Should Aer Lingus be privatised:Poll

bonkey

chill wrote:

Exactly what has there been in the US to privatise ? Airlines ? Buses ? Phone companies ? Electricity ?

Please let us have a list.

What do you need one for. The point that there has hardly been any is still valid even if you qualify it to say that there is little to privatise.

Privatisation of a state industry does not yield the same results as naturally-grown private industry. In theory perhaps it should, but in practice it just doesn't do so.

Arcade wants us to believe that our government should divest itself of anything which is arguably privatisable, and offers the US as teh model to follow. I'm pointing out that the US hasn't followed this model to any appreciable degree, and the one case where it did privatise is an example held up by Stliglitz in both The Roaring Nineties and Globalization and its Discontents as a classic example of how privatisation has disimproved the situation.

I would say that if you want a list, it should be up to arcade to provide a list of successful privatisations that the US has carried out in order for his "we should be more like them" line to hold more water than the collander I use to drain my veg in.

jc

bonkey

arcadegame2004 wrote:

I agree that the liberalisation of the power-market in California was greatly mishandled. But in my opinion that owes more to the precise methodology that they used.

And could you point to a methodology that anyone has successfully used for achieving a good privatisation?

I feel that a different form of liberalisation could have succeeded.

Well, that much is clear from your arguments, but you still don't say how it could be done, or which successful model we should be looking at adopting.

Just because a particular methodology of privatisation and liberalisation has not worked in the US does not mean that done a different way it couldn't have succeeded.

Correct. Unfortunately, it also doesn't really help us in figuring out which of the remaining infinite number of ways we could approach it can succeed.

BTW Bonkey, with regard to your points, I respond "why not" to the idea of two airports in Dublin.

What a compelling argument.

It's like Calcutta in Dublin Airport with all the overcrowding.

Right. So clearly building a second airport is preferable to expanding the existing one.....

Furthermore, competition between 2 or more airports in Dublin could ultimately help reduce airline fares due to competition for airline-traffic on the basis of the airports undercutting each other's landing-charges, thus feeding into airline fares by reducing the cost-base of the airlines.

This is a specious argument. If there is enough traffic to merit a second airport (as you've already suggested), then there is enough traffic that the resultant airports will not need to compete on price. There is also insufficient competition assured by two dominant players to even assume that competition will be engaged in meaningfully.

I'm not ruling out the option of a second airport...I just said that I haven't seen a single argument as to why it would be good. Ultimately, all of your arguments for these things seem to be based on a belief that more than one player will inevitable lead to competition and a better deal for the consumer. Such idealistic economic views are by no means assured in reality, but you still fail to address this key issue - what assurances or mechanisms can we get that will guarantee us competition and the benefits to the consumer? So far, you've offered none, but battered on about teh merits that all of this supposed competition will bring.

The only time you've acknowledged that this is not the case is when you refer to other privatisations and how they went wrong. I don't recall you offering a single counter though - a privatisation which genuinely went well. If I'm missing it, maybe you could re-iterate or supply me a link?

jc

RicardoSmith

If there is a need for a second airport it should be out of dublin in the midlands somewhere with a proper transport network feeding it.

Lennoxschips

The only time you've acknowledged that this is not the case is when you refer to other privatisations and how they went wrong. I don't recall you offering a single counter though - a privatisation which genuinely went well. If I'm missing it, maybe you could re-iterate or supply me a link?

Exactly. Nobody can come up with one intstance of privatisation actually succeeding. Whereas I can name numerous failures off the top of my head.

There's something in that I think.

arcadegame2004

The privatisation of TSB, ICC and ACC banks. I am not aware of any negative consequences of those. Are you? Same with the privatisation of Irish Steel (which is FAR more profitable now than it was in the dark days of 1994). Irish Shipping is another example.

secret_squirrel

Bebop wrote:

Wrong, market forces are dictating that aer Lingus sholud cut costs or go bust

Um...You're way off base there - market forces are dictating that Aer Lingus made profits the last 2 years and is on to make a profit of at least €100m this year. Hardly going bust is it?

