Dáil Éireann debate -
Tuesday, 1 Mar 1983

Vol. 340 No. 7

Air Companies (Amendment) Bill, 1983: Second and Subsequent Stages.

Question proposed: "That the Bill be now read a Second Time."

Minister for Transport (Mr. J. Mitchell)

The Bill is essentially an enabling one which will allow the Minister for Finance to increase the State shareholding in the air companies by up to £60 million and to increase from £75 million to £150 million the State guarantee limit for borrowings by the companies. State equity investment in the air companies at the present time is £43.6 million and, subject to passage of the Bill, it is the intention of the Government to subscribe an additional £30 million by way of equity over the next 12 months, £15 million before the end of the present month and the other half before 31 March 1984.

The Bill has to be seen as part of a comprehensive package designed to bring the air companies back to profitability as soon as possible. Action by the airline itself and certain cost alleviation payments by the Exchequer are other elements in the overall package. I should, perhaps, point out that, apart from some timing changes necessitated by the fact that introduction of the Bill was interrupted by the dissolution of the 23rd Dail, the financial re-structuring package is along the same general lines as that announced by my predecessor in July 1982.

It is over four years since legislation relating to the air companies last came before the House. Since the Air Companies (Amendment) Bill, 1978, which also provided for an increase in the State's shareholding in the air companies, was discussed, the aviation industry has passed through traumatic times. We have witnessed the demise of such well-known airlines as Laker Airways and Braniff, other major carriers such as Pan Am have struggled for survival, while the aviation industry world-wide has recorded losses of unprecedented proportions.

The situation is still grim. To put the position of Aer Lingus in its proper perspective, it is interesting to note what Mr. Knut Hammarskjold, Director General of IATA (International Air Transport Association) had to say about the state of the air transport industry in the course of the association's most recent annual general meeting. Mr. Hammarskjold pointed out that preliminary estimates for 1982 indicate that the combined loss for IATA carriers in their international scheduled operations will be more than two billion dollars and that collectively these carriers had lost money every year since 1979.

The main factors causing serious financial problems for the world's airlines have been the severe economic recession, which in recent years has affected the entire western economy and caused a slump in tourism and in travel generally, the effect on airline costs of inflation, fuel cost escalation, high interest rates, volatile currency exchange rates, and general over-capacity, particularly on the North Atlantic, which has led to severe competition for traffic and unremunerative fares structures.

In the year ended 31 March 1982 Aer Lingus returned a net loss of £9.2 million. This followed a net loss of £13.6 million in 1980-81. These figures are in stark contrast to a net profit of over £4 million in 1979-80 and a general record of profits through the seventies. Indeed, lest the profitable record of Aer Lingus be overshadowed by its current difficulties, I think it only fair to point out that in the 20 year period from 1960 to 1980, Aer Lingus made profits in all years except four. This was a record matched by few national airlines. However, this record could not be maintained due principally to a dramatic deterioration in the economics of the airline's North Atlantic operations.

While the company's North Atlantic service has traditionally been a loss maker, profits from its European air transport operations and more particularly from its ancillary activities, such as aircraft overhaul work, helicopter operations, hotels, computer services etc., have over the years helped to cushion the results of the Aer Lingus-Aerlínte group as a whole. The scale of the 1980-81 losses, coupled with an assessment that 1981-82 would be little better, changed that situation utterly and left the airline facing major problems. At the heart of those problems was the question of continued operation on the Atlantic.

Aerlínte has lost money in each year since 1971 on its North Atlantic operations and accumulated losses on those operations as at 31 March 1982 exceeded £63 million. The problems of the Atlantic have now become endemic and all airlines are suffering from them. Indeed, in the year 1981 total published losses incurred by the airlines on the Atlantic amounted to $400 million and a figure of much the same magnitude is estimated for 1982. Excess capacity and uneconomic pricing have inexorably brought heavy losses in their wake.

Governments on both sides of the Atlantic have for some time past recognised the need to bring a degree of stability back into the market and, while some steps have been taken along that road, in a situation of deep world recession and excess aircraft capacity it would be unrealistic to expect an immediate about-turn from the uneconomic pricing policies that have plagued the airline industry in recent years. If anything, the events of 1983, as they are unfolding, suggest that the road to recovery will be a very long haul indeed.

For Aerlínte the problems of an Atlantic operation are particularly acute. The smallness of the market, affecting economies of scale; seasonality, affecting the ability to employ aircraft adequately on a year-round basis; and low average fare, arising from the dominantly tourist as against business nature of the Irish market, are factors which inescapably make the Irish carrier's role especially difficult. Against this background of continuing heavy losses and inherent difficulties in its operation, Aer Lingus concluded, following a review of its strategic position with the help of management consultants, that without some additional State investment it could not maintain Atlantic operations.

The fundamental question, therefore, had to be faced: should Aerlínte continue to provide an Atlantic service or should the presence of the national carrier on the route be terminated? An expert group, comprised of representatives of my Department, the Department of Finance, the Department of Trade, Commerce and Tourism and Aer Lingus addressed that question and the related financial implications.

The review group looked at the main factors in the deterioration of Aer Lingus's financial performance, examined the scope for cost reduction measures within the company and reviewed the role of the ancillary activities and their contribution to the company's finances. The group looked in detail at the future of the North Atlantic service, having regard to its contribution to the economy generally.

The review group's examination revealed that in the short term at least there would be very little difference between the operating loss returned by the airline with its full range of trans-Atlantic and European services and the loss anticipated with North Atlantic services closed down. This situation arises from the fact that, in spite of 1,500 immediate redundancies which would arise with an Atlantic closedown, a large element of costs currently shared between the trans-Atlantic and European operations would remain after an Atlantic close-down, thus pushing up significantly the costs of the European operation, rendering that operation unprofitable.

In the course of its assessment of the value of the airline's trans-Atlantic operation to the economy generally and the implications of cessation of services by the only carrier on the route with a commitment to providing a service on a year round basis, the review group consulted with representatives of the various agencies concerned, including Aer Rianta, Bord Fáilte, SFADCo, Córas Tráchtála and the IDA. The group found that, apart from the very substantial loss of employment involved — 1,500 jobs — the withdrawal of the Aerlínte service would prove damaging to many sectors of the economy including tourism, trade and commerce. I should perhaps mention that this view was generally shared by the agencies consulted by the review group.

While continuation of the North Atlantic operation was not seen by the group as being justified on strictly commercial grounds, even though closure would significantly disimprove the economics of the European operation, the group's assessment of the contribution made by the service to tourism, trade, industrial development, Shannon Airport and the Shannon region generally indicated that a recommendation in favour of termination of the service would be difficult to justify.

It was on the basis of all these considerations that the last Government, in considering the financial position of the air companies in July 1982, concluded that it was essential from a national viewpoint that the airline should continue to provide a scheduled trans-Atlantic service, a decision recently reaffirmed by the present Government, which also accepted the need for further State investment in the air companies.

The immediate problem is that arising from losses in the past the balance sheet of the air companies' consolidated operations bears an unsustainable level of debt relative to State equity. As of March 1982 the ratio of debt to equity was 88:12 and the interest bill in the year 1981-82 was in excess of £12 million. This is an unacceptable position for a company which is engaged in international commerce.

In examining the need for further investment in the air companies the Government have had to take into consideration not alone the particularly difficult financial position of the Exchequer but also competing claims for equity investment from other State companies, some of which are also in the transport sector. It is against that background that the Government have recently confirmed the former Government's decision to invest £30 million equity in the air companies by 31 March 1984.

The Bill to provide equity is only one part of a thoroughly researched and comprehensive proposal to restore as soon as possible to viability the finances of the national airline. There is no question that losses will be tolerated indefinitely or that there is unlimited Exchequer support available. Action by the airline itself is, therefore, an essential element in the overall plan to improve its financial performance.

An area in which Aer Lingus has been remarkably successful has been the development of profitable ancillary activities to balance the losses which the company has incurred on its air transport operations. Over the years operating profits, before interest and tax, from ancillary activities have grown from £4 million in 1973-74 to over £18 million in 1981-82. In net terms the 1981-82 profit after all charges amounted to some £12 million. The success of Aer Lingus in these ancillary areas of providing services to other airlines, hotel management and financial and computer services is an example of the dynamism which the Government expect from State enterprises. These activities provide profits which have helped to sustain basic transport operations. Without them a serious crisis in the airline's finances would have occurred long before now. In addition, they help to provide and sustain significant employment in Ireland.

It is, of course, the essence of commercial risk-taking that some investments may not come up to expectations. The Government, therefore, expect Aer Lingus to keep under continual review all the individual components of its investments with a view to ensuring that they are earning an adequate return. I know that this view is shared by the board of Aer Lingus. Moreover, in the present circumstances there are limits on the amount of finance which the Exchequer can make available to the airline. In that situation, it is reasonable — and I know that the previous Government were of the same view — that the company should make the maximum contribution which is commercially prudent from its ancillary activities towards the resolution of its present problems.

I want to emphasise, however, that it is not Government policy that Aer Lingus should disengage from its ancillary activities. It would be a very short-sighted strategy to dismantle the ancillary activities programme and forego the profits that the programme can continue to generate. A continuing, and hopefully growing, flow of profits from an ancillary activities programme, constructed and operated within the constraints of the airline's own resources, can help to ensure that Aer Lingus continues as a self-sufficient airline to discharge its mandate to provide air transport services on cross-Channel, European and North Atlantic routes.

Action is also being taken by Aer Lingus with a view to improving efficiency and reducing costs in every aspect of its operations. Undoubted progress is being made on this front, but with the recession continuing and constant pressure of competition, Aer Lingus must be relentless in cutting back expenditure wherever possible. I fully appreciate that such necessary action can, of course, affect certain routes. Indeed, Montreal and Chicago have already had to be dropped from the company's scheduled passenger network. The B707 fleet was retired as its economics disimproved. Operating patterns have had to be modified to realise savings. Substantial savings in fuel consumption are being achieved and new technology is being introduced.

