Cantillon

Thu, Jan 24, 2013, 00:00

INSIDE THE WORLD OF BUSINESS

Ryanair see plane sailing for Aer Lingus

There was a large turnout at the Four Seasons Hotel in Ballsbridge yesterday at the 15th Global Airfinance Conference, which brings together hundreds of executives from the world of aviation.

The highlight of the morning session were interviews by BBC journalist Gavin Esler (pictured) of Aer Lingus chief executive Christoph Mueller and Ryanair’s deputy chief executive Howard Millar.

Unfortunately, the pair were grilled separately by Esler rather than going head to head.

It would have been interesting to get Mueller’s response to Millar’s observation that Aer Lingus has “largely stagnated” in recent years, is “going nowhere . . . sub scale . . . and a peripheral airline”.

Millar said Ryanair has a “bright future” mapped out for Aer Lingus if the European Commission gives it the green light to take over its rival.

“We have a vision and a plan,” he added.

Among other things, this involves ceding 43 short-haul routes out of Ireland to UK airline Flybe to address competition concerns.

As Mueller pointed out yesterday, Aer Lingus and Ryanair have a combined 85 per cent share of air traffic to and from Ireland.

Securing Flybe to take up a chunk of Aer Lingus’s short-haul routes is a key remedy being offered by Ryanair to the Commission.

Coincidentally, as Millar was speaking, Flybe was announcing plans to axe 300 jobs in a bid to save £35 million a year and return to profitability.

Its network of UK bases has also been put under review.

Flybe made a loss of £1.3 million in the six months to the end of September 2012 compared with a £14 million profit a year earlier.

Even allowing for the fact that Flybe has been refocusing its activities away from the UK and towards the rest of Europe, this substantial restructuring of its core British business is hardly the ideal backdrop for a major move into the Irish market to compete with a merged Ryanair-Aer Lingus.

Flybe and Ryanair will have to work hard in the coming weeks to persuade the Commission that this substantial remedy to the Aer Lingus takeover package remains viable in light of the UK airline’s financial difficulties.

EU media owners want to stay in control

The question of how the press is best regulated rumbles on in post-Leveson Britain. It’s also been occupying minds in Brussels of late.

Neelie Kroes, vice-president of the European Commission, has this week presented the “keenly awaited” report of the High Level Group on Media Freedom and Pluralism in the EU. She wrote on her blog that this “remarkably wide-ranging” report represented “an essential round of evidence gathering and thought leadership”. Many journalists, she said, have complained that the EU was not doing enough to protect media freedom, “for example in Hungary, but really in quite a few member states”.

Kroes has spoken several times about pressures on media freedom and pluralism in Hungary and has even forced some amendments to controversial media laws in the country by citing regulations in the EU’s audiovisual media services directive. More needs to be done, she wrote last November.

This is the laudable backdrop to the report, which was led by former president of Latvia Prof Vaire Vike-Freiberga. So far, however, the invited responses from stakeholders have not exactly amounted to a pat on the back for trying to improve Hungarian democracy.

That’s because the report’s call for Brussels to have greater powers to oversee national press councils to ensure they “comply with European values” has prompted brows to furrow among media owners. Yesterday, the European Newspaper Publishers Association said they had “serious concerns” that EU oversight of national press councils would restrict rather than improve media freedom.

Ivar Rusdal, Norwegian president of ENPA, said the proposal was “a serious backwards step” for press freedom and that the report “misses its target completely” in general. “Newspaper publishers will never accept such EU control over the media,” he stated unequivocally.

Kroes has said she is “aware that there are risks to freedom and pluralism from having too much power”. Her blog was, after all, titled “media freedom is a delicate flower”. But some more “thought leadership”, of a less contradictory nature, may now be necessary

Where the wind blows, the money goes

Today, Pat Rabbitte and Ed Davey, his opposite number in the British government, are due to sign the long-awaited memorandum of understanding that will pave the way for Irish wind farms to export directly to Britain.

The memorandum is the product of well over a year of talks between the two governments. Essentially, it will set out in broad terms an agreement that will allow Irish-based wind farms to hook directly into Britain’s national electricity grid, where they will be able to sell power.

A number of big ticket projects, geared specifically at taking advantage of such a deal, are already in the early stages of planning.

The industry generally has been arguing that a deal will provide the trigger for billions of euro in investment with the potential to create tens, if not hundreds, of thousands of jobs.

But we’re not there yet. The memo that will be formally signed today is really just the first stage.

The next requires a full intergovernmental agreement, and possibly some form of supporting legislation on both sides of the Irish Sea.

There are technical and planning issues to be sorted. One example is the fact that the process of getting a foreshore licence in the Republic can be long, and the guidelines are not clear.

All players will need this permit, as they will be laying their own cables across the Irish Sea to connect with the British grid.

Another will be the ownership of the networks. The private developers will be connecting their windfarms to Britain, effectively establishing their own networks, but only the State can own electricity networks, so they will have to transfer ownership on commercial terms.

This is going to involve two sets of civil servants in different countries more or less moving together, something that is never easy to do, as both groups will have different priorities at different times.

And it will also need continued political commitment in both jurisdictions. Equally, it is never easy to guarantee that two different politicians, in two different jurisdictions, will share the same priorities, and there’s always the risk that either the policy or the personalities will change.

Today will bring the necessary agreement a step closer, but a final deal is still a long way away.

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