Dáil Éireann debate -
Tuesday, 25 Nov 2003

Vol. 575 No. 3

State Airports.

Mr. Naughten

I am grateful for the opportunity to raise this important issue. It is hugely disappointing that neither the Minister for Transport nor his Minister of State is in the House and that the Minister of State with responsibility for housing is replying to the matter I raise. The Government has singularly failed to ensure that social and economic development is balanced across the regions. The Government's regional policy, such as it is, has been completely self serving with the result that many regions, including the mid-west, have not fully shared in balanced development.

The Government has utterly failed to address the new challenges faced by Shannon Airport. The airport has a critical role to play as a catalyst for the development not only of the mid-west but the entire western seaboard. The EU decision to open negotiations with the USA on the open skies policy has again raised the issue of Shannon's dual gateway status. Fine Gael believes the status must be retained to ensure that we have some semblance of regional development. It is clear that the Government does not take the same view. The Government has drafted a paper in which it proposes the winding down of the dual gateway status over a three-year period. The reasoning behind this is that Aer Lingus seeks direct flights to Dublin which would increase the value of the company in the privatisation the Minister has planned. It is sought to maximise the funds generated from the sale of Aer Lingus as these can then be used to buy the next election. It was bad enough to buy the last one.

The European Union has no difficulty with the USA and Ireland negotiating to protect the dual gateway status of Shannon Airport. In the United Kingdom, Heathrow Airport has special status which demonstrates the acceptability of this practice. To date, the Minister has done nothing but dither with the result that we have no plans in respect of the future of the dual gateway at Shannon Airport. What impact will the removal of the dual gateway status have on the future of an independent Shannon Airport? There will be a loss of up to €10 million per annum with the falling off in transatlantic passenger numbers.

Last week the Minister stated that Shannon Airport caters for passenger numbers in excess of two million and will be able to generate sufficient funds to keep its capital investment going. The difficulty is that Shannon Airport must carry out significant capital investment on an ongoing basis. If it loses the passenger numbers on transatlantic flights, it will not be able to generate sufficient funds for re-investment in the airport.

Has there been an economic analysis of the dual gateway and the impact its abolition could have on the western seaboard? Has any business plan for the finance of the airport been developed should the dual gateway be removed? The Minister has been developing policy as he goes along. Will the State provide any subvention for capital investments required at the airport in the coming years such as the upgrading of the 50 year old runway?

No commitment has been given to date on the security of loans should Shannon Airport become an independent entity under the State umbrella. Last Thursday the Minister stated that the current legislation and protection for Aer Rianta in regard to capital investment would remain. That would mean that Dublin Airport's debt would be secured by the Government but it would not impact on any future loans which Cork or Shannon Airports would take on. This would have a detrimental effect on the viability of Shannon Airport.

The Minister is humming and hawing on this issue. He has yet to make a firm commitment on the future of Shannon, on what investment is required, on how capital investment will be generated at Shannon and on the future plans for the dual gateway status at Shannon Airport. These are all critical issues. The Minister has not been prepared to give any detail. The only thing he has said to date – again, it was last Thursday – was in the context of the PricewaterhouseCoopers report when he said there was too much financial pressure on the company and that Shannon Airport cannot stand alone. I would like answers on what will be done to ensure Shannon Airport is viable and that we have a decent regional development policy.

Mr. N. Ahern

The Minister for Transport has spoken in the House about this issue several times recently, including several replies to parliamentary questions this month, and, as the Deputy said, it was discussed last Thursday. As far as the issue raised by Deputy Naughten is concerned, the situation is as already mentioned by the Minister in his recent replies. However, I will restate the position. I will begin by outlining the background to this matter before replying to the specific point.

The European Court of Justice ruled on 5 November 2002 on a case taken by the European Commission against eight member states, not including Ireland, on those states' open skies agreements with the US. The court ruled that the designation of national airlines in those member states' bilateral air transport agreements is contrary to the right of establishment provided for under the treaties establishing the European Union. This means that member states must allow any European airline established in their country to enjoy the benefits of that member state's bilateral agreements. This legal principle applies to each member state's bilaterals with every third country, not just with the US.

In response to the court's ruling, the European Commission re-activated a proposal to give it a mandate to negotiate an open aviation area agreement with the USA. This was a long-standing proposal and the Minister considered that it was only a matter of time before such a mandate would be given to the Commission. Under the mandate, the EU and US territories would be treated as a single aviation area. Such an open aviation area agreement between the EU and US would satisfactorily solve the legal problems highlighted by the court in regard to the US and is a pragmatic response to the difficulty of up to 15, and shortly 25, member states having simultaneously to change their agreements with the US in an integrated way.

The mandate put forward by the Commission envisages a liberalised regime in which airlines may operate services in both Europe and the US as well as between them. The intention is that European and US airlines are not constrained as to the destinations to which they fly, just as they are not so constrained within Europe today.

Other issues also arose during discussion on that mandate, such as the implications that an EU-US agreement would have for relations with third countries other than the USA and whether member states could continue to negotiate changes to their agreements with third countries on a bilateral basis. These were all taken into account when the Transport Council took its decision on this whole issue.

Coming to the issue of the Minister's position on the dual gateway status of Shannon Airport, wider considerations must be taken into account, especially the opportunities for new business for Ireland currently not being exploited due to the limitation on the number of US destinations open to Irish airlines when deciding on this issue. Other considerations include the position of Aer Lingus and other Irish airlines, the position of the new board designate of Shannon Airport as well as the position of the unions representing the airport staff. Needless to say, the impact on the surrounding region must also be considered.

As the Minister for Transport has said, change in this area is inevitable. Whatever change there is must be introduced on a phased basis and must run in tandem with the putting in place of a package of measures that will be equally beneficial for Shannon. That package of measures will relate to such issues as the continuity and stability of air services through Shannon Airport, especially by Aer Lingus but by other carriers also, the maximisation of the airport's catchment area through surface transport improvements and the establishment of Shannon Airport as an independent commercial airport with a top quality board and management.

Officials from the Department of Transport are currently engaging on the Minister's behalf with the trade unions representing airport staff, and the Minister will shortly consult the new board designate of Shannon Airport. The Minister has said it is his intention to authorise officials to engage in bilateral negotiations, under his supervision, with their US counterparts on the Ireland-US bilateral agreement. Only when those consultations with the board designate and with the unions are concluded will the Minister finally be in a position to decide on the next steps.