Committee Reports > List of Committees > Joint > 1979 > Committee on Commercial State-Sponsored Bodies > Report No. 06 - Aer Rianta Teoranta

MIONTUAIRISC NA FIANAISE

(Minutes of Evidence)

Dé Céadaoin, 13 Meitheamh, 1979

Wednesday, 13 June, 1979

AER RIANTA TEORANTA

Mr. A. P. McClafferty, Chairman; Mr. James O’Sullivan, Chief Executive; Mr. Derek Keogh, Director—Administration and Company Secretary; Mr. Brian Hampson, Director —Finance; Mr. John G. Ryan, Director—Shannon Airport; Mr. Thomas Cullen, Director —Dublin and Cork Airports; and Mr. Gerry Harvey, Marketing Manager of Aer Rianta Teoranta called and examined.

Chairman.—Gentlemen, thank you for coming along. In accordance with our usual procedure questions will be directed to the Chairman, Mr. McClafferty, and he can refer them to whichever member of his team he thinks appropriate, or answer them himself. I should like to start by asking a general question about the methods Aer Rianta use in making projections of air traffic, both cargo and passenger; how accurate these have proved to be in the past and how do they see the position in, say, five years’ time as compared to the present year.

Mr. McClafferty.—Mr. Chairman and members of the Committee, before answering the questions may I say on behalf of my board that we, in Aer Rianta, are delighted to have this opportunity of discussing our operations with you. We welcome constructive criticism at all times and look forward, at the end of your inquiry, to receiving the benefit of your advice as to the areas in which we can effect improvements in our performance and the service we provide for the travelling public and the community generally.

You will have noted from the submission we made to your committee* that Aer Rianta is a relatively new body in its present form, though based on a number of oldestablished structures. You will also note that we are a very diversified operation: and our third distinguishing feature is our close relationship with the Department of Tourism and Transport arising from our role as the Minister’s agent in the running of the airports.

Ireland is unique in the fact that no other island of our size and population attempts to operate and maintain four international airports. Admittedly only three come under Aer Rianta’s jurisdiction but Aldergrove in the North is a very live potential competitor. We are proud of the fact that, taken as a whole, our three State airports pay their way and are no burden on the taxpayer. Each of our airports has its individual character and problems. You will be aware that Dublin Airport, the largest of the three, has a virtually uninterrupted record of growth and is, at present, operating successfully and profitably. New services such as those operated by Sabena, SAS and Swissair have recently commenced at Dublin and all our forecasts point to continued growth. The problems that we have at Dublin are, so to speak, nice problems: the problems of dealing with expansion of facilities and the provision of additional services.

Shannon, the second largest of our airports, has always had its ups and downs but has survived and will survive through a great deal of hard work and human ingenuity. It had a drop in profitability in 1978 for a variety of reasons, many of which were of a “once only” nature but some—such as the changing pattern of transit traffic and the increasing costs of our own operation—are of a more permanent character. We recognise the need for positive action to restore the fortunes of Shannon and a concerted effort is under way in this regard, in fact. Our Chief Executive will be telling you about a major and timely development regarding the acquisition of Russian oil and aviation fuel.

Cork, the smallest of our airports, has been growing substantially in recent years. Aer Rianta has adopted a role of positive development and promotion in regard to Cork and we are working towards the elimination of operating losses at the airport by 1981.

Being a relatively new company with varying traditions behind it, Aer Rianta’s corporate efforts have, until recently, been dominated to a large extent by organisational matters, the establishment of appropriate internal structures and the integration of the various groupings into an overall whole. More recently, our efforts have turned to forward planning: we have established a corporate Planning Unit to co-ordinate the production of a five-year plan covering all aspects of the company’s activities. We have also established a Physical Planning Unit to produce master development plans for each airport and to back these plans up with co-ordinated development programmes.

Our capital requirements in recent years have been relatively modest but we are now approaching a period when heavy capital investment in airports will be essential to maintain facilities at an acceptable standard and to provide for anticipated growth. We feel the time has come to establish Aer Rianta as an independent airports authority, with responsibility for financing its own development requirements. We feel this will be in the best interests of the travelling public and of the taxpayer and are hoping to convince the Department of Tourism and Transport and the Department of Finance to this effect.

I trust that the document which we submitted to you has given you a broad picture of our company. Along with me today are the Chief Executive of the company and our full general management team. I hope we will be able to answer any questions you may wish to ask. I will refer the questions to the different departmental heads. Thank you.

1. Chairman.—The question I asked was: what methods does Aer Rianta use in making projections of air traffic? How accurate have these been in the past? Could you give some idea of what you expect it to be in perhaps five years’ time and, say, ten years’ time?

Mr. Keogh.—Many organisations have tried to forecast air traffic in the past: the International Civil Aviation Organisation, IATA and various regional bodies. Because air traffic forecasts are very sensitive to world economic influences, they have not in many cases held up beyond the first year or so of these forecasts. So, long range forecasting in aviation has always been a very chancy business. In 1968 when we were separated first from Aer Lingus, the main problem we had that required traffic forecasting was the construction of a new passenger terminal at Dublin Airport. We hired Airways Engineering Corporation of Washington to produce forecasts for us of what the likely traffic at Dublin would be. The basis they used in arriving at traffic forecasts was that they took passenger mile forecasts which the American aircraft industry had been using for many years. They produced growth rates up to 1990. Each aircraft manufacturer had produced his own forecasts and they were roughly similar. The Airways Engineering Corporation then also looked at the previous growth in traffic at Dublin and at a selected number of European cities. They found that the two had paralleled each other reasonably, and they felt that, in the circumstances, since the American aircraft manufacturers had used a global basis, this global basis would be appropriate to Dublin. They produced forecasts for us for the period up to 1990 and I can give you details of these. In fact, the forecasts turned out to be very much overoptimistic, and presumably subsequent world wide and local disrupting factors were not foreseen by them, which was why the actual traffic fell so much short of what they had forecast. The oil crisis in particular had a big influence on aviation development and in our own case, the effects of the North of Ireland situation on tourism affected traffic.

More recently, under the auspices of the Western European Airports Association, which is a body representing all of the major European airports, and also includes the port of New York and New Jersey authorities, the British Airports Authority who have a fairly sophisticated planning establishment, were commissioned to carry out studies at 22 airports in 12 countries in western Europe and we opted into this and had them carry out a study for us of traffic at our 3 airports. They did this study in 1976 and they forecast traffic for Irish airports for the years 1980, 1985 and 1990.

Recently we had them back to up-date these forecasts and they have not found it necessary to change substantially the forecasts in the early years so their original figures had not been badly off the mark. What they did was, they took historical traffic data for each European airport and they divided it into the various categories because the factors influencing different types of traffic are extremely varied. Obviously they had to identify these distinguishable characteristics and to relate the expected growth in each category by reference to changes in key economic variables. We found their method better than the very global and simple one that Airways Engineering Corporation had used. They have now furnished us with, not only total traffic forecasts, but what is of critical importance to us, peak hour traffic forecasts for the period up to 1990. The figures we now have would be of interest. Just to give you the Airways Engineering figures in parallel to show how far off they were: Airways Engineering forecast for Dublin Airport for 1970 a terminal traffic figure of 2.4 million; and for 1975, 4 million. In fact the figure in 1970 was 1.9 million and in 1975 it was 2.2 million. An enormous divergence has taken place between their forecasts and what actually happened.

2. Senator Keating.—Date of forecast?

Mr. Keogh.—They forecast in 1968. The British Airways one was in 1976. British Airports Authority are now forecasting for Dublin Airport for 1980, 2.83 million; for 1985, 3.99 million—roughly 4 million—and for 1990, roughly 5.5 million. For Shannon they are forecasting three-quarters of a million terminal passengers for 1980—I have to deal with transit passengers separately— for 1985 at Shannon, 1.1 million terminal passengers; and for 1990, 1.5 million terminal passengers. For Cork they are forecasting for 1980, 344,000; for 1985, 461,000 and for 1990, 618,000.

I mentioned transit traffic as being a separate issue. In fact, the British Airports Authority, having discussed this problem with all of the western European airports, came to the conclusion that the forecasting of transit traffic was virtually impossible because of the particular factors that influenced it. In our own experience we have found that it is very difficult to forecast transit traffic. For example, in the last year or so, the impact of Freddy Laker’s Skytrain on chartered traffic and the response of the scheduled carriers to that have been quite substantial. Also fluctuations in the fuel situation, developments in the type of aircraft which transit operators use to give them longer range, and so forth, vary enormously from airport to airport. Therefore, British Airports Authority found it difficult to develop any kind of statistical forecasting model that would apply across the board.

This means that a major part of our traffic at Shannon is excluded from the forecast we have got. We have to try to forecast ourselves what this traffic will be. That can only be done, not by a statistical method, but by constantly sounding the market and by constantly keeping in touch with what is happening. We have people in the field finding out what the market for transit traffic at Shannon is, and we exploit it to the full. The present level of transit traffic is about 585,000, so it is fairly similar to the total terminal traffic figure.

Those are the figures which we have forecast. We constantly review the figures in the light of the actual outturn and, as necessary, will refer back to the consultancy service of the British Airports Authority to up-date these figures and to question the models they have used in forecasting them.

3. Senator Cooney.—Your plans for the future obviously are based on these forecasts?

Mr. Keogh.—They are. It is an essential part of our financial planning to take the figures the forecasters have given us. It has also, of course, a major impact in deciding on our future physical planning, because the peak hour traffic is the critical thing for us. We have to design our terminals in the light of what the demand on our facilities will be at a given time.

