Committee on Finance. - Air Navigation and Transport (No. 2) Bill, 1959—Second Stage.

I move that the Bill be now read a Second Time. The principal object of the Bill is to authorise Aer Rianta to raise additional share capital. I should, perhaps, explain to the House that Aer Rianta is the parent or holding company through which capital for the air transport companies is provided. The present authorised share capital of Aer Rianta is £2 million, the full amount of which has been issued and paid up. All of the £2 million, with the exception of the directors' qualifying shares, has been subscribed by the Minister for Finance. The Aer Rianta capital has been used by the company for investment as to £571,194 in Aer Lingus and £1,425,000 in Aer Línte.

Aer Rianta now require additional share capital to meet the current and future needs of the two air transport companies. The main requirement is to provide an amount estimated at £5,868,000 net, to finance the purchase of jet aircraft for Aer Linte and to develop the transatlantic service. As the House is aware, the Government have decided to authorise Aer Linte to place an order for three Boeing jet aircraft. These aircraft are now on order.

Other capital requirements of Aer Rianta include the payment of £655,500 due in the year 1961 to British European Airways Corporation arising out of the 1956 revision of the Air Transport Agreement with Great Britain; and the repayment of £798,500 borrowed from Aer Linte for the purchase of shares in Aer Lingus.

The present Bill proposes to meet the new capital situation by increasing the authorised share capital of Aer Rianta from £2 million to £10 million thereby enabling the Minister for Finance to provide additional share capital for the air companies as may be necessary.

Aer Lingus will require further share capital, but the precise amount has not yet been determined. The Bill provides a total of £9,500,000 for additional share and loan capital to Aer Rianta. The immediate requirements which I have mentioned amount to £7,322,000. There is, therefore, a balance of £2,178,000 to provide for Aer Lingus requirements and contingencies. That amount should, I think, be ample for some time ahead even allowing for the continued growth of Aer Lingus traffic and the extension of their services.

Section 75 of the Air Navigation and Transport Act, 1936, empowers the Minister for Finance to guarantee, without limit as to total amount, such debentures as may be issued by Aer Rianta to secure borrowings. Already the Minister for Finance has guaranteed debentures issued by Aer Rianta in respect of commercial loans totalling £3.5 million. The present Bill proposes to put a limit on the amount of borrowings which may thus be guaranteed, which would be in accordance with normal practice. Section 3 of the Bill accordingly provides that the aggregate amount of such debentures which the Minister for Finance may guarantee will not, at any time, exceed £5 million.

It will be seen, therefore, that Sections 2 and 3 of the present Bill together provide that Aer Rianta would have access to £9.5 million additional capital made up of £8 million share capital and £1.5 million guaranteed debenture borrowings.

The Aerlinte service has now been in operation for over a year and I have seen traffic statements and provisional financial results for the first 11 months, ending March 31st, 1959. In general, it can be said that the estimates of passenger and cargo traffic and of revenue and expenditure which Aerlinte prepared during the early months of the service, have been substantially realised. There were some exceptions, as, for example, in the case of freight, the revenue from which amounted to less than the estimated figure. Revenue from passengers and mail was somewhat higher than the forecast and expenditure was generally lower than had been anticipated.

It is usually understood from the experience of air transport companies in all countries that it takes three years as a rule to get a new air service "out of the red". It was originally estimated that development expenditure to be charged to capital account during the first three years of the Aerlinte operation, including the deficit on revenue account, might amount to something between £1,000,000 and £1.2 millions, the assumption being that the charges under that heading would be about £800,000 in the first year, £200,000 in the second, and nil in the third. These estimates look like proving correct for the first two years, but the position which may exist in the third year is still, of course, somewhat difficult to forecast. It is clear that the introduction of jet aircraft on the North Atlantic route has affected the competitive position of the operators who will still be operating next year the slower piston-engined aircraft.

Before the Taoiseach passes from these estimates, is it possible to tell us what the deficit was in the first years of working?

As I said, these estimates, which were made in advance, have been borne out with remarkable accuracy.

In other words, the deficit was £800,000.

It was not as bad.

No. That was the estimated total gap between outlay and revenue, but that included in that first year a considerable element of non-recurring development expenditure which one would naturally find involved in the establishment of a new service.

Does the balance sheet show a deficit of £800,000?

All that development expenditure, which is anticipated in this first year, will be charged against capital. I shall explain the matter in a way that will be generally understood, I hope. I said that, for the next year—the third year of operation—the company originally estimated that they would break even. They are now disposed to qualify that estimate with the important proviso that they may in that year experience more severe competition from additional operators using jet aircraft. On the other hand, experience in the United States of America has shown that the introduction of jet aircraft on any route has brought about a substantial increase in the total air traffic and that has enabled the operators with propeller-driven equipment to hold their own even where exposed to jet competition. I have seen it stated in the case of one important operator of propeller driven aircraft, that aircraft which they had grounded had been brought back into service because of that expansion in the total traffic available.

In the case of Aerlinte, however, the estimation for 1960 is further complicated by the absence of any precise knowledge at this stage of the extent to which they will in fact encounter competition from pure jet services on direct flights from the United States to Ireland. It was obvious all the time that 1960 would be a difficult year, but I find the Aerlinte management now much less perturbed about the outcome than at an earlier stage when the full effects of pure jet competition were even more uncertain.

Aerlinte's own jets, as I think is known, will go into service early in 1961. From that on, the company expect to earn a revenue surplus. Their estimate of the annual surplus of revenue over expenditure ranges from £46,000 in 1961/62 rising to £287,000 in 1965/66. They expect, therefore, to pay off all their development outlay in due course. Although these estimates have been very carefully and, indeed, conservatively compiled, I feel I ought to emphasise they are necessarily of a conjectural nature, being based upon what is really an unknown quantity at present, namely, the Aerlinte share of future transatlantic operations.

I can, however, give the Dáil the basic information to which the Aerlinte management relate their estimates. Air traffic over the North Atlantic is growing steadily. In 1958, 1,195,500 passengers travelled by air over the North Atlantic routes as compared with 968,500 in 1957, 783,750 in 1956, and 506,500 in 1953. In other words, the total traffic over the North Atlantic routes has doubled in the last five years. There is also the fact that the Irish share of that traffic has also grown steadily. It was 4.7 per cent. in 1956, 5.25 per cent. in 1957 and 5.5 per cent. in 1958. By that I mean that the proportion of the total number of North Atlantic air travellers who started or terminated their journeys in Ireland tended to increase in the manner which I have indicated. These figures are rather remarkable in view of the fact that the total population of this country is less than 1 per cent. of Western Europe at a whole. With less than 1 per cent. of the total population of all Western European countries, Irish traffic on the North Atlantic represents about 5.5 per cent. of the total. The number of transatlantic air journeys originating and terminating in Ireland in 1958 was 63,300. Of the total number of persons travelling to Ireland across the Atlantic by sea and air, 75 per cent. come by air. That figure has also shown a steady increase year by year.

The general estimates of the growth of air traffic over the Atlantic, on which all transatlantic air operators are basing their plans, assume a continuing expansion, with the total number of passengers rising to 2.4 millions by 1965. If our percentage of that traffic remains at its present level of 5.5 per cent. the number of passengers to be catered for by all the air transport operators servicing this country should, by 1965, reach 132,000. The Aerlinte management estimate that they can hope from their experience to date to obtain about 40 per cent. of that traffic. If that expectation is realised then there need be no doubts about the commercial success of their operations.

Apart from these very real prospects of commercial success, the Government are satisfied that an Irish transatlantic service is of vital importance to this country, and in particular, to the tourist industry. It is abundantly clear that the performance of jet aircraft will make it possible for transatlantic airline operators to overfly this country at will and it is clearly to their commercial advantage to give preference to customers who want to travel the longest distance. In these new circumstances, this country would, without its own transatlantic air service, be entirely at the mercy of foreign airline operators in relation to an important element in our tourist trade, namely, the American tourist.

Over the past eight years the number of North American visitors disembarking and embarking at Shannon Airport has increased five fold. Our rate of increase has been greater than for Europe as a whole and that significant fact highlights the great potentialities of that trade as travel inconveniences and delays are reduced by faster and better flying equipment. That increase in our American tourist traffic has been brought about by the availability of regular air services between Shannon and North America. If we are not merely to retain the American tourist traffic which has been built up by air transport but to exploit its potentialities for expansion in the future, we must be prepared ourselves to provide an attractive transatlantic air service. By doing so, we will not only guarantee the availability of a service with satisfactory frequency for passenger traffic between Ireland and North America, but, at the same time, the competition which this service will generate will, we believe, require the airlines of other countries in their commercial interests to route services into Shannon and make greater use of that airport than would otherwise be the case.

A further important consideration is the question of time. Air transportation is, by reason of the introduction of turbine-powered aircraft, undergoing a radical transformation and it is our considered view that an Irish air service must not delay any further in attempting to gain a satisfactory foothold in the North Atlantic region as the prospects of doing so will diminish sharply with the passage of time.

I hope that this Bill and the policy which it implements will commend themselves to the Dáil.

This is probably the most laboured utterance that the present Taoiseach has given, either as Taoiseach or as Minister for Industry and Commerce. There is good reason why it was laboured. If a chairman of a board of directors had presented a real picture of a service in such a desperate plight as this one is, he would probably resort to the same type of evasions as the Taoiseach has resorted to in this particular matter. The amount of time he spent at the end in telling us of the prestige in the tourist side of this service does not certainly breed any great confidence in the commercial side of it.

