In 1986, advised by communications minister Jim Mitchell, I approved as taoiseach the licensing of Ryanair to compete with Aer Lingus, in the hope that this would persuade the national carrier to make itself once again the efficient and reasonably priced airline that for some time previously it had ceased to be, under boards weighted with inadequate political appointees, writes Garret FitzGerald
Shortly afterwards, I also discussed with the company's chairman the possible need to strengthen its management by injecting a new element of external experience. However my government lost office before I could develop this further, and I understand that this proposal was rejected by my successor, Charles Haughey.
Thereafter, despite the spur of Ryanair competition, inadequate Aer Lingus boards continued to allow the airline to get into ever-deeper difficulties, with the result that eventually Aer Lingus had to be bailed out by the government. Unfortunately this action involved a distortion of competition, and the European Commission made it clear that it would not be prepared to permit any repetition of such a bail-out - although of course that would not preclude normal State investment in the growth of the airline.
As a former staff member of Aer Lingus, who with colleagues of an earlier era took great pride in working for a national airline owned by the people of this State rather than by private interests, I had no enthusiasm for privatisation. The reason why I eventually accepted there was a case for such a move was primarily because of my concern that, in the event of a further significant financial setback, the State might be precluded by EU regulation from bailing out the airline once again with the result that, like Swissair and Sabena, it would have had to close.
I also have to concede that the case for privatisation was strengthened by the long history of the failure of the State as shareholder to capitalise the airline adequately, which had stunted its growth.
But while for these reasons I recorded in this column several years ago my reluctant acceptance of a case for an eventual privatisation of the airline, I opposed the adoption of such a course of action at a moment when its value had been artificially depressed by the resignation of its management following the Taoiseach's rejection in offensive terms of a buyout offer from that source.
It is not clear to me what kind of advice the Government relied upon in deciding to go ahead with privatisation involving a continuing State shareholding in the airline.
Our public service is not always well placed to advise on matters relating to the private sector. The truth is that the general reluctance of the administrative civil service to recruit specialised advisers with experience of the private sector (who would, of course, have to be paid much higher rates than the general civil service) has left our governments too reliant on outside advisers - who are even more costly. In relation to an issue such as possible privatisation, which involves the payment of vast fees to financial agents, it is particularly difficult to secure from outside sources impartial advice.
According to the Taoiseach himself, whatever advice was offered failed to advert to the possibility of Ryanair making a major investment in Aer Lingus with a view to an attempted takeover - or, failing to achieve that outcome, nevertheless securing a position as a major shareholder that might enable Ryanair to attempt to block Aer Lingus decisions disadvantageous to its interests.
In this connection I find it very puzzling that the Competition Authority has so far failed to intervene to investigate the appropriateness of Ryanair's 29.4 per cent shareholding in Aer Lingus, and the propriety of its present deployment of the power this gives it to interfere with the Aer Lingus management's decisions.
The advice that the Government received on privatisation led the Government to retain a significant shareholding in Aer Lingus.
This has given rise to a concern lest in pursuit of political objectives potentially damaging to the airline's commercial success, the government might interfere with commercial decisions by its management.
In practice, however, the Government must be inhibited from abusing its shareholder power in this way, because such an intervention could be fatal to the future success of the company - which has already been prejudiced by the very existence of an expectation that such interference might occur.
So all the Government is ever likely to get out of the arrangement is a self-inflicted stream of political abuse when it refrains from interfering in the airline's commercial decisions in response to interested lobbies.
The truth is that several years ago the Government fudged what should have been an unambiguous choice between three clear-cut possibilities:
The first such alternative would have been to have kept Aer Lingus as a State airline - but in future capitalising it adequately and also appointing effective boards.
The second, would have been to have negotiated a buyout by the very competent management that it was fortunate enough to have available to it at that critical stage.
And the third would have been to have undertaken a privatisation clear of any future political involvement.
Instead of any of these, the Government came up with the worst of all worlds: a fudge from the effects of which it is currently suffering acute embarrassment.
In the dilemma it now faces the Government's duty is clear. However unfortunate may be the closure of the Aer Lingus Shannon-Heathrow route - and I do not underestimate the potential impact of this upon the midwest and west, nor the importance of securing an alternative service to Heathrow - it must now use its shareholder power to protect Aer Lingus from the possibly fatal damage that would be inflicted upon it if Ryanair's ploy were allowed to succeed. The Government simply must not undermine the company's management for the second time in a few short years.
Another dimension of this matter is the possible impact upon our relations with Northern Ireland of a Government failure to support the Aer Lingus move to Belfast - the very possibility of which is already impacting negatively upon external perceptions of the extent to which the Irish State is serious about its new relationship with that part of our island.
The Government's situation is currently being aggravated by indiscipline in the Cabinet. Fortunately we have in Noel Dempsey a Minister for Transport who knows where his duty lies and who differs from many of his colleagues in always talking straight and refusing to fudge issues - and who on this occasion should secure the support of a majority of the Cabinet.