JOINT COMMITTEE ON TRANSPORT debate -
Tuesday, 1 Jul 2003

Vol. 1 No. 21

Aviation Policy: Presentation.

Chairman

I welcome the delegation - Kevin Thompstone, chief executive officer of Shannon Development and the Western Alliance; Tony Brazil, chief of the Travel Agents Association and also of Shannon Airport-Western Alliance; Joe Buckley, Signal, Shannon Airport; JoeCunningham, SIPTU, Shannon Airport-Western Alliance, and Councillor Peter Considine of the local authority and the Western Alliance.

I wish to draw your attention to the fact that members of this committee have absolute privilege but this same privilege does not apply to witnesses appearing before the committee. I also wish to remind members of long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside the House, or an official by name, in such a way as to make him or her identifiable.

Councillor Peter Considine

I apologise for the inability of Councillor Mattie Ryan to attend today, as he is sick. He is chairman of the Midwestern Regional Authority and I am deputising for him. I thank Deputy Pat Breen and Senator Dooley for facilitating this meeting. We are aware of the time strictures so I will hand over to Kevin Thompstone.

Mr. Kevin Thompstone

The committee has a copy of the presentation. I will go through it and pick out its key points, referring to the slides.

The document talks about the context for spatial development and, ultimately, that is what is informing people in the Shannon region and the west of Ireland. The national policy is to see balanced regional development, most recently expressed in the national spatial strategy. Our central argument today is that aviation policy is a critical instrument of economic development. Any policy change in the aviation arena must take account of economic impact.

Our presentation also deals with the concentration of air access into the island of Ireland. The committee will see a map of Ireland with the distribution of passenger numbers to the three Aer Rianta airports at Dublin, Cork and Shannon. The most striking data is that over 80% of European and UK traffic into Ireland comes through Dublin. The equivalent figures for Cork and Shannon range from 7% to 11%. The one area that breaks that trend is the North Atlantic market block, where 44% of passenger traffic to the island of Ireland comes through Shannon and the balance of 66% through Dublin. This is the one area where there is some correlation between the level of access into the country and the level of economic activity into the west of Ireland. In addition, transatlantic business accounts for 32% of Shannon's traffic but just 5% of Dublin's traffic. As transatlantic business is very important, any change in aviation policy must serve to improve that situation rather than disimprove it.

In relation to the concentration of activity into the island of Ireland, what we are currently witnessing is ever-increasing growth on the east coast, most recently re-enforced by the 2002 Census data. This indicates that 53% of the population lives in Leinster and we are getting a magnet effect in the area of tourism, industry, services, population and air services. Our central argument is that air access is a vital instrument which can be used to address that imbalance.

A big issue on everyone's mind at the moment is the bilateral aviation agreement between Ireland and the US, particularly the recent change where the EU Council has given authority to the EU Commission to negotiate an air services agreement with our counterparts in North America. There is much reference to theShannon stopover. What I would like to get across this afternoon is that there is no such thing as the Shannon stopover. Ireland has a dual gateway policy and the current bilateral agreement between Ireland and the US allows any airline serving Shannon to provide non-stop services to Dublin provided there are an equal number of air services to Shannon on a calendar year basis, not a day-by-day basis.

What does this mean for consumers for whom this is all about? If one wishes to fly today from Dublin to North America, one can fly to Los Angeles, Chicago, Boston, New York, Philadelphia, Newark and one does not have to go anywhere near Shannon. One can fly non-stop from Dublin to any of these destinations under the current bilateral agreement. The table on display highlights that the current gateway policy provides choice for consumers. In the case of Baltimore, for example, the service operates through Shannon. However, other airlines such as US Airways fly to Shannon and Dublin, with non-stop services in both locations. In other locations such as Atlanta, Delta will fly a number of days a week through Shannon and a number of other days a week through Dublin. With planning, consumers have choice. Our argument is that the current bilateral policy gives consumers choice, as well as generating economic impact. Currently, with choice, 44% of transatlantic passengers choose to disembark at Shannon.

We have done some research on what has been happening in terms of growth in passenger numbers between the US and countries in Europe over the past ten years or so. According to US data, the fastest growing market for travel over that period between the US and Europe is Ireland. Ireland over the period 1993-2002 has seen growth in passenger numbers from just under one million to 1.5 million. It peaked at 1.9 million in 2000, as did other countries. It has shown a compound annual growth rate over that period of 5.6% compared to the average 3% for all European markets over the period. Interestingly, Ireland, the UK and Spain, who do not have open skies agreements with the US, are in the top five growth markets over that period.

We looked at what has happened where we have open skies agreements with European countries. There are countries in Europe who have an open skies agreements, including Austria, Belgium, Denmark and so on. The experience is that countries who have an open skies agreement with the US generally have one city as the location for transatlantic access. Vienna accounts for 100% of Austria's transatlantic traffic, Brussels for 100% of Belgium's transatlantic traffic and so on. No country has less than 90% of traffic going through one gateway. Irrespective of customer wishes, there is significant concentration of air access in countries where there are open skies policies. Our concern is that the experience in Ireland could be the same.

Looking at the Irish Government's position, it is very clear that the Minister for Transport, Deputy Brennan, shares these concerns, as outlined in his comments to the European Transport Council when it made the recent decision to give the mandate to the EU Commission. We share the Minister's concerns. Our analysis shows that if an open skies policy was to be introduced, effectively, the volume of services throughShannon would reduce from the current 50 per week to approximately seven per week. This is one daily service split between New York and Boston.

I will finish by stating that the priorities for Shannon are as follows, if one can imagine a continuum with the commercial argument and the economic development argument. Our concern is that there is a headlong rush in place to change the current bilateral agreement, driven principally by the commercial arguments. We accept that change is coming through the EU process. However, independent of that, we are concerned that there may be a move to change the bilateral agreement over a period of weeks or during the summer period, driven mainly by commercial arguments. Ultimately, policy change is about priorities. We believe most of the priority at the moment is being given to the commercial arguments and not enough attention is paid to the economic development arguments. The balance needs to be analysed and articulated much more clearly before any policy change is introduced. If it is introduced, it must be done on a planned basis over a transition period, with the economic development agenda very much to the forefront.

Deputy Naughten

As the delegation knows, there has been a great deal of debate on where the push in coming from the review of the bilateral agreement. A strong argument has been made that the EU wants to open up this whole debate and have a single skies policy. Is the review of the dual gateway policy part of the open skies agenda at EU level? Perhaps that issue could be elaborated on.

In light of the spatial strategy proposing balanced regional development, could members of the delegation outline what impact it would have on regional development and investment in the region if the dual gateway were to end tomorrow morning? Perhaps Mr. Brazil will elaborate on whether there is a differential between the cost base of bringing tourists into Shannon versus Dublin. In relation to the non-stop flights from either Dublin or Shannon, what is the demand comparison between the two airports and the loading on these flights? What is the organisation's objectives for the future development of the airport either in the context of the current dual gateway or outside of that? Where do people see Shannon developing or gaining new business? What opportunities are there for the future and what structures need to be put in place?

