Seanad Éireann debate -
Wednesday, 9 Mar 1983

Vol. 100 No. 2

Air Companies (Amendment) Bill, 1983 [Certified Money Bill] Second Stage: (Resumed).

Question again proposed: "That the Bill be now read a Second Time".

Mr. FitzGerald

I should like to congratulate the Leas-Chathaoirleach on her appointment today by the Seanad. Senator Honan featured before — when I was not a Member of this House — as Cathaoirleach, and I am aware that because of the way she has carried out her duties she has been spoken of with great respect. I also welcome the Minister to the House.

The measure under discussion is intended to provide the necessary financing for our national airline, a very important public image of this country. Our national airline not only flies to the United States — the transatlantic route is a very important part of the whole enterprise that is Aer Lingus — but also to Europe and elsewhere. It is perhaps the most important symbol of Ireland, reaching every city throughout the world. The airline carries its role commendably and brings great confidence to our people. It is a very attractive vehicle to be used for the development of tourism here.

We are all aware that the Minister for Trade, Commerce and Tourism is in the United States to try to attract additional tourists in the course of 1983 and 1984. He is there with the objective of assisting Bord Fáilte to increase tourist traffic to this country. We have heard of the expected 5 per cent increase in tourism this year. I believe that the company's financial record over the last 20 years, which was very profitable, showed that it was farseeing and not afraid to embark on new areas of development that were advantageous for the company and, as a State company, for the country. They have demonstrated that over a long period. There have only been four years — as the Minister said — where losses were incurred by the national airline.

I do not think that because the company had only four bad years out of 20 we should not have some element of constructive criticism in relation to what might be done about the difficult position the national airline is in. It is well known internationally that people are not travelling on holidays as much as they used to. Certainly the Americans are not travelling in the same numbers as they used to. That produces an additional problem for the airline. It is because we are an island community and because of our need to have regular traffic into the country that we depend more on it than some of our neighbouring countries in Europe would. Other countries would not treat their national airline with the same degree of importance.

The international recession which has affected airlines worldwide has certainly hurt Aer Lingus in its operation. The company faces problems on the transatlantic route and is working against severe odds in competition with other airlines during the summer — particularly the two airlines that fly into Dublin, Transamerica and the Northwest Orient. Those airlines provide competition for Aer Lingus but they also bring in new traffic. However, Aer Lingus have to carry their airline commitment throughout the year and provides a daily service to New York and back. What concerns me about the Aer Lingus operation — particularly the translantic operation — is the value of continuing the jumbo service between Dublin and Shannon. I hope the Minister will comment on that later. I wonder whether a lot more thought could be given to the economy that would result for Aer Lingus if the jumbos took off from Shannon using the great facilities that Shannon Airport offers and if a smaller craft, such as a Boeing 737, was used for the Dublin-Shannon connection, a Cork-Shannon connection or a Belfast-Shannon connection. The jumbo has to take off twice en route to New York before it leaves Ireland, and with the price of fuel that must be a costly operation. Fuel costs are one of the largest elements involved in the problems of air transportation. Surely the Minister could, in conjunction with Aer Lingus, see to it that steps are taken to achieve economies in relation to that.

It is important to state that although the Aer Lingus group loss in the course of the period 1981-82 was of the order of £9.2 million, looking objectively at the total picture in relation to our national airline and all their activities they made considerable profits in some ancillary activities, such as the repairing operations at Airmotive Limited. In addition, the company operate in areas such as leasing aircraft, computer work, hotels, and are now running golf courses. Those areas are producing an additional £12 million for the company. It is important as an entrepreneurial activity that the Aer Lingus company should be engaged in those activities. It is doing a great deal of good that the company are giving their time to such ancillary activities and providing hotels for tourists and support services for other airlines. The two figures must be put together when looking at the loss situation that has been incurred by the national airline. In net terms the 1981-82 profit of the ancillary activities was £12 million but the company overall incurred an operating loss of £9.2 million. Those figures should be taken into account in relation to the ongoing programme of Aer Lingus in the period ahead.

I do not wish to be in the slightest over-critical of Aer Lingus. The company is engaging in a very important job of giving the country an image abroad, bringing in tourists, and engaging in a lot of ancillary activity which is important to the country and the enterprise of Aer Lingus. The fact that the company is doing this has contributed to the success of Aer Lingus as an operation. Every possible economy should be sought in relation to the overall operations of the company in a climate where losses could be suggested to be of the order of £21.2 million in relation to the airline operation itself. The service from Dublin to Shannon is an area where definite economies could be achieved. I have heard figures of the order of £5 million suggested as being a possible economy in this area. Given the level we are dealing with, the degree of funding which is required by Aer Lingus, increasing the shareholding to £60 million by the State and the guarantee limit on increases from £75 to £150 million, those considerable sums should be granted to the company because I am certain they will pay off. However, although there have been exhaustive looks internally in Aer Lingus and its associated companies as to economies and making the airline a more successful operation that part of its operation could be looked at in more detail and, perhaps, may result in additional economies. I will not delay the House any further but I believe the Bill is appropriate. I look forward to hearing some comments from the Minister in relation to my contribution.

