Dáil Éireann debate -
Wednesday, 1 Jul 1998

Vol. 493 No. 4

Adjournment Debate. - Ireland-US Air Services.

Mr. Deenihan

Thank you, a Cheann Comhairle, for allowing me to raise this matter. Today a group from the San Jose area, including the city manager, the director of San Jose International Airport and the director of economic development in San Jose, met Aer Lingus about this issue. They will also lobby Ministers and other influential people in Dublin over the next week regarding the matter. Located a little more than 40 miles south of San Francisco and Oakland and approximately 390 miles north of Los Angeles, Santa Clara County is a key market of northern California. It is the fourth largest county in California in terms of population. San Jose is northern California's biggest city, the third largest city on the west coast and the eleventh largest city in the US.

It is known as the capital of Silicon Valley and is among the top ten US cities for international business. Santa Clara County demographics illustrate an educated and affluent community largely employed in professional and technical industries. The service area of San Jose International Airport encompasses almost one half of the San Francisco Bay area's population, creating the largest business travel market in the region. A total of 1,500 of the nation's largest 2,500 firms are located in Santa Clara County. Exports from there totalled $29.3 billion in 1996. The San Jose metro area is the number one exporter in the US while almost half the Silicon Valley's workforce resides in San Jose.

San Jose International Airport is the only major airport in Santa Clara County. The county has the biggest portion of business related air travel of all the bay area counties. Regarding air cargo, the bay area generates 11 per cent of US manufactured exports while Santa Clara County generates 60 per cent of the bay area's manufactured exports. The airport ships approximately one half of Silicon Valley's air cargo, which is valued at $6.5 billion. Cargo pounds shipped at the airport grew by 66 per cent between 1989 and 1996. Its cost of operation is low, having declined substantially since the early 1990s. Landing fees, and Terminal C rental rates especially, have dropped by between 40 per cent and 50 per cent since 1993.

San Jose is located at the heart of the largest and fastest growing high technology centre in the world. San Jose International Airport serves a local market area with greater population and income than San Francisco or Oakland. Its passenger traffic is more business oriented than that of San Francisco or Oakland, yet San Jose is closer to many tourist areas. It captures an average of 29 per cent of the total bay area traffic in its non stop jet markets. The airport's cost per passenger have declined considerably in the past four years as have landing fees and terminal rents.

A number of airlines use the San Jose-London route while executives in Hewlett-Packard, Intel, Tricom, IBM and other companies from the Silicon Valley which have set up in Ireland use that route. One small company spent $500,000 in air travel last year. There is a major economic reason for Aer Lingus to fly this route. The contribution of these major companies to our GDP is substantial and that is why we must facilitate them. They do not want to travel to London and change or travel to another city in America to fly directly into Ireland.

It is vitally important and that is why there is a delegation from San Jose in Dublin this week to lobby for direct flights. Within Aer Lingus, there is a great deal of support for their case and I hope I receive a positive response from the Minister of State.

Minister of State at the Department of Public Enterprise (Mr. Jacob)

I noted Deputy Deenihan's remarks on this matter. I wish to set out the access provisions under the Ireland-US Bilateral Air Services Agreement. Under the agreement Irish airlines have access to four US points on scheduled services — New York, Chicago, Boston and Los Angeles. US airlines can operate any number of services from any point in the US to Dublin and Shannon. However, services to Dublin must be matched on a one for one basis with direct Shannon flights.

The US has unlimited fifth freedom rights at Shannon, that is the right for US airlines to carry traffic between Ireland and third countries, and one fifth freedom point beyond Dublin outside the EU. US and Irish airlines can operate charters between any point in the US and Dublin and Shannon subject to the Shannon matching requirement. Charters can operate direct to Cork and Knock without any Shannon requirement. The bilateral agreement does not set any controls on the level of air fares or capacity in the market.

Within this regulatory framework on access from the US it is a matter for US and Irish airlines to decide whether to operate air services between the US and Ireland based on their own commercial judgment of the market potential. Of course, the Ministers for Public Enterprise, Tourism, Sport and Recreation and myself, as well as agencies such as Bord Fáilte and Aer Rianta, avail of every opportunity to encourage airlines to extend existing services and commence new services to Ireland. Indeed, a priority in the joint programme for Government is opening up new air links with the US. In this regard a very welcome development is the new service which Continental Airlines introduced last month from Newark to Shannon and Dublin.

Other existing services include Aer Lingus, which flies between Shannon, Dublin and Belfast to New York, Newark, Boston and Chicago. Delta Airlines operates from Shannon and Dublin to Atlanta. Capacity on Aer Lingus services has increased significantly in recent years and in 1998 shows a 13 per cent increase over 1997. For the first time ever Aer Lingus will provide more than one million seats on its transatlantic services this year.

I understand from Aer Lingus that the airline has not yet completed its schedule plans for summer 1999 and has no plans at this stage to offer services to the United States west coast. This position is kept under review by Aer Lingus.

Concerns have been expressed in the past about the lack of direct scheduled services from the west or south west of the United States. It should be recognised however, that growth in airline alliances and code-share agreements, the increasing concentration on hubbing operations — whereby airlines feed traffic from various points through major airports which have a large number of onward connections — and in particular increasing capacity through existing hubs, improves access to and from all US points. Both Delta at Atlanta and Continental at Newark have extensive route networks in the United States while Aer Lingus services to Ireland also benefit from interline traffic at the hubs of other major US airlines.

The Minister in consultation with her colleague the Minister for Tourism, Sport and Recreation, Deputy McDaid, will continue to keep the situation under close review.