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Should Aer Lingus be privatised:Poll
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27-07-2004 7:33pm#1
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Also, the argument that it should be sold off so the taxpayer won't have to bail it out again should there be a downturn is rubbish, as under EU law the government has been prevented from bailing Aer Lingus out for many years now. So that argument is a non-starter. Should there be a downturn, Aer Lingus will have to sort itself out, just like it did in 2001, with no government aid.
Aer Lingus is profitable but only because they are continually cutting costs. There is only so far you can cut costs in a company, so they also require access to private-sector capital. However the unions are refusing to play ball with the next stage of that process. I am almost certain that if Aer Lingus were a private-sector company the unions would be rather less vociferous in their obstructions
Aer Lingus needs to be able to access private-capital. Enough of this argument about it being a "strategic national asset" please. All I care about in terms of air-travel is getting from A to B. The profit-motive will ensure an abundance of air-travel from Ireland to the rest of the world. There is huge tourist interest in Ireland. Airlines will continue to want that business. American trade with Ireland is now double that of the US's trade with China. There is every incentive for airlines to continue to service that massive demand there is already there.
No matter how many lefties try to smear Ryanair, the fact is that passengers are voting with their feet by making it twice as profitable as Aer Lingus. Ryanair has been able to make decisions based solely on market demand whereas Aer Lingus is constantly forced to scale back commercially-necessary decisions e.g.g outsourcing of catering which was planned by Willie Walsh in 2001 but which the militant unions blocked. It is now again being proposed by him and again the Marxist unions are saying "No". They continue to cling on to a Scargillite attitude to industrial-relations. Aer Lingus is doomed if they continue to have the power to block such necessary proposals when bad times return.
Unions in Aer Lingus are far more militant than unions in the private-sector because the Government's ownership of the company emboldens them to strike in the hope that a sitting Government, concerned about the potential effects of the strike on its popularity, is more likely to give in to them. We need to divorce politics from Aer Lingus, and let it act solely on a commercial basis. I firmly believe that state-interference in markets where competition is possible only hold's back economic-growth and keeps inflation higher than it would otherwise be.
alleepally I think you asked me about my attitude to privatisation in general, which is not the topic of this thread. I have explained my position on Aer Lingus in this thread, and on health-care in the "Welcoe to US richest country in world" thread. I similarly fail to see any need for a state-owned peat monopoly (Bord na Mona), or the Bord Gais monopoly in the gas-market , or the Dublin-Bus monopoly in Dublin, or the ESB monopoly (at least the power-generation part of the company). I accept the argument made by other contributors that if ESB is privatised, then the actual lines should remain state-owned, to stop ESB impeding other power-companies' access to them. though. I make no apology for the fact that one of my reasons for being favourably-disposed to privatisation and competition is my opposition to trade-union militancy and the "strike first talk later" mentality that pervades the public-sector part of the movement.0 -
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Originally posted by Lennoxships
Privatisation has never worked out properly, anywhere in the world. Look at Eircom. Look at England's railways. Look at the Russian oil fields. Look at the state of South America, after governments privatised all their major assets. So explain to me, why is it a good idea to privatise AerLingus?
A: EU state-aid rules would prevent the State bailing out Aer Lingus with a cash injection if it faced dire straits , unlike in the early 1990's and before. In that situation Aer Lingus would need private-capital. Recall that a large stake in the company was sold in 2001. If a similar stake were sold next time then a majority of the company would be in private-sector hands.
B:To compete with Ryanair and other low-cost airlines, Aer Lingus needs to cut costs drastically. It remains a highly inefficient company in comparison with Ryanair. For a start it needs to contract out catering to the private-sector. It also needs to slash jobs. Ryanair has 2,000 employees while Aer Lingus has 4,000 (down from 6,000 in 2001). Aer Lingus's current profitability is down to its cost-cutting, but the trade-unions have put a line in the sand and made it clear they are incapable of concentrating beyond the short-term. The fact that Aer Lingus is a public-sector company means that the unions are more emboldened to strike and inconvenience the public than they would if the company was privatised, since private-sector bosses won't tolerate such infantile behaviour. The necessary changes are thus more likely to be facilitated by privatisation, and the consumer will be the winner with cheaper fares on flights to the US.
C:A boon for the Exchequer. The proceeds of the Eircom privatisation went into the National Pensions Reserve Fund. According to the news today or yesterday the fund has made a profit of 4.5% in the last year. We need to look to the longterm and realise that we must avoid at all costs the pensions-timebomb that is engulfing much of the rest of Europe.