Mr. Howard

I welcome the opportunity to speak on the Bill and support the measures proposed in it. I welcome the Minister's commitment, and the decision of the Government — I acknowledge it is a continuation of a decision by the last Government — to provide the financial support required by our national airline. This is being done, as the Minister told us, by increasing the State's shareholding by up to £60 million, by extending the guarantee limit on borrowings by the airline from £75 million to £150 million, and by increasing the State equity investment of £33.3 million by a further £30 million over the next two years. The national airline as far as I am concerned — I believe it is the view of all Members — has served us well, and it is important that we should recognise the contribution it has made to so many aspects of our economic development. Its activities and assistance in the promotion of tourism and business and its contribution to our economic progress must be recognised.

It is only right that we should express a certain pride in the airline and be proud also of its success. Its continued success is something that is necessary for our national well-being.

The national airline, as we have been told by the Minister, in common with other airlines throughout the world, has experienced severe difficulties in recent years. A number of factors have contributed to that including the world recession, escalating costs in many countries, in particular in our own, and the increased cost of fuel oil. Recently I saw a figure quoted by an executive of Aer Lingus which brings into perspective the effect increased oil prices have on the operation of air companies. In 1970 fuel oil represented about 8 per cent of operating costs. Four years later that figure had more than doubled to 17.5 per cent. Last year that figure had again increased to 26 per cent of operating costs. That gives a fair indication of the problems that Aer Lingus and quite a number of other air companies have to contend with. Inevitably, those factors have had their effect. We know that a number of airlines have collapsed in recent years and it is to the credit of our national airline — we have Aer Lingus and Aerlínte involved — that they have succeeded in weathering the storm to a reasonably satisfactory degree. Even against the odds — I am referring to the Minister's speech — in the past year North Atlantic air traffic increased by approximately 3 per cent. Despite the difficulties I have outlined and which we are all conscious of, and in an atmosphere and climate in which other airlines have collapsed, Aer Lingus has maintained its position to a reasonably satisfactory degree and, again against the odds, brought about a marginal improvement on, for example, the North Atlantic route.

I welcome the Minister's decision that his views are in accord with those of the review body of experts who considered whether the North Atlantic involvement by our national airline should continue. I am pleased that the decision is to continue the involvement of the national airline on the North Atlantic route because I believe that the presence of our national airline as a scheduled carrier is vital as far as we are concerned.

Some years ago a very effective campaign was launched by TWA and Pan Am to get landing rights at Dublin Airport in addition to Shannon. They advanced what proved to be a convincing argument at the time that in giving them these additional landing rights at Dublin the country could be assured of improved business, trade and many additional tourists. The landing rights were granted and we all know what happened afterwards. Within two years of the landing rights being granted one of those airlines pulled out completely and by 1979 the other airline as good as removed itself from the scene. The lesson to be learned from that is that we cannot depend on the airlines of another country to maintain a scheduled service all year round to Ireland. We need a scheduled service between here and America and to ensure that we have it we have no option but to continue the service our national airline is providing across the North Atlantic.

The commercial position of the North Atlantic has been outlined by the Minister. Those who have been following it with interest over the past few years cannot but realise the enormous difficulties on that route. Up to the early seventies the North Atlantic was one of the most profitable routes an airline could operate on. One of the factors that contributed to that situation was the policy that for a number of years had been applied by the United States Government of ensuring tight regulations in regard to the operation of airlines across the North Atlantic. During the seventies we witnessed a complete and total reversal of that policy to what became known as the open skies policies. The effect of the open skies policy was to increase the competition on the North Atlantic, to enable other airlines to compete for the market and, in addition, we had the arrival of Laker Airways. That brought about a situation where the North Atlantic became the least profitable route. In that situation we must admire the success of our national airline in not alone surviving on that route but operating in a relatively satisfactory position.

Another aspect of our national airline's operation to which the Minister referred is its success in promoting and developing profitable ancillary activities in such a way that they have continued to show an increase in profit over the years. The Minister gave us a figure of £12 million net profit from those ancillary activities for 1981-82, which is almost equivalent to the amount of the total interest paid by our national airline. The Minister, in the course of his speech, referred to the ratio of debt to equity — 88:12 — and said it was unsustainable. I endorse that view. The measures proposed in the Bill will help to remedy that situation and in some way improve and strengthen the financial position of our national airline. Those measures are long overdue.

The Minister also referred to the fact that the loss incurred by our national airline for the year ending March 1982 was £9.3 million, and he also stated that the figure for the previous year was £13.6 million. I hope that in his closing speech the Minister will indicate how that welcomed improvement materialised.