Deputy Shortall

I welcome the members of the delegation and thank them for their presentation. It is exceptionally clear and makes the case very well and very substantially.

In recent weeks the Minister has talked about the ending of the Shannon stopover being inevitable in the context of an open skies policy. At the same time there are suggestions that there is no difficulty in retaining the dual gateway policy in the context of an open skies regime. What is the delegation's information on that? I understand some members of the delegation have met aviation officials in Brussels. What have they heard from Brussels in that regard? Is it possible to retain the dual gateway strategy and is it compatible with the bigger picture being proposed in Europe? If that is the case, what are the delegation's views on where the pressures are coming from in respect of the position the Minister is now adopting? Are they coming from US airlines or from Aer Lingus? At Question Time in the Dáil recently the Minister suggested that he had met with officials from the American Embassy. Is pressure coming through diplomatic channels to end the stopover? I would welcome the views of the delegation on that.

The figures for non-transatlantic business in Shannon are extremely low. A total of 7% of the airport's business comes from EU countries and 7% from the United Kingdom. What is the potential for developing that business? In the light of the serious access problems at Dublin Airport, what kind of infrastructural improvements would be required in order to attract more business from the west and the general Munster area for that kind of European and UK business? What infrastructural supports can Government put in place and what commitments can be made in order to exploit that potential business?

Senator Dooley

I join with other members in welcoming the delegation. I agree that we have heard an excellent presentation. It was concise and to the point. I recognise the work of the group, which has come together quickly and is doing pioneering work in this regard. The group is to be congratulated for that.

There seems to be a counter argument to that which has been developed by interests on the east coast, particularly within some of the tourism agencies, chambers of commerce, hotel federations and some of the business and employers groups. Representatives of these interests have made statements regarding the necessity for the ending of the stopover in order to drive Dublin as a hub. They see the mid-west and southern regions as spokes to that hub. Will the delegation comment on the effect that might have on the mid-west region?

Deputy Shortall has referred to the question of where the pressure is coming from. That question is also worth examining.

Is the delegation considering an impact study to show the effect of the loss of the stopover, taking into account some of the other measures that have been identified to date, considering the implications for the region and focusing on the tourism sector? Mr. Thompstone might talk about the implications for the business community in the area and the specific effects a second terminal at Dublin Airport would have on the Shannnon region?

Mr. Thompstone

Perhaps Joe Buckley, who has visited Brussels, could deal with the question on the EU perspective on the dual gateway policy.

Mr. Joe Buckley

A group from Signal with some MEPs visited Brussels and met with Mr. Ludolf Van Hasselt, head of unit, air transport agreements. We wanted to find out the EU position in relation to Shannon. Up to that time everything we heard pointed to enormous pressure coming from Europe in relation to the bilateral agreement. Mr. Van Hasselt told us that the bilateral Shannon stipulation is not a major issue in Europe. He said the big issues were the slots in Heathrow and other hubs in Europe. He told us that the Shannon stipulation could be incorporated in a new EU-US bilateral agreement if the Irish Government was to make the case for it. He did not see a difficulty with that. He also said that similar situations existed throughout Europe where stipulations were accommodated and incorporated in new EU-US agreements. He said it was not anti-competitive if every airline could serve Ireland on an equal basis, so that it would not be anti-competitive if the present one-for-one was incorporated in a new EU-US agreement. We also raised the issue of money coming from Europe in the event of the bilateral agreement being changed. He said no money was available from the Transport Commission in Europe for any change in the bilateral agreement.

We got a very clear picture that pressure is not coming from Europe for a change in the bilateral agreement. It is a very minor issue as far as Europe is concerned.

A proposal is before the European Parliament at present for a Council regulation on the negotation and implementation of air service agreements between member states and third countries. That proposal clearly states:

Where a bilateral agreement contains provisions on the designation of airports for the exercise of traffic rights, designation should, in conformity with the principle of subsidiarity, be a matter for the competent authorities of the member state concerned.

This makes it clear that the designation ofShannon as a transatlantic gateway is a matter for the Irish Government. If the Government makes the case to Europe the current arrangement can be incorporated in a new EU-US agreement.

Mr. Thompstone

There was a question about what would happen if an open skies policy was introduced. We have done an analysis of what airlines would do in an open skies scenario. It is very clear that airline chief executive officers charged with a commercial mandate will do what any rational person would do. They will seek to minimise their costs and maximise their revenue. Costs are particularly important to airlines. The committee has seen the evidence we have provided on what airline chief executive officers have done throughout the rest of Europe. They have concentrated their services into one city. Our analysis indicates that the same thing will happen in Ireland.

In a free regulated market we estimate that, at best, Shannon might get one service per week. The reason for that is that airlines will consolidate their cost bases in Dublin. To do business in today's knowledge-based economy one must be able to move goods, services and people quickly from one place to another. My ear is reddened regularly by chief executive officers of companies located in the region saying they have difficulty going eastbound to Europe on a same-day-return basis. If anything happens to reduce the level of transatlantic services we will be in serious difficulty and it will be very difficult for me to persuade our corporate headquarters in the United States to invest in the region. That is the kind of impact we are seeing.

Senator Dooley

Has anything been quantified in monetary terms? It would be useful for us to see the potential loss to the region, both from a tourism and business perspective. Is Mr.Thompstone considering doing such an impact study?

Mr. Thompstone

It has already been estimated that the jobs of approximately 40,000 people are linked in some way to Shannon as an engine for growth. It is not just Shannon but also the Atlantic corridor running from Galway through Ennis, Shannon and on to Limerick. If one applies the average industrial wage to that number, one begins to see the economic impact.

Mr. Tony Brazil

A specific question was asked about tourism. Regarding travel agencies, our real concern is for airport facilities and choice for travellers whether they are coming into or leaving the country. We campaigned strongly in favour of improved facilities in Cork which have now been put in train. We were concerned about the facilities at Dublin Airport and we are now very active members of the airport users' group there. There have been dramatic improvements at Dublin Airport on the basis of our input and that of other interested parties in that committee.

Our real concern about Shannon Airport is the lack of choice for people should there be any diminution in the current arrangements. Our customers include industrialists and they tell us that they want more services. It is no accident that the second largest cluster of US industry based in Ireland is in the Shannon mid-west region. The airport is there to facilitate those companies in the movement of their freight goods and their executives.

The customers say that a summer service alone is not good enough; they want a year-round service. We know that Aer Lingus does not dispute the fact that in a changed bilateral environment, it is indeed possible that we will be left with just one service a day to the United States. The large multinational household names based in our region are the bedrock of the prosperity of the area.

Tours are set up by incoming agents based on the Shannon gateway. The costs for the ground arrangements such as using hotels in the west of Ireland generally, would be 30% less than similar accommodation in the greater Dublin area. That is a significant consideration for many people and is one of the reasons that drives much of the business through the Shannon gateway. In addition, we are all aware of the traffic problems in the north Dublin area. Even before tunnelling began in Dublin, it had always been the case that people picking up self-drive cars found it easier to navigate and become familiar with our road system when they started in Shannon. That is a reason why people choose to travel through Shannon.