We are told that it is very important, if we are either to retain or even increase the number of American tourists that come here, that we should have bigger and better and more expensive services. Of course, that founds back upon what has now been discovered to be a definite illusion with regard to the tourist business here. The American tourist does not count so much at all. It is the tourist from England, the tourist from Northern Ireland, the tourist of our own type coming here for a holiday and the tourist from Western Europe, who are not merely better in numbers but, I think, much better spenders than the American who comes here, so that if the Minister has to throw in as a make weight, as he did now, the advantage to be gained by our retaining certain American tourists, it seems to me to expose the weakness of his argument on the commercial side.

It is rather peculiar to have him introducing a sort of incidental remark that airlines have the power or will get the power and will operate that power to overfly Shannon Airport or any landing ground here. I do not know whether, supposing that becomes an important matter, if we have to overfly with our own planes, we have any way of landing these planes of ours at other airports. I do not know if there has been any development along those lines.

We are told, also, that it is an important thing that we have a sort of prestige value. The prestige value has not been accounted for yet, except to the tourist, to any great extent. In the end, our calculations are based upon that we have arrived at what is apparently regarded as a considerable achievement of getting 5½ per cent. of the passenger air traffic and that it is hoped either to maintain that or to increase it.

In most of the developments in this country there has been something in the way of expert examination and appraisal of, say, the expenditure and of the likely results in respect of it. The Taoiseach took refuge in the phrase so often used about this that the results are not as bad as were anticipated. That is all founded on this, that in the first year of operation it is expected that there might be a loss of £800,000, but that could be reduced to £200,000 in the second year and that we would not lose in the third year. But Deputy Norton has asked already, and I want to repeat his question, are we going to get a balance sheet; are we going to get the details shown; will there be a return; will that return be published by some sort of commercial auditor, or is this going to be something based on expectations, put very low so that there could be a boast that the pessimistic view has not been borne out by the results? If there is no balance sheet, of course, everybody will regard this as merely an effort to put over by a series of evasions something which never should have been started and which certainly now, as far as its first couple of years of operation is concerned, rather bears out that contention.

I should like to hear from the Taoiseach in the effort to discover the likely returns and the likely increasing expenditure, is there anybody regarded as an expert in the commercial side of aviation, who at any time encouraged the Taoiseach to go on with this venture? I do know of one person who has exposed himself to the public, who would be regarded as a bit of an amateur as far as flying is concerned but who might be expected to know something about the Departmental view of a venture of this sort and it always has been a thing remarked upon in my hearing that that individual was not so enthusiastic about this matter that he would risk £100 of his own money or encourage any bank with which he has any influence to embark even £1,000 on this venture, and I think that is right.

The whole thing is based, of course, upon the production of Government money and, as far as I see, with the exception of one individual who made a speech on an occasion when he might be expected, so to speak, to show a certain amount of enthusiasm, that is to say, the start of the inaugural flight, I know of nobody who could be counted an expert economist, an expert viewer of the trend of aviation, an expert in regard to the development, or an expert in the sense of a man who would have any foundation knowledge which would enable him to produce a prophecy or a forecast as to expenditure and as to revenue.

Have we got anything in the nature of an agreed figure? We are told that it is £200,000 but the only figure that I can find is a quotation from a report in the official organ of the Workers' Union of Ireland in which it states that union officials who met Mr. Dempsey were told that there was an anticipated loss of £300,000 for the year 1959-60. It was also stated that that anticipated loss might be reduced by £250,000 only by the laying off of staff or by the non-recruitment of staff.

I know that Mr. Dempsey is the General Manager of Aer Lingus and I understand that he occupies much the same position in Aer Linte. In that connection it may be that the figures relate to Aer Lingus but in connection with Aer Lingus we never understood that there would be a deficit of £300,000 which it was possible to reduce only by sacking staff or by not recruiting staff.

That is the only figure we have and it is from an outside source. Surely it must be possible to give us exact figures and not to talk in terms of estimates that may be aimed fairly low so that the result will come out better than is expected. What was the loss for the first year? The Minister has mentioned a figure of £800,000. Is that the total of the loss or how bad was it really? There must be an accurate figure some place for it. The actual loss must have been discovered by this time and we are entitled to know what it is.

The management of Aer Lingus generally manages to show a good balance sheet by writing off certain services performed by the State as a State debt. Is there any question, in this instance, of writing off the cost of the three jets and is that to be treated as a State subscription? Is the £800,000 mentioned by the Minister an operational loss? To cover the cost of each flight a certain number of passengers must be carried and is the figure of £800,000 the difference between the cost of the flights for the year and the amount of the fares paid by the passengers? The Taoiseach should be able to clear that up but I would rather see a balance sheet produced by the Company, a balance sheet investigated by an outside auditor and not something made up by Departmental officials. Such a balance sheet would let us know what the financial position is so that we could explain the matter fully to our constituents.

We are told that under this Bill Aer Linte will be given access to capital to the extent of £9,500,000 and the amount to be given to Aer Lingus will be £7.4 million. I do not know how much of that is for the purchase of jets. I think I heard the figure of £5,000,000 mentioned for that. Where is the remainder amounting to £2½ million to be expended? The phrase has been used that it is generally understood that it would take three years to get an air line out of the red.

If there is any prospect of getting out of the red in three years, there will be a great sense of relief on the part of the taxpayer. Of course, we do not know how far we are going to get out of the red in that time but surely by this time it should be possible to see how far all these hypotheses can be converted into something that we can stand on.

The Taoiseach has also referred to the fact that the 1960-61 estimates are difficult to make up because of the effect of competition. One significant international development has taken place within the last six months in which the Air Companies of the Common Market countries have come together to pool their resources and share expenditure. They feel that their losses will be so extreme if they stand on their own that the prospects of their development might break down. In face of that action, I cannot see how we can afford to be so optimistic about the effect of competition on ourselves. We, apparently, are to go along on our own incurring an annual loss of between a quarter and a half a million pounds.

The main reason for that seems to be an endeavour to attract a certain type of American tourist. It is stated that we can, by flying into Shannon, give a landing place to those Americans who want to land there. We all know that there is a growing tendency for Americans to go further afield and how many Americans are we going to catch by landing at Shannon? It is not easy to ensnare the Americans with their views with regard to Europe and the historical traditions of Europe which have such an attraction for them. I do not know what grounds the Minister has on which he bases his hopes of retaining American tourists here by offering them the advantage of landing at Shannon instead of over-flying. There are so many Americans who do not want to see either this country or England.

A balance sheet is the answer to all these questions. It should be possible by this time to produce a balance sheet and let us know if there is some foundation for the optimism expressed at the starting of this service.

While the Minister may have delivered his speech in a rather pessimistic strain I think he was able to assemble some figures for the purpose of the speech which seemed to be seasoned with optimism. This is an undertaking in which I feel that a certain amount of optimism is valuable from the point of view of encouraging people to fight against difficulties and obstacles but at the same time I would not fall for the optimistic hopes so expressed. The Minister did not tell us what were the Aerlinte losses in the first year. He said that Aerlinte had assumed they would lose £800,000 in the first year, £200,000 in the second year, and that there would be no losses in the third year. He says that these estimates were pretty largely realised so, if that is so, I take it, though the Minister did not say so, that Aerlinte losses for the first year were approximately £800,000, which included development costs.

Yes, all expenditure on development.

Is it more than £800,000?

No, it is less than that, and includes all development costs.

Then it appears that they lost approximately £800,000 in the first year. I think that is to be expected. We cannot get into the air from scratch and make a profit in the first year nor, indeed, in the second year, but what I do think is that we should have some real appraisal of what it is going to cost us to maintain a transatlantic service. We know they lost £800,000 in the first year, and the anticipation is that their second year's operations should cost approximately £200,000. Perhaps the third year, which it was hoped would be one in which there would be no loss, would now prove to be a much more difficult year than originally anticipated. However, according to the Minister, in 1965, when there are new aircraft in the air, there is a prospect of having a surplus of some £287,000. With all due respects to the Minister, and with all due respects to the calculators in this case, I would not give twopence for these estimates.

At least I gave the material on which they are based.

You might as well spin a crystal ball around on a table, look at it as intently as you can, and conjure up some figures of this kind, as to tell us that in 1959 somebody is able to say that in 1965, in the field of air traffic, we will make a surplus of £287,000. It may happen that that will work out but, frankly, I do not believe it will, nor do I believe that the human mind to-day is capable, in the field of air traffic, of making anything beyond the most fantastic guess as to what air traffic will be operating in 1965.

I would approach this problem entirely differently from whether or not these figures were realistic figures, figures on which we could rely. I think it is a matter on which we have got to take a calculated risk and I would be prepared to take that calculated risk for a number of reasons, without regard to these estimates, which I think are fantastic and for which, as I said, I would not give twopence. There are a lot of difficulties to be considered in connection with air transport and air traffic, and probably the most sober reflection which we could permit ourselves is to look, as I did recently, at a summary of the financial position of the S.A.S. Company, the Scandinavian air system, for last year. They carried 1,500,000 passengers and their income was approximately £38,000,000, yet at the end of the year there was no surplus.

