact is that passengers are voting with their feet by making it twice as profitable as Aer Lingus. Ryanair has been able to make decisions based solely on market demand whereas Aer Lingus is constantly forced to scale back commercially-necessary decisions e.g.g outsourcing of catering which was planned by Willie Walsh in 2001 but which the militant unions blocked. It is now again being proposed by him and again the Marxist unions are saying "No". They continue to cling on to a Scargillite attitude to industrial-relations. Aer Lingus is doomed if they continue to have the power to block such necessary proposals when bad times return.

Unions in Aer Lingus are far more militant than unions in the private-sector because the Government's ownership of the company emboldens them to strike in the hope that a sitting Government, concerned about the potential effects of the strike on its popularity, is more likely to give in to them. We need to divorce politics from Aer Lingus, and let it act solely on a commercial basis. I firmly believe that state-interference in markets where competition is possible only hold's back economic-growth and keeps inflation higher than it would otherwise be.

alleepally I think you asked me about my attitude to privatisation in general, which is not the topic of this thread. I have explained my position on Aer Lingus in this thread, and on health-care in the "Welcoe to US richest country in world" thread. I similarly fail to see any need for a state-owned peat monopoly (Bord na Mona), or the Bord Gais monopoly in the gas-market , or the Dublin-Bus monopoly in Dublin, or the ESB monopoly (at least the power-generation part of the company). I accept the argument made by other contributors that if ESB is privatised, then the actual lines should remain state-owned, to stop ESB impeding other power-companies' access to them. though. I make no apology for the fact that one of my reasons for being favourably-disposed to privatisation and competition is my opposition to trade-union militancy and the "strike first talk later" mentality that pervades the public-sector part of the movement.

PhoenixRising

Originally posted by arcadegame2004
Aer Lingus needs to be able to access private-capital. Enough of this argument about it being a "strategic national asset" please. All I care about in terms of air-travel is getting from A to B.

No matter how many lefties try to smear Ryanair, the fact is that passengers are voting with their feet by making it twice as profitable as Aer Lingus. Ryanair has been able to make decisions based solely on market demand

Surely you are not suggesting that Aer Lingus should follow Ryanair's example to the letter. If that were the case we would not have direct flights to the major hubs such as Heathrow, Paris CDG and Frankfurt etc..making onward connections impossible. Instead we would be flying to remote airports 50-100 miles away from where you actually want to end up because it made 'commercial sense' for the airline to do so.

Most importantly we would not have ANY transatlantic flights operated by an Irish airline. This is where the strategic asset argument comes in. Having direct transatlantic flights to some of the major US cities is vital for the Irish economy and tourism. Who can guarantee that Aer Lingus would continue to operate these routes post-privatisation? If they are to take their lead from Ryanair as you suggest, they'll be pulling out of them, no?

arcadegame2004

Most importantly we would not have ANY transatlantic flights operated by an Irish airline.

Why does it have to be with an "Irish" airline? I don't care if the airline flying me to the US is Irish or not. I didn't know that planes had a sense of national-identity.

The Heathrow-slots issue could be worked out in the terms of the privatisation, e.g. the company could be required to maintain them.

PhoenixRising

Originally posted by arcadegame2004
Why does it have to be with an "Irish" airline? I don't care if the airline flying me to the US is Irish or not. I didn't know that planes had a sense of national-identity.

You would be happy to rely on a foreign carrier to supply our transatlantic flight needs? I certainly wouldn't. In the knowledge that this airline has no vested interest in Ireland and will pull out as soon as things get ugly. Look at what happened post 911 - practically all the US carriers flying to Ireland suspended their Irish flights for weeks afterwards, leaving Aer Lingus as one of the only carriers providing transatlantic flights between the US and Ireland.

arcadegame2004

You would be happy to rely on a foreign carrier to supply our transatlantic flight needs? I certainly wouldn't. In the knowledge that this airline has no vested interest in Ireland and will pull out as soon as things get ugly. Look at what happened post 911 - practically all the US carriers flying to Ireland suspended their Irish flights for weeks afterwards, leaving Aer Lingus as one of the only carriers providing transatlantic flights between the US and Ireland.

I envisage the sell-off in the context of the breakup of Aer Rianta, where airports would compete with each other to attract airlines. Lower landing-charges would help attract airlines. Knock Airport is highly profitable and 70% of flights to it are US-Ireland flights, and I find it hard to believe that the majority of them flew on Aer Lingus to get here.

monument

Originally posted by arcadegame2004
Knock Airport is highly profitable and 70% of flights to it are US-Ireland flights, and I find it hard to believe that the majority of them flew on Aer Lingus to get here.