Competition between private-sector companies has a greater likeliehood of bringing down prices than competition between public-sector companies and the private-sector.
E:British Airways was privatised in the 1980's and as admitted by some posters here the quality of service with BA was experienced by them as better than that of service with Aer Lingus.
F:Just because privatisation went wrong with the railways in the UK, doesn't mean as a rule that privatisation is a bad idea. I always opposed the idea of privatising the railways in Ireland, since I cannot see how competition could effectively be introduced in that sector. But the US - the richest economy in the world by far - is also the country with the most liberalised economy in the world. Look at the France, Germany, Italy and Spain, with their massive unemployment and vast public-sectors. The US must be doing something right.0 -
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arcadegame2004 wrote:A: EU state-aid rules would prevent the State bailing out Aer Lingus with a cash injection if it faced dire straits , unlike in the early 1990's and before. In that situation Aer Lingus would need private-capital. Recall that a large stake in the company was sold in 2001. If a similar stake were sold next time then a majority of the company would be in private-sector hands.
I'll go with that, that's a good reason.B:To compete with Ryanair and other low-cost airlines, Aer Lingus needs to cut costs drastically. It remains a highly inefficient company in comparison with Ryanair. For a start it needs to contract out catering to the private-sector. It also needs to slash jobs. Ryanair has 2,000 employees while Aer Lingus has 4,000 (down from 6,000 in 2001). Aer Lingus's current profitability is down to its cost-cutting, but the trade-unions have put a line in the sand and made it clear they are incapable of concentrating beyond the short-term. The fact that Aer Lingus is a public-sector company means that the unions are more emboldened to strike and inconvenience the public than they would if the company was privatised, since private-sector bosses won't tolerate such infantile behaviour. The necessary changes are thus more likely to be facilitated by privatisation, and the consumer will be the winner with cheaper fares on flights to the US.
So we need to privatise Aer Lingus, so they are free to ignore the unions and can sack people? How does the state benefit by increasing the number of unemployed? Why should they slash jobs when they can make a profit? So we can fly for less? Is the cost to society really worth it so we can save a few pennies on flights?C:A boon for the Exchequer. The proceeds of the Eircom privatisation went into the National Pensions Reserve Fund. According to the news today or yesterday the fund has made a profit of 4.5% in the last year. We need to look to the longterm and realise that we must avoid at all costs the pensions-timebomb that is engulfing much of the rest of Europe.
How does privatisation benefit in the long term? It's the car boot sale approach to economics.
What you are proposing is to bring in big money now to plug the holes that will be caused by the fiscal shortfall when the population ages. That is a short term solution if I ever heard one. A long term solution would involve readressing the entire tax and pension systems so that there will be no holes to plug. Competition between private-sector companies has a greater likeliehood of bringing down prices than competition between public-sector companies and the private-sector.
Sure, it does bring down prices. We can now buy coffee from South America for half nothing due to privatisation in that part of the world. Sure isn't it great! But try telling that to the Columbian coffee picker who has seen their salary halved and their communal health centres closed so that their operation is more "competitive."
You said earlier that Aer Lingus should look to Ryanair. This would involve cutting jobs to become more competitive. Well I say that Ryanair should look to Aer Lingus. You can make money without treating your employees like a dirty kleenex.E:British Airways was privatised in the 1980's and as admitted by some posters here the quality of service with BA was experienced by them as better than that of service with Aer Lingus.
Let's not forget that British Airways has a much bigger market than Aer Lingus and flies more profitable routes. But still, what kinds of flights are people comaring? Most probably to London on Aer Lingus and then onwards from London on long haul with BA. Long haul flights generally offer a better standard of service than short haul. This is standard in commercial aviation. Aer Lingus long haul flights also offer a high level of service.F:Just because privatisation went wrong with the railways in the UK, doesn't mean as a rule that privatisation is a bad idea. I always opposed the idea of privatising the railways in Ireland, since I cannot see how competition could effectively be introduced in that sector. But the US - the richest economy in the world by far - is also the country with the most liberalised economy in the world. Look at the France, Germany, Italy and Spain, with their massive unemployment and vast public-sectors. The US must be doing something right.
Don't get me started. The United States has one of the largest public debts in the world. They have no public health service, no national system of public transportation, a terrible welfare system and 12% of their population is living in poverty. It's the richest economy in the world by far and 13% of the people are living in poverty. There's something wrong there, surely. Germany, France, Italy and Spain piss all over the USA from a very great height when it comes to quality of life and worker's rights, and this comes in part from their unwillingness to put profit first and people second.
I know where I'd rather live.0 -
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