Let us keep that in front of our minds and remember that we are not going to carry anything like 1,500,000 passengers and that our takings will be microscopic compared with the £38,000,000 taken by the S.A.S. Company. Let us remember that they had nothing to give away out of their £38,000,000 and their 1,500,000 passengers, and they have the advantage of long hauls on most of their flights and, for quite a period, they had a monopoly on some of their flights. Bearing all that in mind, is it not rather reckless to give an estimate in 1959 of what our earnings are likely to be in 1965?

What does anyone know what the pattern of transatlantic flight will be in the future? What does anyone know how long the new jet aircraft will hold in the skies? On the basis of past experience, it may be possible that these new jet aircraft should run a course of about ten years, because it probably will not pay to change them in the meantime. You do not know even how far that is a wise calculation because somebody may appear on the scene, with something entirely new in the field of aeronautics, and may put on the market something which again will revolutionise air transport. In the face of all this, any forecast of what the situation is likely to be six or ten years hence must be conjectural, even in the widest estimates.

The problem is further complicated by the consideration that many of the major European countries, very heavily capitalised, with a long flying tradition, have been complaining for some time that the costs of air operations, particularly with the winter time sag, is imposing a very heavy burden on them. They have been saying to one another that they are compelled to keep offices open here, there, and elsewhere throughout the world and that they have got to keep separate handling staffs and separate services at different airports. Recently, arising out of the Common Market development, consideration is being given to the possibility of establishing a merger of air services in Europe, under which these companies will probably operate in pool, and in that way they could regulate flights, regulate time tables, regulate the method of staffing and regulate services on the different routes, eliminating competition and, in that way, probably cheapen their costs and get better and more economically rewarding flight loads in the future.

If Aerlinte were confronted in the transatlantic field with that kind of development from Europe on the one hand, paralleled by perhaps something like it from America on the other hand, and that they were to try to exist as a separate operator, one could not tell what the finances of Aerlinte would be. It is possible to visualise that there will be a merger of European air companies. I think that is clearly coming. The companies themselves are talking about it in optimistic terms and, though the American pattern has not yet been revealed, I imagine that the establishment and operation of a European merger will probably encourage American companies to think likewise, so far as the operation of American services are concerned, in order to hold their place competitively in the skies. In the face of those possible mergers, among companies with enormous resources, I think it would be difficult to estimate what would be the financial position of Aerlinte if it were compelled to compete, as it may well be, with merged companies of such stature and prestige in the air world.

As I said at the outset, the main point is: are we prepared to take a calculated risk in the operation of transatlantic air services? The question which we must ask ourselves is: are we going to stay in the skies, as a nation, between Ireland and the United States of America, or are we going to get out of the skies? Quite clearly we cannot stay in the skies with the present type of aircraft. They would be superseded for long hauls by the new type of jet aircraft, and the type which Aerlinte has at present would, in the course of a couple of years, be regarded as providing second or third class travel. If we are going to stay in the skies we cannot stay there by using planes, which in the light of modern developments in aeronautics, would be regarded as second or third class planes. We can stay there only if we have first class planes.

I think that brings us inevitably up to the question of whether we are going to buy the latest and most modern planes for the purpose of staying in the skies between Ireland and the United States and thus providing the people of the U.S. with a method of direct transport to this country. It is quite conceivable, of course, that when these new jet aircraft come into existence, aircraft which will take people from America to Paris in six hours, the tendency will be to overfly Shannon unless there is some insistence by the passengers that they want to get off at Shannon. How much insistence there will be is another matter. Many Americans come to Europe or come east, but they do not necessarily spend all their time in Ireland. Many of them go to Europe and it might very well be that with high-pressure advertising in America for an air trip involving a stay in the air of five hours, many of them would fly direct to Europe. Certainly, they would be encouraged to do that unless we could provide an alternative service whereby they could fly into Shannon and unless we could manage by press advertising to induce them to fly to Shannon with a view to getting to Europe ultimately by our services which are flying to the Continent.

A decision as to whether we shall stay in the skies with modern aircraft involves a decision as to whether not merely will we do so for air transportation purposes but whether we will do so in order to maintain and possibly develop our existing tourist traffic with the United States. If a situation developed whereby the large companies in Europe and America decided—and we cannot influence them otherwise— that they would overfly Shannon and we had no aircraft in the air it might very well be that a situation would be created in which no person would come direct from the United States to Ireland unless that person first went to Britain or Europe and took in Ireland on the return voyage.

No matter what the cost is so long as it is tolerably within reason I do not think that we can contemplate with equanimity a situation of that kind. I think if that situation were likely to develop we would be in a position in which passengers to Europe might look down on Ireland when passing over but if there were no planes to Ireland from the United States I think we would be bound to lose heavily from the point of view of maintaining or developing our tourist traffic with the United States. Therefore, I think if we are to stay in the skies between here and the United States we must get the most modern aircraft. I think if we are to have regard to the possibility that Shannon might be overflown by these other companies and that we could not provide an air service at short notice to take up the passengers who would want to stop over on a direct flight from America, we must provide a service for them not when a crisis is upon us but we must have the service available all the time.

Thirdly, if there is to be an air merger either in Europe or in America, it may very well be that it will pay us to fit into that somewhere but if we have no aircraft in the skies or no service between Ireland and the United States it will be of very little avail to us to say: "We are interested in an air merger in Europe or America" when, in fact, we have no planes on the Atlantic route. Therefore, there ought to be planes—and decent planes —on the Atlantic route so as to give us an opportunity of considering whether, from a financial and tourist point of view, it would pay us to go into an air merger either in Europe or America so long as this air merger made use of Shannon as a stopping-place or means of depositing tourists here.

That is not an easy decision for any Department or air company to take but I think this is a case where you have to take a risk. If for the reasons I have mentioned an air service between this country and America is essential then I think you have got to take that risk. If I were the Minister I would not rely on these figures. In replying, I would underline the necessity for treating them with caution. I think what we can do is take a calculated risk and carry out the project that has been envisaged and hope that by the exercise of business acumen and ingenuity and the utilisation for what it is worth of our special connections on the basis of kinship in America we can maintain an air service between the two countries which will not impose too great a burden on our taxpayers.

I am very much in agreement with the comments of Deputy Norton. I think that his estimation of the air transport business as a calculated risk is the correct one and, like Deputy Norton, I am inclined to doubt, not the figures, but the possible outcome of the estimate which the Taoiseach read out a few moments ago. Already, as he has admitted, after 11 months we now find that due to possible developments which may eventuate in 1960-61 the estimate of no deficit for that year may have to be substantially revised. Instead of carrying out our first three years' operations on a deficit of £1,000,000, the figure is likely to be substantially larger. The air transport business in passengers and goods could be described, I think, as one of these businesses in which you either get into it and stay in it or else get out of it, and in calculating all the risks involved, particularly the amount of capital required, I feel sure the Taoiseach has had regard to the overall economic position of the country. The terms of this Bill, as he has said, make available a considerable amount of new capital for both Aer Linte and Aer Lingus. I think he said £9½ million for Aerlinte and £2½ million for Aer Lingus. Those are very substantial figures for a small country like ours and I feel sure that if the Taoiseach was not convinced that the money had to be expended and that the country's future in aviation warranted that expenditure he would not ask the Dáil to pass it.

Already we have expended a very considerable amount of money in getting into the air, in the establishment of Shannon Airport and in the recent launching of Aer Linte on the Atlantic route. It is quite certain that the extra £10,000,000 or £12,000,000 about which we are talking now will have to be revised in a few years' time. I think the Taoiseach will agree that there is no certainty in the air transport business that any estimate you make today will not be completely invalid in a few years' time due to development in aircraft in the interim. It is up to us ask ourselves as we know the country if we can keep on voting millions of pounds every few years to stay in the air. Once we are in, I think we have a duty to stay in, having invested this money and having built up a magnificent airport at Shannon were approximately 2,000 people are employed at high rates of salaries and wages. That has meant a tremendous amount to the contiguous towns of Limerick and Ennis and other areas.

Any interference with that employment would be a tragedy, particularly for Limerick City. As has been said without exaggeration, Limerick would be a ghost city if anything were to happen to Shannon. That reinforces my own support of Deputy Norton's view that we must take this calculated risk. If we could go back 10 or 12 years and review the situation in prospect, whether we would be right in getting into the air with our own aircraft is a matter open to very strong views both for and against. But the fact remains we are in it and we have only two choices. One is that we stay in it and vote this money for which we are being asked, or else that we get out.

The Taoiseach referred to the fact that another development would be the greater use of Shannon Airport. Naturally, I was very encouraged to hear that because it is not so long ago, when talking in this House about the Shannon Airport Development Company, that he mentioned that the number of aircraft going through Shannon was likely to decrease and that, in order to provide greater use for the airport and give employment to those working there, it was proposed to set up a special authority to encourage industrial development in the Shannon Free Zone.

I have always maintained—and nothing I have heard this afternoon has changed my opinion—that Shannon is primarily an airport and any funds we can afford to expend on it should be to keep it primarily as an airport, to encourage planes of all types to land there and to attract tourists to come through it. The entry of Aer Linte into the transatlantic route must naturally be to some extent at the expense of the other companies using Shannon. Is there any danger if these companies lose Irish passengers that they may not have the same desire or necessity to land at Shannon as if they had the minimum number of passengers justifying a call? I am sure that facet was considered by the Taoiseach when it was decided to establish our own airline.