US-Ireland flights - wtf??? Do you mean UK-Ireland flights?

Originally posted by arcadegame2004
I didn't know that planes had a sense of national-identity.

They do. Even Ryanair know all their aeroplanes are Irish registered.





So, any way...


....


arcadegame2004, with privatisation, where would you stop?

arcadegame2004

Sorry I meant 70% of flights to Knock Airport are flights from a foreign country to Ireland.

Lennoxschips

Privatisation has never worked out properly, anywhere in the world. Look at Eircom. Look at England's railways. Look at the Russian oil fields. Look at the state of South America, after governments privatised all their major assets. So explain to me, why is it a good idea to privatise AerLingus?

It's like having a cow that is producing milk everyday and selling it to a circus for a quick cash injection. It's stupid. Unfortunately governments never think beyond the next election.

Typedef

Typedef wrote:

Can anybody offer any tangable proof that profits from Aer Linugs go back to the the coffers of the State?

If so, then when it's making money, it should 'continue' to do so, for the welfare of the State, else, recoup the taxpayers money and sell the thing.

Like someone else said, when the sun shines make hay, a downturn in the airline industry would probably just end up costing the taxpayer.

My thinking exactly.

arcadegame2004

Originally posted by Lennoxships
Privatisation has never worked out properly, anywhere in the world. Look at Eircom. Look at England's railways. Look at the Russian oil fields. Look at the state of South America, after governments privatised all their major assets. So explain to me, why is it a good idea to privatise AerLingus?

A: EU state-aid rules would prevent the State bailing out Aer Lingus with a cash injection if it faced dire straits , unlike in the early 1990's and before. In that situation Aer Lingus would need private-capital. Recall that a large stake in the company was sold in 2001. If a similar stake were sold next time then a majority of the company would be in private-sector hands.

B:To compete with Ryanair and other low-cost airlines, Aer Lingus needs to cut costs drastically. It remains a highly inefficient company in comparison with Ryanair. For a start it needs to contract out catering to the private-sector. It also needs to slash jobs. Ryanair has 2,000 employees while Aer Lingus has 4,000 (down from 6,000 in 2001). Aer Lingus's current profitability is down to its cost-cutting, but the trade-unions have put a line in the sand and made it clear they are incapable of concentrating beyond the short-term. The fact that Aer Lingus is a public-sector company means that the unions are more emboldened to strike and inconvenience the public than they would if the company was privatised, since private-sector bosses won't tolerate such infantile behaviour. The necessary changes are thus more likely to be facilitated by privatisation, and the consumer will be the winner with cheaper fares on flights to the US.

C:A boon for the Exchequer. The proceeds of the Eircom privatisation went into the National Pensions Reserve Fund. According to the news today or yesterday the fund has made a profit of 4.5% in the last year. We need to look to the longterm and realise that we must avoid at all costs the pensions-timebomb that is engulfing much of the rest of Europe.

Competition between private-sector companies has a greater likeliehood of bringing down prices than competition between public-sector companies and the private-sector.

E:British Airways was privatised in the 1980's and as admitted by some posters here the quality of service with BA was experienced by them as better than that of service with Aer Lingus.

F:Just because privatisation went wrong with the railways in the UK, doesn't mean as a rule that privatisation is a bad idea. I always opposed the idea of privatising the railways in Ireland, since I cannot see how competition could effectively be introduced in that sector. But the US - the richest economy in the world by far - is also the country with the most liberalised economy in the world. Look at the France, Germany, Italy and Spain, with their massive unemployment and vast public-sectors. The US must be doing something right.

Cork

Lennoxschips wrote:

Privatisation has never worked out properly, anywhere in the world. Look at Eircom. Look at England's railways. Look at the Russian oil fields. Look at the state of South America, after governments privatised all their major assets. So explain to me, why is it a good idea to privatise AerLingus?
QUOTE]

Aer Lingus is an airline that exists to make a profit.

Airlines are ten a penny.

It was competition from Ryanair that transformed a pretty bloated Aer Lingus.

Aer Lingus still needs to trim its costs and there is a lesson in this for many semi state companies.