Mr. Joe Cunningham

In response to the questions asked by Deputies Naughten and Shortall about where the push is coming from, we have pointed out that it is not coming from Europe. There is no doubt in my mind, and it is a view shared by the committee, that there is a definite push coming from Aer Lingus in terms of looking at the situation in which they will find themselves. They argue that it will be beneficial for them if they have increased access to the United States by way of extra gateways.

Depending on what day of the week one listens to answers given by the Minister, there is a different story. We are being led to believe that we have a two-and-a-half to a three-year timeframe in which we can sort out this problem. If that is the case, that is fine. However, two weeks ago on "Morning Ireland", the chief executive of Aer Lingus said that he envisages an eight to 12-week timeframe to effect change. That clearly cannot happen within the European context and renegotiation of bilaterals; it can only happen if there is direct negotiation between the Minister's Department and the United States. That is what we fear most because then we cannot answer the questions that need to be answered about the possible implications of the change. It is critically important to understand that this is not just about the Shannon gateway and the Shannon orLimerick area , it concerns the whole west coast. What people in the Limerick and Shannon area say to Kevin Thompstone, will be similar to what people in Galway and Mayo say to the IDA. It is critical that American multinationals are located on the west coast.

We must consider what would be the impact if the Shannon stop-over were taken away. We asked that question of the Department and asked if we could do a study to show what the impact would be. The answer was: "we do not need any more studies; we are weighed down with studies; we do not want to know that".

We can probably come up with a solution within two-and-a-half to three years which is one we can all live with. Twelve weeks will not be enough time to counteract anything that takes place in that short timeframe. It is a regional development issue and an issue of balance and giving customers a choice. It is not about some dyed in the wool idea that we are looking for benefits and want something for nothing. In the west of Ireland this is the only element of regional development that actually works. All the rest are ideas and concepts but this works and it is now under threat.

Deputy Naughten

The Minister will probably argue that if the Shannon dual gateway stays in place and there is an open skies policy, the US carriers will bypass Ireland and fly directly into Heathrow and then on to Ireland. Could that be possible?

Mr. Cunningham

Of course that could be possible. It is a very real possibility. I am not sure I heard the question correctly.

Deputy Naughten

If the dual gateway stayed in place in Ireland following the renegotiation with the US by the EU and there was an open skies policy within Europe, would US multinationals bypass Ireland and fly directly into Heathrow and then on to Dublin?

Chairman

We would have the worst of both worlds.

Mr. Cunningham

If we maintain a one-for-one price with an opens skies policy?

Chairman

If the delegation has done a study which shows there will only be one airline, it must also have studied how many extra people will fly in. Mr. Willie Walsh says that there could be direct access to approximately 14 cities in the United States. That must mean there will be a large increase in the numbers coming into the country and that will have a spin-off benefit to tourism. Most visitors will visit the west. What is the delegation's view? We could end up with the worst of both worlds, where a certain number of flights have to fly into Shannon and the rest of Europe has a completely open skies policy and people can fly in as they wish.

Mr. Cunningham

We have detailed analysis to show that it is not the case that passengers landing in Dublin will drift across to the west coast. Our information is that a small percentage will go across but the majority——

Chairman

Most American tourists in Dublin will also have been to the west of Ireland.

Mr. Thompstone

The data showed that of visitors overnighting in Dublin, 15% to 20% will also overnight in other regions of Ireland. The equivalent percentage for visitors overnighting in any of the western regions is approximately 35% to 50%. This shows that it does matter what the visitor's access point is. There is a greater propensity for visitors to be distributed up and down the west of Ireland if they access through the west coast as opposed to the east coast. The Bord Fáilte-CSO data provides those statistics on the distribution of visitors.

Chairman

Why does the delegation think Aer Lingus wants to have access to 14 American cities?

Mr. Thompstone

What drives success of airlines is a combination of their revenue base and their cost base. Having two locations, two stations to serve, as they are required to do in Ireland, adds to the cost base for the airline, looking at it purely from a commercial perspective. If I were sitting in Willie Walsh's seat as chief executive officer of Aer Lingus with nothing to think about other than the bottom line, I would probably be looking to do exactly the same thing. However, there is an economic cost that goes with that as well.

Our argument is that all of the drive for policy change at the moment is weighted 100% on the commercial side of the equation. Not enough attention is given to the economic impact. Quite simply, adding to what Mr. Cunningham said earlier, if there is such a benefit to be gained by Ireland Inc. from a change in the current policy, then there should be no problem with doing a very detailed analysis of all of the benefits to Ireland that then can be weighed up against the costs that we have indicated will exist. If that indicates that change is required, then it should be done on a managed basis. The problem at the moment is that no such analysis has been done. The argument is that airlines need to get on with doing things; Aer Lingus needs to get on with doing things; let us go and make the change without doing the analysis.

Deputy P. Power

I join my colleagues in welcoming our guests. I would like them to speculate over the future direction of the negotiations for open skies. I draw the analogy with the next round of the WTO negotiations, the Cancun round, in the context of the recent EU agricultural negotiations. Many of those in the agricultural sphere now suggest that although they were quite painful, the recent negotiations in Europe to reform the CAP to a certain extent ring-fenced the existing arrangements in Europe. When it comes to the WTO discussions in October the negotiating position will be much stronger.

In the context of an EU-US aviation agreement would it be preferable to have some form of existing arrangement in place with which we could live and in some shape reverse it into a much wider agreement? In other words, a bird in the hand is worth two in the bush and it would allow us to know where we stand. I ask the witnesses to speculate whether the interests of the country might be better served in this way, as ultimately this will be a negotiation like other complex negotiations.

Arising out of their meeting, Mr. Buckley stated Mr. Van Hasselt did not see any difficulty with Ireland maintaining a one for one or similar arrangement provided it did not offend competition rules. Was he making assumptions about the US position on that? That will be a key point when it comes to negotiations.

Deputy P. Breen

I thank the delegation for attending to address the committee. I request that the Clerk to the committee circulate copies of Mr. Thompstone's presentation to the other members of the committee who are not present today. Last week, Mr. Mike Carter of Continental Airlines stated that his airline had brought about 750,000 people to this country in the past five years. He believes Shannon is not prohibiting the growth. He has no problem with passenger numbers or with the Shannon gateway.

Do the witnesses feel that Aer Lingus is marketing Shannon Airport sufficiently, particularly on the transatlantic route? Mr. Cunningham commented on the Minister's recent statements. At one stage he said we have two-and-a-half years to make up our minds as to what to do on Shannon. Following a series of parliamentary questions, he mentioned a number of meetings he had with US officials and with Aer Lingus. Willie Walsh said he would like to open winter services from Orlando and San Francisco, which would mean changing the current bilateral agreement if he wishes to serve Dublin only.