I cannot help feeling that, notwithstanding all the good wishes which I know the Taoiseach has for Shannon Airport, factors outside his control are continually at work to concentrate more and more of Irish air activity in Dublin. I cannot help feeling, if that trend is allowed to go on, we may find ourselves in a very invidious position in Shannon due to future developments. Already, in reply to a recent question of mine, the Taoiseach indicated that the maintenance of these new jets will not be done at Shannon. I do not know what the procedure will be when these new jets are in active operation. At present we have this arrangement whereby the Constellation plane lands at Shannon, some passengers get off, and the plane goes on to Dublin. Having regard to the high cost of operating jet planes—I believe the dearest thing is to get them into the air—I cannot visualise how a similar arrangement could possibly be managed between Shannon and Dublin in regard to jet aircraft.

This more than ever reinforces the view of those who feel that the transatlantic route should be from Boston, New York, Chicago, or wherever it is on the American side, to Shannon and that any passengers carried thence should be carried by the ordinary aircraft of Aer Lingus. One essential development, and one that was in effect up to some years ago when it was scrapped, was the direct service between Shannon and London. If this were re-introduced it would be another factor towards making greater use of Shannon. It is possible in the years ahead that Aer Linte might fly on from Shannon and that its route may not be New York to Shannon and then stop but that it may continue to the Middle East or even the Far East. A development like that might have to be visualised at some future date.

I was interested in Deputy Norton's suggestion that at some future date we might consider the question of a merger, if this idea of a merger of airlines is forced on European countries in general. It is something on which we should keep an open mind. But, when it does come, I hope we will be in a sufficiently strong position, both financially and from the point of view of the number of passengers carried, to make a good bargain. I should not like to feel we had arrived at a stage that somebody had to take us over or we had to go out of business. The Taoiseach will appreciate from his experience that it is always easier to negotiate from strength. If any question of a merger arises, I hope we will be in a strong position to get the best possible terms for this country.

I wish the Taoiseach every success with this Bill and I trust that the hopes he holds out for Irish air transport, and in particular for the future of Shannon Airport, are realised in the years ahead. I have no doubts about the difficulties. I know there are strong views against the whole idea of this small country going into air travel. Many of them are very good reasons but I feel we are in now and we have got to stay in; and, that being so, we must expend money on these new planes.

I should like to pay tribute to the very excellent technical advice which the Taoiseach has at his disposal. Whatever about the financial advice, in regard to Aer Lingus and generally in regard to aircraft development in this country, the Taoiseach has at his disposal first-class advice.

This Bill appears to me, from the information the Taoiseach has given us, to be largely a conjectural Bill. As Deputy McGilligan said, he has not been able to give us any definite statistics as to whether this company has to date really justified its existence. It is fair to say from this side of the House that we have always opposed a transatlantic service. The Minister is introducing this Bill because he finds himself, in the changing circumstances that exist in air transport, in the position that unless some step is taken on behalf of Aer Linte, he may as well close down this company. He finds himself in a desperate situation; it is really a sort of gambler's throw.

He had originally at his disposition £2,000,000 for the purpose of establishing this air service. Because of over-flying, which is only in its early stages at the moment, in the near future most of the planes now grounding at Shannon, bringing tourists in large numbers to Europe, will overfly Shannon and land directly in Europe. Anyone who goes to Europe, no matter what city he visits, finds it full of Americans. American tourist traffic to Europe is enormous as compared with similar traffic to Britain and Ireland.

We are being asked to vote public money, the people's money, for this service. We must assure ourselves that we are justified in doing that. If we intend to continue an air service with modern planes two things are necessary. We must be assured that we shall be able to bring sufficient people here to fill our planes. If we cannot do that and, if we bring in people merely in an effort to compete with the other transatlantic services, we must be assured that we can bring those people to their ultimate destination. Put it this way: the natural inclination of tourist business concerns is to take a load to Europe. If we bring in tourists to Shannon in our own planes, have we the facilities then to take them to their destinations? Have we the facilities to land them in Europe, if that is their wish? If we have not the facilities, we shall be competing at an unfair disadvantage with the bigger air operators. It is no use shutting our eyes to facts and I should like the Taoiseach to clarify the position in that regard when he comes to reply. I know there are all sorts of difficulties because of international agreements, and so forth, in getting certain facilities. I wonder has the Taoiseach sought those facilities. I wonder are the facilities available.

If we intend to compete we must be assured of traffic. Indeed the Taoiseach ought to have assured us that the existing services are justifying themselves. The Taoiseach talks in grandiose fashion about the percentage of traffic, the number of people crossing the Atlantic now, and the number likely to cross the Atlantic in five or six years' time. He says glibly that we shall get such and such a percentage of that traffic potential. We have no real evidence to show that we are even getting our proportion of all the traffic at the moment.

There is a considerable risk involved in this. Originally the Minister was ill-advised in inaugurating the service. Having done so, I do not suppose he has any real alternative except to come to Dáil Éireann now and say that he was wrong and that he should never have inaugurated the service. Instead of that, he comes back and asks us to vote money. In all conscience we, on these benches, cannot agree to that. He has not put up any case to justify this service. To prove his case, he will have to give the House much greater detail and much more conclusive facts.

Deputy McGilligan very correctly said the company has produced no definite statement of account. We do not know if these planes are flying in, full or empty. There is another factor to consider. The tendency to-day is towards amalgamation. Only the other day it was stated publicly in the Press that the Common Market countries are contemplating amalgamating their air services. The Scandinavian airways give an excellent example of what unity can achieve. Can we, a small country, stand up to these big combines? Are we able to compete with the wealthy American and British services? Will we be able to continue to compete if we find ourselves face to face with an international combination of aeronautical services? The seven countries which are now negotiating may reach agreement. We do not know what the position is because we have no observer and no one to report on the discussions that are taking place.

All these factors must be considered. I do not know if it is necessary to have this Bill immediately. It might have been better and more beneficial to our aeronautical trade as a whole had we waited a little longer to see what is likely to happen. The Minister proposes to put three jet planes on order. He did not tell us when he is likely to get these planes. With the risk of amalgamation on the part of the bigger air services there is a possibility that a more up-to-date type of plane will be in existence by the time we get delivery of these jets and we may find ourselves in the position of having spent a considerable sum of money with no commensurate return.

I think it would have been more advantageous had we turned our eyes in the air towards Europe instead of America. We can be proud of the air services we are operating to the mainland of Europe at the moment. I have travelled in British Viscounts, in French Viscounts and in Scandinavian Viscounts. In my opinion, no plane compares for service and comfort with those operated by Aer Lingus. Although we provide a better service and although we have a record of which we can be proud, with practically no accidents, we are still competing with vested interests.

Bookings depend on tourist associations. Tourist associations are interested in big business. We are a small country and we cannot always get the tourist bookings that these big combines can get. Only yesterday I was talking to a South African who is doing a three months' tour of Europe. When booking she found she could not get to Ireland because it was not included in the tour. She and five or six others refused to take the tour unless they could see Ireland. The plane flew from Johannesburg to London and this lady and the five or six others had to be put on a separate tour at their own request in order to see this country. I tell the House that in order to apprise it of what is going on in the tourist world to-day. That is the kind of thing with which we have to compete.

The Taoiseach has his majority— the strong majority about which we heard so much over the months—and he will get the money. Is it not a fact that all the factors I have mentioned may bring the Taoiseach back here again in a few years time looking for another £10,000,000 to keep us in the market? There is only one argument in favour of this. It was mentioned by both Deputy Norton and Deputy Russell. Everywhere to-day it is a matter of negotiation, and the fact that we stay in may give us better terms if we have to get out or better terms if we have to amalgamate with some of the big organisations. The tendency in the world to-day is, not for countries to stand alone, but to join in big combines as far as possible I should like to remind the Taoiseach that you cannot join big combines or avail of the facilities of big combines unless you send representatives there to know what is going on.

Ten million pounds for three jet aircraft.

Well, the thesis is that it is to be £6,000,000 and then there are spart parts.

No. The Deputy completely misunderstands. He must not have been here when I spoke.

We are embarking on a programme for which we are appropriating £10,000,000. We may not spend it all now but there one thing arises, as Deputy Esmonde says, that possibly when we are involved in this business the planes we have will prove to be obsolete. There is only one thing certain in air transport, that is, the day you put the airplane in the air it is obsolete; there is another in process of design and ordinarily it is on order to keep the fleet up to date. I think I am right in saying, am I not, that Italy cannot face the burden, France cannot face the burden, Belgium, Holland, Sweden cannot face the burden, much less Norway and Denmark. All these national airlines have entered into mergers with one another for the simple reason that they say they cannot finance the cost of jet aircraft and the prospect of the cost of keeping jet air fleets up to date. An out-of-date jet aircraft is just as useless for modern competition in transatlantic air transport as a turbo-prop is once jets have started to ply regularly on the route.

