Last Friday a controversial figure flew into Shannon airport amid the most intense security operation yet mounted by gardai. He was there to rub shoulders with Bertie Ahern and his colleagues and to make a case for support in the battle against the forces seeking to overthrow him. If things went particularly well, he might even get to shake hands with President George W Bush.

But when Noel Hanlon, the chairman of Aer Rianta, the state-owned airport authority, stepped off his chartered helicopter onto the tarmac at Shannon airport, meeting the leader of the free world was not the issue of most pressing concern.

For the past few days Hanlon has been consumed with the detail of the State Airports Bill, published last Tuesday. As well as reorganising the airport monopoly in advance of its proposed break-up, the bill will mean Hanlon is deposed before the end of July.



In the normal course of events, the removal of a chairman from a state company would not signal the outbreak of war. But in the power struggle between Hanlon, who has 24 years’ experience as a politically appointed chairman of semi-state bodies, and Seamus Brennan, the transport minister, who has 27 years of experience at the Oireachtas, both are digging in for the long haul.

On the face of it this looks like a one-sided battle, but Hanlon has a power base that seems to match that of the minister. One of his closest confidants in Fianna Fail is Charlie McCreevy, the finance minister. The one-time car dealer from Longford sold Albert Reynolds, the former taoiseach, his first car. Reynolds appointed Hanlon chairman of Aer Lingus in 1980 and chairman of the VHI in 1992. By 1995, when he took the chair at Aer Rianta, he was already a veteran of state boards.

Like the smartest of operators, Hanlon has also secured his power base on the ground. He is close to the worker-directors on the Aer Rianta board and has also proved to have excellent relationships with union officials.

His connections with organised labour are surprising, considering in 1998 Hanlon closed his Longford-based ambulance plant with the loss of almost 200 jobs after failing to get union agreement on a rationalisation programme.

This alliance of management, worker-directors and union officials and the power they wield at the state’s airports has moved Aer Rianta to the centre of the political stage.

The stakes extend further than the runways. What started as an attempt to break up the biggest airports has soured relations between members of the government to such an extent that it has also threatened to break up the coalition.







IN THE early hours of Wednesday, June 16, three officials from Siptu, the country’s biggest union, as well as David Begg, the head of the Irish Congress of Trade Unions, and Peter McLoone, its vice-president, were in talks with Dermot McCarthy, the secretary-general of the Department of the Taoiseach, concerning the future of Aer Rianta. The unions needed a deal on the future of the airports to finalise parallel talks on a national pay agreement.

Begg has been portrayed as a protagonist in the Aer Rianta dispute but it is more accurate to describe him as an intermediary attempting to keep Siptu onside. And it was Siptu which brought some of its own members to heel when they threatened to close the national airports last March.

Shortly after that strike was averted, Mary Harney, the tanaiste, gave a speech to her party’s annual conference in which she called for reform of Aer Rianta. Pulpit-beating at a party conference is allowed, but it was Harney’s decision to repeat her calls in a newspaper that raised the temperature.

Harney said: “The break-up of Aer Rianta was fundamental to the programme for government. I have championed aviation since 1996 when I said the best way forward for Shannon was to give it local autonomy. Aer Rianta must be dissolved and the three airports free to compete. Shannon should be a low-cost base to Europe.”

Having forced its own members to stand down, Siptu felt that Harney’s comments left it no choice but to stand up to the government.

During that Wednesday-morning meeting McCarthy was engaged in his usual shuttle diplomacy, liaising between the union officials and Brennan. McCarthy was joined by McCreevy, who was understood to favour Hanlon’s position that the proposed break-up of Aer Rianta would not be good for the company, the country or the exchequer. It was McCreevy who last summer spoke up to prevent Brennan sacking Hanlon. To the surprise of McCarthy, McCreevy now wanted to talk about breaking up the airports after all.

The parties began to draw up drafts of an agreement, all of which were agreed with Brennan by phone. By dawn, when the meeting finished, the parties believed they had tied down an agreement that would sway the unions. McCreevy then mentioned he had yet to get Harney’s agreement. He put in a call to the tanaiste at 4.30am on Friday. Harney was pulling an all-nighter. And that was when the trouble started.

Harney felt too much ground had been given. Although a supporter of McCreevy, Harney refused to sanction the agreement. Faced with the prospect of a government rift, deal makers were forced to renegotiate. Out went agreement that the operator of an independent terminal at Dublin airport would be forced to recognise unions. Out too went a proposal to delay the transfer of assets to the new Shannon and Cork boards by two years.

