Wednesday, February 17, 2010

Economics 17/02/2010: The Saga of 500 jobs

The story of 500 jobs at Ryanair maintenance facility continues with this:
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6 comments:

Liam Delaney said...

They should be as vociferous as possible in arguing their case but directly calling the Taoiseach a liar in the way they are doing there is over the top Constantin.

February 17, 2010
TrueEconomics said...

I agree, I wouldn't have written it this way, but this is Ryanair style. When it comes to substance, they are right. I am not a legal eagle, but I know of several public sector contracts that were awarded on the back of strangely inconsistent and economically / business case illogical bids.

RTE 9 News replayed an unsubstantiated claim that they attributed to government sources that Ryanair is after Hangar 6 to convert it into a second terminal in 2 years time. This is by far worse than what Ryanair are doing in their press release and RTE are complicit with the persons making completely unsubstantiated allegations.

On the other hand, RTE did not bother to ask themselves a simple question: if so, who will be the winner and who will be the loser if Ryanair runs own terminal at Dublin Airport?

The winners - consumers. The loser - DAA. Simple, really.

February 17, 2010
Ed Mc Williams said...

Consigned to the idea that O'Leary is bluffing to a certain extent. This leaves me to bring up the following points:

1. Ryanair say they will not deal directly with the DAA on the hanger 6 issue despite dealing directly with them on other issues such as Terminal 2, etc.

2. Ryanair claim to want this facility beacuse it is suitable for heavy maintance yet Ryanair has up to now sold its aircraft to other airlines before heavy maintance was required. Im reffering specifically here to a 'D-Check' which is carried out on an aircraft roughly every 12 years.

3. Aer Lingus are not using the facility at the moment for heavy maintance because they have contracted this out to a french facility.

4. There are obvious holes in Ryanairs actions since they did not act on this facility when it was freely available last summer.

...So now consider possible reasons for Ryanairs actions:

1. The 'terminal 3' senario outlined above. Frankly this is not as straight forward as it seems. As someone with extensive architectural experience I can tell you that Hanger 6 is a suitable site for a terminal (and was originally to be the site for terminal 2), but the hanger itself cant be simply converted, and a new terminal building would have to be constructed in its place. The road access to this is suitable also, but the remaining hangers would be in the way of pier that would be needed to reach aircraft. I also wish to point out that Ryanair subitted a proposal about 8 years ago to build a terminal on this very site but the DAA (Aer Rianta) declined. Furthermore, even if O'Leary built a 'terminal 3' on the site of hanger 6, it would have planning problems including the face that he would need permission from DAA to use the runways and this just wont happen considering the massive overcapacity at the airport when terminal 2 opens later this year.

2. Perhaps a more somple reason for this soapopera is Ryanair taking advantage of the huge free publicity they are getting from all of this.

3. Its possible that they just want to create more hassle for competitor, Aer Lingus. And remember that Ryanair will have another chance to bid on Aer Lingus in March 2010, hence they may well end up owning the lease on hanger 6 by default.

February 18, 2010
Ed Mc Williams said...

Im consigned to the idea that O'Leary is bluffing to a certain extent. This leaves me to bring up the following points:

1. Ryanair say they will not deal directly with the DAA on the hanger 6 issue despite dealing directly with them on other issues such as Terminal 2, Charges, etc.

2. Ryanair claim to want this facility beacuse it is suitable for heavy maintance yet Ryanair has up to now always sold its aircraft to other airlines before heavy maintance was required. Im reffering specifically here to a 'D-Check' which is carried out on an aircraft roughly every 12 years. This inwalves stripping the plane down and refurbishing it.

3. Aer Lingus are not using the facility at the moment for heavy maintance because they have contracted this out to a french facility for the timebeing.

4. There are obvious holes in Ryanairs actions since they did not act on this facility when it was freely available last summer. Why?

...So now consider possible reasons for Ryanairs actions:

1. The 'terminal 3' senario outlined above. Frankly this is not as straight forward as it seems. As someone with extensive architectural experience I can tell you that Hanger 6 is a suitable site for a terminal (and was originally to be the site for terminal 2), but the hanger itself cant be simply converted, and a new terminal building would have to be constructed in its place. The road access to this is suitable also, but the remaining hangers would be in the way of a new pier (similar to pier D) that would be needed to reach the aircraft. I also wish to point out that Ryanair subitted a proposal about 8 years ago to build a low-cost terminal on this very site but the DAA (Aer Rianta) declined. Furthermore, even if O'Leary built a 'terminal 3' on the site of hanger 6, it would have planning problems including the fact that he would need permission from the DAA to use the runway infrastructure and this just wont happen considering the massive overcapacity (and therefore loss of business seen by the DAA) at the airport when terminal 2 opens later this year.

2. Perhaps a more simple reason for this soap opera is Ryanair taking advantage of the huge free publicity they are getting from all of this.

3. Its possible that they just want to create more hassle for their main competitor, Aer Lingus. And remember that Ryanair will have another chance to bid on Aer Lingus in March 2010, hence they may well end up owning the lease on hanger 6 by default.

February 18, 2010
TrueEconomics said...

Ed, some of the points you raise, I agree, add to the picture.

Potential for conversion of Hangar 6 is a very good point here. Even if Ryanair were to make this move to strategically prepare for such an investment, it will be (1) subject to general approval/permission and DAA will have the same means for preventing it as it does with any operation of facilities it owns; and (2) I do not see such a possibility economically damaging. In fact, we know that Terminal 3 - using McEvaddy brothers land - can be built, and run profitably.

Ryanair expressed interest in the Hangar before it was 'allocated' to Aer Lingus, so timing wise, they were ahead of the curve.

Ryanair are raising legitimate question as to the process through which Aer Lingus obtained the use of Hangar 6 that the Government must respond to.

If Ryanair is getting free publicity here - who is to be blamed for this? We have over 400,000 people on the dole and a number of engineering staff with skills and experience on the dole. If I were the minister, where would my priority be? In fighting Ryanair (while providing them with free publicity) or in getting new jobs for the unemployed?

Last night there was an announcement that the 'private sector' will donate up to €1.2 million through a competition to develop 2 ideas for jobs creation in Ireland.

And there was another announcement that 500 engineering jobs will remain on ice at Dublin Airport from Taoiseach.

Any sense of proportion?

February 18, 2010
sean said...

Constantin,

I fully subscribe to your angle on this Ryanair issue. O'Leary seems to be losing the plot, his drive time interview yesterday was pretty crazy but in fairness to him maybe that's what's required to compete with government transport monopolies.

O'Leary probably needs a long holiday.

In any case, I agree, it is absolutely remarkable that the government won't deal with ryanair.

Suck it up and sign the paper minister.

February 18, 2010

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