INSIDE THE WORLD OF BUSINESS
Finding on airport charges flies in the face of regulator's ruling
THE FINDING by the Aviation Appeals Panel that the Commission for Aviation Regulation should introduce differential pricing for passenger charges for terminals one (T1) and two (T2) at Dublin airport has certainly put the cat among the pigeons.
At least we think it has because its findings have not been made public yet. Instead, it was left to Ryanair to spill the beans yesterday.
The panel has decided that passengers using T1 and T2 should be charged different sums to reflect the services they will receive. This would suggest a higher fee for users of T2, which opens in November.
It was music to the ears of Ryanair, the appellant, which feels those who use T2 should pay off its capital cost. But it flies in the face of a key finding by aviation regulator Cathal Guiomard in his determination on airport charges up to 2014. Guiomard decided there should be a flat fee charged regardless of which terminal passengers use.
Aer Lingus, which is supposed to be T2’s anchor tenant, has made it clear that it won’t be budging from T1 if it has to pay more to use the new building.
Guiomard has two months to decide what to do. And there’s the rub. The appeals panel’s findings are non-binding. So Guiomard can simply ignore them, as he has in the past.
Every five years, the Commission for Aviation Regulation makes a determination on passenger charges at Dublin airport. It almost inevitably follows that appeals are lodged. This time around, Aer Lingus and the Dublin Airport Authority joined Ryanair in appealing the ruling. All had different reasons for doing so.
Under the curious system we use, the Minister for Transport then sets up a three-person panel of outsiders to examine the appeals. Inevitably, these individuals come to the process cold without indepth knowledge of the industry or the processes involved. They try to absorb the voluminous material involved in the commission’s determination before responding to the appeals.
After which, the commission can simply ignore them. It is a daft system and one that should be scrapped.
Banking on each other
THE EXTRAORDINARY assistance afforded to Anglo Irish Bank by Irish Life Permanent at the peak of the financial crisis is well known at this stage and is the subject of various official investigations.
The deal, as we now know, was inspired by the “green jersey” agenda under which financial institutions helped one another during the 2008 bank liquidity drought.
The €7.45 billion back-to-back Anglo-Permo loans were not disclosed to the Financial Regulator by either at the time of the transactions and masked Anglo’s weakened position at the crucial year-end around September 2008.
There is also a difference of opinion between the two over how they characterised the loans.
Separate to this, EBS disclosed in its recently published 2009 accounts that included in its customer deposits was €650 million from a non-banking subsidiary of a bank covered by the Government bank guarantee.
These funds were, in turn, placed back by EBS with the guaranteed bank as an interbank deposit and were included in the building society’s loans to credit institutions in the 2009 accounts.
EBS tells us this was a normal transaction – fully and accurately disclosed in the accounts – and that the transaction was agreed due to the close working relationship with the other institution, which it declined to identify.
The transaction arose, the society says, because the other institution held funds which were not covered by the State guarantee as they were held by one of its subsidiaries and it wanted the benefit of the guarantee to ensure these funds were covered.
EBS says this was not a so-called “bed and breakfast” transaction like the Anglo-Permo loans – some €400 million was put on deposit in 2008, maturing when the guarantee expires in September, while an additional €250 million was placed on deposit last year and will be rolled over until September. The accounts do not say how much EBS made in the deal.
A lethal cocktail?
THE PURCHASE of Quinn Insurance by a competitor or a new entrant will inevitably lead to huge job losses in the Quinn hinterland of Cavan/Fermanagh.
There will also be job losses in Blanchardstown but the regional impact on the Border area will be particularly focused and painful.
Nevertheless, it does not seem likely that a suggestion put forward by businesspeople from the area – and from others who do business with Quinn – will be adopted. In essence, they want the State, through the bust Anglo Irish Bank, to step in and save what Seán Quinn, who himself is bust, has ruined.
All the signs are that the Financial Regulator, Matthew Elderfield, is against such a scenario, even if it could get past State aid rules.
It’s hard not to feel that, even without such rules, Quinn, Anglo and State support are a cocktail that should be avoided.
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Figures for the performance of the services sector in Ireland will be published this morning.