I am aware of the considerable progress which Aer Lingus has made over the past two years in reducing staff numbers. While consultants' reports have made it clear that Aer Lingus is in line with industry norms of productivity for airlines of its size, the financial pressure which it is facing and the drastic measures being taken by its competitors to reduce their unit costs are such that further improvements are clearly necessary. It is clear that our State companies which operate in international markets can only continue to be successful if their unit costs are as low as or lower than those of their competitors. Sustainable jobs of long-term value to the community can only be maintained within a framework of commercial viability. For this reason, I strongly support the efforts of Aer Lingus to streamline its operations further by reducing supervisory structures and simplifying work practices. Considerable progress has already been made but Aer Lingus itself is fully aware of the need to do more to enable it to return to profitability as quickly as possible.

When these various elements — equity investment by the State and the measures being taken by the airline itself — are combined the unfortunate fact remains that Aer Lingus will still be in difficulty at least until a much more favourable environment is restored on the Atlantic route. In that situation, and bearing in mind that accumulated losses on Atlantic operations give rise to an interest bill of the order of £7.5 million a year, the Government accept that some temporary support in respect of the commitment to continue Atlantic operations is called for. Payment of £5 million a year for a three-year period between 1983 and 1985 by way of cost alleviation to Aerlinte accordingly forms an integral part of the overall financial restructuring package. Provision for payment of the first £5 million instalment is included under subhead S of the Transport Vote in the current year's Estimates, which I understand the Dáil will take this week. I must stress, however, that this cost alleviation is a temporary measure to help the airline during a period of particular difficulty. As such, it will, I believe, help the airline's finances without interfering with the commercial ethos of its operations.

There is one other aspect of the North Atlantic situation to which I must refer and that is the position in relation to charter traffic from the United States this year. Deputies may have seen recent press reports on this subject and I would like to take this opportunity to clear up any misunderstanding which may exist.

First, let me say that the Government welcome US charters and see them as having an important role to play in ensuring that the needs of Irish tourism are adequately served, particularly in the peak season. Any assessment of charter activity must, however, also take account of the basic need to provide the framework for comprehensive, reliable year-round air services at the lowest possible economic prices to meet the growing requirements of trade, commerce and tourism between Ireland and the US. Excessive charter capacity can very easily destabilise the market for scheduled carriers with a commitment to providing year-round services. This can be particularly the case when the charter capacity is provided at what can only be termed opportunistic, or indeed predatory, fare levels. It is against that background that I have had to examine the position as it was emerging on the charger front this year and take certain decisions which I will now recall for the benefit of the House.

In examining charter programmes submitted in accordance with my Department's charterworthiness rules up to 31 January 1983, I reviewed the overall market situation and concluded that for the New York and Boston gateways, filed programmes, coupled with the services provided by the three scheduled service carriers, would provide ample capacity for the coming summer.

Accordingly, I approved the programmes before me at that time. These programmes provided for a doubling of the number of charter seats that could be offered, as compared with the 1982 level of operations, and for a 50 per cent increase during the peak months June to September. In approving that scale of increase, I am satisfied that there is ample scope for growth in tourist traffic between the US and Ireland in 1983. In that regard, Deputies will be aware that Bord Fáilte have set themselves a target of a 5 per cent increase in tourist numbers from the United States this year.

The charter programmes will be operated on Pan Am aircraft by Round Tower/Old Country Tours, the largest tour operator in the United States specialising in the Irish market, and by International Weekends, a large Bostonbased tour operator which has brought visitors to Ireland for many years. The approved charter programmes are attractively priced and, taken in conjunction with the extremely keen fares being offered by the three scheduled carriers serving the US—Ireland market — Aer Lingus, Northwest Orient and Trans-America — should go a long way towards helping Bord Fáilte to attain their 1983 target. Indeed, I should also mention that Pan Am charter operations played a significant part in the turn-around in Shannon Airport's fortunes last year, and the increased charter activity now authorised should help to further strengthen Shannon's performance during the current year.

I have referred already to the destabilising impact that excessive charter capacity can have on the overall market. Accordingly, when approving the increase in charter activity which I have already described, interested parties, including a number of US airlines and tour operators, were notified that summer 1983 charter programmes beyond those duly filed and approved by me would not be authorised from either New York or Boston into Ireland. That decision, I might add, was taken only after full consultation with the State agencies involved in the promotion of tourism to Ireland, all of whom acknowledged that the decision was necessary in the best interests of Irish tourism and the development of Shannon Airport.

I am satisfied that without this regulatory action considerable damage could have ensued, damage which would not only have aggravated Aer Lingus' already serious financial problems on the Atlantic but might also have undermined the commitment of the US carriers to continue providing scheduled services to Ireland.

Some press reporters have suggested that my decision also affects charters from Chicago. That is not the case. Charters from Chicago, or indeed any US point outside the gateways of New York and Boston, are not affected by my recent decision.

Before concluding, I should like to say a few words about Aer Lingus' current traffic performance and prospects. Traffic for the year ending 31 March 1983 continues to show the effect of the recession and, for the third year running, cross-Channel air traffic is down compared to the previous year. Continental traffic has shown a fall of some 1 per cent. In traffic terms, the Atlantic is the only bouyant sector, with Aer Lingus achieving a growth rate of 3 per cent in 1982. The year ahead is seen by Aer Lingus as another difficult one. In financial terms, and taking account of the various measures to which I have referred during the course of this speech, the position is, however, somewhat more promising with Aer Lingus hopeful of reversing the loss-making results of recent years.

The financial package which is now being put together was developed after an exhaustive analysis of various options by the review group to which I have already referred. I recognise that the package still leaves the airline with a formidable task in endeavouring to return to profitability. Such a return is vital, not only in terms of the next few years, but also so that the airline can begin to face the major question of fleet replacement in the later half of the 1980s.

I express my thanks to Deputy Wilson and the Opposition for agreeing to take all Stages of this Bill today.

I commend the Bill to the House.

Mr. Wilson

This is my first opportunity to welcome the Minister and wish him well as Minister for Transport. The ministry has become a fairly difficult one and part of the reason for that difficulty is apparent from the Minister's speech. I appreciate what the Minister said that in essence this is the Bill which I got ready for the House when I was Minister for Transport. I had hoped to take it in November 1982.

There is hardly any semi-State company which has attracted more pride from Irish people at home and abroad than Aer Lingus has from its inception and throughout its period of development. Those Members of the House who have good taste in literature and read our programme The Way Forward will see that in our projected programme for the five years ahead we said we intended to commit semi-State companies to an appreciation of commercial criteria in their activities. The Minister reiterated that in his speech. It is important not to stand back from that. Ideologically it does not mean that there will be less commitment to the semi-State sector nor is it a move away from semi-State to privatisation, but it is an effort to apply strict commercial criteria to the activities of semi-State bodies so that the State will benefit from increased productivity and competitiveness.

As the Minister outlined in his speech the nub of the financial problem is the North Atlantic operation. It is true that Laker and Braniff are no longer able to operate this route because of the cost involved. It is also true that charters put pressure on Aer Lingus. As the Minister said Trans-America and Northwest Orient fly the North Atlantic route as competitors of Aer Lingus. Air Florida was not mentioned by the Minister for obvious reasons. In relation to charters the ideal situation as far as Aer Rianta and Bord Fáilte are concerned would be total freedom for all charters to fly in as many people as possible. That approach is too simplistic. There must be regulation of the charter business; otherwise scheduled business would fall by the wayside.

Falling traffic has been a serious problem although I heard the Minister say that on the North Atlantic route Aer Lingus improved last year. We had strikes in 1978 and 1980 which damaged Aer Lingus and Aerlínte. The Minister mentioned the huge interest which has to be paid on borrowings. There are factors which damaged the service such as the deregulation in the United States. Basic to the whole problem is the international economic recession. We are told that in the US there may be a little economic uplift. However, we have heard it so often now that a wise man would wait and see whether it is justified.

The Minister mentioned the heavy cost of fuel. This has been a factor in all transport operations for some time. There seems to be some justification for a little optimism in this regard. Fuel costs seem to be on the verge of dropping. I ask the Minister to indicate whether his colleague, the Minister for Finance, will pass on to Aer Lingus and Aerlínte the full value of any drop in fuel costs which we may have in the period immediately ahead.

The decision to provide additional equity for Aer Lingus was made in a certain framework. The years to be covered were 1982-83, 1983-84 and 1984-85 in the arrangement I had envisaged with £10 million equity investment to cover each of those years. I understand from the Minister that what he is doing is providing £15 million in the year ending 31 March 1983 and £15 million in the year ending 31 March 1984. The amount of money involved is the same but due to unfortunate errors on the part of the Irish electorate this money was not made available in November 1982. Consequently the Minister is providing £15 million for the current financial year which for Aer Lingus ends on 31 March. The provision of £60 million for an increase in share capital is something which the law indicates may be subscribed by the Minister for Finance. The increase of £75 million in the State gurantee limit for borrowings for air companies was also included in my proposals for Aer Lingus at that time.

The Minister commended Aer Lingus and rightly so for their involvement in ancillary activities. He praised the company for having made profits in those areas which were used to sustain their general activities. I know there was controversy about the extent to which air companies should be involved and the extent to which they should realise some of their assets with regard to ancillary activities. When in office my general principle was that what was providing a good return on capital and profit for the company should not be interfered with. There was some question about the disposal of two particular assets, the Foxhills and Tenerife, and some talk about Guinness Peat investment. I fully realise the delicacy of this matter and that if the company were regarded as being under pressure from the Government to dispose of these assets, purchasers would be in a very strong position to buy perhaps at prices far below the value of the assets. I would like the Minister to indicate what is happening along these lines. I am sure that the combined wisdom of the Minister and his Department will ensure that no action will be taken which would in any way lower the price that might be available to the company for their valuable assets which they have decided to dispose of.