I surmise that the Taoiseach may be in this difficulty that he contemplates an amalgamation or an entry into an amalgamation on the basis of equality with Belgium, Holland and Switzerland, say, and that yet he does not want to declare that publicly but feels that unless we have jet aircraft flying we have no basis on which to make that approach. Well, there is within the general machinery of Parliament a means of dealing with a situation of that kind so that confidential information can be exchanged if it is in the national interest that it should be so exchanged but, in the absence of any confidential information of that kind, the situation we are confronted with here today is that we are asked to appropriate £10,000,000 to finance a programme to be inaugurated for the purchase of three jet aircraft. The Taoiseach himself is not prepared to say with certainty what the ultimate financial obligations are going to be. He is probably conservative in his estimate. Perhaps I am unduly pessimistic in mine but I do not think I am being unreasonable when I say that, if there is one thing certain in air transport, it is that the aircraft put in the air today is obsolete the day it leaves the ground. The moment you get into this dialectic of matching your services with world services you have to keep abreast of modern progress. Only last week, the Chairman of B.O.A.C. and B.E.A. made an impassioned appeal in the papers, for Heaven's sake, not to force him into the position of undertaking unrestricted competition with any American competitor who chose to take the field with supersonic aircraft and he sounded a note of caution. "If you get into that competition," he said, "we will all bankrupt ourselves and we will all become a chronic charge upon the public Exchequer." I do not know if Deputies saw that in the paper but it gives you an indication of the dialectic into which we are moving.

I regard it as all mad—crazy—quite crazy and quite unnecessary. I have consistently supported the programme and policy for Aer Lingus. I think that is a practical proposition and, in any case, I think it is reasonable to say that contact with the outside world, Great Britain and the Continent of Europe, by air, is a necessary adjunct of our position as a sovereign State but I think it is fantastic to say that it is a necessary adjunct of our position as a sovereign State to be in the transatlantic air transport system because it is manifestly untrue. I can sympathise with the sentiments that initiated Irish Shipping on the ground that an island country such as ours must have its own contacts, which it is in a position to control in all circumstances, with the outside world and cannot for ever remain dependent on foreign shipping. It must always have a reserve of its own shipping over which it has dominion but that does not apply to transatlantic aircraft.

There remains the argument that a direct transatlantic air service with the United States of America promotes tourism. I think that argument is extremely inapplicable but let us accept it as a valid argument and I want to suggest to the Taoiseach that it is not an effective one. I want to make a suggestion to the Taoiseach that our positionvis-a-vis transatlantic air travel and the international airlines is not at all as weak as some Deputies seem to consider. I do not think that we are in a position of mendicants vis-a-vis the great international airlines. I think our geographical position and the fact that we have an air base at Shannon means that if we are moved to call anybody's bluff, we can turn them into mendicants. I do not think the international airlines flying across the Atlantic can afford to do without Shannon. We have seen every year a considerable number of aircraft avail of the facility of Shannon in emergency. Some of these aircraft would never have survied if they had not Shannon to come to or certainly would have moved into indescribable peril. Aircraft are no longer small vessels carrying ten or 12 people. You may have in modern Russian versions of jet aircraft 250 passengers, exclusive of crew, in great peril 200 miles off the west coast of Ireland. The difference between their survival and their loss may be the existence of facilities at Shannon.

I hear people talking continually about our being overflown. Of course we will be overflown and it is fantastic to imagine that we will not be overflown. It is ludicrous to say that if you reduce the passage from New York to London to a matter of five hours, which is highly likely within the next decade, these airplanes are going to come down at Shannon just for the purpose of getting a breath of fresh air. The cost of getting them down and getting them up is very substantial and I am told that it is extremely difficult in so short a journey as, certainly, from Shannon to Dublin to get a jet aircraft up to the appropriate level at which it can fly at all economically; it is virtually impossible. I am convinced that we will be overflown and I have believed for a long time that it is inevitable that, in the ordinary course of American-European travel, this country will be overflown. That does not mean that those who overfly us can do without us. I think that we have always under valued that immensely important element in the value of Shannon as an airbase. At present Shannon costs us £250,000 a year to operate.

Shannon produces a substantial surplus.

Shannon and Dublin cost us approximately £400,000 a year.

The Deputy is out-of-date. They both make a surplus.

I have the figures and Deputy Haughey has them also. He is my colleague on the Committee of Public Accounts. Shannon and Dublin costs us a pretty steep sum annually. I often wonder why we go on paying out that money. I think we are in a position to say to the transatlantic air fleets that if they wanted the amenity that is provided by Shannon they ought to pay a sum sufficient to ensure that it will cost us nothing to maintain it there.

What are you going to do with the jets when you bring them into Shannon? Do you propose to fly them from Shannon to Dublin? They would not be able to get up to the height needed to fly properly and I understand that if they were going to land in Dublin, they would require to start coming down before they got to Shannon. Is it on the programme to get them to land in Dublin?

The real truth is, and we all know it, that the Taoiseach has gone into this up to the neck. He is a gambler and is going to go through with it now. What is it all about? What is it all for? What are we going to get out of it? How is it going to advantage this country? We have an admirable air service to London, Paris, Germany and Scandinavia. How does it advantage us to fly aircraft from here to Shannon if we are going to make an operational loss out of it? I might understand it if the alternative were to close down Shannon. I do not want to close down Shannon and I do not think that is the alternative.

I think we would get a favourable reaction from all the transatlantic companies if we tell them that we shall continue to provide the service at Shannon but that we do not want to do it at a loss. If we approached TWA, Pan-American and the two or three Continental companies, and told them that we want a guarantee of a minimum number of landings at Shannon in order that the facilities there will not cost us anything, I think we would get a favourable response. I am certain that the fact that we ourselves are not operating a jet service does not necessitate the closing of Shannon.

Deputy Russell made the point that people will not fly into an area unless there is a direct link from it to the country from which they come. I think he is quite wrong. We are always inclined to compete with Paris, London and New York. We have no attractions in this country in that category at all. The attractions we have here are the attractions of restfulness analogous to those of Majorca, Sicily and the Ionian Islands to which there is not the ordinary flow of tourist traffic. We get the Irish who wish to come and see their own country but the other kind we get are those who like hunting, fishing and rural amenities. We have those in exceptional quality and at a low cost. The type in search of that kind of amenity are the type who like to travel to London and Paris and then to come here by Aer Lingus. I do not believe that direct contact between this country and the United States by our own jet aircraft is an essential to bringing tourists from America.

I am convinced that the value of Shannon in inter-continental air traffic is such that no combination of lines would likely look for its disappearance and I believe that that puts us in a very strong negotiating position. I am frankly appalled at our embarking on a programme the initial stages of which invole the expenditure of £10,000,000 in the next three or four years. That sum is, in itself, formidable but where are we going? I think it is folly to enter into competition with the great nations of the world in the light of the warning posted on the walls of the international airports everywhere. The Chairman of BOAC has cried out that he recoils with horror from the prospect of the cost that is likely to eventuate in maintaining up-to-date air travel amenities in the jet age.

We began the day by introducing a Bill to manufacture grass meal in Glenamoy. We are going to end the day by voting £10,000,000 to fly our own jet aircraft across the Atlantic with the understanding that, having landed them at Shannon, we are going to lift them again and land them at Dublin which I submit is an impossibility, unless we fly them via Tory Island. The Taoiseach has more experience in these matters than I have and he must agree that it is impossible to get a jet aircraft into the air at Shannon and land it at Dublin unless a wide detour is made. I think the whole idea is crazy and I have no experience of anyone embarking on this crazy enterprise except the Minister.

When we came into office we found a project for a transatlantic air service. We very wisely then said that the results of that did not permit this country effectively participating in transatlantic air traffic and that ultimately, if we attempted to stay in this business, we would become involved in financial commitments that would cripple us. In the event that has proved to be abundantly true.

I think if you asked anybody in 1948 whether jet aircraft would be flying across the Atlantic to the exclusion of propeller aircraft within ten years they would have said: "You are daft." We are now told that it is within the range of possibility that within the next five years the Atlantic will be crossed by supersonic aircraft. At the moment there are aircraft flying in the sky, as part of the normal equipment of the British Air Force, which fly at twice the speed of sound. They are normal equipment of certain air divisions of the British Air Force. Picture our position if, in five years' time, the transatlantic air companies are equipping themselves with supersonic aircraft of the type at present being used by the Russian air company which recently landed Mr. Kozlov or whatever his name was, in New York.

The Minister for External Affairs could tell the Deputy his name.

I do not see why Deputies themselves do not see the crazy dialectic into which we are moving. I am apprehensive that the reason we are moving into it is that the Taoiseach thinks he must redeem his reputation by showing that his plan of 1957, or 1946, should be persisted in. I do not believe he has any clear vision of what the end of this is going to be and, in default of that, I think it is very wrong to ask for this money, more especially when I reflect that if we grant this money now, instead of having to take a decision hereafter to wind up something which has the limited commitment of £2 millon involved, we will be facing the problem of dealing with something in which, perhaps, £10 millions or £20 millions is involved in a few years' time, and will be that much more vulnerable when we have to take a decision whether to go on or turn back.

I think it true to say that in five years' time the aircraft which we will have in the air, the aircraft which will become available at the end of next year, or whenever they are delivered, will be virtually unsaleable. Many air companies are discovering at the present time that propeller aircraft are unsaleable because nobody wants to buy them when jet aircraft have become the normal equipment of air travel.