Lennoxschips

arcadegame2004 wrote:

A: EU state-aid rules would prevent the State bailing out Aer Lingus with a cash injection if it faced dire straits , unlike in the early 1990's and before. In that situation Aer Lingus would need private-capital. Recall that a large stake in the company was sold in 2001. If a similar stake were sold next time then a majority of the company would be in private-sector hands.

I'll go with that, that's a good reason.

B:To compete with Ryanair and other low-cost airlines, Aer Lingus needs to cut costs drastically. It remains a highly inefficient company in comparison with Ryanair. For a start it needs to contract out catering to the private-sector. It also needs to slash jobs. Ryanair has 2,000 employees while Aer Lingus has 4,000 (down from 6,000 in 2001). Aer Lingus's current profitability is down to its cost-cutting, but the trade-unions have put a line in the sand and made it clear they are incapable of concentrating beyond the short-term. The fact that Aer Lingus is a public-sector company means that the unions are more emboldened to strike and inconvenience the public than they would if the company was privatised, since private-sector bosses won't tolerate such infantile behaviour. The necessary changes are thus more likely to be facilitated by privatisation, and the consumer will be the winner with cheaper fares on flights to the US.

So we need to privatise Aer Lingus, so they are free to ignore the unions and can sack people? How does the state benefit by increasing the number of unemployed? Why should they slash jobs when they can make a profit? So we can fly for less? Is the cost to society really worth it so we can save a few pennies on flights?

C:A boon for the Exchequer. The proceeds of the Eircom privatisation went into the National Pensions Reserve Fund. According to the news today or yesterday the fund has made a profit of 4.5% in the last year. We need to look to the longterm and realise that we must avoid at all costs the pensions-timebomb that is engulfing much of the rest of Europe.

How does privatisation benefit in the long term? It's the car boot sale approach to economics.

What you are proposing is to bring in big money now to plug the holes that will be caused by the fiscal shortfall when the population ages. That is a short term solution if I ever heard one. A long term solution would involve readressing the entire tax and pension systems so that there will be no holes to plug.

Competition between private-sector companies has a greater likeliehood of bringing down prices than competition between public-sector companies and the private-sector.

Sure, it does bring down prices. We can now buy coffee from South America for half nothing due to privatisation in that part of the world. Sure isn't it great! But try telling that to the Columbian coffee picker who has seen their salary halved and their communal health centres closed so that their operation is more "competitive."

You said earlier that Aer Lingus should look to Ryanair. This would involve cutting jobs to become more competitive. Well I say that Ryanair should look to Aer Lingus. You can make money without treating your employees like a dirty kleenex.

E:British Airways was privatised in the 1980's and as admitted by some posters here the quality of service with BA was experienced by them as better than that of service with Aer Lingus.

Let's not forget that British Airways has a much bigger market than Aer Lingus and flies more profitable routes. But still, what kinds of flights are people comaring? Most probably to London on Aer Lingus and then onwards from London on long haul with BA. Long haul flights generally offer a better standard of service than short haul. This is standard in commercial aviation. Aer Lingus long haul flights also offer a high level of service.

F:Just because privatisation went wrong with the railways in the UK, doesn't mean as a rule that privatisation is a bad idea. I always opposed the idea of privatising the railways in Ireland, since I cannot see how competition could effectively be introduced in that sector. But the US - the richest economy in the world by far - is also the country with the most liberalised economy in the world. Look at the France, Germany, Italy and Spain, with their massive unemployment and vast public-sectors. The US must be doing something right.

Don't get me started. The United States has one of the largest public debts in the world. They have no public health service, no national system of public transportation, a terrible welfare system and 12% of their population is living in poverty. It's the richest economy in the world by far and 13% of the people are living in poverty. There's something wrong there, surely. Germany, France, Italy and Spain piss all over the USA from a very great height when it comes to quality of life and worker's rights, and this comes in part from their unwillingness to put profit first and people second.

I know where I'd rather live.

Cork

Lennoxschips wrote:

Why should they slash jobs when they can make a profit? So we can fly for less? Is the cost to society really worth it so we can save a few pennies on flights?

If they can cut costs to make a profit and give people a better price on air fares. I see no reason why they should not trim their workforce.

Why should Aer Lingus not be run a business?

or years Aer Lingus charged large prices for basic flights. This did nothing for the consumer.

It was only with the advent of Ryanair that Aer Lingus had to adapt more to consumer needs.

Lennoxschips

But they are making a profit. So why cut even more jobs? Lay people off for the sake of making even more profit?