RainyDay

arcadegame2004 wrote:

Same with the privatisation of Irish Steel (which is FAR more profitable now than it was in the dark days of 1994). Irish Shipping is another example.

I suppose it depends what you consider to be 'negative consequences'. Some people might consider the fact that neither company exist as negative.

therecklessone

Lennoxschips wrote:

I can't believe I have to explain why having one main airport is better than having many smaller airports.

I asked the question for clarity's sake, if I thought you were going to be a sarky shi*e about it I wouldn't have bothered.

Lennoxschips wrote:

One large airport:

One tower.
One terminal complex.
One motorway link.
One onsite fire brigade.
etc.

Two smaller airports:

Two towers.
Two terminal complexes.
Two motorway links.
Two onsite fire brigades.
etc.

I'm glad you've managed to work out that 1+1=2.

Two towers? (avoid the LOTR gag... ) How is that a problem? The vast majority of ATC work is done by Dublin ACC (radar service), and there would be little problem having a 2nd airport with its own tower service providing ATC within a control zone. Establish procedures for the handover of traffic to/from Dublin ACC, much like currently happens between ATC at Baldonnel and Dublin.

A decision to go with a 2nd airport rather than a 2nd terminal *may* make sense. Increase terminal capacity at Dublin without increasing runway capacity, and regardless of terminal operator you'll still have delays. A parallel runway at Dublin is by no means a certainty. What about the cost of upgrading public transport?

Why not develop the disused facilities at Gormanston? M1 close by, and a mere walk from the main Dublin-Belfast rail service. Make sense?

Or Baldonnel. It would suit South Dublin airport users, and is close enough to Citywest to be integrated into the LUAS system.

Lennoxschips wrote:

Cities with multiple airports are massive cities where they simply don't have the room to build one airport that is big enough to handle all the traffic. New York, Paris, London, Tokyo etc.

Stockholm, population 1,250,000 - 4 airports (Arlanda, Broma, Vasteras, Nykoping)

Belfast, population 277,000 (2001) - 2 airports (Belfast City, Belfast International aka Aldergrove)

Glasgow, population 577,869 (2001) - 2 airports (Prestwick, Glasgow)

Bebop

secret_squirrel wrote:

Um...You're way off base there - market forces are dictating that Aer Lingus made profits the last 2 years and is on to make a profit of at least €100m this year. Hardly going bust is it?

I take your point..
its making a profit now, bur later this year when the higher oil prices are kicking in there will be a bloodbath in the airline industry, that is why they want to cut costs now, €100M profit may seem a lot, but it would not buy you a second hand Airbus A330, Aer Lingus needs more profits to provide for re-investment or it will go bust like Swissair..I know someone said in this thread that Swissair just merged with Crossair, I dont buy that, they suddenly stopped all flight operations, sacked staff and sold most of their planes, Aer Lingus operate an ex Swissair A320, this certainly looks and smells like an Airline that went to the wall and was sold off cheap to its competition and the Swiss are not governed by EU rules, they could have bailed them out, this is no longer an option for an Irish government

bonkey

Bebop wrote:

I know someone said in this thread that Swissair just merged with Crossair, I dont buy that, they suddenly stopped all flight operations, sacked staff and sold most of their planes,

Well - read it whatever way you like. Exactly what happened was covered in quite a lot of detail here in Switzerland, and I still stand by the original point I was making, which was that arcadegame's assertion that 9/11 was the cause of their downfall to back his already-indestructibly-sturdy argument was wrong.

jc

secret_squirrel

Bebop wrote:

that is why they want to cut costs now,

Actually this round of job losses/outsourcing is pretty much only about getting headcount off the books at any cost - Just in time for privatisation.