I understand Shannon Development carried out an impact study on the bilateral agreement in the 1990s. At that time the then Minister for Public Enterprise, former Deputy O'Rourke, said that the bilateral agreement was the best thing for Shannon in the circumstances at the time. Does Mr. Thompstone feel circumstances have changed in the meantime to alter the view of the agreement?

Senator Morrissey

I thank the delegation for its presentation to the committee. How will American airlines feel if we keep the dual gateway? Given the capacity for growth due to the lack of congestion in getting to Shannon and the availability of slots there, what is its future in the next five years if the Minister's plans go ahead? I would like the witnesses to speak further about Shannon as a hub for Europe due to its available capacity.

Mr. Buckley

I would like to answer some of the questions in relation to Europe. What disturbs us at the moment is that there is almost a panic reaction to go away and renegotiate the current bilateral agreement on an Ireland to US basis. When we were dealing with Europe we found that they had great sympathy for Shannon's position. If looked at independently, it would suggest that the strongest possible negotiator would be the EU negotiating on behalf of Ireland and the rest of the member states. That is something that is coming. Negotiations will probably start in the autumn.

We would see a situation where Aer Lingus would get the gateways and an arrangement could be incorporated for Shannon into a new EU agreement. It is less likely that Ireland would get an acceptable arrangement if Ireland tries to negotiate because of the strength of Ireland versus the US when it comes to negotiating. It is going to be a small issue in Europe, so we figure that if Europe is negotiating with the US there is a much better chance of getting an agreement for Ireland both from the point of view of Aer Lingus looking for the gateway and also from the point of view of keeping the Shannon arrangement as well. We are disappointed that there seems to be an urgency. We are talking about a couple of weeks and this is going to be done very quickly.

There was mention of an impact study. It is absolutely critical. I take your point, Chairman, about additional gateways being put forward. If that is the case, let everybody lay out the pluses and minuses formally in an impact study and see what the benefits will be for Ireland, what the consequences are for Shannon and what the benefits are for Aer Lingus. What really concerns us is the absolute urgency there seems to be about negotiating the bilateral agreement at present. We are dismayed and shocked at how this thing has moved in the past few weeks.

Mr. Thompstone

Deputy Breen asked about the 1990s study on the potential impact of open skies. He is referring to a study commissioned by the Shannon Airport marketing consultative committee on the impact of Aer Lingus joining one of the strategic alliances and an open skies agreement. The report of the study, which was conducted in 1999, was made available to the then Minister for Public Enterprise, former Deputy O'Rourke, and more recently to the Minister for Transport, Deputy Brennan. The analysis highlights the figures to which I referred earlier, which indicated there would be a significant reduction in the volume of services through Shannon Airport and, essentially, that all carriers would consolidate around Dublin, leaving perhaps one service through Shannon.

Has anything changed since then to make me disavow those views? No. The main changes have been that Aer Lingus has joined the One World Alliance, of which we were not aware at that time, and US Airways has moved into the Phila-delphia route, which begins to address some of Senator Morrissey's queries.

Under the current bilateral policy, Continental Airlines has decided to service the Newark route serving Shannon and Dublin airports on a non-stop basis and US Airways has decided to serve the Philadelphia route to Shannon and Dublin airports on a non-stop basis. Under the current agreement, therefore, we have incremental services and passenger traffic to Ireland, which has facilitated growth. As the presentation highlights, Ireland has been the fastest growing market in transatlantic traffic with the United States.

The fact that the European Union has received a negotiating mandate indicates that change is coming. We must avoid coming across as being stuck in the mud or rooted in the past. While we recognise that change is coming, our central argument is that we must plan for it and be aware of its impact. If an analysis indicates that change should be made, one plans for it. For example, in terms of European and transatlantic services, it is currently impossible to build a significant commercial base for traffic at Shannon Airport because of the level of ground access to the airport. A coherent policy, together with significant investment in road and rail infrastructure over an extended period, are required. This is the message we try to get across in the final part of the presentation, namely, that change can be managed but on a planned basis over a transition period, not, as is our current concern, over a short period this summer.

Mr. Brazil

In response to Senator Morrissey's question, Ireland's experience is outlined in a table in the presentation. We are top of the league and have doubled the number of passengers coming here through the revised policy introduced in the early to mid-1990s. The answer to current events is to be found in the figures. The United Kingdom is number four in the league, whereas we are at the top. The approach taken to date has worked.

An allied question on marketing was asked. One could argue one can never spend enough on marketing. In recent times, the manner in which Aer Lingus has marketed itself has not helped attract more tourists because its large-scale advertising in the United States has been severely reduced. I do not wish to be too critical of this decision, as one must also recognise that the change from Bord Fáilte to the new platform for marketing Ireland abroad, Tourism Ireland incorporating the Northern Ireland Tourist Board, includes an informal arrangement whereby €1 is spent on Northern Ireland for every €3 spent on the Republic. Consequently, many areas, including areas in the west are not receiving the same intensive marketing as previously because one quarter of the budget is spent on Northern Ireland. One must bear in mind that there are more registered hotel and guesthouse bedrooms in Killarney than in the whole of the North. We have all suffered from this imbalance, not just the Shannon region but also the entire west coast from counties Mayo and Sligo to counties Cork and Kerry. The decision has created a disadvantage.

Chairman

Is the problem not related to the events of 11 September 2001?

Mr. Brazil

No, it is due to a shortage of funds. The volume of money spent previously is no longer being spent.

Chairman

Not many people would agree.

Mr. Brazil

I would be happy to produce——

Chairman

Americans have not been travelling since 11 September 2001.

Deputy Killeen

I appreciate the opportunity to attend the meeting and contribute to proceedings. I apologise for not bringing a press cutting from the Clare Champion, as promised, in which the Chairman made a star appearance on the matter under discussion. I welcome the deputation and compliment speakers on their presentation and the answers they have given, particularly Mr. Thompstone's point that there is no such thing as a stop-over, except in the case of one of the airlines which serves this country, Aer Lingus, the only one which does not offer choice on all routes. On the Los Angeles route it does not include Shannon Airport, while on the Chicago route, one must fly Shannon to Dublin to Chicago; likewise on the return leg. On the Baltimore-Washington route one must fly Dublin to Shannon to Baltimore, which is a perverse arrangement, since Chicago has much more in common with the west and the US capital, Washington, has much more in common with Dublin.

Do the members of the deputation agree that the correct answer to the question put by the Chairman and Deputy Naughten is that Aer Lingus has a vested interest in ensuring it is in the best position for privatisation as quickly as possible? Moreover, while there are perhaps some benefits to the State in obtaining the best price for the company, powerful individuals and corporations, which tend to benefit in the privatisation stakes, also stand to gain. The witnesses are too polite to say this is the case, but it is true.

While visiting the United States recently, I was taken aback by the reaction of Americans to anti-war protests in Europe, including in Ireland but particularly in France and Germany. I even found that Congressmen who had voted against the war took an extremely negative view of some parts of Europe and were greatly disappointed and surprised by the demonstrations in Ireland. What efforts have been made to ensure we benefit from the goodwill on the US side arising from the Government's decision to make Shannon Airport available for US troop carriers?