4. Senator Cooney.—In the light of those projections what is the capacity of your present facilities to deal with them?

Mr. Keogh.—We are having a study carried out at present. The Airways Engineering Corporation estimate of what the Dublin passenger terminal was capable of handling was 4 million passengers. We have carried out through our own physical planning unit surveys of the accuracy of that figure. Our first findings are that, while it is probably possible to handle 4 million passengers through that terminal, certain substantial changes will have to be made within the terminal. The envelope can handle 4 million passengers but there will be bottlenecks at certain points. We are at present fairly far advanced in producing a plan to convert the passenger terminal at Dublin so that it can handle those 4 million passengers. We expect to be looking after four million passengers by the early eighties. Therefore by about 1981 or 1982 we shall have to begin to plan for a major extension of the terminal to provide for further increases in traffic.

5. Senator Cooney.—What is the time lag involved between deciding on having Dublin smooth for four million passengers and its availability?

Mr. Keogh.—It varies in accordance with the nature of the work involved. Broadly speaking we would find a lead time of at least a year between identifying the need for any major work and actually having that work under way—beginning to come on stream.

6. Senator Cooney.—The capital you need for this work must be raised from the Department of Tourism and Transport?

Mr. Keogh.—Yes, and the Department of Finance, too.

7. Senator Cooney.—I take it that justification for requesting that kind of capital was based on these projections. What has been the attitude of the Department to your capital requirements?

Mr. Keogh.—The demand for capital is cyclical. In the late sixties and early seventies we built new terminals at Dublin and Shannon and the requirements for any additions to those were fairly limited for a number of years. As has happened always in the past we are now coming to the stage where fairly major new developments will be necessary in order to provide the type of facilities we want. Our experience with the Department has been very good in that they have always been very understanding and co-operative in funding our requirements. We have elaborate procedures for examining and vetting capital proposals and we must have a very good case before we can get money. The problem we are running into now is that, with this major development coming up again, the level of capital allocation we have been getting will not be sufficient. As our Chairman indicated in his statement, we find that if we are to be regarded as a general part of the public capital expenditure programme and if our allocation is to be increased by whatever percentage is being applied to the public capital programme, we will be running into trouble: we will not be able to get the kind of money we will need. Therefore, we have come to the conclusion that there must be a direct relationship between the capital we require and the revenue we are capable of generating so that we can have a raison d’étre, that we can have a capital requirement to aim at which can provide for us our profit target. If we generate our own capital, we generate the necessary profits and reinvest them in our requirements, and the situation becomes a fairly normal economic planning situation.

8. Senator Cooney.—Historically you have been getting the capital you needed?

Mr. Keogh.—Yes.

9. Senator Cooney.—Do the financial results on that capital bear out what you are saying now?

Mr. Keogh.—The figures we have provided in our submission to you* show that, for example, in the last ten years we have surrendered an operating surplus to the Department which more than covered our capital requirements. That was the case even when the new terminals were being built so that we have generated the kind of profit that would have been needed for our capital requirements. Our present forecasts would indicate that that would continue to be the case.

10. Senator Cooney.—While remaining competitive in terms of fees, and so on?

Mr. Keogh.—Yes. As the Committee will be aware from our submission,* we have a deliberate policy of trying to control airport charges so as to encourage traffic and to find our profits from ancillary commercial activities.

Mr. McClafferty.—We would estimate that our capital requirements in the next five years would be in the region of £30 million.

11. Senator Cooney.—How does that compare with the past five years?

Mr. McClafferty.—Since the completion of the terminals we have not had very much expenditure.

Mr. Keogh.—In the past five years our average annual capital expenditure has been between £1,500,000 and £2 million.

12. Senator Cooney.—You say that you will need very large extra capital in the future and you have implied that you wish to get away from the public capital programme. Do you envisage a situation in which you will be seeking subventions to enable you to meet your commercial obligations?

Mr. Keogh.—While we have been getting sums of the order I have mentioned from the Department in recent years, in the years 1972 to 1975 we were only generating that kind of operating surplus: it varied between £1,250,000 and £2 million. In recent years the operating surplus has been almost £4 million. It has been keeping pace.

13. Senator Keating.—I shall state a pair of alternative mechanisms and the appropriate person might then comment. Historically what you seem to be doing is going through the budget-making process once a year in order to get capital moneys as you need them and any time you made a few pounds you had to surrender the money. The other alternative is that you are hived off, that you earn what you can, that you borrow on long term and that you function like a company, State or private. But the mechanism you have inherited puts you at the mercy of annual budget making and of a policy which essentially has nothing to do with you. I should have thought there was an overwhelming argument to say: “There is the asset, there is the traffic, that is what the market will stand, so manage your own business and do not come near us; appoint reasonable people to do this and fire them if they do not deliver.” That is putting it crudely but is there not a fundamental choice as to whether this present mechanism is continued or whether there is a fundamental departure that entrusts the experts with much greater autonomy in their own affairs?

Mr. O’Sullivan.—There were discussions some years ago with the then Department of Transport and Power with regard to giving Aer Rianta more autonomy but the early seventies were not good for the country generally and we were not generating the kinds of surpluses which in the view of the Department—and we had to agree—justified a change. Consequently, the issue was shelved but it is being considered again because obviously we are now generating more revenue. To use that horrible expression, it is an on-going thing. Once we have produced our five-year plan we shall be entering into discussions with the Department of Tourism and Transport and, possibly, with the Department of Finance, with a view to this change.

Mr. Hampson.—We are very keen to get to a situation where we would not be relying on a budget system from year to year. As airports are very much a long-term proposition we should be planning for five, ten or fifteen years in advance. As we are subject to the public capital programme we must programme on a yearly basis. This is why we are very keen on an autonomous body for Aer Rianta. This means we would be generating our own revenues and in talking to airlines, especially in terms of airport charges, and IATA, there would be a better understanding of the situation since this is the position at other airports. Long-term planning would be to the benefit both of the airlines and of Aer Rianta, and would result in our having better airports.

14. Deputy L. Lawlor.—On that basis then are you saying that Aer Rianta would be better to be a semi-State company or is it under your jurisdiction to put forward the type of structure you want, and have you put any submission forward?

Mr. Hampson.—Some years back the proposals were shelved because of the aviation climate at that time. Discussions have taken place in the past year with the Department about the setting up of a separate autonomous body. We are getting to the point where we would need to take an initiative and go fully out for it. We would wish to have an autonomous body with a financial type of structure that would not give us a large commencing capital debt. In the UK, with the exception of Heathrow, Gatwick etc., the tendency has been to give the airport to a semi-State company or local authority free of charge, in other words, not to give them a commencing capital debt. Heathrow, Gatwick etc. had a commencing capital debt of about £52 million. The reason I mention this is that if we were set up with a commencing capital debt we would have to pay interest. Aer Rianta would have a very good start if they were set up with the assets given free, then we could hold the revenues which we are earning at the moment and are paying to the Department. It would also give us a very great incentive to have good surpluses because the better the surpluses, the better the capital expenditure programme. In that way we could plough money back into the airports and, again, we would have a better relationship with the airlines who understand this type of approach.

15. Senator Cooney.—Obviously you have been giving consideration to your capital requirements in the context of the company being autonomous. Have you made any projections as to how you would finance your capital requirements as between borrowing and internal surpluses?

Mr. Hampson.—If we held on to the surplus that we are earning at present, it would go a long way towards our capital programme, because the cash flow generated would be used for future capital investment. If we found we were short we would have to either get a grant-in-aid or borrow the money on the outside market. I see no difficulty in that, provided we do not start with a large commencing capital debt. The reason I mentioned this is that if you start off with, for instance, a capital debt of about £40 million which is the amount of money spent on the airports to date, and we were paying interest at the rate of ten per cent, we would be paying immediately more than £4 million to the State by way of interest alone. That would wipe out our current cash surplus. If that commencing debt was not there, we would start with £4 million to spend on our capital requirements each year. In current money terms I think that would be more than adequate taking the long-term view.

16. Senator Cooney.—You would meet the vastly enhanced rate of investment that you need to deal with these projections?

Mr. Hampson.—That is correct. It must be borne in mind also that these projections contain an element of inflation and we would expect our surplus to rise with inflation.

17. Senator Cooney.—At present what rate of return have you on the capital investment involved in Aer Rianta?

Mr. Hampson.—The capital debt of about £40 million has accumulated since the days of Foynes and since the start of Shannon, Dublin and Cork Airports. It has not been depreciated in any way. If we were to write that figure down we would probably arrive at a figure of about £20 to £23 million, depending on what system was used. We would think that a return of £4 million on that was reasonably good. We have done some exercises in trying to establish whether Irish airports are doing well. To do this we have got to look outside the State for comparison to find out how our airports are performing, and we have looked especially at the British airports as they are similar to ours in some ways, though different in others. The British Airports Authority have a very large airport—that is Heathrow—and a lot of small airports, particularly in Scotland. We also looked at Manchester which is owned by the municipal authority. The traffic through that airport is of the order of 3,500,000 passengers and the airport is turning in a surplus of £3 million before capital charges. All the Scottish airports lose money. Gatwick breaks even, but Heathrow makes a considerable amount of profit. We found that the Airport de Paris in Paris lost money both last year and in the previous year. Last year they lost 9 million French francs which is roughly £1 million. In the previous year they lost 13 million French francs which is about £1,500,000. However, their accounts include capital charges at their airports.