I do not think you can look on these developments in isolation. This is going to be operated as a charge on the resources of this country. We are not all that "riding on a rainbow" at the moment. Our exports are going down and our imports are going up and incidentally these aircraft are going to represent pretty substantial imports. We are virtually isolated in our trading relations. This is a time when we have quite considerable difficulties to contend with, not insuperable difficulties, but formidable difficulties. It is a time, in my judgment, when we should not undertake a burden of £10 million with the prospect that it will grow, with a pious hope that after losing £800,000 in the first year and £200,000 in the second year we may break even in the third. We all know that we have been listening to that pious hope about C.I.E. for a long time, and the longer we wait the less close we are to breaking even.

Does anybody in this House honestly believe that in three years' time we shall be earning a profit on the transatlantic air route? I do not believe anybody does. If we do not, do not let us fool ourselves, now that we are called upon to decide what best to do in regard to this, by pretending to believe that we think we are going to earn a profit in three years' time. We shall be making a loss and, if the trend continues as it is proceeding in the world today, the loss will tend to grow. Is there an airline in the world today operating on the transatlantic route which is making money? I doubt it. Perhaps the Taoiseach knows.

Any amount of them.

I would like to hear which of them are doing that. Why are all the airlines in Europe amalgamating? Is it for love of one another? That is not my information. My information is that it is because they could not make the money to pay their overheads. I am practically certain T.W.A. is in the red. I do not know about P.A.A. but we are going into this business with three aircraft and the prospect of replacing them as time rolls by. Does anybody believe we are going to make money on this? I am seriously apprehensive that we will put Aer Lingus into the red too through the association which exists between Aer Linte and Aer Lingus.

If the Taoiseach were a prudent man, and morally courageous, he would drop this whole business. He would use the valuable amenity of Shannon to secure for this country such transatlantic landing facilities as may be required, and he would concentrate on such resources as we are in a position to deploy to improve and develop the existing admirable service provided by Aer Lingus between this country, Great Britain, and the Continent of Europe. On those lines there is a prospect for sustained and profitable development.

If I saw the slightest hope of success I would be very glad to join in the good wishes to the Taoiseach for this enterprise, but it would be the sheerest hypocrisy to say he has my best wishes when I do not believe in it. I believe this enterprise to be misconceived, to be reckless, and to partake of a character of a wholly improvident gamble with the resources of this country. For that reason, I must strongly urge the Minister to mend his hand and to dissociate himself from a departure which may be a disaster for us all.

The transatlantic air service has been such a controversial subject over the last ten years that I want, briefly, to put on record my opinion about it. We are at a certain disadvantage inasmuch as the Taoiseach had not, or did not, give us a full report of the activities of Aer Linte over the eleven months up to the 31st March of this year. I think he himself will be the first to admit that the reports he gave, in the nature of prophecies for the future, do not constitute a good case on which to build his plea to this House for a further substantial sum of money for the purchase of three jet aircraft. He could not be pinned down to specific figures possibly, as he said, because he had not got them. He did say vaguely that our hopes of Aer Linte in regard to freight were not realised but that they were realised in respect of passengers and mail. What the overall position has been, taking the loss on freight with the profits—let us call them—on passengers and mail, we do not know. We have the assurance that in three years Aer Linte should be—to use the Taoiseach's own words "out of the red."

I have no particular experience or knowledge to speak on air travel but, like Sir Anthony Esmonde, I have made air trips now and again. It seems to me that Ireland is now being asked by the Taoiseach to participate in an air race and a pretty keen one. I certainly would not hold out my judgement against that of the Taoiseach——

We are operating from New York to Shannon. It is only the competition on that route that concerns us.

There is competition on that route.

Yes, but we need not think about what the Russians or somebody else are doing.

I am not concerned about the Russians or anybody else——

No, I was referring back to Deputy Dillon. Do not take umbrage because I mentioned the Russians.

I am only concerned about traffic between the U.S. and Ireland. It seems to me that not only are we trying to "keep up with the Joneses" but that we must keep up with them. So far as the transatlantic air service is concerned, I can only judge it in one way. If I had a substantial amount of money to invest I would say very quickly that I would not put one penny of it into a transatlantic air service. That is the only criterion by which I can judge the extension of this project as suggested by the Taoiseach tonight.

I do not think there is any use in comparing Aer Linte with any other State concern such as Bord na Mona, Comhlucht Siúicre Éireann, the E.S.B. or even with Irish Shipping. In Bord na Mona we are concerned with the home market for the consumption of turf and the use of turf in the production of electricity. In Comhlucht Siúicre Éireann we are concerned with the home market. Investments in a project like that could not fail because there is a virtual monopoly in so far as the production of turf is concerned and there is certainly a monopoly in the production of sugar. In the case of Irish Shipping it cannot be regarded as an absolute monopoly but it was a pretty good bet by anybody's standards that if the Irish Government set up a State concern and wanted to engage in shipping they would have a good chance of succeeding.

Here, we are trying to attract a foreign market because it must be admitted that in that market the commodity happens to be people whom we want to attract to travel.

We are trying to attract only persons who want to travel from New York to Ireland and nobody else.

That is why I say it is risky. That is the point I make about it. If we were dealing exclusively with an Irish market and with Irish people we would have a very good chance of success. Some people might think that any opposition coming from this side of the House, from the Labour Party is unpatriotic. We have been told that before. I am not saying the Taoiseach said it, but members of his Party described us as unpatriotic because we opposed in the first instance the establishment of the transatlantic air service. That would not be my motive in opposing it. If I thought it was going to benefit the country as a whole and be a good thing for tourism and for the economy of the country generally I would certainly support it. I do not think it will be, but I shall be the first to apologise in this House if it is a success. I hope it will be a success because as somebody else has said, we are in for a penny now and we must be in for a pound. Either we must cut our losses and get out losing our money or throw in more money in a further gamble because I think it must be admitted there is a big element of gamble in it.

We are asked to increase the amount to be advanced to the air company by the sum of £8 million. Is the investment of £8 million in Aer Linte?

No. I have been trying to make that clear all along.

There is something over £5,800,000 to go to it——

We are putting a new ceiling figure now on the capital of Aer Rianta.

The three aircraft are going to cost approximately £5½ million?

I have to ask myself on behalf of the people of my constituency is the investment of approximately £5½ million in jet aircraft the best investment——

No, that is not the question.

One of the best investments——

No. It is not really in competition with any other investment. The question is: is it a good investment in itself? No other investment is being stopped by reason of it.

The Taoiseach should let me finish. I know the Taoiseach is anxious to get in and I do not desire to hold him up——

No, it is just to correct the argument.

I have to ask myself is the investment of £5½ million in the purchase of three jet aircraft the best investment we can make at the present time? I assume that the Taoiseach will have available to him by way of public loan or otherwise a sum of £5½ million and he says: "I am going to allow Aer Linte to buy three jet aircraft to operate between this country and the United States." I do not think it would be an unreasonable question to ask the Taoiseach: could that £5½ million not be invested in Ireland to greater advantage?

If there is the possibility of, or advantage in investment in any other direction to an equal extent, we can take advantage of that also. We do not have to choose between one type of investment and another. We can do both.

Does that mean that there could be another £5½ million or £10 million available that could be invested in the tourist industry?

If it can be usefully and profitably employed there.

And could the Taoiseach not readily admit that it could be employed there at the present time? There must be a limit to the amount of money available to the Taoiseach and the Government.

There is no profitable investment that need not be undertaken by reason of a deficiency of capital resources.

That is bewildering for me and I am sure it is equally bewildering for other Deputies.

I have been saying that in every speech I made this year.

Why do we not get £5½ million more then to invest in the establishment of industry?

We have it. It is available.

Why cannot we get industries established if we have a sum like £5½ million?

A much larger sum than that has been made available for investment in industry. It is provided in legislation passed in the Dáil this week.

And they closed down half the land project because they could not afford it!

In any case, I want to be brief. There is a dual purpose in this measure, to earn money for this country through Aer Linte and to promote tourism, tourism, I assume, from the United States. All of us will be pleased if the Taoiseach's ambitions, so far as attracting tourists from the United States are concerned, materialise. I doubt it very much. Might I suggest to the Taoiseach, as I said at the begenning of my speech, that we are trying to attract in a market outside this country a commodity which in this case means persons. Would the Taoiseach not seriously consider the establishment of an air service between the various parts of this country and Britain where there is a ready made market?

These air services already exist.

They do not already exist. I shall give the Taoiseach an example. People from London who want to get to Waterford, Cork or Wexford invariably come right across England by train to get the Fishguard boat for Rosslare or Waterford to get to their homes. In present circumstances if they are to fly portion of the journey they must go from London or Birmingham or Leeds to the centre of Dublin. Then they must be transported by train or bus or car to Mayo, Wexford, Waterford, or Cork, or other parts of the country. We have hundreds of thousands of Irish people in Britain who come here at different times in their lives, some of them three or four times in the year. Let the Taoiseach go ahead with his transatlantic scheme, but in regard to the investment of the other moneys the Taoiseach has, Aer Lingus would be well employed establishing airports in Cork——

We are in fact building an airport there.

——Galway, Waterford, Wexford and Athlone. With the hundreds of thousands of Irish people in England who want to come home quickly, such a project by Aer Lingus would pay dividends very rapidly. I do not know whether the Taoiseach has seriously considered that, but it would attract quite a number of Irish people who have their roots in Britain to come home on short visits. At present, it takes them two or three days to do so and it is not worth while. If they could board a plane in London or any of the other cities in Great Britain and get to various parts of the country in three or four hours, they would come home much more frequently. In any event, it is something Aer Lingus should be encouraged to consider.

