Bus Éireann faces possible loss of €160m schools deal

European Commission rules firm enjoys unfair advantage in €160m annual deal

Bus Éireann faces the possible loss of the €160 million-a-year schools transport contract following a European Commission ruling yesterday.

The commission ruled the deal giving Bus Éireann exclusive rights to operate the school transport scheme for the Department of Education was “not compatible with state aid rules”. Brussels officials explained the scheme gives a “selective advantage to Bus Éireann over its competitors” and indicated a remedy would be to put the service out to tender, allowing the State company’s privately owned rivals to bid against it.

In a statement, the commission pointed out member states have to bring such arrangements into line with state aid rules and said it planned to begin talks with the Government.

The scheme’s loss would be a blow to Bus Éireann, which receives about €160 million a year from the department to cover the costs of transporting students to and from schools around the Republic. In 2013, the company had total revenues of €239 million, earnings of €7 million and a pretax profit of €400,000.

The commission’s ruling is a result of an investigation begun in 2007 following complaints from the Coach Tourism and Transport Council, which represents private operators. It found the school scheme was legal until 1995, when the EU changed the rules governing public transport to allow competition.

As the scheme pre-dates the EU’s decision to liberalise public transport, the company will not have to repay the money it earned.

The scheme is the subject of two other complaints to Brussels and a court case, taken by Student Transport Scheme (STS), backed by US group Navistar and Galway businessman Enda O'Coineen, which is seeking to have the service put out to tender.

One of STS's principals, Tim Doyle, said they are delighted. "We are relishing the opportunity to tender for this," he added. Fellow director Brian Lynch pointed out Navistar's plans for the Republic could result in the creation of up to 6,000 jobs.

Bus Éireann welcomed the ruling and noted it acknowledged the agreement with the department pre-dates the opening of public transport to competition.The Department of Education and Skills said it had not received any notice of the investigation's outcome and thus would not comment.