Cork

Lennoxschips wrote:

But they are making a profit. So why cut even more jobs? Lay people off for the sake of making even more profit?

There is nothing wrong with making an organisation more efficent. The airline industry is cyclical. Profits cound take a nose dive & where does that leave Aer Lingus?

By trimming excess costs - Aer Lingus can better compete with low frills competitors.

Aer Lingus does not need as many cabin crew. These will get jobs in other organisations.

Either Aer Lingus can itself adapt to change or itself will be redundant.

Lennoxschips

Lennoxschips wrote:

But they are making a profit. So why cut even more jobs? Lay people off for the sake of making even more profit?

Good God man.
If a business, any business didn't lay people off if it meant more profit for them(or profit at all in marginal circumstances which easily could be the case in the airline industry) then their competitors will...
Not following suit is a recipe for failure through losing business(as you find you cannot compete with the leaner competitor) and eventual bankruptcy, ie no jobs at all in that business, they'd all be gone.

Tuars

If my experience going through Dublin Airport last week is anything to go by then Aer Lingus needs more staff and not less. There were queues the length of the airport because there weren't enough baggage handlers to keep up with the flow of baggage and the conveyors at the check-in points had to be stopped. It didn't look much better down at the Ryanair end of the hall either.

My problem with the current trends towards privatization and (so-called) free-markets is that it seems that for these companies the shareholder always comes first and the customer comes a very distant second. We can see how Ryanair, for example, continue to degrade the customer experience to satisfy the bottom line. This has gone beyond curbing the luxurious excesses such as in-flight dinners to the point where they now want to introduce tariffs for carrying baggage.

You cannot really compare the US to Ireland since the huge population there means that the power of companies to screw the customer is limited by the number of alternative choices available. In a country as small as Ireland the customer doesn't have that luxury and (as can be seen with Eircom) is ripe for abuse.

If we had a genuine free market in Ireland then maybe I could see the benefits in privatising Aer Lingus. As it stands I am sceptical about the benefits it would have for customers and I would be concerned about the loss of Aer Lingus as a strategic asset. I know this point is sometimes overblown but I believe it is an important consideration especially in light of what happened to our telecoms infrastructure after eircom's privatisation.

Ireland had one of the best telecoms infrastructures in the world at the end of the eighties and this had a huge impact on our economy. Now we have slipped down the scale and lack of investment in the network (due to demands on the shareholders' bottom line) means we are not as attractive a place to do business as we were. I see the same thing happening with Aer Lingus if it is privatised.

It's all well and good to shout about militant trade unions (although that is overblown too given the recent history of social partnership and the sacrifices already made at Aer Lingus) but what's the point of privatising Aer Lingus if we simply replace the tyranny of trade unionists with the tyranny of shareholders?

Cork

Tuars wrote:

what's the point of privatising Aer Lingus if we simply replace the tyranny of trade unionists with the tyranny of shareholders?

tHE POINT IS THAT GOVERNMENTS CAN NO LONGER BAIL OUT TROUBLED AIRLINES.

The government could have sold off SDS a couple of years ago. Before, loss making has lead to its closure.

Monies raised from the sale could be used to fund the infrastructure of this country instead ofbeing tied up in a airline.

Tuars

Tuars wrote:

My problem with the current trends towards privatization and (so-called) free-markets is that it seems that for these companies the shareholder always comes first and the customer comes a very distant second. We can see how Ryanair, for example, continue to degrade the customer experience to satisfy the bottom line.

Don't forget that since the low cost model was applied on routes between Ireland and the UK, more people are flying than ever, ever, ever, before.
These are on the whole, satisfied customers.
When Aerlingus had a near monopoly, it cost over £300 or €400 for your cheapest ticket to the UK.

If Ryanairs charging for baggage is not acceptable to their customers, they'll move to another airline.
Ryan air must know there are reasons why most won't-probably reasons of price.
Now Ryan air aren't stupid, they know how to beat the competition,and despite the moaning and groaning of some, this has made them one of the largest passenger carriers in Europe.
That must equate to strong customer satisfaction.

Remember the customer is always right and companies when there is lots of competition(as there is in the case of ryan airs market) don't ignore the customers wants as to do so would be to lose the customer.
Ultimately that would piss off the shareholders even more as less customers mean less profits and lower share price and earnings per share etc etc.