18. Senator Cooney.—It is not an operating loss?

Mr. Hampson.—No. Taking into account the fact that the Airport de Paris is operating in circumstances that are totally different to the situation at Irish airports and even at the British airports, taking an overall view we would say that Irish airports are performing reasonably well.

19. Deputy L. Lawlor.—In the past, has the actual runway and equipment for automatic landing and so on taken second place to commercial investments because you were getting a more instant return? How would you compare your commercial invesment activities with the investment in facilities associated with airlines?

Mr. Hampson.—The situation is that we invest in commercial activities to produce as much revenue as possible so as to keep operating charges at a reasonably low level and, consequently, we are very keen to develop commercial activities but no operating activity is suffering as a result of that. In other words, there is no starving of capital in operating areas.

20. Deputy L. Lawlor.—There is a comment in some of the documentation on the interruption of air services in certain weather conditions as a result of the lack of certain landing facilities which are available in most European airports.

Mr. Hampson.—You are referring to Category 2 and to landings at both ends of runways. At the moment we have a committee looking into the long-term runway commitment at Dublin Airport. If we were to build these runways we would build these facilities into them. It would be wasteful to build them into the current ones. I would say that if the airlines insisted on having it or requested that it be put in as a matter of priority it would be done immediately.

21. Senator Cooney.—Why would it be a waste in so far as the current runways are concerned?

Mr. Hampson.—You would only get a certain length of life out of that runway but the committee are considering the long-term development of runways and when their findings are made known—that will be in approximately six months’ time—we shall make a decision as to whether to go ahead. In other words we would not like to spend money and then find it was nugatory in a matter of a number of months. The committee are considering specifically our requirements regarding runways.

Mr. Keogh.—Category 2 is something which is related to meteorological conditions, to circumstances in which it is safe to land at airports. Category 1 means that. if the cloud ceiling is 200 feet or more, it is OK to land provided the horizontal visibility is 2,600 feet. Those are the technical specifications laid down in Category 1 and we meet those. Category 2 means a cloud ceiling of not less than 100 feet, so it halves the cloud ceiling and the visibility horizontally is half again, 1,300 feet or 400 metres. The need for Category 2 landing at airports depends very much on the normal meteorological conditions at the airport and the record at the airport. So far we have not had any complaints from the airlines about the lack of Category 2 facilities at Dublin Airport.

In order to achieve Category 2, I will just list quickly the additional aids that are required: runway centreline lighting, runway touch-down zone lighting, substantial additional approach lighting, automated runway horizontal visibility reporting systems, secondary power supply having a maximum switch-over time of one second, an ILS (an instrument landing system) capable of Category 2 facility performance, taxiway centreline and illuminated stop bar lighting. These are very expensive things to do and it is a judgment essentially made not by us but by the Department of Tourism and Transport as to whether this is necessary. There has been no pressure to provide this but, nonetheless, taking the long-term view that we should provide the maximum possible operational capabilities at our airports, we would intend to provide this when we are building the new runway at Dublin Airport.

22. Deputy L. Lawlor.—Aer Lingus feel it should be there at the moment?

Mr. Keogh.—They have not made that case to us.

23. Deputy L. Lawlor.—Have they not?

Mr. O’Sullivan.—The Department of Tourism and Transport have their technical division related specifically to this. They are a sort of FAA of the Irish Government and they have a big involvement in these features. They are part of the State services.

24. Senator Cooney.—To go back to the capital position for a moment and the question of depreciation. You mentioned that you often depreciated your return. You reckon it will be sufficient to fund your future capital return. Are you speaking of depreciation on an historical basis or on a cost replacement basis?

Mr. Hampson.—Historical cost.

25. Senator Cooney.—Would it be on that basis that your income would be adequate to meet your future capital needs?

Mr. Hampson.—Yes, on balance we feel that taking one year or another it would be.

26. Senator Cooney.—You mention Foynes as part of your capital.

Mr. O’Sullivan.—This is the historical fact. In the Department of Finance all capital put into the airport is still on the books since the Foynes days. Similarly, as you gentlemen probably know better than I do, we get our capital through a grant-in-aid and we pay back the surplus by way of appropriation-in-aid, but the two actually never meet. So the surplus never reduces the amount of capital on the books in the Department.

27. Chairman.—Would there be a danger of under-payment? As things stand at the moment you know the Government will not push it too far in regard to capital outlay because they know they will have to find it. But, if you are an independent body, the Government on the one hand could be impressing on you that you need new runways, new airport buildings, and so on, and tending on the other hand to push you and say: “You opted for being independent. Now provide yourself with your own funds.”

Mr. O’Sullivan.—I agree, but at the same time common sense we hope will prevail in a situation like that and the capital we would provide out of our own surpluses we would also obviously augment by borrowing. There is no specific provision in current legislation whereby Aer Rianta’s capital can be guaranteed by the State. There is a section whereby we can borrow with the approval of the Minister. If we were pushed very hard we would obviously have to borrow money. We would have to borrow money in the short term. The Minister would be involved to the extent that he would have to approve of our borrowings. There would be a certain balance struck from that point of view.

28. Senator Keating.—I wanted to follow that in a slightly different way. I have not referred back to the prime document but to a digest of the main points of your submission. Section 4 is headed “Activities and Objectives”. Without pointing a finger at whoever drafted the objectives, they seem quite extraordinarily general and imprecise, shatteringly so. Nonetheless, as you make functional decisions, which you have to do continuously, you do so according to a pretty precise set of guidelines, historically involved again, no doubt. There is a rule book, some of it written down, some not, some in people’s minds, some tradition, and so on, but what worries me is that that making of the rule book and using the rule book in day to day decisions is shared between yourselves and the Department of Tourism and Transport. It is not clearly in one place or the other. The Department of Tourism and Transport have a considerable input into decisions. We were talking about capital decisions just now, about putting some navigational equipment onto runways. Tourism and Transport have a role in that. They also have a regulatory role—is it the FAA in America?

Mr. O’Sullivan.—That is what I mentioned.

Senator Keating.—There is a confusion, it seems to me, in the ideal administrative sense, between those two roles. It seems to me that, if we wanted the executive and administrative thing done as well as possible, and the regulatory thing done as well as possible, then the argument would be to say to the people actually responsible for the day to day running: “Now, you are the executives; you are the administrators; the other people are the regulators”—let the interplay take place between two organisations rather than having the interplay as it currently is. Some of it at present is within the Department as between the regulators on the one hand and the administrators on the other and that is making decision processes very imprecise and very difficult. I would have thought that when you have to have a regulatory role on the one hand, and a decision-making and an administrative and executive role on the other hand, they would be better to be organisationally separate, and that you could develop a dialogue and perhaps a slightly public dialogue with the Department. I am taking too many words to say this but it seems to me organisationally confused currently.

Mr. McClafferty.—Of course, the State services are reserved State services.

Mr. O’Sullivan.—We are talking about air traffic control, the radio section specifically and, of course, part of the Met Office.

Mr. Keogh.—We would never see ourselves taking over these services.

Senator Keating.—No, I probably have not made myself clear.

Mr. Keogh.—We would agree entirely that there is this slight ambiguity in the role of the Department at times, in that the Department has its technical divisions and its administrative division, and the administrative division to a great extent parallels us. It makes the same kind of judgment we do about the operation of airports. There is an element of confusion between us. I would not exaggerate it but it is there, conceptually at least, and it is one of the reasons why we would welcome the establishment of an airport authority to make it clear exactly where our function ceases and their’s begins.

29. Senator Keating.—I would have thought that certain decisions as to major capital investment would be impossible on rational grounds unless the rule book was clear and available. If the rule book is partly in your mind, partly written down, partly in the minds of the Department, then a long-term rational decision becomes very difficult.

Mr. O’Sullivan.—It is also because of the fact that we get our money from the capital budget for the year. We may want, say, £3 million and if it is a cabinet decision to slash the capital programme by 10, 15 or 20 per cent, we are part of that slashing without any consideration given to us or any priority. So we have to shuffle and try to adjust our programme as a result of that situation.

30. Senator Cooney.—Effectively, if you became autonomous would you continue to use current cost accounting less depreciation?

Mr. Hampson.—There is a draft called Exposure Draft 24 which was prepared by the Institute of Chartered Accountants in England and they are recommending a target date of 1 January 1980 for the implementation of current cost accounting for all companies with more than £5 million turnover. So it is inevitable that we are going to produce historical cost accounts for the purpose of the Companies Acts and also current cost accounts as guidelines. Obviously we then get into the whole situation of revaluing of assets and depreciation of higher adjusted values. It is anyone’s guess as to how the situation will develop over the next few years. What we will have to do pending a decision is to create more reserves for replacement. In other words, we will create depreciation reserves but we will also have to create special obsolescence reserves and replacement reserves from our surpluses. This is what happens in the case of British airports.

31. Senator Cooney.—These considerations do not change your overall view that you will be able to reach your capital requirements from that income rather than to borrow?

Mr. Hampson.—I am sort of putting my hand on my heart and hoping. We meet IATA and the airlines on a yearly basis— there is a number of meetings this year— and we discuss problems as regards traffic growth and airport charges generally. I have always found that in practice we come up with an arrangement. I would say that if we put to IATA a projection of a five, ten or 15 year capital programme, which is what we are trying to do, it would be in their interest to agree an arrangement because they are going to use the facilities provided and they understand that in the long run they are paying for the facilities.