In the longer term, in the context of EU-US negotiations, but more urgently in the shorter term, in the context of the comments made by Mr. Buckley and Mr. Cunningham on the possibility of Ireland trying to renegotiate the bilateral agreement, while considerable advantages would arise from holding talks with the American transport authorities, the Government's behaviour in pursuing precipitate negotiations with the United States in an unseemly hurry for such a small return in terms of a better price for Aer Lingus, appears peculiar.

Deputy O’Sullivan

I welcome the delegation and the opportunity to attend the meeting as I am not a member of the committee. I will briefly address the economic arguments. In answer to a series of parliamentary questions I tabled to the Minister last week, and one tabled by Deputy Pat Breen, the Minister stated the process towards an open skies policy is no longer about legal interpretation but economic policy. I interpret this as his first admission that this decision has not been driven by EU rules and regulations but is instead Government policy.

Has the deputation had the opportunity to make economic arguments, such as Mr. Thompstone's argument on the 37,000 jobs which depend on Shannon Airport, to the Minister? This argument must be made on behalf of Shannon Airport before a hasty decision is taken which will have a significant impact on the mid-west and west.

In other European Union countries which do not have a gateways policy, transatlantic traffic almost invariably uses only one city, usually the capital. It is essential that these arguments are presented now before an irrevocable decision is made. This issue is crucially important to people in the mid-west. The public perception is that this is being driven by EU rules and that the Government has no choice in the matter. It is vital that an economic impact study is carried out before any decisions are made to change the dual gateway status with regard to transatlantic traffic.

Senator Daly

I thank the Chairman for the opportunity to make a short intervention although I am not a member of the committee. I welcome the delegation. I already had the opportunity to hear the views of various speakers at an important meeting in Ennis so I am familiar with the arguments they are putting forward.

I was the vice-Chairman of the previous Oireachtas transport committee. Some fairly long discussions were had with people involved in the aviation business generally, including Willie Walsh, the chief executive of Aer Lingus, but the election intervened and that discussion was never concluded. Reference might be made to the discussion that took place at that time. It might be worthwhile getting Mr. Walsh to address the committee because of the widespread anxiety that exists, particularly in Aer Lingus and in Shannon. This year, as far as I am aware, no additional staff have been recruited by Aer Lingus for the summer. The number of Aer Lingus employees, which is significantly lower this year, is causing alarm among company personnel. Confidence needs to be restored among staff at the company at Shannon and Mr. Walsh has a responsibility in that regard.

Has any attention been given by the committee to the opportunities that might be available in terms of European business? Up to now the concentration has largely been on transatlantic business, which I accept is of critical importance to Shannon, but there is also a potentially lucrative business in European destinations and this has not received much attention.

A number of people in the region are seriously concerned at the impact this will have on local industry. With the imminent enlargement of Europe, it might be more attractive for multinational businesses in particular, to find other destinations outside of Shannon in view of the expansion and development of the European market to the east. Confidence needs to be restored as a matter of urgency in the concept of Shannon among personnel in the airline industry, tourism and industry in general. The committee cannot act too speedily in this regard.

Mr. Buckley

In relation to confidence inShannon, there is an awful air of uncertainty about the place, not alone at the airport but also from an industrial development point of view. What is taking place is extremely serious. I think IDA Ireland went on record a couple of weeks ago saying how difficult it is to attract industry to areas outside of the east coast. This is of critical importance.

One of the few things we have going for us in the west of Ireland is that we have decent transatlantic services through Shannon. We do not have good roads or a rail infrastructure, so the airport is about the only thing that is in our favour that can attract American industry into the region.

A point was made in regard to what happens in Europe where open skies agreements are currently in operation. In many countries all of the traffic goes into one airport only, usually the capital city. Do we want all transatlantic traffic to end up in Dublin Airport?

One of the difficulties facing us is that nobody has seriously looked at regional development. The congestion and problems that exist in Dublin are due to the lack of a balanced regional development. Most people are probably unaware that more than 77% of international aviation goes into Dublin Airport. Shannon Airport gets some 10%, of which transatlantic traffic is part. Does the committee think it fair or reasonable that we should lose the transatlantic business to Dublin? Is it fair that the west of Ireland will have major difficulty in attracting new American industry to the region? As was said, the lucrative industry which is there at present might be better off relocating in Europe where it would have a range of transatlantic services.

Unfortunately, insufficient time was spent in researching this subject and the lack of a serious impact study is hugely detrimental. Impact studies are carried out on minor things at present, yet when there is a critical issue in regard to regional development, Shannon Airport and the west of Ireland, people say we do not need an impact study. That is absolutely crazy.

Mr. Brazil

I think I should answer that point. Joe Cunningham has been attending meetings with me in Dublin, representing the Western Alliance, with the Department of Transport. Only a couple of months ago we were told by the most senior civil servant present at the meeting that the issue of the bilateral was months, if not years, down the track before we would get into any formal discussions. However, as a result of a parliamentary question from Deputy Killeen we discovered that was not the case.

This is the difficulty that we have. In Shannon we come from a proud background where we were happy to develop the first ever US pre-inspection in Europe. We also developed the duty free concept. We are not coming from a negative background. This is a buoyant region and we are proud of what we have done. We will continue to perform and contribute to the national economy. The difficulty is that we are not playing on a level playing field.

Reference was made to the Shannon Development report. When that report was handed to the officials we were told that they had enough reports and they did not want to have it updated even though it could have been updated very easily. Nobody worth their salt in business can make any decision without having the facts at their fingertips. This is a matter of life and death for many people. What we are discussing will have an impact on many young people going to school in the west of Ireland. This is not a trivial matter.

Deputy Killeen and I were wedded together in the early 1990s on this campaign and we understand what we are talking about. We must ensure that, first of all, there is fair play and that the decisions, when they are taken, are balanced ones. We are able and willing to play a full part in that decision-making process, but if the process takes place behind closed doors without any consultation, or without taking on board the views and attitude of the people of the west of Ireland, that will be a sad day.

Mr. Cunningham

I want to come back to a point made by Deputies O'Sullivan and Killeen. I hope we have not come across as a bunch of whingers from the west of Ireland who are trying to hang on to something unreasonable. That is not what we are about. I think we have illustrated that if we are given a fair crack of the whip we can develop. As has been pointed out, the largest concentration of multinationals outside of Dublin is located in Shannon because we have made the most of the opportunity that was there and we will continue to do that.

If there is one thing that we would like to get sorted out at this stage, it is that we do not want to have something that is critical to our future decided in the coming weeks. That could be detrimental to our long-term future and that is the critical point we want to get across to the committee today.