As it stands the bill proposes that Cork and Shannon will have their own boards, which will prepare business plans in support of full independence. In a move that effectively gives McCreevy a veto, the boards will not move to full independence unless the finance minister approves those plans.

If enacted the bill will ensure Aer Rianta is renamed as the Dublin Airport Authority, with a new board headed by Gary McGann, the chief executive of the Jefferson Smurfit Group.

It was the speed with which the Aer Rianta board was to be dissolved that is believed to have angered Hanlon, whose term of office was due to expire in September.

McGann’s new company will get ownership of Great Southern Hotels and of Aer Rianta International, whose assets include a 40% stake in Birmingham and Dusseldorf airports. It is understood McGann insisted on taking control of these assets if the Dublin Airport Authority was to assume all of Aer Rianta’s €448m debt.

The plan, it seems, is to dispose of these non-core assets quickly in a move that could realise up to €500m in cash to pay down the debt.

The new bill stops considerably short of Brennan’s original plan, which envisaged the full break-up of Aer Rianta. Earlier this year Brennan’s advisers told him that company law would require all the existing directors to sign off on a statement that each of the new companies would be financially viable. Given the poor relationship with Hanlon that prospect was never a runner.

Now Hanlon has gone on the offensive. Last week he told RTE he had prepared a 10-year business plan that showed neither Shannon nor Cork airports could be viable in the short to medium term. Hanlon said: “Our business plan, which will go in (to the Department of Transport) today shows quite clearly that Shannon airport cannot survive on its own without exchequer funding or without funding from some other source within Aer Rianta. Cork airport cannot make any profit for the first five or six years.”

The transport department said its only knowledge of the business plan was what Hanlon told the media. It added it was surprised that a plan had been prepared, particularly as it was predicated on Aer Rianta remaining intact.

Hanlon’s plan, a 180-page document drawn up with the help of six senior Aer Rianta executives and a team of outside consultants, is clearly an attempt to stymie Brennan’s break-up proposals. Its eventual publication is designed to undermine the plans put forward by the individual airport boards, which will argue in favour of their full independence.

Any such hopes are unlikely to be realised. The Department of Transport is confident the heavy hitters on the three new boards are unlikely to produce business plans that might be rejected by McCreevy. They include Mike Hodkinson, who made his name as the head of the British Airport Authority.

According to Michael O’Leary, the chief executive of Ryanair, Hodkinson is an “airport genius”. “It is laughable that anyone could even dream that an ambulance-maker from Longford could possibly do a better job than Gary McGann and Mike Hodkinson,” he said.

Even the unions privately admit that the prospect of McCreevy ending up on their side is remote.

The break-up is welcomed by many of Aer Rianta’s other customers, including Aer Lingus, its biggest.

“The view of the industry is that this (break-up) would be welcomed,” said Willie Walsh, chief executive of Aer Lingus. “It provides an opportunity for a fresh start. The relationship between the airlines and Aer Rianta has not been positive.”





ALTHOUGH the new airports bill is a watered-down version of what Brennan sought, most observers believe he will eventually get his way.

The focus now is on the plans for a second terminal at Dublin. With competition between airports looking like a done deal, airlines want to see competition at Dublin. Having taken the battle this far, the only danger is that the cabinet does not stay together long enough to turn promise into reality.

BRENNAN’S TERMINAL PLAN

WHILE the break-up of Aer Rianta has received most of the attention, it is Seamus Brennan’s plans for an independent terminal at Dublin airport that airlines believe will be of most benefit to the Irish aviation sector. This is the issue at the centre of the standoff between Ryanair and the government.

Despite the obvious business case for opening up new routes from Dublin, Ryanair’s Michael O’Leary has refused to consider such a move until an independent terminal is built. O’Leary has promised to base 10 new aircraft in Dublin, open up 20 new routes from there to Europe, create a minimum of 5,000 new jobs and “revolutionise” the Irish tourism industry once an independent terminal is opened.

Observers have questioned some of O’Leary’s numbers but there is no doubt an independent terminal could have a dramatic effect.

At the very least it will ease existing pressure at Dublin airport, which even Hanlon, the Aer Rianta chairman, concedes is seriously overcrowded.

According to Brennan, a new terminal could be built at no cost to the taxpayer, with operators recouping their investment from landing charges and rental income from concession stores.

It is not yet known whether those tendering for the terminal will be allowed to choose their own site or be required to build on a site chosen by the government or Aer Rianta.

There is no shortage of interest from the private sector. No less than 13 private groups and consortia have expressed interest in building the terminal.

The prospect is not welcomed by workers at Dublin airport. A private operator is likely to achieve greater efficiencies, which will put pressure on work practices and employee levels.