32. Senator Cooney.—How much do you have to charge them?

Mr. Hampson.—On the question of capital requirements for runways, we have Aer Lingus and the Department represented on a committee. I certainly see a situation when large capital outlays at airports require consultation with the users and the main users are airlines. To embark on a large capital programme without getting some sort of understanding with the users would be very unwise. If we want new runways at Dublin Airport and obviously Aer Lingus would appreciate the need for those because of the growth in traffic, then after agreement had been reached we could begin working out a programme regarding payment. Assuming that sort of arrangement works in the future as it has worked in the past, I am confident about the future.

33. Senator Cooney.—I gather from Aer Lingus that they are critical of your landing fees, in that they are higher than those which apply at many other airports.

Chairman.—The fourth highest of the European stations served by Aer Lingus.

Mr. McClafferty.—We are well down the line in terms of Europe.

34. Senator Cooney.—They say you are the fourth highest of the European stations served by them. Were Aer Lingus consulted when the level was being set?

Mr. Hampson.—Yes.

35. Senator Cooney.—Was the consultation in the form of telling them that this was to be the level?

Mr. Hampson.—We put up a good case. When comparing airport charges we look at the western European airports, at airports in the main capitals of Europe. There are 18 such airports. We compare airport charges over the lot, regardless of whether they are used by Aer Lingus or not. On that particular league table, Dublin, Shannon and Cork airports have constantly in the last number of years come into the latter end of that league table at about tenth or eleventh. It could happen that taking one year with another there would be marginal changes and currency fluctuations but there are other aspects. When comparing, for instance, airport charges recently at Paris and Dublin I found that fuel charges and noise charges at Paris were not included and these would be very important in making a comparison between airports. For instance, in Dublin there is a straightforward landing fee. At other airports there are navigational charges, fuel charges, security charges and noise taxes. If we compare Paris with Dublin, taking all the charges into account at both ends, we find that we are very close.

36. Senator Cooney.—How do you determine your charges? How are you going to determine them in the future?

Mr. Hampson.—We take a lot of matters into consideration. Obviously growth is a very important factor. Growth in passengers obviously means more revenue and more landings. That in itself generates revenue but also it generates cash through the commercial areas. So that in our discussions the growth in passenger numbers has a very big bearing. We take many issues into consideration in arriving at charges. We certainly do not want Irish airports to be uncompetitive. We are very conscious that Shannon should be a very competitive airport and that it should attract as many transits as possible.

37. Senator Keating.—On a technical point on landing fees, does it matter where the aircraft is coming from or going to? Is it a fixed fee that simply depends on the nature of the aircraft and the load?

Mr. Hampson.—Except in the case of domestic. If you land at an Irish airport before going on to another Irish airport you get an 80 per cent domestic rebate on the landing. There is no domestic passenger charge. So that an aircraft coming from New York would land at Shannon, pay a landing fee there and go on to Dublin where it would pay 20 per cent for landing in Dublin airport and would pay no passenger charges between Shannon and Dublin. International passenger load fees vary by destination.

38. Senator Keating.—Let us take an aircraft that was on a Frankfurt-Dublin or London-Dublin route. Would the fees for the identical aircraft or the identical load be identical?

Mr. Hampson.—Yes, for the landing it would.

39. Senator Cooney.—At the moment your landing fees and passenger load fees are subject to sanction by the Minister and the National Prices Commission?

Mr. Hampson.—Yes.

40. Senator Cooney.—Do you foresee that as being a difficult factor for you should you become autonomous?

Mr. O’Sullivan.—To take Aer Lingus who, of course, have more autonomy, their fares are subject to Government approval. So there is a similar situation. So even if we had autonomy probably our charges would be likely to be subject to control.

41. Senator Keating.—All State companies, if I recall, have to submit their charges for approval?

Mr. O’Sullivan.—Yes, the same would apply to capital expenditure, even if we had autonomy. All State bodies so far as I know have to get approval for capital expenditure. Aer Lingus cannot buy aeroplanes, simply because they have the money, without the approval of the Department.

42. Chairman.—How important are landing and handling charges? Do you reach a stage where airlines would definitely be inclined not to land and to go to other airports? How important in deciding what to charge, subject of course to the Minister’s consent, is it to keep charges low, or is it regarded as a captive market?

Mr. Hampson.—Landing charges generally are a very small element of the cost of running airlines. They can vary between 6 per cent and 13 per cent, depending on whether you are running a short haul or a long haul airline. Fuel would be their main consideration rather than airport charges. They would not see airport charges as being a very big problem, but obviously they would take them into account. They would not be a critical factor.

43. Chairman.—You have what can be described as three different areas of activity. You have landing facilities and that kind of essential work. Then you have not so essential things like catering for passengers, and so on. Then you have things which are not really essential at all, like duty-free shops, and so on. How do you shuffle around the charges on these three? Do you regard the duty-free shop as a means merely of subsidising your other activities, or do you regard it as a way of making money and hoping to break even on the others? How do you view what can broadly be described as three different areas?

Mr. McClafferty.—As a general principle we try to make our commercial end as profitable as possible with a view to keeping down our charges at the operational end and to make it as attractive as possible. We do a little bit of cross-subsidisation. Generally we are not in favour of subsidisation.

44. Chairman.—Do you regard the commercial activities then purely as a necessary evil?

Mr. McClafferty.—It is a terribly important part of our operations—the commercial profits we seek—and as a result of our commercial profits we are able to keep our operational charges at a minimum.

Mr. O’Sullivan.—We concentrate as much as we can on Irish goods. Our sales of food and drink and everything else at the airports are a boost to our contribution towards the economy. This plays a very important part. There is also employment.

45. Chairman.—It would appear from the figures given to us and the turnover and the people employed, and so on, that the purely commercial activities are to some extent taking over and becoming a more and more important aspect of your activities.

Mr. O’Sullivan.—I do not think that would be a fair assumption, Chairman. If there are commercial opportunities naturally we take full advantage of them. This does not in any way detract from our primary obligation to provide a safe and efficient service at the airports under the heading of operations. If we can develop our commercial activities, as all airports do, to the maximum extent possible, it is to the advantage of the country and to the airline.

46. Chairman.—For instance, a great deal of your capital in the future would be on extending your shops and that kind of thing rather than on extending your runways?

Mr. Keogh.—The actual expenditure on commercial activities from capital is very small. That kind of work, extending shops, or extending catering facilities, is relatively cheap from a capital viewpoint. Where the big money comes in is on the air side, runways, taxiways, and aprons. That swallows it up very quickly. If I could just broaden that point a little. Our philosophy would be, if you like, that we make money from optional things the traveller does not have to do and may choose to do or choose not to do like buying in a duty-free shop, or having a drink or a meal, so that we can keep down the actual cost to him of the essential thing which is travelling, assuming that travelling is regarded as a socially desirable thing and that we are in the business of encouraging it. It might appear from looking at the figures of employment or turnover that the commercial side is becoming more important simply because of the nature of the activities we are in. Catering is labour intensive. Shopping to an extent is labour intensive and so our staff numbers and the actual turnover may be going up. But we never lose sight of the fact that our essential reason for existence is to operate airports and to provide facilities for passengers, for airlines, and for the public, and the commercial activity is there as a means to help us to provide those essential facilities.

47. Senator Cooney.—What criteria do you apply towards gauging the success of your commercial activities? Do you apply normal commercial criteria?

Mr. Keogh.—It would vary from activity to activity. For instance, in catering operations we would be very concerned about the payroll ratio to turnover or to gross profits and the normal kind of critical factors that would be applied by commercial catering establishments in lounges and bars. In shops we would be concerned about sales per passenger. We would be concerned again about payroll ratio in relation to turnover, and also payroll ratio to net profits. We would apply the normal kind of factors that any commercial firm would apply in the same activities.

48. Deputy L. Lawlor.—One airline said that if the items were indeed duty free the profit margin would appear to be exorbitant when compared with prices at full retail duty paid outlets. The assumption from that is that the margin you are marking up for the duty-free facility is quite high percentage-wise. You are making a very large profit on the duty-free shops?

Mr. Keogh.—That is so. We make substantial profits on duty free, but our justification for doing so is again that the purchase of duty free goods is an optional thing for travellers; and, since we have to operate on an efficient and economic basis, if we do not make the money from duty free we have to make it some other way and that other way would be essentially by charging the airlines more for landing or having a higher passenger load fee which would directly go into the cost of travelling for everyone.

Deputy L. Lawlor.—I do not disagree with taking a large profit on the duty free, but the point was made.

Mr. McClafferty.—Our duty free prices are uniform almost, I think, with B+I.

Mr. L. Lawlor.—Which means you are making a good profit.

49. Senator Keating.—There is still an unanswered question here about the pricing policy in the shops, because you must have conflicting considerations. If I give an example of airports—if I have a choice I will go through Amsterdam because it seems to be the best shop. If I wanted to eat I would go to Paris. I would avoid Heathrow at all costs for every possible reason. In other words, the way that the facilities are organised, people expect normally both to eat and drink and buy things and therefore that influences airport use. A cheap shop will pull in passengers who have choice of routes. Even in the middle of Europe you can always pick a whole series of intermediate stops and different airlines offer you different things. Is it a case that there is so little choice of where a passenger puts down in Ireland on the edge of the whole European network that you can choose to take a high profit rather than to promote your airport by having the reputation of a shop that gives good value?

Mr. Keogh.—I do not think our prices are uncompetitive with other European airports.