Tuars

Cork wrote:

tHE POINT IS THAT GOVERNMENTS CAN NO LONGER BAIL OUT TROUBLED AIRLINES.

But under EU law they can't do that anyway, privatisation won't change that. What government can do if it has the will, is to ensure that Aer Lingus operates in a way that complements the economic development of the country. With privatisation that power is severely diluted. I hold eircom as a prime example. Privatisation of eircom has benefited a few well-connected and rich individuals at the expense of the future economic competitiveness of the country.

Cork wrote:

Monies raised from the sale could be used to fund the infrastructure of this country instead ofbeing tied up in a airline.

That wouldn't be the telecoms infrastructure you're on about by any chance...

Cork

Tuars wrote:

Privatisation of eircom has benefited a few well-connected and rich individuals at the expense of the future economic competitiveness of the country.

Privatisation of eircom has benefited the people of this country as the national pensions reserve fund was set up.

Bord Telecom often changed people massive prices to call abroad. Just as Aer Lingus charged people large amounts for flights to the UK.

It was only with de-regulation and competition that brought prices down.

Tuars

Earthman wrote:

Remember the customer is always right and companies when there is lots of competition(as there is in the case of ryan airs market) don't ignore the customers wants as to do so would be to lose the customer.
Ultimately that would piss off the shareholders even more as less customers mean less profits and lower share price and earnings per share etc etc.

Point taken and I'm not against competition per se. I think it has done wonders for Aer Lingus. However, you are assuming a very efficient market with lots of alternatives for the customer and as I already said I don't think this applies in Ireland. Outside the Dublin-London routes the market is very limited. This means that companies can push the customer a lot further than would be deemed acceptable in, say the US, before they go elsewhere. I think Ryanair are a big offender in this case.

I suppose part of the problem is that we have a government that only pays lip-service to regulation. I would regard strong regulation as an essential component to protect the consumers in the Irish market. In the absence of this I think privatising Aer Lingus will not be to the advantage of consumers.

Cork

Tuars wrote:

I would regard strong regulation as an essential component to protect the consumers in the Irish market.

How could an Irish government impose regulation in the face of EU deregulation?

Trade Unions and the labour party got over their anti privatisation mindset with Eircom. Dick Spring even sat on the Eircom Board.

The government really has no interest in owning an airline. They same arguments were used to hype up the importance of Irish Shipping. We are an island nation etc.

It has also no interest holding on to things like 2fm.

Lennoxschips

2fm in it's current form, no. 2fm is in no way a public broadcaster in the way Radio 1 is, it doesn't provide a service to the people. They just play Justin Timberlake all day and have loads of ads and sponsored giveaways. It's a disgrace that they can get away with this as a public broadcaster.

2fm should reform and become a quality music broadcaster.

alleepally

Lennoxschips wrote:

2fm in it's current form, no. 2fm is in no way a public broadcaster in the way Radio 1 is, it doesn't provide a service to the people. They just play Justin Timberlake all day and have loads of ads and sponsored giveaways. It's a disgrace that they can get away with this as a public broadcaster.

2fm should reform and become a quality music broadcaster.

2fm is public service. It's target market is being catered for, just as Radio 1, RnaG and Lyric cater for specific markets. Just because it is Pop radio doesn't mean it's not public service. Don't forget there's a couple of talk shows on (Gerry Ryan in the morning, Dave Fanning in the evening). There's also the news show at 7.30. 2fm also did the transition year schools project for students around the country.

arcadegame2004

Originally posted by Tuars
But under EU law they can't do that anyway, privatisation won't change that.

Yes but if they were privatised they could raise money through share-issues.

Please explain what you and some others here mean when you refer to problems in the telecom-market since Eircom privatisation.

It was probably a mistake for Eircom to maintain control of the local-loop after privatisation. They have been criticised a number of times by COMREG for not alllowing sufficient access to it by their competitors. However, other than that I feel that the privatisation was a good idea. In that context, if ESB is privatised (a proposition I strongly support), the Government probably should retain the lines, while privatising the power-generation section of the company.

But Tuars, I do not accept your contention that Ireland is too small a market to have substantial competition. I find such a notion dangerous. It almost gives the rip-off merchants an excuse to keep on ripping us off, e.g. insurance-companies. Mary Harney has already told the media that a number of foreign insurance-companies are expected to enter the Irish market soon. Also, recall that Bank of Scotland's entry into the mortgage market prompted a fall in mortgage-rates by other banks.