The Minister might also mention something about the federal express project which I have not heard about for some time. It was regarded, more by Aer Rianta than Aer Lingus, as a possible source of substantial profit. I would also like the Minister to indicate if he has any thoughts beyond 31 March 1984 because, in the terms of my own proposals, there was, as the Minister knows, a three-year span. Admittedly, there was a certain loss in the interest involved through the money not being made available at the end of 1982. Current cost alleviation has been mooted for some time and I had made a decision on it. I was going to make available £5 million in 1983, £5 million in 1984 and £5 million in 1985. Aerlínte-Aer Lingus were very anxious that the whole idea of subsidy should be excluded from consideration with regard to those companies. If my memory serves me right the provision of the £5 million was connected with certain extra costings which Aer Lingus had to endure, the provision for Dublin and Shannon landings, for example. There may also have been a fuel factor involved; I am not sure. Perhaps the Minister would indicate whether the current cost alleviation provision is linked to that type of cost because, as far as the ideology is concerned, it is helpful if that is so, the views of Aer Lingus being what they are with regard to the danger of being subsidised. Perhaps the Minister could also indicate the source of this finance. Is it Exchequer, internal or external financing?

I welcome the Bill which, with the exception of the one change of allocation of resources in two years instead of three, is fundamentally the Bill which I was preparing for the House. The Minister has rightly commended Aer Lingus for having made a profit from 1960 to 1980, with the exception of the four years he mentioned. At that time we were extremely proud of Aer Lingus and their achievements. There used to be a story of a British Airways pilot buzzing one of our pilots on the North Atlantic route asking what was keeping him as he passed him out. The Aer Lingus pilot replied: "Pass out, we are carrying a full load". This was an indication of the buoyancy of business at that time.

Perhaps the Minister would also like to refer to the Airmotive, the venture that Aer Lingus had so much hopes for. I gather, from my time in the Department of Transport, that the signs were hopeful then. Since then I read in a newspaper article that this venture has run into difficulties. I do not know what credibility to give to the article. I am naturally and basically sceptical about statements like that so I would be grateful to the Minister if he indicated what the position is now.

The loss on the North Atlantic operations is very serious and is causing headaches to Aer Lingus-Aerlínte and to the Department of Transport and, seemingly, will continue to do so. We have already mentioned the deregulation, the competition from other airlines on the North Atlantic route and also the problem of chartered planes. These are all part of the picture. There are matters of national prestige although they do not rate very highly in the commercial world involved in maintaining the service. Nevertheless, it is wise to indicate to Aer Lingus-Aerlínte that the strictest commercial criteria that can operate, considering the difficulties, should apply in this case so that it would be known that the taxpayer, while investing in Aer Lingus-Aerlínte's operations on the North Atlantic for various reasons, including national prestige, will get the very best value for money in a very difficult market. I do not think any economist is capable of disentangling all the factors of profit and loss in such an operation.

Bord Fáilte have a very strong interest in the maintenance of the North Atlantic service. It is impossible to quantify the benefits to tourism from that operation. The Industrial Development Authority, apart again from national prestige and the advertising value of having a national airline operating in an area where we are trying to attract investment, find it hard to quantify what it means in terms of industrial development and the attraction of capital for investment here.

The Minister mentioned the review group and that they had looked at the future of the service having regard to their contribution to the economy generally. I cannot see how anybody could have the multi-faceted expertise to decide succinctly and exactly what profit they bring to the country but all the agencies are in agreement that, as a national airline operating on the North Atlantic, it is very important for them in the various activities to which they are committed. On strictly commercial grounds it has been said that we cannot justify in any way the continuation of the service but, taking everything into consideration, we must maintain it. I think that the Minister's proposals in the Bill are at present the only way that we can do that.

The parlous debt-equity ratio will be remedied somewhat by the provisions of the Bill. The problems will not be over when this Bill is passed and the money made available. Nevertheless, the Minister has provided the company with some of the equipment to help to maintain their system over this very difficult period. The facts and statistics are given and the House will agree with the Minister in what he is doing not merely for the company themselves but for the other agencies who benefit by its continuation.

I would like to ask the Minister about the B.707 fleet. He stated that it was retired as its economics deteriorated. I would like to know the present position. Has the fleet been disposed of, and, if so, at what kind of figure? Again, the question of employment is a serious one and it is serious in our economy in general, and in order to improve the company's competitiveness there has been a reduction in staff numbers. The Minister will agree that improvement in competitiveness is a laudable objective and the reduction of unit costs is very important in order to be able to continue with the operation, but there is a limit to the application of that criterion also. Commercial viability, to which we have attached great importance in our programme for the five years coming up, is very important but it is not the only consideration to be taken into account.

I am sure that some Members of the House will have more to say about the charter operation. I have stated my views on it. We have the position of Bord Fáilte and Aer Rianta attempting to get as many landings and customers as possible on to our soil and we must balance that against the requirements of Aer Lingus who are committed to keeping a scheduled service on the Atlantic throughout the year. The Minister has made clear that in the action he took about charters he is not in any way discouraging any chartering from Chicago or other areas in the US and I am glad to have his assurance in that regard.

Finally, I am pleased that this has come to the House at this time and that the Minister, apart from the allocation of the money in packages different from the ones I had intended, has stuck to the policy reached by me as Minister and by the Department in consultation with other Departments and with Aer Lingus themselves. The goodwill of this House has always been available to Aer Lingus as our national airline company and that will continue to be so. I endorse the Minister's remarks which I take not merely to be a statement of fact but also an encouragement to Aer Lingus to improve their profitability for the benefit of their own company and of the taxpayer and to provide a good, competitive, efficient service which in commercial terms will be good for this country and also from the point of view of national prestige.

Dá bhrí sin cuirim fáilte roimh an Bhille seo. Déanfaidh mé mo dhícheall chun cuidiú leis an Aire an Dara Léamh seo a chríochnú agus an Bille iomlán a chríochnú an tráthnóna seo.

Mr. O'Donnell

Ba mhaith liom, ar an gcéad dul síos, mo chomhgháirdeas a ghabháil leis an Aire as ucht a cheapacháin mar Aire Iompair. Is é seo an chéad ócáid a bhfuil deis agam labhairt go poiblí san Dáil nua agus guím rath Dé air agus ar an saothar atá roimhe. Chomh maith leis sin, ba mhaith liomsa mo dhea-ghuí a léiriú leatsa, a Cheann Comhairle, as ucht do cheapacháin.

Is Bille an-tábhachtach é an Bille seo agus tá áthas orm go bhfuil an deis seo agamsa labhairt ar an mBille tábhachtach seo chun níos mó airgid a chur ar fáil do Aer Lingus chun go mbeidh siad in ann leanúint leis an obair thábhachtach atá á déanamh acu agus chun cúrsaí cumarsáide agus aer línte a chur ar fáil idir an tír beag seo, na Stáit Aontaithe, an Bhreatain Mhór agus an Mór Roinn. Aontaím leis an Bhille seo agus ba mhaith liomsa mo thacaíocht phearsanta a léiriú don Aire as ucht an airgid atá á chur ar fáil aige do Aer Lingus. Ba mhaith liomsa chomh maith mo chomhgháirdeas a ghabháil le Aer Lingus de bharr an chaoi in ar éirigh leis an comhlacht Stáit seo leanúint ar aghaidh agus aer seirbhísí a chur ar fáil i measc deacrachtaí an-mhór ar fad a bhí ag brú isteach orthu ar feadh cúpla blian anuas.

I am glad to have this opportunity of contributing to this debate and of supporting the Bill which has been introduced by the Minister and which will allow the Minister for Finance to increase the State shareholding in the air company by up to £60 million, and to increase from £75 million to £150 million the State guarantee limit for borrowings by the company. Also the State equity investment which at present is £46 million will be increased by an additional £30 million.

At a time of severe financial stringency naturally people who are not familiar with the airline business perhaps do not realise the enormous difficulties which have confronted Aer Lingus and every air company particularly in recent years due to the world economic recession, escalating oil prices and continually increasing costs.

The basic fundamental argument in favour of the State continuing to support the national airline is the fact that we are a small island country on the periphery of Europe and, therefore, the provision, maintenance and continuation of air links between this small country and the continent of North America, Britain and Europe is vital and fundamental to our economic development and social progress. We are a small island country, vitally dependent on exports, modern trade and tourism, and in this modern age air services are a sine qua non for the conduct of business and the development of industry, business, trade, commerce and tourism. While the balance sheets and annual reports or Aer Lingus, the national airline, in recent years showed increasing losses and on the face of it would be a cause of concern for this Parliament, nevertheless when one looks at the performance of the national airline over the past few years against the enormous problems that have confronted this company and the aviation industry all over the western world, we must admit that Aer Lingus have had a remarkable degree of success. I fully support the measures proposed by the Minister and I hope that the financial provisions will be adequate to enable Aer Lingus to overcome the enormous difficulties confronting them. The greater part of the problem is due to factors outside the control of the company and the Government.

The advent of deregulation in the United States has led to utter chaos, particularly on the North Atlantic. It has led to a free-for-all situation, a drastic reduction in air fares and the inevitable collapse of a number of air companies. The most notable pioneer of low fares on the Atlantic, Freddie Laker, is regarded as having revolutionised the whole concept of air travel but he went too far. It is easy to advocate the reduction of fares to totally uneconomic levels as Mr. Laker did, but it has led to many problems. Following the decision 18 months ago by Icelandic Air to terminate their scheduled transatlantic services, the president of that airline said that the law of the jungle operated where strong airlines were killing the weak. This has been the exact position during the past couple of years.

I agree with the analysis outlined by the Minister and also with the findings of the review committee who have examined the matter. The question will continue to be posed as to whether Aer Lingus should continue with their Atlantic services, despite the enormous losses incurred. I believe our national airline must be allowed to operate on the North Atlantic. The chaos created by deregulation is forcing the American authorities to reconsider. The world economic recession which has had such an enormous impact on aviation will not always be with us. A decision to terminate the Aer Lingus transatlantic service would be short-sighted and would not be in the national interest. It would be detrimental to tourist traffic and the promotion of business between the North American continent and this country.