Mr. Cullen.—The Senator picks the one airport which charges prices that are lower than ours. That is Amsterdam. The shopping policy in Amsterdam is controlled by the airport authority to put Amsterdam into the league table of European airports versus London, Paris and so on. All the activities in Amsterdam are concessionary activities. The airport authority have the over-riding say in pricing and that is part of the package which the airport is using to sell the Amsterdam gateway. That is really what you are saying. Our prices are slightly higher than Amsterdam but we are competitive with Heathrow and the British airports. Our policy here is to maximise profitability at duty-free shopping. We see duty-free shopping as a bonus, the price of bottled liquor being around £3 and the price in town being in excess of £5. If you are going on holidays there is a considerable saving. There is no compulsion on people to buy. We think it is in the overall interest of the airport to subvent the essential activities. Eighty per cent of the people going through the airport buy duty-free.

50. Chairman.—Is this decision entirely a matter for Aer Rianta or do the Government have any part in it?

Mr. Cullen.—In duty-free pricing we are not subject to the Prices Commission. We are in relation to bar prices and we are subject to administrative price control in relation to food prices, which means the Department of Finance.

51. Senator Cooney.—Do you distinguish your pricing policies between Shannon, which has transit potential, and Dublin, which is terminal? For example, do you consider making Shannon competitive to increase the amount of transit traffic?

Mr. Ryan.—We are fairly uniform in our pricing policy. I think there would be complications if we were to do as the Senator suggests, because many passengers go through both airports.

Mr. Cullen.—Our Shannon pricing policy relates to the market in America with which we are competing. The price of cigarettes in the US is much lower than it is elsewhere. Therefore the price of cigarettes in Shannon is much lower than the price of cigarettes in Dublin. We have to take into consideration the competition we are dealing with. Regarding the Shannon price in certain liquor lines, we must take into consideration the price in the discount shop in New York or Boston. Our prices are fairly uniform but there are variations depending on the market at which the shopping is aimed.

Mr. McClafferty.—Our marketing manager will mention some market research that has been undertaken in retailing.

Mr. Harvey.—First, arising from a joint market research survey that we conducted with Bord Fáilte, we had very little adverse reaction to our retailing despite promptings in that direction. Our general impression from asking the people we are concerned about now is that they are pretty well satisfied with the service they are getting. That does not mean we are satisfied that is all we should be doing about it. Shannon and Dublin are different operations in terms of scale. Shannon is a major retailing institution with a worldwide reputation. We have now instituted a very sophisticated study including the employment of outside consultants to bring the standard of Shannon up the scale to take account of trends in international shopping. We detect new demands on us for more sophisticated goods. We are anxious to avoid falling into the trap of over-supply and perhaps disturbing the balance of the economy of the shop. We are probably reaching a point of major refurbishing of that shop, with considerable capital requirement as well. That study is probably going to take six to nine months to complete.

52. Chairman.—Is the shopping centre at Shannon not an example of what I was commenting upon earlier? It has reached a stage where it really has nothing to do with the airport. You have a mail order shop there which even if Shannon was closed down entirely would still be continued. What proportion of your sales there is to passengers and what proportion is to mail order customers?

Mr. Harvey.—There are two separate operations. The mail order operation is not dependent on passengers going through Shannon, except to the extent that the passengers pick up literature. We are appealing to them directly in a fully commercial sense.

53. Chairman.—What is the proportion of sales to mail-order people compared with sales to passengers who buy on the spot as they pass through?

Mr. Ryan.—The mail-order sales level is £3 million a year. The shopping is about £7 million.

Mr. O’Sullivan.—The mail-order division is independent of airport operations. It is a very useful diversified activity not directly associated with aviation activities. It helps Shannon in a bad year because it can operate without being concerned with the drop in traffic.

Mr. Harvey.—Senator Keating’s point about the attractiveness of Amsterdam having something to do with the shop is relevant in the case of Shannon. We recognise there that it is part of the overall ambiance of the airport. It has an attractiveness to the trend of passengers there, and is one of the reasons why some of the more casual users of the airport would touch down there. We are very conscious of that.

Mr. O’Sullivan.—The main concern is the use of Shannon for transit operations—for fuelling. Mr. Ryan elaborated on this. We have a team every year going out to the United States and negotiating with nonscheduled operators to entice them to come through Shannon to pick up fuel. We work out fees with them but there is strong competition in Europe from other airports. We have to do our business and know what we are doing. It is a hard business to keep going. There is a lot of hard selling involved. Shannon Airport is a very different airport from Dublin Airport. Shannon is part of an area to which it has an important economic contribution to make—by getting in transit passengers, even though they are not tourists in the normal sense, they come in to Shannon, they buy in the shops, maybe drink in the bars and also there is the advantage of crews coming in, changing at Shannon, using hotels, hiring cars, and that sort of thing. There is quite a spin-off in relation to this transit business even though we do not get tourists directly out of it. In the last five years it has been very helpful to Shannon and the terminal traffic is not good.

54. Senator Cooney.—You distinguish in your accounts between your operating surplus for your airline activities and the commercial profits from your non-airline activities. On the question of your operating surplus, it showed a significant growth between 1975 and 1976 and since then it has been declining. I understand that an absolute decline of 4 per cent is projected for this year. Can you tell us why this has happened?

Mr. Hampson.—I think I should start by mentioning that when we set our 1979 budget we set it on a conservative basis. We provided for quite a number of contingencies that we were aware of so that when we are setting our budgets we take a conservative view so as not to overstretch ourselves in targets. Subject to certain reservations about oil we expect 1979 to come out better than 1978.

55. Senator Cooney.—The decline will stabilise or be reversed?

Mr. Hampson.—That is correct. There are certain charges in 1979 of a one off nature. Certain provisions have been made for certain contingencies which may or may not happen. I would take the view, at this stage in the year, accepting that the peak has not come yet, that the 1979 return will come out better than 1978.

56. Senator Cooney.—On the operating surplus?

Mr. Hampson.—That is right.

57. Chairman.—You talk on the one hand of having the fixed assets, the capital, and so on, provided. On the other hand you show an operating surplus. How would the surpluses work out if they were modified by depreciation charges, interest charges, and the cost of State services? Have you made estimates which would show what the surplus would be or would there be a surplus?

Mr. Hampson.—There would be a small surplus. If we take the figures for interest and depreciation that are currently worked out by the Department, we would show a small surplus on our overall operations.

58. Chairman.—You told us at the beginning that merely looking at two sides of the line comparing what you were given with what you gave back—it more or less balanced. Is that correct? How do you relate that to what is being said now?

Mr. Keogh.—That was a point I made when I was talking about the capital we had received from the Department over a ten year period and the surpluses we paid to them.

59. Chairman.—They more or less balance?

Mr. Keogh.—They more or less balance. What Mr. Hampson is now saying is that, taking the years 1977 and 1978, using the actual interest and depreciation provisions the Department of Tourism and Transport make in their appropriation account, we would still make a small net profit. We would be able to meet all those and still have a net profit over and above.

60. Senator Cooney.—Would that small net profit enable you to finance your capital requirements in the future if you became autonomous?

Mr. Keogh.—That would depend on whether we had to meet these interest and depreciation charges, coming back to the point we made earlier. They arise from that historic capital debt and, in the case of the British Airport Authorities, in fact a capital debt was arrived at. A moratorium was given on any repayments on that capital debt. So at the very least we would expect that treatment which would mean that, from the beginning, we would not be paying interest.

61. Chairman.—You would start from scratch?

Mr. Keogh.—We would hope so.

Mr. Hampson.—How we are set up is very important. If we are set up with a large capital debt and large interest payments, then we cannot finance our future capital requirements without large loans or grants-in-aid.

Mr. McClafferty.—There are precedents for the writing off of the original capital. CIE is one.

62. Senator Cooney.—CIE?

Mr. O’Sullivan.—A better case is the British Airport Authority.

63. Chairman.—It is like picking landing charges. It depends on many things.

Mr. McClafferty.—In this country there are precedents. We recognise that the capital being around £40 million, the replacement value probably would be around £250 million.

64. Chairman.—Do you feel yourselves, or has it been suggested to you by the Government or by anybody else that you have certain social obligations, considerations which are not, strictly speaking, profit making?

Mr. McClafferty.—Yes. we are conscious of that, Mr. Chairman. We have a commitment to social non-commercial activities, as was touched upon earlier. In Shannon. for example, we feel we have a social obligation and commitment to the region to bring as many people to the region as possible for the benefit of the hoteliers and the general public in that area. We have also a social obligation we feel in matters pertaining to employment. We also have an obligation to use Irish goods and materials. We are conscious of a commitment.

65. Senator Cooney.—Cork has been losing money pretty consistently. Will that trend continue?

Mr. Cullen.—Aer Rianta took over Cork Airport in 1969. It had a history of losses. On the facts of life in relation to Cork Airport, I do not think it is our decision whether it should or should not be there. It is an important part of the Cork infrastructure from an industrial, tourism and business point of view. Our job is to do the best we can in making it successful. The facts of life financially in relation to Cork Airport are that the revenue of the airport approximates to £ ½ million. The expenditure of the airport is about £1 million and taking a normal inflationary growth rate of say 10 per cent and a traffic growth rate of 10 per cent, you are in a situation where never the twain shall meet. We took a policy decision in 1974 that we could do one of two things. It was impossible to make Cork Airport break even because if you are running an international airport you are involved in conforming to international standards in relation to safety and so on. We are also involved in providing security to meet the National Aviation Security Committee requirements. These are essential cost factors. There is no way we can reduce the cost side of Cork Airport so what we are trying to do is to accelerate growth at Cork Airport above and beyond the national level. We set up a promotion section and in co-operation with the airlines, the travel agents and the handling agents in the area, and the tourists interests, we are very actively promoting Cork Airport.