I disagreed with the initiation of this service and I am still against it. Like other Deputies, I feel that, when we have it, we must either decide to stay on or get out. I suppose it is only reasonable that we should give the project this other chance. But I doubt very much whether it will succeed, in view of the fact that air travel and aeroplanes are changing so very rapidly. It is possible that in another one, two or three years, the Minister for Industry and Commerce may come in and say he wants another £10,000,000 or £20,000,000. And that would be a different story.

We are going into the development of the transatlantic air service in the confident expectation of making a cash profit as well as conferring other benefits directly or indirectly on the country. Our expectations are based upon estimates prepared by very shrewd people who know this business thoroughly and who rarely have been wrong in similar estimates before. Deputy McGilligan said I had justified this development on grounds of prestige. I never mentioned the word "prestige". I have no interest in prestige in this regard. The decision to proceed with this transatlantic air development, which had been pressed on me by the Board of Aer Lingus, was taken on hard, cold commercial facts and nothing else.

The expectation that, after the initial development period has passed, a substantial cash profit will be realised is based upon a conservative calculation of the traffic available. It is a very satisfactory thing that we can visualise a development which can confer indirectly very substantial benefits on the national economy, which will provide not inconsiderable employment of a very high calibre for a number of our people and, at the same time, make a profit in doing so. The indirect benefits are not to be ignored. Deputy McGilligan, and I think Deputy Dillon, were inclined to speak disparagingly of the American tourist trade. The American tourist trade is, of course, less important to us than the British tourist trade. But it still is very substantial and is growing very rapidly—more rapidly than the American tourist trade to Europe as a whole.

The potentialities of that trade are enormous. When the difficulties and inconvenience of air travel across the Atlantic are very substantially removed, as they will be with the advent of the new aircraft, one could hardly attempt at this stage to calculate what the full potentiality of that trade may be. We have based our calculations of the traffic that will be available for air companies operating services to this country upon the overall calculations as to the increase in transatlantic air traffic generally and not upon any special inducement which we may have to offer to American tourists.

Furthermore, there is the very important question of the future of Shannon Airport. It is perfectly true that with the new jet aircraft Shannon Airport is no longer required by any air company on the North Atlantic route for operational reasons. In the early days of Shannon every company operated through there because their planes could not fly further. They had to come down to refuel. The business of Shannon Airport was built upon that transit traffic. That phase is past. There are aeroplanes now flying that do not require to come to Shannon for operational reasons. They will come in there for traffic reasons, to put down and take on passengers, but for no other reason. I am talking of the first class traffic. There is no doubt a continuing business for Shannon in the charter flights that are increasing in number across the Atlantic; and in my view there is a considerable future in the air freight business. But, confining our observations to first class passenger traffic, that is the situation we have got to face.

While we all know every foreign company operating a transatlantic service will seek to fill its 'planes with the maximum number of passengers travelling the furthest distances, they are interested only in traffic to Shannon to the extent that they are induced by the competition of the Irish airlines to provide a service into Shannon. If that service is not there it is certain that these great companies —P.A.A., T.W.A., the British company and the European companies— would say to anybody who wanted to travel to Ireland: "We will put you down in London. You can then get an Aer Lingus flight from there," or "We will put you down in Paris and you can get an Aer Lingus or an Air France flight from there." Their commercial reasons for providing a service to Shannon will turn entirely on the certainty that otherwise Aer Linte will get the bulk of the passengers who want to travel to Ireland.

All this talk about Russian aeroplanes, about a combination of European airlines and about the possibility of supersonic 'planes and space travel has nothing whatever to do with this. Aer Linte is operating from New York to Shannon and the only competition they are interested in is from the other operators flying from New York to Shannon. They can fly their supersonic jets or their big aeroplanes on any other route they like. If they are not on that U.S.-Shannon route, they are not in competition with Aerlinte. All these possible developments in civil aviation to which Deputies have referred have nothing whatever to do with this. It is the extent to which Aerlinte can hope to develop trade on that route that matters when we try to estimate its commercial prospects.

As I said, their calculations assume that the growth in the total of transatlantic air passengers flying on all services will be as estimated by the international bodies which, with expert advice, have published their conclusions in that regard, and of that total number of passengers flying by air over the North Atlantic, Aerlinte will continue to get the same percentage as at present. First of all, that the number who want to travel to Ireland will be the same percentage in future as it has been in the past and, of that number, Aerlinte will get the same percentage as it has got up to this. Is not that a reasonably conservative basis of estimation and, on it, the experts available to the board of management of this company have calculated that they will make a substantial cash profit?

On existing fares?

With jet aircraft.

On existing fares?

They are, of course, members of an international organisation which determines the fares and they will charge whatever fares are set by that organisation and charged by other operators on the route. We shall have another look at these calculations later. Let me try now to clear up any misunderstanding that may exist about the information available concerning the outcome of Aerlinte operations to date.

There are available to me provisional estimates of revenues and expenditures for the first year, which was only an eleven-months year for the company really. That is the financial year which ended on 31st March last. These provisional accounts will be checked and finalised by the auditors and published at the annual meeting of the company which, I understand, will be held at the end of this month. Charged against revenue in that first year is a considerable amount of initial outlay. As I said, this was inevitable in the first year of operation of any air service. Offices had to be opened at the traffic centres of New York, Boston and so forth. A great deal of publicity had to be embarked upon to let people know there was an Irish airline operating. Not a great deal as yet, but certainly a considerable amount in the future will have to be spent upon crew training. In many directions the outlay in the first year was considerably higher than would normally be anticipated. Of course, the business available to the service must also be expected to be well below what they could normally hope to get.

The experience of every airline shows that it takes three years to get a new service "out of the red." A substantial loss in the first year, with heavy development expenditure inevitably arising, a much smaller loss in the second year and practically level in the third year is the established pattern, and into profits then in the fourth year. That has been the experience of Aer Lingus. It is the experience of most airlines. It is assumed it will be the experience of Aerlinte.

As I have said, the accountants and experts of the company sat down in advance to calculate what the receipts and outlay would be. Up to the present they have been shown to be extraordinarily accurate. I was at one time disposed to contest the reliability of their estimation. I have certainly withdrawn from that position. They have shown themselves to be able to forecast these matters with considerable skill and accuracy. It is these same experts who, projecting their calculations into the future upon the assumptions I have given the Dáil, have given us this expectation of a cash profit which will enable them, over some period, to repay these initial deficits and then commence to earn profits. These calculations assume the complete writing-off of the investment in the aircraft in a period of ten years.

There has been reference here to the Dáil providing money and to taxpayers supporting this service. All we are asking the Dáil to do now is to change the law which says that Aer Rianta must not have more than £2,000,000 in share capital so that, in future, Aer Rianta will be permitted to have £10,000,000 in share capital. I have not even said, because it has not yet been decided, that that share capital will be provided by the Minister for Finance. There is certainly no suggestion of asking the taxpayer to contribute anything to the development of this service. The expectation is that the company will, as its service grows, be able to repay the deficits of the earlier years and clear these items out of their accounts, ultimately paying a dividend upon the moneys invested in it. From the point of view of the development of the country and the benefits which this service can secure for the country as a whole, I think we should contemplate a position in which any funds that may become available to it out of its own resources would be used to develop its services rather than to remunerate the investment. I can, however, appreciate that if the Minister for Finance finds the whole, or any part, of the capital he may take a very different view.

For what does Aerlinte want capital? First, there is the purchase of aircraft. Secondly, there is a rather substantial item for the training of the crews and the personnel who will service them. As the House well knows, we are now operating on chartered aircraft, the crews for which are provided by the charter company and the servicing of which is done on the other side of the Atlantic by the same company. With jet aircraft we shall be utilising our own crews and our own servicing personnel. These have to be trained. It is quite a substantial business to train personnel to the very high level of proficiency required before they can be entrusted with the operation of expensive and intricate equipment of this character. With the advent of the jets, there will be occasion for a considerable new outlay-upon publicity and advertising generally. Some figure—we estimate about £250,000—will be required for working capital purposes.

What about spares?

One aircraft is spare. The expectation is that the service which will meet the full requirements of this country and carry the full traffic available to Aerlinte can be operated with two aircraft, but there must always be a spare. I do not say there will be one plane just standing idle, waiting to be used, but three will be so operated that one will always be spare.

But you must carry a stock of spares as well.

Certainly there is a substantial investment in spare parts. Deputies have suggested that these aircraft may become obsolete before we are able to recover in the depreciation allowances the moneys we have invested. This is a matter we have had to consider before. In 1948, when the original Aerlinte transatlantic air service was contemplated with Super-Constellations, we were able to satisfy ourselves, by consultation with technical experts and advice from the aircraft manufacturing companies, that that type of aircraft could be regarded as stabilised for a 10-year period and there was no prospect of any major technical change in the design or performance of aircraft for a period of ten years. That proved to be correct. It is only now, in 1959, that another major advance in technical design and performance of aircraft is taking place. Once more, we have been able to satisfy ourselves in the same way that no further technical change in the design and performance of aircraft in commercial use is likely to take place for a 10-year period. It is technically possible, I am told, to build an enormous aircraft to travel at supersonic speed, but it would be so uneconomic to operate on a commercial service that it does not come into the picture at all. In 10 or 12 years from now there may be another major change in the design and performance of commercial aircraft. It is fortunate for us that we are able to take this step at this time in the history of the development of aircraft.