I fully support the concept of ensuring that we have the national flag carrier operating on the North Atlantic. They should be supported during this time when the law of the jungle is operating. Nevertheless, there is one important matter we must face. The transatlantic services land at Shannon and Dublin. While I have had the privilege of being a member of the European Parliament I have had occasion to catch the morning flight from Shannon to Dublin to connect with Brussels or elsewhere. The Aer Lingus Boeing 747 lands at Shannon: some passengers disembark and the remainder continue to Dublin. I do not know the exact figure but I believe that on average 60 per cent or 65 per cent of transatlantic passengers embark or disembark at Shannon. A massive Boeing 747 flies between Shannon and Dublin only one-third full. There has been much controversy about this fact during recent years. Two years ago Captain Hill of the Irish Airline Pilots Association flew a kite and advocated that Shannon should be by-passed. A certain lobby in Dublin have been making this case. Deputy Sylvester Barrett and Deputy Daly will agree that we have heard the flimsiest excuses in support of the claim that Aer Lingus should overfly Shannon, such as that the winds are marginally dangerous or the visibility might not be very good. In considering the loss-making transatlantic services we must recognise that the services should be turned around at Shannon. Shannon should be the transatlantic terminal. All the economic evidence supports this case and I challenge anybody to refute it. I have made this point during every debate on aviation in the past 20 years.

Smaller aircraft should operate between Shannon and Dublin, Belfast, Cork, Waterford and other smaller airports. The transatlantic services should be based at Shannon with a proper system of feeder services. This is the logic we must face and I hope the new Minister will look at it objectively and get an independent assessment of the economics of it. I believe a saving of £1 million could be effected. There are massive costs involved in a Jumbo jet taking off at Shannon every morning en route to Dublin with possibly only 100 passengers. A small aircraft such as the Boeing 737 would be adequate and other aircraft could be used to link with Cork and elsewhere. I have spoken on this subject on many occasions but the arguments in favour of this suggestion are stronger and more convincing now than ever.

I now turn to the question of regional air services. Aer Lingus have made a massive contribution directly and indirectly to our economic development, particularly through tourism. A cost-benefit study will show that the direct and indirect contribution by Aer Lingus to the development of tourism was impressive, but on the other hand the company has not shown a proper commitment to the development of regional air services and services between our regional airports and airports in Britain and Europe.

Aer Lingus made monumental blunders in regard to the development of such air services. When Deputy Lenihan was Minister for Transport and Power between 1969 and 1973 — at that time I had the privilege of being spokesman for Transport and Power for my party — it was decided by Aer Lingus to go all jet. At that time 11 Viscount aircraft were left lying at Dublin Airport and finally had to be sold for scrap. Prior to that the company sold the Fokker Friendship aircraft. Those of us who travel to Brussels regularly are aware that most mornings we must go via Amsterdam because there is no direct flight due to an unfortunate ongoing dispute between Aer Lingus and Sabena. From Amsterdam to Brussels one will travel on an F27, the inter-city hoppers operated by KLM and others. Aer Lingus had such aircraft in the fifties and sixties.

When Aer Lingus phased out the Viscount and Friendship aircraft I described it as a fatal mistake, pointing out that the company should have established a second level airline for charter and regional services, between Cork and Great Britain and near destinations in Europe. It was wrong to sell off all the turboprop aircraft and go all jet. As a result of that Aer Lingus in recent years has had to pull out of Liverpool, Cardiff, Leeds-Bradford and other UK routes. There is not any service to those UK destinations from Dublin, Shannon or Cork. It is not economic to operate a 737, 747 or a BAC 111 but as soon as Aer Lingus abandoned those routes British companies took them over using small aircraft. A very satisfactory service is being provided from Liverpool to Dublin twice daily with an aircraft capable of carrying 17 passengers.

Aer Lingus could have continued to operate on those routes had they retained their turboprop fleet. The Minister should comment to the House on a report in the Irish Independent this morning by John Healy to the effect that Aer Lingus have placed orders for a number of Shorts 330s, a small turboprop aircraft for use on cross-Channel services. That is fine, but it should have been done in 1960 because in the meantime UK companies as well as Aer Arran and Avair have developed successful services between here and the UK. After sitting back for 15 years and concentrating on all-jet routes it appears that Aer Lingus are about to purchase the small aircraft for use on routes that have been developed by other companies. If that is the case it should be stopped.

Applications by independent operators for licences to use routes abandoned by Aer Lingus have been vetoed time and again by successive Ministers because of objections by the company. The attitude was that a licence could not be given to independent operators to fly Dublin-Leeds-Bradford because Aer Lingus were operating the Dublin-Manchester route. It was felt that to give a licence for a Dublin-Leeds-Bradford service would mean that passengers would be taken from the Dublin-Manchester route. That ludicrous situation will have to be looked at. Shannon Airport is our main trans-Atlantic airport and I have advocated that Aer Lingus should have to turn around there.

I am the only Irish representative on the European Parliament's transport committee and since 1979 that committee has devoted all its time to the question of European aviation. A number of documents and reports have been produced by the Commission, the first in 1979 by the Commissioner for Transport, Mr. Richard Burke. A number of reports have also been produced by the transport committee. The question of regional air services is recognised as a vital element in the development of peripheral European regions. I regret that problems are arising in relation to Cork Airport because in the context of the development of that vast region it would be an economic disaster to downgrade it. We have never looked at the development of internal aviation services on a national basis. We have had ad hoc applications for licences for various routes and I was involved in those as Minister for the Gaeltacht during the development of Aer Arran. We have a new airport at Waterford and landing facilities at Farranfore, Ballinskelligs and other centres, including the three Aran Islands. There is also an airport at Castlebar but the airport at Galway is in need of expansion. For too long successive Ministers have looked at the development of regional airports on an ad hoc basis. I appeal to the Minister to carry out an objective study into the prospects of development of a proper internal air service and the prospects of developing further regional services into Cork, Shannon, Galway and Castlebar.

I made those suggestions because of the monumental blunder by Aer Lingus in the sixties and their decision to opt out of internal aviation development. With regard to Knock Airport I should like to state that while I was a Minister I was responsible for committing State funds for the laying of seven airfields from Donegal to Ballinskelligs and I came to the conclusion then that there was a cast-iron case for a Connacht regional airport.

Castlebar Airport, which some of my colleagues and I have used on a number of occasions, cannot be extended because the railway line is at one end and the road at the other. They should have proceeded with the Connacht Regional Airport on the basis that there was an airport development there. It should have been done on a phased basis. A runway to take smaller aircraft should have been erected and this could have been extended as the service developed. If one had a proper aviation development programme one could approach it on that basis.

While I have consistently defended the national airline and supported every Bill that was introduced in connection with the national airline, because I believe it is vitally important for the country to have essential airlinks with the major centres in North America, Britain and Europe, we must recognise the total failure of the national airlines to develop internal services and regional services. I believe they have terminated certain services — I have not got the list of them — particularly the services terminated between Dublin and other destinations. There was a service between Shannon and Manchester for a number of years.

I hope the Minister will throw some light on the question of whether Aer Lingus have now decided to buy smaller aircraft and, if so, whether they are going into competition with companies like Aer Arran and Avair who have developed those routes. I hope the Minister will be able to tell us that during his term of office he will make a comprehensive study of the development of internal aviation and also the development of regional air services between Cork, Shannon and the other regional airports we have and various destinations.

I have referred to the deregulation situation in the USA, the "Open Sky" policy, as it has been called, or "Freedom of the Skies". It is a free for all. Aer Lingus have had to contend with this. The European Parliament over the last three and a half years has been devoting continuous attention to the whole question of European aviation. During that period there has been a continuous new threat to the viability and the future of Aer Lingus emanating from the EEC because there is a strong lobby within the EEC Commission and within the Parliament in support of the application of the rules of competition of the Treaty of Rome to air transport. There has been a consistent attempt to introduce deregulation in the European aviation scene. I am the only Irish member of the transport committee but I must acknowledge the continuous solid support I have got from all my Irish colleagues in the European Parliament irrespective of what party they belong to and whatever group they are attached to in Europe. Up to this we have successfully fought this attempt to deregulate and to introduce an "Open Skies" policy. We are seriously concerned about this situation. The Irish members have briefed members of the transport committee very impressively on this matter.

I want to direct the Minister's attention, in his capacity as a member of the Council of Transport Ministers — and, hopefully, in a few years times when Ireland has the presidency he will be President of the Council of Transport Ministers — to how very important it is that he and his Department pay increasing attention to the developments taking place within the Commission in particular and within the European Parliament. The Irish members of the European Parliament will watch this development. The latest attempt now is to dismantle IATA. The former Minister for Transport, Deputy Wilson, must also be aware of this. There has been a concerted attempt to dismantle IATA on the basis that there must be more competition in European aviation, that there must be more competition between the airlines. Some go so far as to say that there should be a free for all, that any company who want to operate into Dublin, let it be Sabena or KLM, should be allowed in unrestrictedly. That has been knocked because of the disastrous results of deregulation in the USA. The latest attempt is to try to apply the competition rules of the Treaty of Rome to air transport.

We had a debate last December in the European Parliament in which a report was produced by the Economic Affairs Committee which has special responsibility vis-à-vis competition policy. In that report by a British conservative member, Miss Forster, it is recomended that IATA be dismantled and that the fixing of air fares within the EEC should be done independently of IATA. They have introduced a highly dangerous new concept which could be very detrimental to Aer Lingus — I want to draw the Minister's attention to it — a new concept of country of origin. That would simply mean that if a European airline applied for permission to operate a service into Dublin at a fare which Aer Lingus at the other end might consider uneconomic, they would be allowed to do so. At the moment, due to the bilateral agreements, under IATA regulations, the arrangements are subject to negotiation between the two countries concerned. It is very important in this matter of deregulation, of dismantling IATA and trying to apply the rules of competition of the Treaty of Rome to the European aviation scene, that the Minister puts his foot down. I have no doubt that he will do so. I am sure any Irish Minister would adopt the same attitude. The Minister referred to charters from the USA. This topic has been discussed for many years. I remember having many a battle, when I was in Opposition, with the then Minister for Transport, Deputy Lenihan. There have been many discussions about the question of charter services and applications for landing rights made by American tour operators, voluntary groups and other airlines. This has always been a bone of contention. Successive Ministers for Transport have taken a balanced view of this. I can appreciate this. It is a very important factor. It has been said that the recent decision by the Minister to refuse an application from a group in Chicago will result in a net loss of £14 million. I do not accept this. Unfortunately, there is a lot of misinformed comment about it. One has to look at the question of charters objectively and try to arrive at a balance. I believe successive Ministers have tried to strike a reasonable balance.

