Written Answers. - State Aid to Aer Lingus.
Jan O'Sullivan
Question:
106
Ms O'Sullivan
asked the
Minister for Public Enterprise
the written submission which was furnished to the EU commission in support of the Government's request to advance funds to Aer Lingus following the aviation crisis after 11 September 2001; and if she will make a statement on the matter.
[31057/01]
Jan O'Sullivan
Question:
107
Ms O'Sullivan
asked the
Minister for Public Enterprise
the compensation which will be paid to Aer Lingus by the Government; and if she will make a statement on the matter.
[31058/01]
I propose to answer Questions Nos. 106 and 107 together.
Irish efforts to achieve the maximum support for Aer Lingus from the European Commission have been continuous and unremitting since the Transport Council on 16 October 2001. I have already outlined to the House my own efforts in the build up to that council and therefore I do not propose to go over again all the personal bilateral contacts I made with the Commission and ministerial colleagues or the strong case I made on the day.
I will illustrate some, but by no means all of the contacts and correspondence with the Commission since 16 October. On almost a daily basis, I have met the Secretary General and other senior officials in my Department to review developments in Aer Lingus and under my direction specific action was put in train. Key contacts are outlined as follows.
On 17 October, the Taoiseach met President Prodi and the full Commission and outlined the Aer Lingus difficulties and the impact of the events of 11 September on the company.
On 19 October, the Secretary General led a delegation of officials to meet a group led by the Chef de Cabinet of Commissioner de Palacio and also with Mr. Ayral, head of the Air Transport Directorate, to outline the uniqueness of the Aer Lingus case and to discuss the full range of possible methods of State investment in Aer Lingus.
On 24, 25 October and 2 November, my Department supplied information to the EU Commission on Aer Lingus in support of the position as outlined at the meeting on 19 October, including the importance of transatlantic flights to Ireland and Aer Lingus.
On 26 October, the Secretary General wrote to Chef de Cabinet de Palacio and received confirmation by return that the position of the Commission on State aid as indicated by me to the House was correct. This exchange in correspondence was necessary because of press reports, which conveyed a different impression of the Commission's position to that outlined by it on 19 October.
On 12 November, the Secretary General issued a letter to the Chef de Cabinet of Commissioner de Palacio to update him on developments at Aer Lingus and formally put the Commission on notice that the Irish authorities would make a case for extending the four day compensation package. Later in my response, I will deal specifically with this issue.
On 16 November, my officials attended a meeting of EU Directors General for aviation chaired by the Commission in Brussels to discuss the state of European aviation and in particular the measures put in place since the terrorist attacks. The Irish representatives outlined the case of Aer Lingus and advised that Ireland was keeping all options open to assist Aer Lingus including State investment. My Department is keeping all competition and state aid rules and regulations under review in conjunction with the Attorney General's office. My Department has also engaged on a consultancy basis the services of a former senior official from the Competition Directorate of the European Commission to advise us in this area. My Department will be in a position to make a comprehensive case in respect of any proposal for investment in Aer Lingus, which the Government may wish to make to the European Commission.
As the House is aware, the Government has decided in principle that, provided the survival plan is rapidly agreed and implemented in all its essential aspects, the Government will facilitate private sector interests in an investment in Aer Lingus in order to provide a source of funding to support the survival plan. The Government also decided it should be open to the staff of Aer Lingus to invest further in the airline.
In relation to the EU position regarding funding for all European airlines including Aer Lingus, I have already outlined to the House the horizontal emergency aid package agreed by the Transport Council on 16 October for all European airlines following the events of 11 September. This package essentially consisted of: compensation for losses suffered by EU airlines as a result of the four day closure of US airspace; coverage for insurance to end of the year; and discretion for states to cover additional security costs.
Since then, my Department has put arrangements in place in relation to the insurance cover.
Regarding security costs, my officials are in contact with Irish airport companies and airlines to establish the additional security costs attributable to the events of 11 September.
In relation to the four day emergency compensation, on 31 October, my officials clarified with the Commission certain details in relation to the criteria that may be taken into account when such payments are being assessed by member states and this aspect was followed up in written correspondence.
On 1 November last, a letter issued from my Department to all Irish licensed airlines setting out the criteria for the emergency aid and inviting submissions. At this stage three claims have been received and a fourth airline has indicated it will submit a claim. One of the claims relates to Aer Lingus and was received on Friday, 23 November. Payments of this claim have been made to Aer Lingus earlier today.
I still believe the compensation measures for all European airlines for the four day closure of US airspace is minimalist and insufficient given the impact of the terrorist attacks, particularly when one takes account of the US aid package. I am continuing to press for an extension of this measure and my officials have formally put the European Commission on notice that we will make a strong case for the extension of this measure. Aer Lingus has advised me that it is currently working on an analysis of the full impact of the events of 11 September and will forward its submission shortly. On receipt, I will make a formal case to the Commission. I will return to this matter at the next Transport Council on 6 December.
On the wider question of State investment in Aer Lingus, the Deputies will be aware that following all our recent contacts and in all its public pronouncements on this issue, the European Commission has been unyielding in its view that any State injection of funds into Aer Lingus would be in breach of the State aid rules. In any event, even if the Government were to go down that road, any such proposal would take a minimum of 12 months to be examined by the Commission. Even if there were a chance of a favourable outcome, we do not have the luxury of such a time frame in which to save Aer Lingus.
The Commission has indicated it does not see any circumstance where a State investment in the company will meet the market economy investor principle. It has further stated that following a notification of such a proposal, it would invoke the investigation procedure, under the state aid rules, which would take a minimum of 12 months to complete.
I have been asked on several occasions why we do not apply to invest in Aer Lingus under Article 87(3)C of the EU Treaty, citing exceptional circumstances under the 1999 guidelines. The Commission has said the response to the exceptional circumstances of the 11 September must be on a horizontal basis as agreed at the Transport Council on 16 October. Furthermore, Aer Lingus received aid under this Article in 1993 on a one time, last time basis. The Commission does not foresee any circumstance where it will allow a second derogation for Aer Lingus under the State aid rules.
We have reserved the right to contest these views of the Commission in relation to any specific proposal, which the Government may decide to formally present to the Commission. However, without agreement within the company on the survival plan, interpretation of the State aid rules becomes academic.
The next full discussion among European Ministers on the aviation crisis in Europe takes place at the Transport Council on 6 December. I will prepare for that Council in the same manner as I did for the October Council, namely by renewing my bilateral contacts with ministerial colleagues who expressed a degree of support for the position I took at the October Council. I will also press Commissioner de Palacio both before the Council and during the Council itself to propose a more generous package of horizontal assistance measures for European airlines and one which would better reflect the exceptional nature of the events of 11 September and also the inequity of very substantial assistance to US airlines from its Government.