The other factor that is important in relation to Cork is that we had a very small duty-free shop there. With the European traffic into Cork Airport at about 25,000 people it was very small. We got the bonus of the UK duty free which gave us a situation where we were able to halve our deficits straight away. We have a promotion team working with Aer Lingus. We have put pressure on the airline at board level and at executive level to increase the services out of Cork Airport. I should like to say that in 1977 when growth rate at Dublin was 3 per cent, the growth rate at Cork reached a 9 per cent target. Last year Dublin was running at about 11 per cent growth rate. We exceeded 15 per cent at Cork. That 15 per cent was reached despite the fact that the airport was practically closed for two months of the year, during the Aer Lingus strike in March-April. The 15 per cent was achieved by coming in very strongly from August up to the end of 1978 with a 20 per cent growth rate. They came into 1979 with that sort of growth, and in fact the growth rate for the first four months of 1979 is 38 per cent. That is from 20 per cent in January up to somewhere like 69 per cent in April. That is when the strike was on. I see the operations deficit projected for 1979 as £550,000. In that figure there is a once-off payment. We bought out overtime in relation to the security force. You are probably aware of that. In 1978 the loss on the airport was £282,000. That is the actual figure. It is slightly different from the one you have. With the increase in commercial activity and the possibility of achieving much higher growth rates than are being achieved at the other airports, I would expect that 1979 would come out at somewhere over £200,000. With the growth rate at 20 per cent you can see that it will turn the situation around. If things do not go drastically wrong, and unfortunately they are beginning to look like they are going drastically wrong this year, I would estimate that Cork would be in a break-even situation by 1981.

There is no other answer to the thing. We are talking about economies of scale. We have a plant down there. It is costing us so much to run irrespective of whether 100 passengers go through it or 3 million passengers go through it. The only way we can reduce our costs is by increasing the through-put and we are very actively involved in that.

66. Senator Cooney.—Am I right in taking it that the increased growth rate you are generating in Cork exceeds the projections prepared by the outside consultants?

Mr. Cullen.—Absolutely. The growth rate projected for Cork for the first two years of that study was about 4½ per cent increasing from then on to 9 per cent. At the stage when we were supposed to be on a 4½ per cent rate we were on 9 and 15 per cent. Towards the end of last year and into this year we have been running at 20 per cent up on the previous year.

67. Senator Cooney.—Am I right in taking it that a positive effort can bring a positive increase and, if so, could the same be done in respect of Shannon and Dublin?

Mr. Cullen.—The same is being done at Shannon in respect of which there is a team out in the States for a very considerable portion of the year. We have got great co-operation from the national airline in promoting Cork Airport. For the first time, in 1979 Aer Lingus has two aircraft based in Cork Airport. This is very important from the point of view that previously you had a service running Dublin-Shannon-Cork-Paris which was half full by the time it got to Cork Airport, but they have the capacity out of Cork now to provide European services directly with their full aircraft available. In the charter area also, if you have aircraft based in Dublin which are to be used in Cork the cost of the charter out of Cork will be £300 or £400 dearer than out of Dublin because the aircraft has to be brought down to Cork. That situation has improved tremendously by the location of the aircraft at Cork. We brought Dan Air into Cork. A significant factor is that they have applied to the CAA in Britain for a Gatwick-Cork service for 1980. The Cork community and the airport authority are very much in favour of introducing this competitive aspect into the Cork-London service. If they get permission in Britain it will then, under the bilateral arrangement, be referred to our own Department. Obviously it will be a competitive aspect for the national airline. The load factors on Cork-London are very high in the peak period. Load factors are in the nineties and it is one of the aviation philosophies that if you have loads over 65 per cent on average you are turning people away. So with load factors in the eighties and nineties there are certainly a lot of people who want to travel but who cannot be accommodated. Aer Rianta support the application for this new service. We have brought in a number of smaller airlines, one which operates from Plymouth and TAT which is a French airline operating from Paris and Rennes. These were actual contacts our sales staff made. We support new airlines coming in by giving them up to 75 per cent discount in relation to their operations for the first year and after that maybe reducing to 50 per cent for the second year to get them on their feet. We co-operate with them in producing brochures. In some instances we give them a headage payment for every tourist they bring into the airport.

68. Chairman.—Do you give them incentives in the off season?

Mr. Cullen.—Most of the smaller airlines in the charter business are concerned with summer traffic. They are not too interested in operating like the TAT company I mentioned. They operate a 20-week summer charter from Rennes. They are doing a 10-week charter from Paris. They are not interested in the off-season business at this stage. In a small airport like Cork it is very difficult to run a service if you are trying to operate planes like 737s. Any of these smaller companies operate 48 seaters and the like so that if you get 30 passengers on board you are doing well. British Airways and Aer Lingus cannot afford to develop the provincial routes in Britain or the smaller European routes with the equipment they have. If you have 30 people on a 737 you are in a big loss situation. These smaller companies can develop routes which may ultimately be taken up by the national airline or converted to bigger-type aircraft. It is one of the economic factors in the aviation business—the need for companies with smaller aircraft to develop less main routes.

69. Senator Cooney.—You introduced a new airline into Cork. Have you ever considered introducing the cheap fare airline?

Mr. Cullen.—Are you talking about the Lakers and so on? It is part of the experience with Laker that he always wants to operate into the capital. I think he has his eye on Dublin rather than on Cork. He operates into New York and he did operate into Los Angeles. Even his Los Angeles service ultimately was converted to Los Angeles through New York. It is very difficult to sustain his type of business in a small run.

70. Senator Cooney.—Would you take Aer Lingus’ views into consideration when deciding on what other airline to invite to use one of your airports?

Mr. Cullen.—We would take them into consideration. The Minister, who is also the parent, you might say, of Aer Lingus and ourselves, is the ultimate decider of the interest of the national airline. Obviously, if there was a lack of traffic on a particular route, we would not be interested in encouraging additional airlines to come in. Unfortunately, in the Cork scene British Airways and Aer Lingus pool the route and by agreement they are most anxious to progress in steps. The steps would be that they would put on two additional services. You would have another British Airways route and you would have another Aer Lingus route. We see at this stage that there is a need for one additional service without creating a problem for either airline. Either of the airlines would recognise that this is so. It is not feasible for them within their arrangement to provide this one extra service.

Mr. O’Sullivan.—Might I clarify a point? It is only in certain cases that we can invite airlines into airports. We can do so in the case of Shannon for transit traffic because it is not in competition with the national carrier or TWA or anyone else. They do not pick up passengers. They just bring passengers through and stop there, so we can invite as many airlines operating transit services as we can. We would have no right to invite Freddy Laker or anybody else. Freddy Laker would have to go through the normal procedure—apply to his own Government, get the approval of his own Government, and approach our Government. We do not have a direct say in that. The only area where we can do all the business we can is with transit carriers. There are no restrictions. They have the licence. If they are properly licensed they are more than welcome to operate.

Mr. Cullen.—We would not make any public statements in relation to new airlines which might embarrass our Minister.

71. Deputy Kenneally.—Does a difference obtain in the handling of a scheduled service versus a charter service?

Mr. Cullen.—Not really.

Mr. O’Sullivan.—The transit carrier would not be in competition. We can invite as many airlines as we can get our hands on to come into Shannon just for fuel but they are not picking up or setting down passengers. We have a free hand as far as that is concerned. We use it to the maximum extent possible.

72. Senator Cooney.—Apart from your inviting in the cheap fare airlines, have any of them asked to come in?

Mr. Cullen.—No, not directly. The only one is Freddy Laker applying for or introducing the £25 fare on the London route.

73. Chairman.—May I take it that the airline training programme which you have in Shannon is very profitable as far as Shannon is concerned?

Mr. O’Sullivan.—It was even more profitable up to a certain extent. Because we are in a public hearing, I would not like to touch on some reasons relating to the problem.

74. Chairman.—Pilot training?

Mr. O’Sullivan.—Yes, pilot training is the main problem. It is very profitable but it has been better.

Mr. McClafferty.—Mr. Ryan, Director of Shannon, will explain what exactly we have been doing recently at Shannon for training.

75. Chairman.—Is this confidential?

Mr. Ryan.—Yes, it is. Just to give you a background on a particular aspect of training.

Chairman.—In that case, perhaps you can write to us and tell us.

76. Senator Cooney.—How do you deal with fluctuations between seasons—your high season and your low season? For example, temporary staff. What other considerations arise because of the fluctuations?

Mr. Keogh.—Many of our staff are not engaged in any way in front line traffic. The basic number of staff we require in the peak season is not very different from the basic number required in the off season with the exception of commercial areas. In commercial areas we try to keep the basic number of staff at the most economic level and bring in temporary staff during the summer period. That would be the pattern. Outside the direct commercial areas we would have roughly the same staff throughout the year because requirements are related to the shape and nature of the airports and the hours of opening.

77. Senator Cooney.—Is there anything you can do to remove the disparity between high season and low season?

Mr. Keogh.—We are involved, particularly in Shannon, with the Shannon Development Company in various efforts to try to improve the shoulder periods which are of importance to us. On the more negative side of it, we are looking at the economics of our operation on the commercial side during the slack winter period, particularly at night, to see if we can cut back on our costs in those areas. Negotiations have been in train for some time about that.

78. Senator Keating.—Is it the position that the company does the catering in Dublin, Shannon and Cork? Perhaps I ought to say the hard thing and this is on the record. I go through Dublin Airport, did a great deal and still do considerably: and I would not go for a snack at all, or would not think of drinking the tea or the coffee. Sorry about that, but that is the way I feel. I am possibly very critical of all standards in providing food, private and public, in Ireland. I think our standards are exceedingly low in both quality and cleanliness. I know that is a problem of the society as well as a problem for individual organisations. How do the returns compare? Is it your intention to bring all of them under your own management and control or is it your intention to let all of them to concessionaries?