I believe the approach of the current Minister is of the same character. He has granted licences to a large number this year which will bring a substantial addition to tourist traffic into Ireland and particularly into Shannon. If an application for a landing licence was made by a tour operator in Chicago, Boston, New York or anywhere else, the argument was that there is adequate capacity on the Atlantic at present, but we must be very careful that, when a tour operator applies for landing rights for charters, our refusal does not result in that operator by-passing Ireland and going on to a European destination. We could lose traffic that way.

From what the Minister said, I understand there is no problem in relation to west coast destinations. Aer Lingus do not service the west coast of the United States. It was a great pity that we stopped the Chicago service. There are many Irish in that area and there has been a great influx of visitors here from that city. It was a great pity that economics, exclusively, dictated that Aer Lingus pull out of that route.

In supporting this Bill I hope Aer Lingus will be able to ride out the financial storms on the Atlantic route. Anybody familiar with aviation will realise they are fighting against enormous difficulties. I hope this additional financial subvention will enable them to survive and develop new services. I want the Minister to have a hard look at the desirability of having the trans-Atlantic services terminate at Shannon. Aer Lingus, as a national airline, will have to play their part in developing and maintaining regional air services, particularly from Shannon, Cork and any other airports there might be.

Mr. Raphael Burke

Like previous speakers I warmly welcome this Bill. Essentially it is not just an enabling Bill, but continues the commitment of the restructuring package which was accepted by the previous Government in July 1982. That involved subscribing an additional £30 million by way of equity over the coming period, and further £15 million cost alleviation payments over a three-year period. This should go a long way towards restoring the viability of our national airline.

Our national airline is a matter of great pride to all Irish men and women. We have had many failures in the semi-State area but the success story of Aer Lingus, the service and courtesy of their staff and the high rating of the airline is a source of pride to all. It is a source of particular pride to those of us who have the privilege and honour of living in north County Dublin. Many of the work force of Aer Lingus and the airport are resident in that area. It is also a source of pride for us to have seen the development of the airline and the airport over the last generation. This is vital to the economy of north County Dublin and the health of the airlines, and any measures taken by the Government to help them is of vital importance.

Lest it be thought that this Bill and the commitment by the Minister to honour the decision of the previous administration with regard to equity and current cost alleviation is a handout to our national airline, let me tell everybody that that is far from the truth. Our national airline in the 20-year period 1960-80, with the exception of four years, were in a profit situation. What has happened is that our airline have been, in the words of one of the senior management in a recent paper delivered to the Institute of Transport, in a situation of survival in a blood bath. That is the only way one could describe the present situation in the North Atlantic.

It is important to remember that Aer Lingus are wholly owned by the Irish public and their primary aim is to provide a service for the public in accordance with a commercial mandate. They are anxious to operate on a commercial basis but it is important to recognise the business environment in which they had to operate on the Atlantic in the last few years. I purposely used the word "business" because I want to emphasise that this involvement of the State today, as announced by the Minister — £30 million equity and, in particular, the £15 million current cost alleviation — is in no way to be perceived as interfering with the commercial operation and is in no way setting Aer Lingus down the slippery slope which has been taken by so many State organisations.

This Bill and the Minister's decision confirming the previous Government's decision is a recognition of the totally unique circumstances of trading that Aer Lingus have had to endure for the last few years. It is merely an effort to restore viability so that Aer Lingus can go from strength to strength. When considering this injection of State funds it is important that we look at the regulatory background and the problems Aer Lingus faced in the seventies when there was the start of the charters and the fuel crisis — and the problems faced by Aer Lingus and other carriers during the Laker period, from 1977-82 when he went bust, right up to the new US-Europe accord of 1982 which promised so much stability for the future and then dashed so many hopes.

IATA have been referred to on a number of occasions in this debate. It is important to remember that that organisation was part of the machinery set up to ensure the orderly development of aviation. Governments took the initiative in creating IATA and the object was to protect the consumer, and to set rates at economic levels which would enable international aviation to be operated commercially. Unfortunately, what we have seen over the last number of years — in particular the decision of the American Civil Aeronautics Board to scrap regulations — is massive damage being done to national airlines, such as our own, and to companies of the strength of Pan Am.

It must also be remembered that CAB, in making that decision, made it not in the interests of any of our European airlines or the major US airlines, but for strategic and military reasons, to back up their second line carriers which were used for the carriage of their troops to Vietnam and, in their spare capacity after Vietnam, of the US troops in Europe. There is a major element of military strategy involved in the support of the US supplementals by the Civil Aeronautics Board. The problem is, that while CAB have been involved in this process, they have succeeded in providing vast overcapacity on the European routes and have clearly damaged the national airlines. The second problem facing Aer Lingus, which could not be foreseen when they changed in the sixties from turboprop aircraft to a full jet fleet, was the massive fuel increases which took place in the early seventies. Deputy O'Donnell spoke about the mistake made by Aer Lingus in the sixties in changing to a jet fleet. At that time, that was very good forward thinking and planning. Nobody could envisage the change which took place, in particular during 1973, in fuel costs and the effects of these on airline charges and on the costs incurred by airline companies.

The load rate which Aer Lingus must succeed in achieving just to break even across the Atlantic is now somewhere around 40 per cent, before the aircraft can take off the ground. That is just for the cost of the aircraft. Before they can make a contribution towards overheads and repayments on loans and so forth, they have to obtain a load factor somewhere in the region of 75 per cent to 80 per cent. Again, this is something which nobody could have envisaged a number of years ago.

Another problem which has been the curse of Aer Lingus and the other national airlines has been the Laker phenomenon. Laker developed the charter idea into a walk-on, walk-off situation where one booked a ticket and took availability. The situation, on the surface, looked good from his point of view, a high load factor, making it a paying proposition. However, that did not materialise, because the other airlines had to fight back. At the time, Sir Freddie was the darling of the media, David taking on Goliath — Goliath being IATA and the national airlines. Unfortunately, the sky-train concept was doomed to failure and did fail, and we are all aware of the effect of that failure, not only on the employees of Laker airways, but also on international air fares and the viability, generally, of international airlines.

It is vitally important, if the Minister is serious — and I totally accept his bona fides in this — about ensuring the viability of Aer Lingus, that we once again strengthen IATA for the benefit, not just of the airlines but also for the benefit and protection of the consumers — the travelling public. While the Minister spoke of the provision of finance for the airline, greater productivity and other factors, to which I will refer later, unfortunately he did not refer to the importance of agreements between the American civil aviation authorities and the European authorities. It is vital that the Irish Government fight on behalf of Aer Lingus to protect their work force and our national identity with our national flight carrier. Otherwise, what we are seeing today will be only short-term. We must bring some control, sense and sanity back into the transatlantic air flight arrangements. Without that, there will be further Pan-Ams — and we are all aware of Pan-Am's situation today, groping throughout the world for any cash flow situation which they can use. This is one thing which worries me about the recent arrangement made by the Minister with Pan-Am, with the tour operators, whose name escapes me for the moment, coming into Shannon at rates far below what the three established carriers — Trans-America, Northwest Orient and Aer Lingus — can compete with.

The general success of Aer Lingus, as I have said, is a matter of great pride to us as a nation but, equally, the continuation of Aer Lingus on the transatlantic route is absolutely essential. It is vital, from a national and an airline's point of view, that Aer Lingus continue to carry passengers on a scheduled basis across the Atlantic. To do that, they need the assistance which has been given, the equity and the current cost alleviation funds. They need those funds, but they also need the assistance of the Government in fighting on behalf of our airline with our European partners, in contest and in debate, with the American operators.

If the Atlantic service were to go, as was stated in the Minister's speech, up to 1,500 jobs would be lost in Aer Lingus. That is a figure which is unacceptable. The national impact of the loss of a scheduled service to America, the effect on our trade and industry and the absence of an Irish scheduled connection between Dublin and New York, the effect of that on IDA promotional work, on CTT and their trade efforts, the effect it would have on Bord Fáilte, the effect it would have on so many different facets of our society — all that is one thing. But the totally unacceptable figure of 1,500 jobs means that what the Government are doing now will have to be continued in the future in order to assist Aer Lingus, ensuring that we have a long-term commitment to the transatlantic route. Already the work force in Aer Lingus has dropped by 9 per cent over the last couple of years, something like 700 men and women. That is a lot of jobs. Many people have lost out through voluntary redundancies without any replacement. To talk about a further 1,500 jobs is Minister that I will fight that every inch of the way.

We have heard much about productivity and the achievements of Aer Lingus. One area of achievement about which we should all be proud is that of their ancillary activities. They have been superbly successful in this respect. Their contribution to the overall financial strength of the company is a source of pride to us all. The fact that management had the foresight to involve the company in so many ancillary activities, resulting in the production of this profit for the company, is also something of which we can be very proud.

I am glad to note that the Minister says there will be no cuts effected in the ancillary activities programme, something about which I am very happy. The talk circulating some time ago about interference with the London Tara Hotel is something about which I was unhappy. Certainly I should not like to see such interference. That hotel has contributed to the overall success of the company's ancillary activities, something I should like to see continuing.

The question of the turn-around of transatlantic flights at Shannon arose in the course of the debate and was referred to particularly by Deputy O'Donnell. I want to put on the record of the House again quite clearly that I am totally opposed to the idea of Shannon becoming the base for our transatlantic fleet which traditionally has been at Dublin. It is our capital city and it is there our national airline should have its national headquarters. The case put forward by Deputy O'Donnell was that feeder planes could bring passengers to Shannon from Dublin, Cork, Belfast and the other regional airports around the country. Equally, passengers could be brought on these feeder lines not to Shannon but to Dublin. I thought Deputy O'Donnell advanced a very good case for a total over-fly at Shannon. This is not something I want to get into. I do not want to involve myself in a regional row among Deputies from all sides of the House on Shannon versus Dublin. If Deputy O'Donnell is talking about a feeder passenger service into a base for the transatlantic flights, he is making an excellent case for a feeder system into Dublin Airport. I honestly believe it to be in the interests of Shannon, that region and in the national interest that we continue to have the transatlantic stop-off at Shannon, with aircraft operating from the national base at Dublin Airport. It has proved to be an excellent system so far and I see no reason that it should not continue. As a matter of fact if Deputy O'Donnell and others who advocate that case really thought about it they would see that they are coasting on very thin ice, that it is something that would not be in the interests of the national airline, in the interests of its efficient operation, or in the interests of its success and financial viability. In the long run I do not think it would be in the interests of the viability of the airport at Shannon.