Bebop wrote:

€100M profit may seem a lot, but it would not buy you a second hand Airbus A330

Actually a brand new A330 only costs around €80m - ish

Also Aer Lingus's accounts contain a huge amount of reserves (€400-500m) for meeting loan payments and buying new aircraft.

Bebop wrote:

Aer Lingus operate an ex Swissair A320,

They have 2 - both leased, not picked up at Honest Han's Used Swiss aircraft lot

I also believe there was at least some (swiss) government backing/help for the Crossair takeover of swiss.

chill

secret_squirrel wrote:

Um...You're way off base there - market forces are dictating that Aer Lingus made profits the last 2 years and is on to make a profit of at least €100m this year. Hardly going bust is it?

Yeah right.... what profit ? a 'paper' profit you mean.

The only reason they can report a 'profit' is because they got tens of millions from us the tax payer for FREE and never had to pay it back or pay interest.

If they were subject to strict free market conditions they would be losing money like they always did.

The sooner it is sold off the better, and then allow another private terminal in Dublin Airport.

secret_squirrel

chill wrote:

Yeah right.... what profit ? a 'paper' profit you mean.

The only reason they can report a 'profit' is because they got tens of millions from us the tax payer for FREE and never had to pay it back or pay interest.

If they were subject to strict free market conditions they would be losing money like they always did.

The sooner it is sold off the better, and then allow another private terminal in Dublin Airport.

Do you even check your 'facts' before you post?

The last time Aer Lingus got 'tens of millions' from the Govt was in 1993 - discounting the subsidised domestic routes that Aer Lingus have given up and which Aer Arrann now operate.

Aer Lingus have effectively been operating under 'strict free market conditions' since 1993 - unlike most of its European and US rivals such as Alitalia (3 recent bailouts and counting ), United, American, Delta. Infact pretty much every US carrier got bailed out after Sept 11 - what a triumph for the free market that was.

As the Owner and major shareholder the Govt have been entitled to a dividend every profitable year, and are also capable of enacting any legislation they like to recoup money from Aer Lingus - why dont you try lobbying your TD if you don't like it?

Selling off Aer Lingus will have NO effect on a second terminal at Dublin Airport - that is Aer Rianta's business - a completely unrelated company. In fact Aer Lingus have been as vocal as Ryan Air in pushing for a second terminal - its Aer Rianta and the Govt that are dragging their feet....

arcadegame2004

Down with Socialism!

sceptre

arcadegame2004 (yes, this was the entire post) wrote:

Down with Socialism!

I think you may have forgotten the "out with non-ethnic Irish" part of your thesis there. Not that that would have anything to do with coherency and the actual thread but then neither did what you managed to type.

AngelofFire

Down with Socialism!

.

The question of privatisation is not purely a Socialism vs Neo Liberalism issue.Its no good being pro state ownership purely because its based on socialist orthodoxy, likewise it would be a bit silly to support privatisation just because its part of the dogma of Neo Liberalism.

but we gotta show them pinkos who`s right, Eh? :rolleyes:

Rredwell

Privitasation takes the dividends out of the hands of the many for the benefit of the few. In Britain, the railways are a case in point. Not only have the people lost out by losing public ownership, but safety standards have plummetted.

secret_squirrel

Safety is a good case in point - with Aer Lingus' stated intention to become the new Ryan air how long will it be before they drag their safety record down to Ryan Air's shoddy record??

arcadegame2004

Privitasation takes the dividends out of the hands of the many for the benefit of the few. In Britain, the railways are a case in point. Not only have the people lost out by losing public ownership, but safety standards have plummetted.

That is NOT typical of most privatisations. Privatisation is justifiable where effective competition can be introduced, in a manner that could lead to companies competing on the basis of undercutting each others' prices.

Clearly, such a model is impractical in the railways.

Aer Lingus has actually taken money OUT of the hands of the many through the money thrown down the Aer Fungus sink through all those State-bailouts/throwing good money after bad/rewarding failure in the past. Ryanair has shown that an airline doesn't have to be statw-owned to link Ireland to the rest of the world. We should reject such tripe for what it is.