Mr. McClafferty.—Our policy would be to let everything out on concession, if that was possible but we inherited the position at Dublin and Shannon. Cork is a concession. We have freedom there to operate as a concession and it comes up again for tender this year.

79. Senator Keating.—There must again be policy decisions because you have to offer—certainly at the larger airports—a spectrum of things. You have to offer someone who wants something to drink a place to drink in, and you have to offer the possibilities of a reasonably elegant meal at the other end. I remember a time when people from all over North County Dublin and from further away used to go to eat at the airport. That is no longer the case. The more people you can carry through your diningroom the better value you can give and the better quality you must have. What are the policy attitudes about the upper end of the catering?

Mr. McClafferty.—Trends have changed in the catering business. At one time Dublin Airport was a resort where people went along to spend the evening and perhaps brought their families along for the novelty of watching aeroplanes and the general activity. We were running a very high class restaurant at Dublin Airport. Then trends changed, the novelty wore off the airport as a resort. We found ourselves losing a very considerable amount of money on the first-class restaurant. We did quite a lot of market research, not alone at home, but abroad. We feel that we have to give the general public what they are looking for and the general public are looking for quick service, snacks and that kind of thing. This is what our market research showed up and this is what we provide. I want to mention that some years ago in some leading Dublin hotels, grill bars were unheard of. Now every leading hotel in the country has a grill bar and they have proved very successful.

Mr. O’Sullivan.—Our Director at Dublin will tell you the plans we have for an improved catering service.

Mr. Cullen.—I would subscribe to the view that catering at Dublin Airport is a reasonably depressing experience. We changed from a situation where our staff were orientated towards high-cost meals and at the time our Chairman mentioned, which coincided with my arrival at Dublin Airport, we surveyed the situation. We used advertising campaigns to try to get the people back to using the restaurant again but we were not successful. I think security was another aspect that prevented people from coming to the airport, the difficulty of parking cars, and getting into the building. We reached a situation in which the average usage of the restaurant per night was about 16 people; I think that we had about 20 of a staff on the other side and all the cooking facilities in operation to service that restaurant. The staff were not too happy about the closing down of this restaurant because it was obviously a source of income to them particularly in the “tipping” area. We wanted to change to the type of catering which we found from our surveys was required. We entered into negotiations with the staff over a period of years to try to change with their agreement rather than create a situation where we suddenly decided that we were going completely self-service and to put out of employment staff who had been working with us for a number of years. We have completed these discussions now and we do not intend re-introducing restaurants, I am sorry to say, Senator. But we do intend creating a much more conducive atmosphere in catering. The theme would probably be of a garden-type or balcony-eating arrangement. We are also thinking of, in two airports anyway, introducing this Régéthermic cooking which is a reconstituted cooking arrangement, and introducing carousel service arrangements. But we will have a fairly good grill bar with modern type self-service arrangements. We have three bars at the airport which would require some refurbishing and so on. We have two coffee bars or snack bars—one in the arrivals area and one in the departures area.

I think one area you mentioned was the snack area. It is very difficult to provide coffee and tea to a uniform standard when you have numbers of people going through an airport. We are introducing programmed coffee and tea makers which you would probably have seen in Amsterdam, whereby you can produce fresh coffee on a programmed basis which would avoid the situation where you come along and you are getting coffee which could have been standing there for a quarter-of-an-hour previously. I think really that your comments on the catering are acceptable and I hope that within the year you will see considerable improvements in that area.

Mr. McClafferty.—Recently we carried out a joint study with Bord Fáilte. This involved a questionnaire being given to a large number of passengers as they were passing through. The remarks and the comments were quite clear as to what the public wanted.

Mr. Keogh.—I notice the Senator winced when reconstituted food was mentioned. We have carried out extensive tests as to the quality of the food produced in this way, involving our chefs who are very particular people and who have been around since the days of the gourmet restaurants at Dublin and Shannon. They are very pleased with the quality and found it indistinguishable from food cooked on the spot.

Mr. Cullen.—It is a fact of life that most of the food you eat in restaurants has been cooked some hours previously and heated up again.

80. Senator Keating.—Regarding the management of the car parks, again I offer you the comment that every time I use Dublin Airport I find myself under pressure going in because your users will not obey the regulations about where the cars ought to be. This restricts the whole flow through the car parks to the extent of being exceedingly annoying because of these morons doing these anti-social things. At the same time there is a management element in that. Whether you tow them away or whether you stick great stickers on their windows—like they do out in RTE —or what ever you do, it does seem to be something that ought to be sorted out.

Mr. McClafferty.—Before anybody gives any answers I would just like to make a general comment on car parking. It is something that has occupied a lot of time at board meetings. The Committee may be aware that we have a magnificent two-floor roof car park at Dublin Airport. But unfortunately we are not permitted to use it. The National Aviation Security Committee directed that it is not to be used under present circumstances.

81. Chairman.—What are present circumstances?

Mr. McClafferty.—Security at the airport. We have been trying to get them to rescind their direction in this matter for quite a long time. We have had very little success so far. We have a very ambitious plan for the car park.

Mr. O’Sullivan.—In the short term we are extending the present car park across the road. We are examining what we are going to do in future assuming there will be a growth in cars, and assuming the fuel situation is going to be right. The planning body who are looking at it have to decide whether they will build a multi-storey carpark where the present public carpark is or have it built further away from the airport and have a coach service bringing the drivers who park their cars up to the airport which is quite common in several airports. We have to weigh up the problem. If we build a multi-storey carpark where the present public carpark is we deny for the long term the possibility of having to use that area for expansion of the terminal for offices and for line operators because of the expansion at Dublin Airport. It is a subject we are studying very closely.

On the question of the congestion mentioned by the Senator, the people who dump their cars outside the white line and cause all sorts of congestion—we now have approval to tow away and fine a delinquent driver £10. We are running into industrial relations problems with our security force in this regard. We would like to let the removal of cars out on concession but the security people feel they should be doing it. We have not settled that yet. On the question of using large stickers on windscreens we have thought about it quite a lot. We are concerned about the reaction. This is the difficulty because you get this aspect of intrusion on your car, putting a sticker on it and taking half an hour to get it off your car. This is a problem we have considered. Frankly we would love to do it. We feel we would get a very bad public reaction. It is a difficult problem.

Mr. Keogh,—The provision of 500 additional car parking spaces at Dublin Airport this year will ease the problem temporarily.

82. Chairman.—There is a complaint from one of the scheduled operators in Shannon that when you are successful in selling package tours, and so on, you do not make provision for handling that traffic and the scheduled operators suffer as a result of your success in bringing in nonscheduled tours.

Mr. Ryan.—I am not quite sure what is meant by that. The handling is done by Aer Lingus in Shannon who control technical transits and terminal traffic. It is my view that the technical transits tend to stop us rather than the terminal ones which are a success. We are not aware of any complaints in regard to precedence given to one airline over another in handling at Shannon.

83. Chairman.—It may not be deliberate preference. Of course you do not do it. It is Aer Lingus, but nevertheless you have overall responsibility. The suggestion seems to be that if you have a regular staff of say 100 people handling traffic and if you promote many extra charter flights, there are still only 100 handling. The scheduled operators, the normal operators, find themselves not getting proper service because there are so many extra charters.

Mr. Ryan.—It is possible, We have a committee at the airport, ourselves and Aer Lingus and Shannon Repair Services who are a subsidiary of Aer Lingus, who do the planning. We are very conscious of this and we watch it all the time. It is very much in our interest that nobody has a complaint. I am not aware of any serious complaints. Generally speaking we are not aware of any complaints.

Mr. McClafferty.—We will have that matter investigated.*

Chairman.—I can see it is the type of thing that could happen. Whether it does or not I do not know.

84. Senator Cooney.—Would you let us know your profits on your duty free sales for each airport over the past three years and your projections for the next three years?

Mr. McClafferty.—Yes, in confidence.

85. Senator Cooney.—On the question of the allocation of concessions for banking and car hire, how are these costed? How much do you reckon you get from them? Do you try to maximise your revenue from these sources?

Mr. O’Sullivan.—On the banking question. You appreciate there are two parties to the agreement especially in relation to banking. We invited banks to submit tenders. This is the procedure we follow. The present incumbent has been there since 1971 at the three airports. The initial agreement of five years contained a provision to negotiate that contract for a further five year term on conditions to be agreed which meant, in effect, on our conditions. That currently is the situation.

86. Senator Cooney.—You invited a number of selected banks to tender?

Mr. O’Sullivan.—Yes.

87. Senator Cooney.—And gave it to the highest?

Mr. Keogh.—It would be fair to say we did a great deal of research before we did that. One of the nice things about the airport business is that other airports are in the same kind of business and yet are not direct competitors of yours. Therefore, they are willing to share their experiences with us even on matters as confidential as how much they are getting from their banks. We did have a fairly good idea of how much we should be getting and we were satisfied that the tenders we got met our requirements.

88. Senator Cooney.—Was there much difference between the tenders?

Mr. O’Sullivan.—There was a difference. We will give you the information in strict confidence if you require it.

Senator Cooney.—If you are satisfied that what you have got is in line with international standards, I do not think so.

Senator Keating.—Just as communications between airports are good, communications between banks can be quite good.

Mr. Keogh.—As a matter of general interest, within the successful bank they actually use the exercise by which they arrived at their tender as a training exercise for bank managers within the bank itself.