Deputies have spoken about the financial difficulties of some Continental air operators. These financial difficulties arise very largely from the fact that they have in use at the moment propeller-driven aircraft which they have not fully depreciated and that they have to incur new investment in jet aircraft before they recover their original investment. We are not in that situation. Once again, we are coming into the transatlantic airfield with some advantages over other operators and, therefore, are all the more entitled to believe that we can maintain ourselves successfully there.

Coming back again to the basis of our calculation, according to the estimates which have been prepared by the highly competent technical people who have gone into this matter with great thoroughness, in 1960, next year, 87,500 people will want to fly from America to Ireland or, to be more accurate, I should say will want to engage in flights over the North Atlantic which will either start in America or in Ireland and terminate in the other country. We know we have a problem in 1960. In 1960, we shall still be operating the propeller-driven Super-Constellation aircraft which Aerlinte have chartered. Therefore, we have to ask ourselves how are we likely to do in that year. If it is likely that 87,500 people will want to fly to Ireland or from Ireland across the Atlantic in that year, how many can Aerlinte get, operating these propeller-driven Super-Constellation aircraft? If the original Aerlinte estimate that they can get the transportation of 40 per cent. of that number proves correct, there is no question that Aerlinte will break level on its accounts in that year and, indeed, I think it will be able to show a not inconsiderable revenue surplus. We do not know at the moment to what extent it is reasonable to calculate that they will get 40 per cent. of the available traffic because we cannot say the degree to which they will be in competition with jet aircraft on that route next year. We do not know.

We have had consultation with other companies before we took our decisions in this regard and we found no company operating on the North Atlantic route that was prepared to give us an undertaking that they would provide a service with jet aircraft into Shannon and, as I said, the expectation that they will in future operate with jet aircraft into Shannon is based upon the belief that the commercial competition that they will experience from Aerlinte will force them to do so, will make it in their interest to do so, just as, in the absence of the Aerlinte service, it would probably be in their interest not to come to Shannon at all.

That fact which I have mentioned emphasises difficulty at this stage of calculating the extent to which they would be prepared to operate services into Shannon with jet aircraft next year. If they do not, Aerlinte can reasonably hope to get the 40 per cent. of the total available traffic that they have got up to now, to carry the 35,000 passengers that that would represent, and make a profit in that year. If they are up against jet competition, then the total number of passengers they get that year is likely to be less but how much less one cannot say. It will almost certainly be more than their total carryings this year.

Again I want to emphasise the experience in the United States of America, when jet aircraft went on to the internal air routes. With the advent of the jets, there was brought about an enormous increase in the total number of people who wanted to travel by air, such an increase that, not merely were the jets fully occupied by air travellers, but all the propeller-driven aircraft on the same routes were also fully occupied and companies who, fearing the competition of the jets, had grounded their propeller aircraft had to bring them back into service. The belief is that with this new major development in the technique of air transport operation, more and more people in the United States of America are deciding to take a holiday in Europe next year, coming here by air, and that there will be such an increase in the traffic potential that most of the operators still compelled to use propeller-driven aircraft in that year will be able to attract a growing volume of business.

If the Taoiseach is finished with that aspect, will he clarify this for me: If the Taoiseach is right in believing that he will make a profit, then, of course, we would all agree with him. The difference between us is that some of us think he is going to make losses. He thinks he will make a profit. If it is a profitable transaction, manifestly, he is justified in taking it but, if it is a profitable transacton to operate into Shannon, why did T.W.A. or Pan-Am or one of these others not provide these services themselves?

That is not quite the question. One does not know what factors may have operated in the minds of the management of those companies. I cannot even say that they would not have provided the service. I think it is extremely likely that, if we had given an undertaking never to come into competition with them, we could have arranged with some company to provide a service into Shannon but one would not like to think that all the potentialities of that trade to the country would depend solely upon the goodwill of a foreign company and its capacity to make profits out of it. May I say this, however, that the estimates I have given as to the outcome of this operation are not my estimates? They are those given to me by the management of Aerlinte and represent their conservative calculation.

Deputy McGilligan asked me had any expert advised me to get on with this transatlantic air transport development. When I became Minister for Industry and Commerce in 1952, resuming after the first Coalition Government, the Aer Lingus Board came to me and expressed the view that the future of the Aer Lingus services required the establishment of a transatlantic service. They urged me then to plan for the development of transatlantic services on the lines which we had contemplated in 1948. In the financial circumstances of that year, I had to tell them that we could not undertake it and, while Deputies will know that we attempted to reorganise the transatlantic air service and to get it going with chartered aircraft at that time, because of certain difficulties that emerged, we did not succeed.

When I resumed office in 1957 the Aer Lingus Board came to me again and said that it was essential to the future success of Aer Lingus that there should be a transatlantic air service. Deputy McGilligan asked me what expert advice I have. What other advice should I look for? That decision to come to me and to press that policy on the Government was based upon their expert calculation and, indeed, it is worth mentioning that, up to date, an average of 20 per cent. of the passengers who travel eastward on the Aerlinte service are booked for destinations further in Europe and carried to these destinations by Aer Lingus.

Deputy Russell spoke about the possibility of Airlinte operating from New York to Shannon and then on to some other destination in Europe. That would be an ideal situation. There would be no question about that being profitable—it would be a veritable gold mine. But that would be the type of facility which it is extremly unlikely that other countries would be willing to give us. It is known as the sixth freedom right—the right to operate from one foreign centre to another and it is very rarely granted. Deputies will have seen that the United States Government quite recently refused that facility to Britain's BOAC. That happened within the last couple of months. I do not think that we can hope to get that facility. I agree that Aer Lingus should give serious consideration to traffic potentialities between Shannon and European destinations. These possibilities must be there and they may certainly develop when the Cork airport is in operation and there is a further pool of traffic to be tapped in the operation of such services.

Deputy Dillon misunderstands the position in regard to Shannon airport. I do not know what information was given to the Committee of Public Accounts but the revenue surplus of the airport last year was £100,000. I might make a calculation based upon a return on the capital investment and provision for depreciation, which might show a different result. I am talking of the cash account which shows an excess of income over outgoings of £100,000. There was a deficit on the operation of Dublin airport but the overall figures for the two airports show a cash surplus.

Certain information has already been gathered by Aerlinte as a result of its operations to date. One piece of information is that the pattern of traffic over the North Atlantic has become much more seasonal in character than it used to be. There is a heavy flow of traffic from West to East, say from the beginning of May to somewhere around the early part of July. Then there is a slack period which is followed by a heavy flow of traffic in the other direction. One of the advantages which Aer Lingus envisages from the availability of jet aircraft is that that hiatus in the middle of the transatlantic season can be used by putting the jet aircraft on European routes. They contemplate the efficient utilisation of some of these aircraft on some of their European services which tax their existing equipment during that period. In that way they can get a more profitable utilisation of all their equipment over the whole year.

By operating jet aircraft at turbo-jet fares?

Not necessarily. I do not know the answers to details of that kind but that possibility of making additional use of the jets during the high summer season is much in the mind of the company. It is to be assumed that the volume of traffic during the winter months will be much smaller and during that period the overhaul and redecoration of the aircraft will be undertaken.

I know that in this matter we cannot come to the House with a guarantee of success. It is not the same thing as calculating for the production of turf briquettes against a known demand. To a large extent the business which this company will secure will have to be generated by itself but there is no reason, in our experience and in that of other operators and on the information available to us, to assume that it will not develop along the lines I have indicated to the point at which it will be collecting a cash profit as well as giving to the country the other considerable advantages which I have outlined.

Does the Minister mean that the overflying of Shannon by the other companies will mean that Aerlinte can syphon off Irish travellers that are at present dropped at Shannon by TWA and Pan American?

Aerlinte have been getting 40% of the number of passengers who want to travel to Ireland. The other 60% are carried by other air companies that run scheduled services into Shannon. It is assumed that the number will continue to expand on all lines but that Aerlinte will still have only 40 per cent of the traffic and the other 60 per cent. will continue to go to the other companies. If Aerlinte did not operate that route the companies which now carry that 60 per cent of the traffic might decide to drop them in London, letting them travel on to Ireland by other means. It is the knowledge of the availability of Aerlinte services flying into Shannon that is I believe going to force these other companies to continue to operate their own services into Shannon so that in that way they may retain their 60 per cent.

Can the Taoiseach tell us of the transatlantic companies that pay a profit.

They all pay a profit. Look up the records.

I cannot give precise information but my recollection is that what Deputy Briscoe has stated is correct. Some American companies found themselves last year in the financial difficulties which I have mentioned. The fact is that they now have to incur very substantial outlays upon the purchase of new jet aircraft before they have written off the obsolescent propeller-driven aircraft. Any financial difficulties I heard of arose out of that and not out of the inability to make profits on the operations of their services across the Atlantic..

Have they not all got oil wells behind them?

Maybe we shall have them, too.

Not if we give them away in the way we did.

Question put and agreed to.
Committee Stage ordered for Tuesday, 21st July, 1959.