Safety is a good case in point - with Aer Lingus' stated intention to become the new Ryan air how long will it be before they drag their safety record down to Ryan Air's shoddy record??

Examples of this supposed "shoddy record" please. Not a single Ryanair aircraft has ever crashed. NOT ONE.

For such a "shoddy" airline Ryanair seem to be incredibly successful.

thejollyrodger

i reckon we should sell it off. We can do with the cash!!

monument

arcadegame2004 wrote:

Aer Lingus has actually taken money OUT of the hands of the many through the money thrown down the Aer Fungus sink through all those State-bailouts/throwing good money after bad/rewarding failure in the past.

The important words there are ‘in the past’.

arcadegame2004 wrote:

Ryanair has shown that an airline doesn't have to be statw-owned to link Ireland to the rest of the world. We should reject such tripe for what it is.

The rest of the world??? Tell me that what when Ryanair starts flying to the rest of the world, or at least flying transatlantic flights, oh, sorry exactly who here wants to fly with an airline like them to the US?

Lennoxschips

If I want to fly from Amsterdam back to Cork I have the following choices:

Ryanair: Drive to Charleroi, fly to Shannon, drive to Cork
Ryanair: Drive to Charleroi, fly to Stanstead, then fly to Cork.
British Airways: Fly to Heathrow, then fly to Cork.
Aer Lingus: Direct flight.

For me, Aer Lingus is cheapest by far.

secret_squirrel

arcadegame2004 wrote:

through all those State-bailouts/throwing good money after bad/rewarding failure in the past.

Name ALL those 'bail outs' - then name 1 in the last decade.

Also Consider that past Governments have helped cause Aer Lingus problems by not supplying proper investment until it was too late - thus costing the tax payer more than it should have.

arcadegame2004 wrote:

Examples of this supposed "shoddy record" please. Not a single Ryanair aircraft has ever crashed. NOT ONE.

Fortunately for us the Irish Aviation Authority has a wider definition of safety than 'we havent crashed yet'

Examples :-

1. The poor engineer who lost his arm for one. (well reported)

2. Try searching the transport forum - there's plenty.

3. The flight I traveled on dublin- bristol 4.5 years ago where it took all the cabin crew working together about 10 mins to get the door closed.

4. Numerous anecdotal stories from well placed sources at Dublin Airport. (Can I prove they happened? probably for some of them, do I believe they happened? Definately I know the sources I got them from are reliable.)

arcadegame2004 wrote:

For such a "shoddy" airline Ryanair seem to be incredibly successful.

Try not taking my quotes out of context - I believe they have a shoddy safety record - I said nothing about them being a shoddy airline. I think the rise of Ryan Air has been fantastic - I just have reservations about the way they cut costs and treat their staff and customers.

arcadegame2004

Also Consider that past Governments have helped cause Aer Lingus problems by not supplying proper investment until it was too late - thus costing the tax payer more than it should have.

That's just an excuse. If they give the customers what they want, they will succeed. Aer Lingus does NOT have a god-given right to succeed. They only deserve to succeed if they satisfy consumer demand. If they fail to do this, then they deserve to fail. Treat them like Ryanair.

I call it consumer-democracy.

secret_squirrel

arcadegame2004 wrote:

If they give the customers what they want, they will succeed.

Thats ridicously simplistic and you know it - there are many more factors that contribute to whether a company suceeds or not, and also many ways to please the same or similar groups of customers. An many do not require Privatisation as a pre-requisite to work.

arcadegame2004 wrote:

Aer Lingus does NOT have a god-given right to succeed.

I quite agree - last time I checked Aer Lingus were doing quite nicely thank you - whilst still being in public hands.

The point you are consistently avoiding is - Why privatise them for a once-off gain when they are doing fantastically whilst still being state owned?

arcadegame2004

The point you are consistently avoiding is - Why privatise them for a once-off gain when they are doing fantastically whilst still being state owned?