89. Senator Cooney.—You have set up a corporate planning unit for long range planning. What progress has it made? Has it produced any plan yet? Could we have it? Is it at that stage yet?

Mr. O’Sullivan.—We have done a lot of study. We have been working on this now for about eight months. We are relatively new, and we are a mixture of the private sector in the sense of having the Shannon Sales and Catering Organisation under Brendan O’Regan, the old Aer Rianta and parts of Aer Lingus and civil servants. It was quite a blend of the public sector and the private sector. It took quite an amount of hard work and cohesion to achieve the stage we have reached now. It is very satisfactory. We are going forward now with this five year plan. I would say it will probably be available in the latter half of this year.

Mr. Hampson.—I might add that we employed Arthur Anderson and Company, who are international consultants, to set up the initial programme as to how we were to go about the plan. We are now in the process of getting a detailed plan from each Manager so as to have consultation right across the board.

90. Senator Cooney.—If you became an autonomous board would there be any essential difference so far as the public is concerned?

Mr. McClafferty.—I would imagine that the public would gain by it. If we can generate more profits, organise more capital and improve our facilities, the public will benefit but if there are to be delays on decisions on capital expenditure, our amenities and facilities will deteriorate. This is something I am quite worried about.

91. Senator Cooney.—You say “if”. Is it only an “if”?

Mr. McClafferty.—Perhaps “when” would be a better word.

92. Chairman.—Regarding staff training and development, do you consider your present programme as adequate and sufficient for the future or is there a problem there?

Mr. Keogh.—It is not a problem. We have a training unit established in our head office and we also have a training unit within Shannon Airport. We cover pretty well the whole spectrum of the training required. We have an amount of specialist programmes which we have developed ourselves in airport management-type training. We have developed a lot of programmes in sales training and we have the general run of executive development and administrative-type training. We use extensively, for training our fire-fighting staff, the British Airports Authority fire training school at Stanstead which is of a very high standard and which is recognised as such internationally. We are working now with the Garda on security training.

93. Senator Keating.—It seems at some stage we will be making a report and expressing an opinion. The central thing that we can say something useful on is whether your present relationship to the Department, in relation to the Government, is appropriate or whether the establishment of a much more autonomous organisation is important. I do not want to put words into people’s mouths but it seems to me that much of the thrust of the argument from your side is that greater autonomy is desirable and this would be good for service to the public in the terms of smoothness, of long-term planning and of avoiding a stop-go approach in terms of capital investment and things like that. Is this an argument that you can make in public? You are seizing this opportunity, which perhaps is one of the justifications for a committee like this, to make that argument but vis-à-vis the Department, is this something you can go public on or can they say to you, “Look, that is appropriate to the Department to express opinions on: do not generate a controversy”?

Mr. McClafferty.—I do not think so. We feel quite free to go public on it. Up to now our relationship with the Department has not caused us any inconvenience. It has worked out quite satisfactorily. With the capital we will require in the future, say £30 million in the next five years, we can foresee this as a problem in terms of delays in decision making and so on whereas if we were able to borrow capital ourselves we would be in a better position. Of course, it would all have to be sponsored or monitored by the Minister.

94. Deputy Kenneally.—You say that in the early seventies you considered this question?

Mr. McClafferty.—It has been under discussion for some considerable time and we have had some sort of favourable reaction from the Department. There is no conflict.

Mr. Keogh.—That is the point I wish to make. It is not a controversial subject. It is just a question of timing.

Mr. O’Sullivan.—The Minister has set up an inter-departmental committee with an official of his own Department chairing it, and also including officials from the Department of Economic Planning and Development and the Department of Finance. At a likely meeting with them next Monday one of the major discussions will be this very question.

Mr. Keogh.—On the issue of timing, it is fair to say that when times are bad there is no point in discussing it and when times are good the issue is whether they will last.

95. Deputy Kenneally.—Will the oil crisis affect you? Have you projections for the future in an oil crisis situation?

Mr. O’Sullivan.—The eastern European countries were using Shannon up to two years ago as a transit point but suddenly stopped using it. Our people wanted to find out what it was all about. There was a very simple answer, “We are using our own fuel and we fly as far as we can so we go to Gander”. We got in touch with the Soviet Ambassador here. He opened gates for us and we have had several negotiations with the Russians. We are at an advanced stage in negotiation whereby if it is fruitful and it looks as if it could be fruitful, they will ship fuel to Shannon. They will come in and pick it up there. It is a question of a long-term contract. We would require an investment to put up the installation because their fuels cannot be co-mingled with the western area fuel. This would mean a very substantial boost to Shannon from the point of view of landings and of business in the shops. If it goes well, it is going to be a very attractive proposition for the development of Shannon. We hope that the negotiations which took place in Moscow on 24 May will carry some weight. In other words we are importing a raw material, processing it, getting all the benefit from it and then exporting it. We think it has great prospects for Shannon.

96. Chairman.—Are they providing supplies for themselves there?

Mr. O’Sullivan.—I would not like to comment further on that. I would be delighted to have the opportunity later on. It is a very exciting development.

97. Senator Cooney.—You are going into Europe with your mail order business. What progress has been made?

Mr. O’Sullivan.—We retained consultants to look into the British market and the turnover in the British market is very great. We are starting a sampling operation to see how attractive it can be. If that is successful, the next step then would be to look into selected countries in Europe to expand our mail order operation. Mr. Cullen was very much involved in this. Mr. Harvey may want to elaborate on it.

Mr. Cullen.—We are committed to test marketing the British market effective from early September. We are launching a campaign based on the concept of beautiful things from the world which in its first stage will represent merchandise from Ireland, Italy, the US and mainland China.

Senator Keating.—This is amazing stuff.

Mr. Cullen.—It is rather unusual but the concept is that we have buyers around the world searching out exotic merchandise for you to bring it to you through advertising media and through list testing. We are mounting a campaign with the objective of getting 20,000 responses from this test marketing in the pre-Christmas—September-October—period. We are looking for an 8 per cent response rate which is very high in mail order terms. If it is successful we will roll out a major campaign over the next two years. Then our next step is using Denmark as a spring board into Europe, Denmark being a country with a high English-speaking population of welltravelled people who have plenty of money in their pockets and they have very similar characteristics to the Scandinavian and particularly the German markets. The German market is the big mail order market in Europe. We would be aiming at getting in there. We will be presenting the best of Irish merchandise in competition with the best of merchandise from other companies. It is a very attractive proposition. The British mail order market is there and that is a 2,500 million pound market and we are trying to get about 2 per cent of that over three or four years. It could bring us up to 45 million. That is very optimistic, but mail order is a very difficult subject. We are practically the only company in Ireland with the experience and expertise to do it. It will be a great shop window for Irish manufacturers if we make the break through there. In a Shannon situation particularly, which is an up and down situation—one year trans-Atlantic is going well, another year the bottom is falling out of it by some technological advancement or something like that—we feel it is very important to have industries at the airport which are independent of actual aviation so that the job content and so on in the area can be maintained. We feel this is a good programme.

98. Senator Keating.—Something arises from that which reminds me of something I heard Brendan O’Regan talking about some years ago. There are two firms in Copenhagen which specialise in the worldwide diplomatic target. I have seen their catalogues which feature very extraordinary items. I thought the people in Shannon in partnership with the mail order development were considering going after that sort of market. Is that working or not working?

Mr. Cullen.—We did go after it about ten years ago. I think it was Mr. Aiken and the Secretary of the Department of Foreign Affairs who encouraged us in this venture. We produced a lovely diplomatic catalogue and we eventually ended up with a few orders from Geneva for a half a pound of black pudding. It was a total flop. We were competing with people on the mainland. We had all the shipping costs and trans-shipment costs, and so on. The Shannon people are talking about having another go at it.

99. Senator Cooney.—You fix your charges for the banking concession on the basis of tenders. On what basis do you fix your car hire and advertising charges?

Mr. Hampson.—Over the last number of years we have been working towards a 10 per cent commission on turnover. We have achieved this at Dublin but in the case of Shannon and Cork we have not for good reasons, mainly because of seasonality considerations. It is mainly in line with the European norm.

Mr. Harvey.—In the case of airport advertising historically we did it ourselves. It was only last year that the company decided to appoint an outside professional agency to do it. About ten firms were interviewed and made submissions. Spaces are allocated after consultation with our own architects. We set a scale of charges, and we pay the agent 15 per cent on the gross earnings generated by him. They have been acting as our agents for four or five months only. There is not much to report except that the signs are good.

100. Chairman.—Are there any final points the witnesses would like to make?

Mr. McClafferty.—Mr. Ryan might like to talk about another possible project for Shannon.

Mr. Ryan.—First of all Shannon is different from Dublin. Dublin gets business anyway. At Shannon as long as I have been there we have had to struggle all the time to make it viable. It has never lost money. We are always looking for things. We have had discussions in Washington about the possibility of pre-clearance of aircraft at Shannon. This is done in many instances where aircraft are going further into the United States. It would require some investment at Shannon. It would be worth it because we would attract a large number of aeroplanes which would not otherwise come. We are not in a position to make a definite statement on it yet. We used the opportunity of Speaker Tip O’Neill’s visit to Ireland, to ask him to give it a bit of a push for us. It would be very much dependent in the long run on whether our own national carrier would be prepared to use it. We are having discussions with them on that subject. If we succeed, in about two years from now it would be an added boost to Shannon traffic.

Chairman.—Thank you, gentlemen.

The witnesses withdrew.

*See Appendix 1.

*See Appendix 1.

*See Appendix 3.