Drop in demand blamed for CIÉ service cuts and fare hikes

A 10 PER CENT increase in CIÉ fares and the rationalisation of services were necessary because of a deteriorating financial situation, Minister for Transport Noel Dempsey told the Dáil.

He said that CIÉ was projecting an operating deficit of €39.5 million this year after exchequer subvention, compared with an operating deficit of €1.47 million last year.

“This significant deterioration in the financial position of CIE is due in the main to losses in revenue due to a drop in demand for services and increases in costs, particularly fuel costs in the earlier part of this year.

“The outlook for 2009 is for a further deterioration in the group’s financial situation in the absence of corrective measures.’’ Mr Dempsey said that the CIÉ subsidiaries were considering service reductions which maintained the integrity and attractiveness of their networks and achieve significant cost reductions over time.

He said he had agreed an increase of €5 million next year in the compensation paid to CIÉ in respect of its public service obligation, provided for in the estimates. Measures would be taken to improve bus priority and journey times.

It was a matter for the CIÉ group of companies, said Mr Dempsey, to secure operational efficiencies and to reduce costs so as to maintain services at the highest level possible.

“I have requested that, in deciding on service reductions, the group should aim to maintain rail services, peak-time bus services and services for developing areas.

“Service reductions should be a last resort in the group’s efforts to maintain financial stability.” Labour spokesman Tommy Broughan said the Minister had agreed with him a few months ago that buses must perform their core role until the major investment required for heavier public transport was available.

Mr Dempsey said that CIÉ was suffering as a result of the economic recession. “In that kind of environment, it is inevitable that services will end up in a loss-making situation.”