As the saying goes, "past returns do not justify future returns". Aer Lingus's success is VERY late in the day indeed.

Ryanair remains far more successful in profitability and market-share terms, and crucially for the privatisation argument, has been like that for far longer than Aer Lingus.

We must consider Aer Lingus as an airline like any other, and we must divorce ourselves from socialist ideas of central state-planning.

secret_squirrel

arcadegame2004 wrote:

As the saying goes, "past returns do not justify future returns".

Actually I think you'll find the saying is 'past returns are not necessarily any guide to future returns' - which is a different kettle of fish indeed.

arcadegame2004 wrote:

Aer Lingus's success is VERY late in the day indeed.
Ryanair remains far more successful in profitability and market-share terms, and crucially for the privatisation argument, has been like that for far longer than Aer Lingus.

arcadegame2004 wrote:

We must consider Aer Lingus as an airline like any other,

Indeed why dont we stop comparing it to Ryan air for a start. The differences far out weight the similarities.
1. Its a transatlantic carrier - Ryan arent. Transatlantic flights are far more staff and cost intensive.
2. BA a more comparable airline (in terms of fleet mix, not size) made huge losses in 2002 - Aer Lingus made a profit. Size for size Aer Lingus was also far more profitable in 2003.
3. It has 60 years of baggage - Ryan Air started with a clean sheet.
4. Since Sept 11 Aerlingus has delivered more profit in real terms than BA, one of 'your' privatised companies.

arcadegame2004 wrote:

and we must divorce ourselves from socialist ideas of central state-planning.

You know your arguements might be more convincing if they were based on looking at the facts, rather than your ideology. Tell me the last time that the Govt produced a 'State Plan' for Aer Lingus. The Board have been left to get on with the job of running a profitable airline in recent times.

Is there a case for privatising Aer Lingus - yep. Is it a good one - No.

There is a better case of maintaining ownership of a national asset and taking a dividend each year. Also the tax and wage contributions of Aer Lingus to the Irish economy are far higher than Ryan Air's simply because of all its overseas bases and staff. And if Ryan air continue their policy of employing eastern european workers at low wages even more money will flow out of the economy.

Any decision on the privatisation of Aer Lingus should be made on strict economic and social grounds (ie whats best for Aer Lingus and Ireland) - not Ideological ones.

sliabh

secret_squirrel wrote:

The point you are consistently avoiding is - Why privatise them for a once-off gain when they are doing fantastically whilst still being state owned?

Because what business does the government have running a private company? The usual argument for semi-state companies is that the goverment gets involved where it is not possible for the private sector to do so, either because its not practical or just too expensive (e.g. ESB the 30's) or where there is a strategic need that is not being met (e.g. Aer Lingus in the 30's as well)

So where Aer Lingus are generating a profit and there are several airlines serving the state there is little justification for the Governement continuing to be the main shareholder in the airline.

conor-mr2

In the long run Aer Lingus's distribution costs remain too high to continue making a decent profit.
Revenue from sales actually decreased but the reason Aer Lingus made a profit last year was due to decreasing the distribution costs. I don't have figures on hand at the moment.
Think about the shoddy expensive maintenance deal with FLS that was put in place by a minister years ago.

I think privatisation is the way forward.
Simple economics--if Aer Lingus isnt competitive it fails to exist.

IMHO the company is far too unionised anyway.

secret_squirrel

sliabh wrote:

Because what business does the government have running a private company?

Who says they shouldnt be involved in running a private company? - especially if its not costing them anything.

Conor-Mr2 wrote:

IMHO the company is far too unionised anyway

Tbh 5 years ago I would have agreed with you, but right now I think they are on the defensive and the balance is about right. I personally think there should be a limit to which the likes of Michael O'Leary can grind down the average worker - and some of Ryan Air's practises go too far. I'd rather work in MaccyD's than Ryan Air.

Edit - attributing quotes to correct sources.