While we have seen the success of Pan Am this year in bringing extra business into Shannon, I made the point earlier that some of the fares they quoted were of the level of a company experiencing serious financial difficulty who needed a cash flow at any cost. That is what we have been seeing there. Some Deputies will recall the debate of a number of years ago on the subject of Pan Am and TWA getting landing rights at Dublin Airport. Yet they had not got into Dublin a year or two when they left again. That argument continued for years — about all the extra business and tourists they would bring into Dublin with the full benefit of their worldwide schedules. Yet they had been here for only a year or two when they disappeared again. Therefore I suggest to the Deputies from the Shannon area, including Deputy O'Donnell, that they are skating on very thin ice if they are depending on the efforts of Pan Am as one carrier.

I welcome this badly-needed Bill. It is unfortunate that international air travel has got into its present state. I would appeal to the Government to make a strong case, along with our European partners, to the Civil Aeronautics Board in Washington to introduce more regulations across the Atlantic. This would be in the best interests of passengers, and it is about passengers we must be most concerned, and would also be in the best interests of our national airline, our economy and that of our European partners.

The Minister spoke of productivity earlier. I might remind him that productivity does not mean merely letting men go. At a time of high unemployment here the last thing we should be thinking of is relating productivity to fewer numbers in jobs. Although I should like to see airline productivity being raised, it should not be by a reduction in the numbers. It could be done by the company involving themselves in extra fleets, extra marketing, in regional programmes, involving themselves in turboprop aircraft for shorthaul work. That is the sort of productivity I should like to see. As a society we have got into the habit of linking productivity with firing people — that if you fire people you get productivity. That is not the way forward and I should like to see greater recognition of the work that has been done by management, by staff at all levels, from loader to chief executive, from cleaner to airline pilot, to air hostess and booking clerk. They have done a superb job on behalf of the nation. As a native of north County Dublin it has been a source of pride to me to see the development of our airports and our airline. Long may Governments show the wisdom we did last July when we came to our decision, and long may the Minister continue to show the wisdom he is now displaying in implementing the decision of July 1982.

Mr. Allen

Like previous speakers I welcome the Bill, particularly the assurances given by the Minister about the future of the transatlantic route and about charter flights to Shannon. I come from a region very much dependent on tourism. I have read the criticisms levelled at the Minister about decisions made in relation to charter flights, but having listened to the points made by him today I agree that the decisions made were in the best interests primarily of the country.

I am not an expert on civil aviation, but like Deputies Burke and O'Donnell I will be unashamedly regional in my comments. I come from the Cork-Kerry region which is suffering from higher than average unemployment. It is very much dependent on the tourist industry and on the ability of the IDA to maintain our markets with Europe and Britain and the ability of our industries to maintain those links. We also depend on the IDA to develop new industries and to attract outside industries to the area.

We have a high number of chemical and computer industries in the Cork area that require a continuing link with Europe and Britain and with different centres in both Europe and Britain. I am surprised that the Minister's speech did not make reference to the links between Cork and Europe and Britain. In recent times there have been suggestions that the Cork link with some European and British centres would be done away with. There have been a number of meetings between Aer Lingus representatives and representatives of interested groups in the Cork region, and agreement has been reached. At the same time I should like an assurance from the Minister this evening that next year Aer Lingus will be in a position to obtain the type of shorthaul aircraft necessary to make the Cork-European and Cork-British routes viable.

All fair-minded people must admit that the curtailment of flights from the Cork-Kerry region will further erode the confidence of the people there. Having lost one major link with Britain this year because of a problem that crept up on us through managerial difficulties, the Minister has an obligation in fairness to the region to ensure that a planned withdrawal from the Cork region will not be undertaken by either of these semi-State bodies involved in civil aviation, Aer Lingus and Aer Rianta. I appeal to the Minister to stand up to both bodies and to tell them to get out of their mind the obsession they have with centralisation. It is a dangerous trait that has been creeping into Irish society, especially among semi-State bodies: there is a tendency to think that everything has to come in and out of Dublin. Here today we have heard that everything has to come in and out of Shannon as well, without any mention of Cork. In any future plans or financial packages put together, Cork must be considered seriously.

I question the arrangement that exists on the transatlantic route. Aer Lingus are forced to stop over at Shannon, I think on all scheduled flights coming into the country. Has this been costed? What is this arrangement costing the national airline? Deputy O'Donnell made a good case for having the transatlantic flights terminated at Shannon and, naturally enough, Deputy Burke, representing north County Dublin, put an equally strong case for terminating at Dublin. We cannot have it both ways. The problem must be looked at seriously. I am convinced that moneys being lost because of this arrangement between Dublin and Shannon is resulting in a curtailment of services in the Cork region.

I will mention one other problem in relation to Cork. It involves Aer Rianta who at present are arranging for the planned curtailment of flights out of Cork while they are engaging in an investigation of their operations in Cork. I have lost confidence in that semi-State body because last year we were told there would not be any question of redundancies in Cork but we learn now that the company were quietly, behind closed doors, going ahead with plans for redundancies, cutbacks in overtime and other measures at Cork Airport. Since these problems are inter-related I ask the Minister for an assurance — I do not ask him to do it tonight because I have only just informed him of it now — that the Cork area will not have this. We have suffered enough because of semi-State conniving and it is about time semi-State bodies were made more accountable to us, politicians, who ultimately must take the rap, because the buck stops with us. Therefore I ask the Minister to ensure that because of a temporary curtailment of flights, Cork will not be downgraded this year by the second semi-State body involved. I welcome the major parts of the Bill as presented to the Minister.

Mr. Barrett

(Clare): I congratulate the Minister on his new portfolio and wish him well during his term of office. Like other Deputies, I welcome the Bill which gives the necessary transfusion to Aer Lingus to stay in business. It is not before time. Naturally it was delayed due to the election, but now we have got it and we hope it will be of great benefit to Aer Lingus. It surely must be because of the amount of money involved.

During the years Aer Lingus have been regarded as a successful semi-State body. On both sides of the House many politicians congratulated Aer Lingus many times. They were truly a success story because when most airlines throughout the world were suffering severe losses — big outfits like Pan Am and TWA — Aer Lingus were one of two airlines in the late seventies who broke even or showed a slight profit — Aer Lingus, and if I remember correctly, the Israeli airline, who have now gone out of business. It is a departure for them to find themselves in a loss situation. Two years ago they lost £13 million or thereabouts and last year they lost just over £9 million. We would be interested to hear from the Minister the reason for this drop in one year.

Aer Lingus have had a much wider role than many people realise. They were not confined to flying people in and out of the country. They were one of the greatest promoters of Irish tourism in the North Atlantic countries. From their inception they advertised extensively and brought tourist customers into the country. This should never be forgotten. Quite a sizeable part of their financing went towards this cause which was well worth while as all the good years in tourism have proved. They worked side by side with Bord Fáilte and all the other State agencies who were involved in these advertising and promotional efforts. We owe them a debt in that respect.

Transatlantic operations have been showing a loss for some years. Most other airlines have been showing a loss in the North Atlantic. In their efforts to counteract this loss, Aer Lingus became involved in what are known as ancillary activities. It was a very good decision to do this not only in London but also in the US. There were also proposals in relation to Tenerife. If Aer Lingus are flying people from Shannon or Dublin to London, there is nothing wrong with providing hotel accommodation to reap some benefit from that end of the activity as well.

The same would apply to Tenerife. Quite a large number of people go there on holidays. I am not up to date with the Tenerife proposal. I do not know whether it got off the ground or will get off the ground. The Minister might let us know what the position is.

Another of their purchases was the Foxhill complex which was to be a sporting complex. If I remember correctly this was put on the market. I would be interested to know if any reasonable offer was made which was anywhere near its value at that time. I understand it has not been disposed of and I should hate to see it disposed of at a serious loss. In the long-term it has a future in the ancillary activities.

Their ancillary activity in the US is a real success story. They bought into the Dunfey chain of hotels and I understand that chain has been doing quite well. The manner in which these hotels are used by Aer Lingus to promote Irish tourism is also a success story. Their ancillary activities have helped them in no small way to counteract the losses on the North Atlantic routes when the short haul routes, the European routes and the United Kingdom routes, were paying their way.

I welcome the new arrangements expanding the charter flights and making the whole system more flexible. Many tourist operators and people involved in tourism are not too worried about what type of planes are used to fly in tourists so long as the tourists arrive. Some would not mind if the tourists were flown in in wheelbarrows so long as they are flown in to spend money. I am not saying they should be flown in in wheelbarrows. The expansion of charter flights makes it more attractive to tourists from North America to come here for a holiday. I welcome the new arrangements.

The question of Shannon Airport was mentioned by a few speakers. Deputy Allen wondered why planes on the North Atlantic route had to stop at Shannon Airport. It so happens that Shannon Airport is our transatlantic airport. Dublin is not. It should be remembered that over the years, while it has varied slightly, a figure of between 60 and 70 per cent of all terminal passengers to this country from the North American countries disembarked in Shannon. The remaining percentage flew on to Dublin. This is also a very good reason why the planes should land there.

In the early seventies we had an issue known as the landing rights issue. This was the question of whether other transatlantic airlines or North American airlines should be permitted to fly into Dublin instead of using Shannon as the terminal for their flights, which had been the case. This became a major issue in this House and outside it. There was a great deal of opposition to it and comment on it during our term in office up to 1973. We withstood the pressures brought to bear on us to grant these landing rights.

