I wish to share time with Deputies Richard Bruton, Owen and Deenihan. I move:
That Dáil Éireann conscious of the vital importance of the airline industry and of Aer Lingus in particular to the commercial life of the nation and deeply concerned about the future of the industry and noting the decision of the US Federal Government to support US airlines, calls on the Ministers for Public Enterprise and Finance to move motions at meetings of EU Ministers to enable EU national governments to give financial assistance to their airline industries in order to assist them survive the current temporary downturn in aviation business and further calls for the deferment of any decision on the future ownership of the national airline for at least three years to enable the airline to be strengthened and restructured.
I have already given notice, and I do so again now, that one of the major themes on which Fine Gael will fight the next general election is the failure by Fianna Fáil and the Progressive Democrats to manage the most successful years the Irish economy has ever had.
Everywhere we look, we see this failure of management. We see it in the health service, in the education sector, in the gridlock on our roads countrywide, in the failure of the Government to organise driving tests in an efficient and effective manner, in the appalling failure to manage asylum seekers, in the mess that is Dublin Airport, in the rip-off of almost half a million people in the Eircom flotation, in the failure to deliver affordable housing, in the failure to deal with homelessness, in the failure to bring about much needed infrastructural change in the telecommunications sector and so on.
The litany of Government failure would be inexcusable in any circumstances but it is particularly so in circumstances where we have had the most successful economic growth in the western world. Our rate of economic achievement was envied all over the world. The performance of the economy was first rate. The performance of the Government in managing it can only be described as dismal.
While the Government produced discussion paper after consultative paper, created photo opportunity after photo opportunity, it avoided most issues where decisiveness and leadership were required. Meanwhile, the ordinary people got on with the job and developed some of the most successful enterprises this country has ever known.
This was done despite the failure of Government. We need look no further than the high-tech sector where an OECD survey shows that this country is now the ninth most expensive for peak time Internet access and where broadband penetration is just 0.01% of the total population. That Irish software companies have succeeded at all is remarkable given that they typically pay ten times more than their British counterparts for the relevant services and for that money, they get the service at one-tenth of the speed.
There is a thread common to many of the difficulties I have highlighted – in transport, in telecommunications, in airports and in aviation. That thread is the Minister for Public Enterprise, Deputy O'Rourke. Her failure and that of the Government is most obvious, most alarming and most regrettable in the case of Aer Lingus. She has been the shareholder representative of that company for more than four years and has managed in that short space of time to bring a once proud national symbol to its very knees. She has done so at a time when Ryanair has gone from strength to strength. She cannot blame market conditions. She cannot blame the ups and downs of the Irish economy because it was all up. She cannot blame the decline in the Irish economy because, as I said, it was all up. She cannot blame a decline in the Irish or in the world business sector because that was all up also. She cannot blame passenger numbers because they were all up. She cannot blame anybody but herself, although I would suggest that the Taoiseach's failure of leadership has also been a decisive factor in the near collapse of Aer Lingus. He should have recognised a long time ago that his Minister was quite simply not up to the job. He should have overcome his normal desire to be seen as the nice guy and removed her from office.
Let us reflect briefly on the situation which the Minister inherited. In the two and a half years of the rainbow Coalition, passenger numbers in and out of Ireland were never higher, Aer Lingus was massively profitable and the then Minister for Transport, Energy and Communications, Deputy Dukes, mandated the board of Aer Lingus to explore the possibilities of the airline entering a strategic alliance with or without the transfer of equity and to submit proposals to the Minister as shareholders. The Minister, Deputy O'Rourke, came into office in June 1997. What did she do? As with so many other things, she dithered, ducked and weaved. It was December 1999 before she announced the intention to sell the entire 95% Government shareholding – a move which was estimated at the time to raise up to £600 million for the Exchequer.
The market place looked good, aviation stocks were doing well but because of the public's experience with the Eircom flotation, they were deeply suspicious of anything which the Minister was offering. She did not help her own case when she emphasised that the flotation would "follow the Eircom model".
The Minister also made it clear that she wished to complete the sale before the end of the year 2000. The Aer Lingus Bill, 2000, was to provide the legislative framework for the IPO. The Minister appointed the necessary advisers and committed to the usual high fees as she had done in the case of Eircom. Meanwhile, encouraged by the Minister, Aer Lingus planned its strategy on the basis of the availability of private sector capital. At no stage did the Minister do anything to disabuse Aer Lingus of the correctness of its approach in allowing for the provision of private sector capital.
Somehow or other, from the summer of 2000 onwards, the Minister lost control of this situation. She had lost control well before the outbreak of foot and mouth disease and the softening of economic conditions in the US market. She was certainly floundering at the end of last year when she began to talk about looking for an alternative sale option for the airline. She asked advisers to take soundings of interest from potential investors or buyers and she created such an atmosphere of uncertainty and indecisiveness that no one in the aviation sector could any longer regard her as a serious player. One day it was a public offering of Aer Lingus stock, the next day it was a sale to anyone who might buy it. In the circumstances, it was hardly surprising that the airline went from crisis to crisis and that it has now reached the lowest point in a very distinguished history.