In fairness to Deputies Killeen and O'Sullivan, they were very frank in terms of their description and of what might be driving it from the point of view of Aer Lingus. None of us want to see anything but the growth of Aer Lingus as well. We are not anti-Aer Lingus. We would love to see it grow also, but not at the expense of the west of Ireland which is what we are talking about here. We want the debate to continue for two and a half years so that we can carry out studies and analyse the implications. If it can be shown to us that it would be to our benefit to allow a change then so be it, but at least let it be debated in public, based on factual information rather than on the basis of the answers we receive from the Department. When we asked what kind of analysis had been done, we were told that the Department and the Minister were "of the view that". There was absolutely no research behind their decision.

Essentially, we want to convince the committee that we should commence a two-and-a-half year debate on the future rather than have someone make a decision in 12 weeks. A decision should not be made to benefit a vested interest which is looking for something else. This should not be allowed to happen and we beg the committee to ensure that it does not.

Chairman

The impression we got when we went to Europe was not that it would be done in the next 12 weeks. What is the attitude of the delegation towards Aer Rianta being split up and Shannon Airport's independence?

Deputy P. Power

Last week Mr.Cunningham's colleagues from Dublin Airport appeared before the committee. They were extremely negative about allowing Shannon to decide its own future in terms of marketability and wider industrial development as part of a more balanced approach to regional development.

Chairman

What is the delegation's response to losing Ryanair and 70,000 or 80,000 passengers per year?

Councillor Considine

The ownership of the airport is not a matter we wish to highlight today; we are here to discuss the matter of the open skies policy. The issue of Ryanair is a matter for Aer Rianta. Obviously, it is disappointing to lose any passengers from Shannon - it is not something we are trying to do - but there is, as the committee is aware, a problem with the management of Ryanair, which requires much freedom of the airport. From the point of view of the airport's management, the services and facilities must be paid for. Nobody can expect to receive the facilities gratis. Our reaction to the loss of those passengers was devastation. The hotels and B&Bs of the west of Ireland were certainly devastated.

Chairman

Some of the passengers went to Kerry, though.

Councillor Considine

Yes, but how long will that last?

Chairman

Ryanair claim it is making money on it.

Deputy Shortall

The main player for the Kerry market is Shannon.

Chairman

The delegation wants to get more people into Shannon. Do they think that Shannon, independently run, would be able to market itself? Mr. Brazil put a lot of emphasis on marketing. Does he think there is more potential there now?

Mr. Brazil

We fully support the Government's policy of more autonomy for Shannon and Cork airports. As has been said in the presentation, well over 30% of the income of Shannon comes from US traffic, so if there is a deterioration in the contribution from the US, no matter who runs the airport, there is a serious problem. A question was asked earlier about the opportunity of developing traffic from within Europe and the UK and, undoubtedly, if finance was made available, it would be possible to develop more services. It is a chicken-and-egg situation. It is a fact, as anyone in the business will agree, that we need more money to be spent on marketing the west of Ireland. That would help to paint the backdrop against which carriers could produce services from Europe in and out of Shannon. There are probably half a dozen services - certainly two or three in the UK and two or three in Europe - that could be considered as additional services for Shannon, but moneys will be required for that to happen.

A question was asked about the ownership of Shannon. Mr. Cunningham has indicated the difficulties we have had in this respect. We have come to meetings and been told certain things and then quickly found that something else is the reality. The element of trust and belief——

Chairman

That sounds familiar.

Mr. Brazil

We do this for a living because we believe in what we are doing. We are from the west of Ireland and we are proud of that. We are trying to make sure that our children will enjoy the benefits that are there. We will not easily stand aside and let people take from us what we believe is ours. It is a question of finance - any changes must be funded in such a way that the airport will be in a position to make out on its own. There will be great difficulty with cutting pieces off a large organisation such as Aer Rianta so that the other entities, Cork or Shannon, are forced to compete against it. Without the funds they will be smothered. Anyone in business will understand that.

Deputy Ellis

I welcome the delegation, whose members have put their case very well. There are a number of matters, however, that need to be considered. As somebody who is on the periphery I can look at matters differently. What does the delegation really believe needs to be done for Shannon to develop? Has any study been done on the possible expansion of services in and out of Shannon over recent years? We all listened to the proposals for hub status for this airport or that airport around the world. It is obvious that Shannon is ideally located to be a hub servicing the Far East and the Middle East from the US, because west coast traffic from the US is always seeking a stopover point in Europe - at the moment most of it uses Frankfurt or Amsterdam.

Are landing charges in Shannon the same as they are in Dublin? It was stated that 30% of the airport's income was generated by US business. In other words, the 7% of UK and European business which Shannon has is generating 70% of the income. Is the airport running after the worst possible money-earner? The other thing that frightens me is that the airport has the same throughput as Cork Airport, which has no transatlantic business. There are 1.9 million passengers going through each airport. Is the airport providing a cheap service to somebody rather than providing a service with a long-term future?

Senator Dooley

Will the members of the delegation confirm that they are not against change - that is what they seem to be saying - but that they recognise that any loss in US passengers would require a rather significant change in the way the region is marketed and the product that is offered? The European sector is to be targeted but the two markets are obviously very different. It seems they are arguing for a time frame in which the region can be repositioned in terms of being more focused on European markets. That, however, does not overcome the difficulty mentioned by Mr. Thompstone which relates to the business in the region. Tourism might be dynamic to a certain extent - one could target the European sector rather than the US sector - but with the base the region has in terms of US multinationals and companies, I do not think anyone would suggest it was possible to reposition them and try to target European companies. A balance is required.

If the fat cats in Aer Lingus get their way in terms of privatising the airline, where do the members of the delegation see Ireland's hub being positioned? I share with those in the aviation sector a concern that if Aer Lingus is ultimately privatised and sold to one of the other carriers, or there is consolidation within that market, Ireland's most direct access to the US will be through London. A short-term measure of a single gateway might result in the ultimate demise of Ireland's direct access to the US. What is the view of the delegation on that?

Deputy Power

Has the 30% share of revenue coming from the US market been a constant over the years? What is it in comparison to other years?

Mr. Brazil

It is actually 38%; I said over 30%.

Deputy Power

Yes, I thought it was higher than 30%.

Mr. Brazil

In reply to Deputy Ellis's comment, the anecdotal evidence, which we can stand over, is that each American travelling through the airport contributes about the cost of three people taking the low-cost carriers out of Shannon to other destinations in Europe because of the spend in the duty free shop.

Deputy Ellis

If they contribute 38% of the income some of them must be spending very little because some spend three times as much as those who are going to Europe.

Mr. Buckley

The income is spend per passenger but there would also be a spend from other segments whether property or car hire concessions. I do not have the exact figures but there is a considerable spend from Americans going through the airport. For instance, in the duty free shops it could be four or five times the spend of somebody on a European flight.

Chairman

Surely that is because they are getting duty free?

Mr. Buckley

Yes, but it is a broader argument than just the airport. The issue is that it is a considerable revenue generator. The transatlantic services through the airport are the backbone of the airport from an economic and revenue point of view. The regional argument is about American industry. Suppose we remove the transatlantic services and replace them with European services what happens to American industry in the region?