If I remember correctly Deputy O'Donnell was Opposition spokesman for Transport and Power. He opposed it. On one occasion he made a public statement that if the rights were granted he would resign. I think I am correct in saying that. In Government we withstood the pressures and the rights were not granted. A short time after the change of Government in 1973 those landing rights were granted to TWA, not to Pan Am. They flew into Dublin. They had the same experience that the big percentage of their passengers disembarked at Shannon. They flew into Dublin for quite a short period and then discontinued flying in to Dublin. As it transpired, it was not such a major issue as many people thought it was, and the harm it did was not as great as some people feared.

That brings me to the point Deputy O'Donnell made about using Shannon as a turn-around point for transatlantic flights. I find myself in agreement with him that this should be considered seriously, even though Deputy Burke on my side of the House is not prepared to contemplate it. I makes good business sense to consider it seriously. If 60 per cent to 70 per cent of the passengers on the jumbos and the bigger planes disembark in Shannon, surely this should be the terminal. Shannon should be the turn-around point because, as Deputy O'Donnell rightly said, smaller aircraft could be used between Shannon and Dublin at a lesser cost to Aer Lingus and Aerlínte. It should be considered seriously.

Deputy Burke put forward arguments which I find do not stand up, so I will not go into them. The only argument I take seriously regarding why this should not be done is that of the major transfer of skilled staff and maintenance staff from Dublin Airport to Shannon. I do not know what percentage of the staff involved are from rural Ireland and it has never been fully examined whether these people would want to transfer. It must be remembered that during the years Aer Lingus have involved themselves in maintenance and overhaul work on foreign aircraft. This work has been carried out successfully at Dublin Airport. By developing this work they could still employ many of the staff involved at Dublin Airport. This matter should be considered seriously. It would mean a saving to Aer Lingus if they did not have to fly the jumbos and the larger aircraft on the short flight from Shannon to Dublin. I am not saying this just because Shannon is in my constituency but, with respect to Cork, Shannon is the airport that services the west of Ireland from the point of view of tourism and I am sure all will agree that the west of Ireland is the best of Ireland.

Something will have to be done about fares to the UK. They will have to be reduced in some way. The cost of a return flight to Cardiff for two people is £310. This is a phenomenal charge for a short flight, probably the shortest flight from Dublin across the Irish Sea. The return flight from Shannon to London is £185 which is an excessive charge for a short flight. There are many Irish people in London who would come home more frequently if the fares were more reasonable. Generally a reduction in the fares would encourage more passengers from here also. Many of the flights do good business because they connect with other European flights but the entire service could be developed more effectively if the charges were examined with a view to reducing them. When one considers that the return fare to Cardiff for two people is £310, I am sure if the people involved took the ferry and drove down to Cardiff they would save at least £200. I ask the Minister to request Aer Lingus to try to do something about the very high charges for short flights.

We welcome the Bill. This is badly needed for our national airline of which we have been so proud during the years. Aer Lingus have the job of flying people in and out of Ireland and they have also played an important role in promoting this country since their establishment and since they first went to North America.

Mrs. Owen

I do not want to pre-empt what the Minister may say in his reply but I am sure that, like me, he has been heartened by the support and interest this Bill has evoked from all sides. Interestingly enough, we have seen colleagues from the same party disagree with each other. I am sure it will not have escaped the Minister's notice that most of the contributors to the debate are people in whose constituencies the major airports are located. That is good because it means the Deputies concerned are fully conscious of the role of Aer Lingus in the country.

It is fashionable nowadays to criticise our semi-State companies. Perhaps I would have criticised the input of another £30 million if it was the case that Aer Lingus were the only airline in the world losing such a vast amount of money on the North Atlantic route. However, as the Minister pointed out, this is not the case. Many of the major airlines are finding the same difficulties as those encountered by Aer Lingus. These difficulties can be traced back to the problems that arose particularly in 1973 at the time of the fuel crisis and also to the enormous growth so far as consumers are concerned. I am not the oldest Member here but I remember when I was 18 or 19 years the thought of a flight to the Continent for a holiday was as far removed from my hopes as a flight to the moon. However, nowadays practically every young person has been on a flight by the time they are 17 or 18 years.

We could not have a debate on a Bill such as this and just talk about the costs and the financial viability of Aer Lingus without reflecting also on the service element. Of necessity, any service industry will find it difficult to make ends meet. If Aer Lingus were to make ends meet on the North Atlantic route the easy answer would be to put up charges to such an extent that they could run the service economically. However, they would not sell any tickets if they did that. Therefore, we cannot rule out the service element. If we cease operating on the North Atlantic route it will be open to the charter companies to fill the void. While these companies help to supplement traffic during the high season they are not there in the low season even though the service is still required by the tourist industry and, even more important, is required for business interests. I know that the Minister has studied carefully the work of the review committee which was set up to see whether this kind of finance should be put into Aer Lingus. I see that discussions were held with groups such as the IDA and SFADCo. These groups have stated they would be concerned if the North Atlantic route were to be closed. The Government decided that the service be kept open — hence this Bill.

As other speakers have done, it is important to dwell on the more positive aspects of Aer Lingus. They have had considerable success as a semi-State body. We have seen their success with their diversification programme, particularly with their hotel, computer services and travel businesses. This is a good indication that Aer Lingus want to find an area in which they can have a viable operation which will compensate for not being able to raise fares so high that they would lose passengers. They have had great success in fuel economy and with the greater use of technology this is an area where there could be even greater improvement. They have reduced their fuel costs by 30 per cent, which is considerable.

About 70 per cent of all travellers to and from this country use Aer Lingus. They cannot say that they are not serving a purpose as a national airline. They should be commended for so doing. As the Minister pointed out, there is not a bottomless pit from which money can be drawn for any State-sponsored body. I am sure the staff and management of Aer Lingus are conscious of this. We are playing a dual role. We are giving the necessary finance to Aer Lingus to ride out their severe economic difficulties on the clear understanding that they have a role to play in cutting costs and introducing flexibility to ensure efficiency in staffing and administration.

I have heard many people complain that on the Dublin-London route one does not get a cup of coffee. Most of us can survive for three-quarters of an hour without a cup of coffee. If this was found to be cost effective then it was not a bad move by Aer Lingus to cut out such small comforts. Recently I flew home from a Continental city and there were approximately 14 passengers on the plane. We had three air hostesses looking after us but we could have been effectively looked after by one. I am not saying that we should automatically fire two out of three air hostesses but management should look at flights which are not heavily booked and see if some savings can be made.

I agree with Deputies O'Donnell and Barrett that we must look at the size of our aircraft. Air Lingus have three jumbo jets. It is not an answer to say that they do not need three jets because in summer they would have to cut their trade. However, the time has come for them to look at the size of their aircraft. In the sixties fuel was cheap and we moved into the jet area. Now that fuel costs are so high there is merit in looking at the size of aircraft serving certain routes and at the number of passengers who fly at certain times of the year. Perhaps investment in a few smaller aircraft might prove better in the long run. These are ways in which they can look at their operation and come up with answers.

I know Aer Lingus are making strong efforts to reduce their costs. They have a staff of 6,000 between Dublin, Cork, Shannon, England, the US and Europe. In the last few years there have been 600 redundancies. They are making an effort which should not be overlooked. Apart from giving them this equity, the Government must look to see how they can help with the enormous capacity on the North Atlantic route which is available particularly during the summer. Are there any measures the Government can take to prevent price-cutting flights or limit them in some way? If stringent measures have to be taken to prevent these very cheap flights, then the Government may have to take them. It will not be popular from a consumer point of view, but it may have to be done.

Aer Lingus must look at the cost of maintenance. I represent a constituency in which Dublin Airport is situated. In every housing estate in my constituency there are at least five families earning a living directly or indirectly from Aer Lingus. There is a fair amount of talk about Aer Lingus and their service at almost every gathering in Dublin North. If Aer Lingus need to hire a plane that cost can be as high as £20,000 per day. Most spare parts are enormously costly. It is not just £4 or £5 but £4,000 or £5,000 for even the smallest replacement part. Aer Lingus must keep a careful watch on maintenance.

I welcome the Bill and know from people I have spoken to in Aer Lingus that they are conscious of the role they must play. They know that the £30 million equity is to help them over a rough period. If the North Atlantic route was cut, 1,500 people would lose their jobs. I do not say that we must weigh up the loss of those jobs and allow a non-viable operation to continue indefinitely. I hope it does not come to that. The management and staff are very conscious that the end of the road came too near in recent years.

A senior management person in Aer Lingus, Mícheál O Riain, read a paper rather evocatively called "Survival in a Blood Bath", to the Chartered Institute of Transport in Dublin on 15 February 1983 in which he stated:

I would like to end on a high note but I am afraid it might be false. The problem of the Atlantic for North Atlantic carriers as a whole is not showing any signs of easing. The prospect of continued losses by Aerlínte remains. Easing of our interest burden as a result of the Exchequer investment makes it possible that we will reduce out Atlantic losses, make profits elsewhere in the system and survive, but the problems are far from over. Meanwhile the one sure path we must follow, whatever the outside circumstances may be, is the path of cost control and we are firmly on that path.

That is a commitment which I am prepared to take and I hope Aer Lingus will see it through. I welcome the Bill and hope it will pass through the House so that Aer Lingus can survive.

Mr. Daly

Like my colleagues I wish the Minister well in his new office and assure him of co-operation and support from this side of the House.

We welcome this legislation and I sincerely hope it will be effective in ensuring the speedy return to profitability of the airlines generally. However, more than financial incentives and assistance are needed to tackle the problems in the airlines. We must have an overall strategy which covers the sale and marketing of our airlines and industry generally. In many respects, financial incentives, aids and Government support will not succeed in getting the airlines back to profitability.