While I am very strongly in support of privatisation in the great majority of cases, I do concede that it should be done in such a way as to ensure that the former state-monopoly does not have an unfair advantage over competitors that might be considering entering the market. In hindsight, it was not the privatisation of Eircom per se that was a mistake, but rather their retention of control over the local-loop. A lesson can be learned here with respect to any future privatisation of ESB, but that lesson is that the privatisation should be carried out in a manner not likely to entrench the existing monopoly of the company. In that context, the actual lines should probably remain in public-sector ownership with the power-generation section being sold off.

I consider competition to be even more important than privatisation though. It would be a good idea if, in advance of future privatisations of state-owned companies, that the Government remove barriers to entry to competitors in the electricity market, gas market, bus-market, and airport-ownership. This would hopefully erode much of the market-share of the semi-state monopolies and therefore have the effect of reducing the power of the public-sector trade-unions to hold us to ransom.

Cork

alleepally wrote:

2fm is public service. Don't forget there's a couple of talk shows on (Gerry Ryan in the morning, Dave Fanning in the evening). There's also the news show at 7.30. 2fm also did the transition year schools project for students around the country.

Lets face it 2fm should be flogged off asap. What is the government doing holding on to a pop radio station?

*cough* bbc radio one etc cough*

2fm's advertising revenue cross subsidises the public service remit of the rest of RTÉ

Tuars

arcadegame2004 wrote:

Yes but if they were privatised they could raise money through share-issues.

They'd hardly be an attractive option if they were in the 'bail out' position that has been suggested.

arcadegame2004 wrote:

Please explain what you and some others here mean when you refer to problems in the telecom-market since Eircom privatisation.

I think you've already done that for me. I agree with much of what you say vis-vis privatisation and competition (and I'm glad you highlight that the two are different). The problem is not that Ireland is too small for competition to work, rather it is the nature of the privatisation that is forced up on us in the name of competition that is the problem. It seems we are following a US-style model which just does not translate to Ireland.

The privatisation of eircom is a prime example. The government facilitated the privatisation so that vested interests and well-connected individuals reaped the rewards. The taxpayer benefited some (it's questionable how much in the long term now that the infrastructure has been compromised) but it's difficult to see how the consumer benefitted (especially given the weakness of the regulator).

It is not privatisation itself that I am opposed to and I am a strong advocate of competition. My concern is that privatisation in itself will not bring all the benefits of competition that are being trumpeted around.

Meanwhile some nice quotes from Michael O'Leary in today's Indo:

"Are we going to apologise when something goes wrong? No we're f**king not," said O'Leary.

Ryanair bans 'push-back' on seats as another frill frays

Whatever happened to "the customer is always right?"

BuffyBot

Tuars wrote:

They'd hardly be an attractive option if they were in the 'bail out' position that has been suggested.

I think you've already done that for me. I agree with much of what you say vis-vis privatisation and competition (and I'm glad you highlight that the two are different). The problem is not that Ireland is too small for competition to work, rather it is the nature of the privatisation that is forced up on us in the name of competition that is the problem. It seems we are following a US-style model which just does not translate to Ireland.

The privatisation of eircom is a prime example. The government facilitated the privatisation so that vested interests and well-connected individuals reaped the rewards. The taxpayer benefited some (it's questionable how much in the long term now that the infrastructure has been compromised) but it's difficult to see how the consumer benefitted (especially given the weakness of the regulator).

It is not privatisation itself that I am opposed to and I am a strong advocate of competition. My concern is that privatisation in itself will not bring all the benefits of competition that are being trumpeted around.

Meanwhile some nice quotes from Michael O'Leary in today's Indo:

Whatever happened to "the customer is always right?"

The problem is, a large percentage of the time, they rarely are.

Lennoxschips

Credit to Michael O'Leary, he's achieved a lot in the industry, but does he have to be such an arse all the time?

BuffyBot

TBH, at least he's honest about things. I'm much more distrustful of those who window-dress their words.

alleepally

Lennoxschips wrote:

Credit to Michael O'Leary, he's achieved a lot in the industry, but does he have to be such an arse all the time?

He's more of a parody of himself now. If he doesn't say something controversial people wonder is he going soft. So basically, he has to keep up the bad guy image whereas his second in command is the good guy.

arcadegame2004

They'd hardly be an attractive option if they were in the 'bail out' position that has been suggested.

Then how come Aer Lingus was able to sell a 25% stake in 2001?