Deputy Ellis

How many thousand tonnes of goods are shipped through Shannon from the American companies in the region? I refer to goods shipments.

Mr. Thompstone

While I do not have the data to hand I am aware that cargo is a significant element of the business for the airlines atShannon. Most of the airline traffic movement at Shannon is people not goods.

Mr. Ellis

The big winner for airlines is cargo which is carried in conjunction with passengers. The cargo is more important to many airlines, the prime example being Virgin which feels that its cargo business is more important than the passengers who sit over the cargo.

Mr. Thompstone

Virgin has a particular pricing model in terms of its traffic but for an airline such as Aer Lingus, which depends on business traffic to pay for the rest of the plane, cargo is important to the business base in the Shannon region and in the west of Ireland. The passengers are also important, for example, Dell employs 4,000 people in Limerick. Another 4,000 are employed by suppliers to Dell which brings in the order of 200 to 400 passengers per week into the plant in Limerick. That indicates the importance of air services to a business like Dell. In addition to Dell there are General Electric, Analog Devices and Intel, all of which are modern businesses. Apart from manufacturing goods they bring in corporate customers, suppliers, and technical people going from the operation to the customer base in Europe or the US, so the movement of people is important too.

Chairman

Are members happy that their questions have been answered?

Deputy Power

Has 38% been a constant or is there a graph for recent years?

Senator Dooley

Could I have a comment on the potential position of Aer Lingus, or Ireland, not having a direct access point to the US please?

Mr. Thompstone

Perhaps Mr. Buckley can answer that. There is an advantage to Aer Lingus in a quick change to the bilateral. It wants more US gateways because it is making most of its profits on the transatlantic runs so it will benefit from more gateways. However, there is also a potential downside if that causes a change in the dual gateway status. If it can get more gateways and no change in the dual gateway status, everybody wins. That is the big question. Will the US authorities go along with that? If there is change it is also possible that were Aer Lingus to be privatised and bought, for example by British Airways, under open skies Ireland's traffic could be concentrated in London. If BA is operating to the airline model with services to New York, Boston, and Chicago out of London-Heathrow it will consolidate the services in London rather than run some US bound flights out of Dublin. Our fears for the western region may apply to the whole country.

Deputy Naughten

Let us say that Aer Lingus is not sold, that it stays in State ownership, the dual gateway remains in place and there is an open skies policy throughout Europe, what is to stop a US carrier flying into London and from there into Dublin and out of Dublin via London back to the US? There will be a dual gateway via London rather than Shannon. Deputy Breen and I have asked that question and we would like an answer to it.

Will the delegates elaborate on the demand on loading comparisons between Dublin andShannon for direct flights into the US? Following up on Senator Dooley's point, what is the committee looking for, retention of the dual gateway or an agreed timescale to wind down the dual gateway? I am confused as to what is the committee's final objective. It seems that the removal of the dual gateway would damage industry yet there seems to be an acceptance, especially in light of Senator Dooley's comments, that the dual gateway is going to go at some stage. Will the committee clarify this point?

Will the committee also elaborate on what it sees as the future prospect for Shannon developing eastwards, as a hub for eastern Europe, as Deputy Ellis suggested? A few years ago Ryanair proposed to develop Shannon as a hub for western European connections. Does the committee think that can be done under the present structures within the company and the airport? Is it possible if changes are made that could develop? Is it possible that under a single skies agreement the dual gateway would be retained, and that there would be a single skies policy which would allow Aer Lingus to land in 14 or 20 cities in the US if it so wanted? This would retain the dual gateway while giving Aer Lingus the access it wants.

Senator Dooley

I want to clarify a remark that Deputy Naughten seemed to misunderstand. I did not indicate that the dual gateway would go completely. I asked the committee to identify what would happen if there were any potential changes to it, as opposed to its going. I accept, as does everyone else, including the committee, that there would be changes as a result of EU involvement, certainly not that it would go.

Chairman

Thank you.

Deputy Naughten

Very well, to clarify, a reduction in the level of services at Shannon——

Senator Dooley

Change is the word that I used. I do not expect a reduction.

Deputy Naughten

Well it will not increase.

Senator Morrissey

The questions I asked seem to be getting a greater airing now. What about the argument that was developed recently with regard to Shannon becoming a hub? The group did not respond satisfactorily and that is why other members are raising the same point now. Given the capacity for growth of up to two million passengers in Shannon, Mr. Brazil mentioned that it would take further investment - was that for marketing?

Mr. Buckley

Yes.

Senator Morrissey

I wondered was it investment in Shannon itself. What are the group's plans? Does it look west or east to fill those two million slots? Given the air slots that exist in Shannon what great fears does the group have? It is because of congestion in Europe from when we were over there as an Oireachtas committee meeting European officials. The congestion there is in Europe is not experienced in Shannon. I see Shannon having a future because of its lack of congestion. How is the management going to fill those slots?

Deputy P. Breen

Willie Walsh in Aer Lingus has been quoted as saying that he wants direct access into San Francisco and Orlando airports as well as other destinations in the US. Does the panel believe that Aer Lingus Dublin are operating an anti-Shannon airport policy? I am looking at people who travel into this country from the US, directed into Dublin Airport. Second, we have people who find the fares on the Internet are cheaper going into Dublin than Shannon. Shannon is often more difficult to find than Dublin.

Deputy Shortall

I would like to return to the motivation of Aer Lingus in this issue. Are the costs really that different in operating a single airport as opposed to two airports, given that they have the staff, the desks and various facilities in Shannon anyway? What is the scale of the benefit for Aer Lingus? In that regard, has the panel had any contact with the other transatlantic airlines? Would it share the view of Aer Lingus?

Following on from what Deputy Naughten and Senator Dooley said, I am not exactly sure what the bottom line is for this panel. Is it looking for the retention of the dual gateway policy indefinitely on a 50-50 basis? Is it in terms of existing routes and then airlines could choose the new routes to take up? What timescale is it talking about? Is it the two-and-a-half year timescale to develop alternative business? Does the panel want to see the 50-50 basis remaining indefinitely?

In terms of the potential of developing European business, can the panel be a little more specific about the kind of infrastructure improvements that would be required to help better access to Shannon? There is 7% of European business which is small given the potential of the catchment area of the airport. What does the airport need specifically in terms of improvements to infrastructure? There is an onus on this committee to make some recommendations in the short-term arising from the hearing this afternoon. There is a need for a proper cost-benefit analysis to be carried out before any decisions are taken. This is important due to the massive impact of any decision and the worrying prospect that the decision will be taken in the short-term. I want this committee to make a recommendation in that regard. Where does the delegation see it going now? Are there any commitments by the Minister to meet with them in the short-term?

Mr. Cunningham

I will take the first part of questions by Deputies Naughten and Shortall in terms of clarifying where we are coming from——

Deputy Naughten

And where we are going to.