The Minister said that the closure of the North Atlantic would result in a significant disimprovement in the economics of the European operation. This brings home to us that the European operation is almost totally linked now with the North Atlantic operation and if we talk about the discontinuation of the North Atlantic operation, we are really talking about a discontinuation of the whole operation as well as a loss of 1,500 jobs. This has been borne out very forcibly by the Minister's remarks. I am glad that the review body have come out strongly and demonstrated very clearly that a close down of the North Atlantic operation would have a serious detrimental effect on the whole operations of the airline. It is important that we keep this in mind. I was disappointed that there was not a more positive approach in this regard. The Minister seems to be saying that a recommendation in favour of terminating the service would be difficult to justify. That is a weak and defeatist attitude. We must have a positive and constructive approach in this whole area.

I have a special interest in Shannon Airport and I support the views which have been expressed here by Deputy Barrett and Deputy O'Donnell that it is timely now to have a close look at the question of the turn-about of the North Atlantic services in Shannon. There are indications that Aer Lingus are about to purchase additional small aircraft. Approximately 65 per cent to 70 per cent of transatlantic passengers disembark at Shannon and we should look at this area to see if we could have this turn-about at Shannon. I am aware that decisions were made some years ago to turn-about some of the transatlantic flights, but that course was not proceeded with. I would like to see some, if not all, transatlantic flights turn-about at Shannon this year. Other smaller aircraft could be utilised to supply the necessary backup for that.

A committee was set up under Mr. Walls to inquire into the feasibility of customs pre-clearance and the possibility of having that service provided at Shannon. I am sure the Minister is aware of the benefit that such clearance would have, not only to Shannon but to the North Atlantic operation generally. I would like the Minister to give us up-to-date information about the report of the Walls inquiry. If it is not possible for him to publish the report at this time he should at least make it available to various interested parties who have been concerned about it.

The major problem that needs to be dealt with in the North Atlantic is to try to get over the smallness and seasonability of that operation. It is desirable and urgent that we have a strategy to try to extend the season so that we would not have this problem where for much of the year many services have to be maintained without benefit to the operation generally. A very vigorous campaign is needed to extend the tourist season in co-operation and consultation with the various bodies involved.

I want to refer to the charter situation and to support the views which have been expressed by Deputy O'Donnell. I am glad the Minister has clarified the question of charters in relation to Chicago. As the Minister is aware, there was some press comment recently from tour operators in the United States that because of the failure to allow charters from Chicago and New York and other centres there would be a loss of $20 million to the tourist industry this year. I am not satisfied that the Minister has clarified the situation. I would like to get details of the applications which were refused by him and why they were refused. I have a parliamentary question down in that regard. I would also like to know whether any consultation was undertaken by him directly with the industry to see if it would be possible to allow at least some of these, bearing in mind that in some cases it may not be running counter to the views that have been expressed in other quarters.

Generally speaking, we welcome the Bill and especially the decision being taken to continue the transatlantic operation. Those mid-west of the Shannon are conscious of and recognise the value not only to the airlines of this business, but the whole importance of the development to the structure of the economy of the mid-west and the west generally. We would like to see Shannon maintained as a gateway to the west and to see further development and expansion of facilities at Shannon to make it a more attractive place. We would like to see a more vigorous campaign embarked upon by the Government to develop infrastructural facilities, including customs pre-clearance, federal express and all the other additional business which can be generated and can make these operations viable and profitable in the future. I assure the Minister he will have our co-operation in seeing that the right policy and approach is adopted to deal with this complicated and difficult area.

Mr. Wilson

We agreed that all Stages would be taken by 7 o'clock. It now looks as if the Minister will not have an opportunity of replying to the questions we put to him. We did not envisage when we agreed to have all Stages taken by 7 o'clock that this would happen.

Acting Chairman (Mr. Connolly)

I am led to believe that there was an agreement with the Whips in regard to this matter. Therefore, I am now calling on the Minister to wind up this debate.

Minister for Transport (Mr. J. Mitchell)

I would like to thank all the speakers who wished me well in my appointment and especially Deputy Wilson, my predecessor, who now has the onerous responsibility of shadowing me. I also wish him well and I am sure we will work together in the interests of the country to take the best decisions for transport in all its aspects.

I apologise to Deputy Carey and other Deputies who have not been able to get in on the debate because of the agreement to curtail it in order to get this legislation through in time. There have been delays, as Deputy Wilson said, because of the general election. I will try to answer as many of the points raised by Deputies as I can. Before doing so I would like to thank Deputies for the constructive nature of their contributions. I found the debate very interesting and illuminating and Deputies can rest assured that the points they have made will be taken into account.

Deputy Wilson asked about Air Florida. Air Florida departed this year from Ireland and that departure is indicative of the problems on the North Atlantic generally. Ireland cannot look to US carriers to provide year-round services. Air Florida followed the pattern of TWA and Pan Am who abandoned the scheduled services to Ireland in previous years.

Another point raised was cost alleviation. Aer Lingus are obliged to serve both Shannon and Dublin. That should not be seen as a penalty in a national sense because the two airports contribute roughly equally in the supply of passengers to the airline. Aer Lingus must invest very heavily in promoting Ireland as a tourist destination. The investment clearly has two objectives: the promotion of tourist numbers to Ireland and the filling of Aer Lingus seats. In that regard the airline must invest more than average in promotional activity. Those factors, plus the heavy interest burden to which I referred in my opening speech, were all taken into account in deciding on the cost alleviation payment.

Mr. Wilson

I thank the Minister.

Mr. J. Mitchell

As Deputy Wilson stated, it is important that the payment should not be seen as in any way carrying connotations of subsidy. For that reason it is being made clear to the company that the payment is a temporary one for three years and it is intended to help to place the airline's finances on a sound footing.

Deputy Wilson also asked about Airmotive. Airmotive are an extremely attractive company from a national point of view. They are providing a high technology export-oriented service in the maintenance and overhaul of aircraft jet engines. The company have been successfully set up, the staff trained and this is a highly productive organisation. The company have been less successful than anticipated in their early years in obtaining engine maintenance contracts because of the worldwide recession in the airline industry which has reduced demand sharply for jet engine overhaul. While the setting-up phase of Airmotive is likely, therefore, to take somewhat longer than originally anticipated, there is every expectation that this will be a highly successful high technology Irish company.

In relation to asset disposal, also raised by Deputy Wilson, as I have explained in my Second Stage speech, a comprehensive package has been designed to bring the air companies back to profitability as soon as possible. This includes the equity investment by the Exchequer, the cost alleviation payments and action by the airline themselves to restore their finances to viability. In the latter connection, I have outlined the action being taken by Aer Lingus with a view to improving efficiency and reducing costs in every aspect of their operations. In regard to asset disposal, it is a matter for the company themselves to make the maximum contribution which is commercially prudent from their ancillary activities towards the resolution of their present problems. I am aware that Foxhills, to which the Deputy referred, has been advertised for sale and that some parts of the Tenerife property have been sold. It is a matter for the board of the air companies to determine what further contribution can be made from within their own resources towards solving their financial difficulties.

The question of turnover of services at Shannon has been raised by Deputy O'Donnell, who suggested that Aer Lingus transatlantic services should be turned around at Shannon. I stress that Shannon is the country's transatlantic airport and will remain so. However, we cannot avoid the fact that Aer Lingus need both Dublin and Shannon traffic to fill their Boeing 747s. In fact, the two airports contribute almost equally in the generation of traffic for the transatlantic service. The feasibility of using feeder services between Dublin and Shannon has been examined in detail many times, but because of the marketing considerations and other operational reasons the option is not really practical. Deputy Raphael Burke made a number of points countering points made by Deputy O'Donnell. The debate on this point shows the complexity of the whole situation. As I have said, Dublin and Shannon are essentially complementary feeding points for the Aer Lingus transatlantic operation and I can see no situation in which Aer Lingus will not continue to serve both airports.

Deputy Bernard Allen questioned the cost of the dual-stop requirement. While double landings clearly cost more than a single stop, marketing considerations dictate that the airline must serve both airports.

In relation to Cork Airport, which was raised by Deputy O'Donnell and Deputy Allen among others, following a critical evaluation of services into Cork, Aer Lingus concluded that the restructuring of their services for summer 1983 was called for. While the original plan envisaged the virtual elimination of direct plane services between Cork and the Continent the revised schedules which Aer Lingus devised would have given a better range of services — admittedly directly through Dublin — into Cork from the major European destinations. In the process Aer Lingus would have been expecting to realise a cost saving of some £700,000 a year. The scaling down of direct plane services was not viewed in the most favourable light by the local Cork community and, following a series of very constructive meetings between Aer Lingus and a group representative of all Cork interests led by the Lord Mayor, Deputy Coveney, a compromise package was recently agreed, with the new arrangement to come into effect at the end of the month.

It is disappointing that traffic through Cork has been on the decline in recent years and, the costs continuing to rise, this has posed problems not only for Aer Lingus but also for Aer Rianta. A loss of roughly £.5 million was incurred by Cork Airport last year and if the surplus on commercial activities such as duty free sales were left out of the reckoning the loss on operations would have been of the order of £1 million. With no great prospect of traffic recovery this year Aer Rianta are facing a difficult position in Cork. It is against that background that the company's concern about the financial fortunes of Cork must be looked at. In that regard Aer Rianta are looking at all of the options in the same way as any prudent commercial enterprise would do when it sees the gap between its costs and its revenues widening. Clearly, a State company would be failing in its task if it did not take account of emerging trends. At the same time, bearing in mind in particular the headlines in one of this morning's newspapers, I want to make it clear that there is no question of Aer Rianta taking unilateral action of a drastic nature in terms of their employees in Cork.

Acting Chairman

Minister, I do not want to interrupt you but you have a couple of minutes in which to conclude.

Mr. Wilson

The Minister was looking at this clock and there are eight minutes to go on that one.

Acting Chairman

There is an error and I am going on official time so the Minister has two minutes.

Mr. J. Mitchell

I would like to answer all the points raised by the Deputies but, if the Opposition are agreeable, I will circulate a reply to the points and I will include those points in my Second Stage speech in the Seanad.

Acting Chairman

Is it agreed that the Minister circulate these matters?

Deputies

Agreed.

Question put and agreed to.

Agreed to take remaining Stages today.

Bill put through Committee, reported without amendment and passed.

Acting Chairman

This Bill is certified a Money Bill in accordance with Article 22 of the Constitution.