At this late stage, what is needed above all else is clarity. Without clarity, there can be no industry or consumer confidence in Aer Lingus. Without confidence, the decline in forward bookings will not be arrested. Unless this decline is arrested, Aer Lingus will go the way of Swissair and Sabena.
It is, therefore, vital that the Minister answer straight questions with straight answers. First, what are her objectives in relation to Aer Lingus and how does she propose to achieve them? Second, is it the Government's intention to further back the airline financially and if so, on what conditions will it do so? Third, is there a reasonable expectation that EU permission can be secured for any further state assistance which the Government might have in mind? Fourth, if it is the Government's intention not to give additional financial support to the airline, either because it believes this is inappropriate or because of EU prohibitions, how does the Government intend that Aer Lingus will be led out of its current difficulties?
The employees of Aer Lingus, the tourism interests, particularly away from the east coast and the people need answers to these questions and they need the answers now. Last year, 1.2 million tourists came here from North America. With the reduced capacity now announced, we will be lucky to have a million this year and it looks particularly black for next year when forward bookings would indicate an almost wipe-out of the North American market. Without a national carrier, particularly serving the North Atlantic, we have no possibility of maintaining and developing a vibrant tourism industry, particularly away from the east coast. Shannon without Aer Lingus is simply not viable. Not only is it the key transatlantic airport for tourism from Kerry to Donegal but it is a key cargo airport for the industries radiating out from Shannon which are so dependent on the North American markets.
I will address a question to the Minister for Tourism, Sport and Recreation, Deputy McDaid. As part of the Good Friday Agreement arrangements, Bord Fáilte and the Northern Ireland Tourist Board amalgamated key promotional functions into Tourism Ireland, a company which has a board, a chief executive and a budget but no employees to administer it. Just when tourism needs the maximum support, the Minister has managed to preside over the creation of another fiasco, another fine mess – an agency without employees to either spend its budget or implement its policies. The situation is critical and requires immediate action. It is for this reason that I must press the Minister for immediate answers. What are her plans for Aer Lingus? How does she propose to implement them and what is the timetable?
I have a proposal to make which I hope the Minister will find helpful. It relates to the possibility of State support for Aer Lingus, particularly against the background of the support the US Administration has made available to US airline companies. At present, there are three airlines connecting the United States and Ireland. These are Continental, Delta and Aer Lingus. Continental and Delta are beneficiaries of US Government support. It seems quite extraordinary that a Commission in Brussels would, in those circumstances, refuse to allow the Irish Government to give some support to Aer Lingus. In particular, given our island status and the fact that we are so heavily dependent on the US for investment, trade and tourism, it seems entirely unreasonable that the Commission would continue to refuse the provision of support in these difficult times.
I can understand that the Commission's refusal to allow Aer Lingus as a whole to be subsidised may be a tenable position. My proposal, therefore, is that the Government should revert to a position which previously existed and split Aer Lingus into two airlines, one serving the United States and the other serving European cities. The application to the Commission in Brussels for approval to give subsidies might be confined to the transatlantic alliance and the case might be based exclusively on the precedent created by the US Administration. Brussels can hardly object to the creation of a level playing field. If the case was properly presented, I believe Ireland's special status as an island and its special economic links and dependency on the United States might sway Brussels and allow at least some short-term support for Aer Lingus if the company was restructured on the basis outlined.
I put it to the Minister that Aer Lingus is in a dire situation. The company had been losing money for a long period before the events of 11 September. Since that date, traffic on the north Atlantic route – in both directions – has fallen by 30%, October to December bookings are down by more than 30% and the downturn will cost £40 million, leading probably to a loss this year for Aer Lingus of £70 million compared to a loss of £58 last year. It is estimated that 600 temporary staff and 25% of permanent staff will be laid off and that the resulting redundancy package will cost approximately £150 million. In addition, it will cost a further £50 million to restructure the company. Without fudging the issue in any way and without taking any half measures, it is, therefore, apparent that £200 million will be the minimum amount of money needed to ensure that Aer Lingus does not go the way of Sabena and Swissair. It is for the Minister to decide whether that £200 million is provided by way of borrowings or equity. Part of the total may be provided through borrowings, but some of it must be provided through equity.
I reiterate that if there is a principled objection in Brussels, the Minister should restructure the airline by dividing it into a north Atlantic airline and a European airline. A total of 40% of Aer Lingus' business and 60% of its profits come from the North American routes and it will not be viable unless those routes are viable.
The latest announcements indicate that 68 flights due to leave Shannon each week are being cancelled. Most of our linkages from the mid-west to Dublin Airport have been cancelled out. Not only is this affecting the tourism industry, it is completely detaching the mid-west and the west from the economy of the remainder of the country. This will shatter the economies of these two areas and I would like the Minister to comment on these adverse effects.