Mr. Cunningham

We want to nail the myth that this has gone, that it is inevitable or that it is only a matter of time before it is gone. We are not saying that. We do not believe it is gone. We are trying to point out that there two things happening at the one time. There is a suggestion that there are two and a half years and the reality is that something could be changed dramatically. We welcome the suggestion from Deputy Shortall that something should be done by this committee to support what should not happen at least. We are saying that we believe we can convince people, given a two-and-a-half year timeframe, that it is to Ireland's benefit that this policy remains the same. We are saying that we can illustrate, given the opportunity, that this is beneficial to Ireland. An analysis of what people do when they land at the airport should be prepared.

We want the policy to remain and use the two-and-a half-year timeframe to convince people of that in any negotiating position. No one is going to say that we are negotiating for one proposal when what we really want is something else. What we are saying is that we believe we have a credible case that will prove that what we are saying can and will work in that two-and-a-half year timeframe. If we do not gain access to the ear of the Minister or the Department over 12 weeks, then we do not get the opportunity to say that. To be honest, how much the ears are open to listening to what we are saying given that we have 12 weeks, is questionable. If we have a public debate, we can win that argument and convince people that there is merit in what we are saying. We want it to remain on into the future.

Mr. Buckley

Deputy Breen mentioned a bias against Shannon. We hear stories all the time that there is a bias against Shannon. People who want to travel to the west of Ireland are being directed on Aer Lingus services into Dublin. There was a recent example of that during the Special Olympics. The El Salvador team were based in Tralee. They arrived at Dublin Airport on a transatlantic service and were bused to Tralee, adding 100 miles to the distance they had to travel. Was that not bias against Shannon Airport? We have transatlantic services coming into Shannon, so we ask why did the team not come through it? We cannot put our finger on it but there have been incidents where an effort was made to build up the transatlantic services out of Dublin. We spoke about spare capacity at Shannon. The terminal at Shannon was built to handle four million passengers and currently we handle two million. We have plenty of capacity to handle extra business at Shannon.

A hub and looking eastwards was mentioned. Any extra business that the airport can get would be beneficial. However, it is incremental business. If we lose the backbone of the transatlantic services, it will put the airport into dire economic circumstances. When one is building new services, one needs a strong financial income stream to allow this. The transatlantic services provide that income stream. In the case of building new services, there are various discount schemes which offer routes for a number of years free out of Shannon. One needs income from somewhere to allow this and the transatlantic services provide that.

On the future, the bottom line must be to maintain the current level of transatlantic services, to help them grow at Shannon Airport and to have a facility to do this for the long-term. It is not just enough to look at the transatlantic services. From a regional development viewpoint, we should be looking at a long-term plan for the west of Ireland with Shannon Airport as the base. The road between Shannon and Galway is in dire condition. The one item that the official we met in Brussels commented on was how bad the road was between Shannon and Galway. In Brussels, they are talking about our roads in the west of Ireland.

Mr. Brazil

There are obviously deficiencies in infrastructure. On a practical basis, speaking as a travel person, it is sometimes more attractive for a person living in Galway to consider a motor journey to Dublin Airport than to Shannon because of traffic congestion and bottlenecks. We should not lose sight of the fact that traditionally where low cost operators function, they fly from centres of population with a million people at one end to a million plus at the other. One of the difficulties in the Irish context, particularly Shannon, is that the catchment area is half a million people. In the time leading up to 2000, the bulk of people on the transatlantic flights loaded in the United States, with a lesser number loading from Ireland. It could be 60%-40% or 55%-45%. After the Twin Towers tragedy, the share on the transatlantic flights from Ireland went well over 50% on many occasions because of the fall-off in the numbers of tourists coming here. Americans were staying at home. I cannot, therefore, give the committee a straight rule of thumb figure.

Senator Morrissey asked about the possibility of using Shannon as a hub for eastern Europe. There is an opportunity for that but it is a very limited one. A recent analogy involved Royal Jordanian Airways, which flew into Shannon and travelled on to Chicago in the United States. As soon as they got the bigger version of the airbus, they cut out the stop at Shannon and we lost that service. There is a short-term opportunity in the next few years for countries like the Ukraine and so on to use their own aircraft to pick up people at Shannon and bring them across the Atlantic. However, when those countries become economically strong and are able to lease aircraft that can fly the Atlantic, they will drop out of the Shannon picture. There are some opportunities and they are being worked on by the people at Shannon but in the long-term they would not be sustainable and would disappear.

Deputies Naughten and Shortall may have missed the earlier intervention when we said that we are all very proud of what we have done inShannon. Shannon has taken many actions which were not just first for Ireland but first for the world and we want to continue on that basis. It is not a place of negativity or a "thou shalt not take anything from us" attitude. We are open to change. We say to the committee, and to the country at large, that decisions should not be taken without proper and adequate knowledge of the market and the implications for the future. This must be done in a planned way and we will be proactive partners in that discussion.

Mr. Thompstone

Chairman, let me make a final comment. We say, essentially, that the final shape of the EU-US open aviation policy is far from clear. The EU authorities have got to produce the negotiating framework and then engage their US counterparts. That has to go through its overall process. Our central argument is that Ireland can use the available time to develop an optimal negotiating position. I hope we have been able to show the committee that the dual gateway policy has served Ireland well, not just the west. There are many benefits that go with it and we believe those benefits can continue into the future. Above all, what we need now is joined-up thinking around all of the elements that drive sustainable airport and access growth into this country. That is the central thrust of our argument, to use the time to develop the optimal negotiating position.

Deputy Naughten

I would be interested to know if Shannon Development, or anyone in Shannon, is doing anything about the single skies policy in Europe in respect of air traffic control and the location of the centre that will service the Shanwick air traffic control area. Getting that into Ireland and based in the Shannon region would be very welcome. Perhaps the delegation will report to the committee on that aspect.

Councillor Considine

I thank the committee for the time and courtesy afforded to us today. It has been a beneficial discussion from our point of view and I hope we have planted the seeds of a positive recommendation to Government from the committee. Our case has been fairly well articulated. I am aware there is a precedent for the committee sitting outside the House and I would like to extend an invitation to you, Chairman, and the committee members to visit us in Shannon as soon as possible. We would like to show the committee what we have and what we are lacking also. I thank the committee once again on behalf of the delegation.

Chairman

We have discussed the idea of holding meetings outside the House. We do not intend to do that for the moment but we may do so next year. We could not do it this year because of cutbacks, etc. I did not realise it was so expensive to have a formal meeting outside the House.

Councillor Considine

Even an informal meeting?

Chairman

We might consider something like that. On behalf of the committee I would like to thank the delegation for attending and giving us very valuable insights into the future development of Shannon Airport. We wish the group well. We all hope that Shannon and the west does well. I am a great believer in decentralisation and moving as much out of Dublin as possible. Hopefully, we will be able to continue the discussion. We appreciate the visit by the deputation. We are adjourning until 9.30 a.m. tomorrow.

Deputy Shortall

Can we go into private session for five minutes?

Chairman

Yes.

The joint committee went into private session and adjourned at 4.40 p.m. until 9.30 a.m. on Wednesday, 2 July 2003.