I should now like to be parochial. I am conscious that the Minister referred on a number of occasions to the importance of the North Atlantic route to Shannon Airport. I read his Second Stage speech to the other House and I was taken by the fact that he emphasised that Shannon is the country's transatlantic airport. I encourage him to endorse that viewpoint again in this House. The people of the Shannon area are very conscious of the importance of Shannon Airport to the area and to the country. They are also conscious of the fact that statistics show that of every three passengers carried in either direction across the Atlantic at least two of them either get on or get off at Shannon. I have been generous, and rightly so, in the compliments I paid to our national airline on the matter they have carried out their functions, but I should like to express reservations that are shared by quite a number of people in my area. The Minister has given a commitment that Shannon is our international airport, but there are many people in the Shannon area who doubt, and have doubted for some time, that the commitment of our national airline to Shannon as our only international airport is 100 per cent. We have witnessed over the years the transfer of staff, services and activities from Shannon to Dublin. We regularly witness also the over-flying of Shannon Airport by the flight from New York to Ireland on to Dublin. We hear excuses that there are cross-winds on particular days or that visability is not good on another day. I hope the Minister will give us the dates on which Shannon has been overflown during the past year and the reasons on each day.

We have had comments from pilots and others about the undesirability of the double stop. It is a very expensive operation. There has been a lobby in existence for years who have worked towards promoting Dublin rather than Shannon as the one stop for transatlantic flights. In view of the amount of traffic generated at Shannon, the fact that two-thirds of the passengers either get on or get off there, if there is a question in relation to the double stop it should make economic sense to have that stop at Shannon. Any passengers for Dublin should be ferried from Shannon in smaller aircraft. In addition to Dublin, centres such as Cork and Belfast could also be serviced.

I am told that our national airlines are developing a policy that will involve the purchase of smaller aircraft and a greater involvement by the national airline in regional and internal flights. We are involved today in voting considerable sums of money, which I have no reservation in doing, to the national airlines and it is only reasonable to say that we are entitled to know what their policy is with regard to engaging in internal and regional flights to an extent that was not done in the past. In fact, they have disengaged from a number of routes that operated in the past, some of which are now being operated sucessfully by smaller companies. I would appreciate it if the Minister would let us know what is the policy of the national airlines in relation to additional internal and regional routes.

The Minister might bring us up to date on the position regarding the proposal for a customs pre-clearance arrangement at Shannon and also regarding the Federal Express project which was under very active consideration some time ago. We are aware that both these projects would be of considerable benefit to Shannon Airport. We are also aware that discussions on them have reached a very advanced stage. For some reason that is not quite apparent, matters seem to have halted in relation to both. There are people in my part of the country who would like to know if the attitude of our national airlines to both these points has been as simple as it could have been. Has the attitude of the national airlines to customs pre-clearance and to the Federal Express project been in any way part of the delay that has arisen with regard to the bringing into operation of both these projects? I would be glad to have that information.

The Minister has clarifed in a satisfactory manner the situation with regard to charters. Quite a number of people were concerned with certain articles which appeared, some of which conveyed an impression that, as a result of the decision in relation to charters on the the North Atlantic, the tourist industry stood to lose £14 million. The Minister told us that Bord Fáilte are predicting that the growth in tourist traffic from North America will be in the region of 5 per cent this year. He has ensured that charter seats available on scheduled flights from New York and Boston to this country will increase by 50 per cent and that beyond the New York and Boston gateways charters originating anywhere else in the States have open skies before them. The articles concerned were misleading and damaging and I am glad that the Minister availed of the opportunity to clarify the situation.

We are voting substantial sums to the national airlines and these are well deserved. The airlines have proved their value to the country and will continue to do so in the future. Despite the reservations that I may have expressed in relation to local matters, on the national scene our national airlines have done a magnificent job for the country. They deserve our support and I am glad to be in a position to vote for that support today and to join in congratulating them for the wonderful services which they have rendered.

Professor Hillery

I welcome the Minister to the Seanad, congratulate him on his appointment as Minister and wish him well.

The Minister, in his opening speech, has correctly identified and underlined the North Atlantic part of Aer Lingus-Aerlínte activities as the key problem facing the organisation. The North Atlantic losses are caused by a variety of factors, not least by the exceptionally long off-peak period of eight months and the fact that aggressive price competition on the North Atlantic is limiting the airline's ability to make up the winter shortfall with summer revenue. The traditional tactic of chartering out surplus North Atlantic capacity during the off-peak period is very difficult at present due to a world surplus of Boeing 747s. Speaking of tactics, I wonder if Aer Lingus have given enough emphasis to projecting themselves as an international airline, instead of as an extension of the tourist industry and, secondly, as a European airline. I would like to see them being perceived as being in the airline business, attracting customers from the United States to Europe and including as many stops in Ireland as is feasible.

Aer Lingus are different from many other airlines in that they have had a huge expenditure in marketing to attract a market back to Ireland due to our tiny home base. American airline companies have greatly benefited from this marketing effort because they have not had to spend large sums on marketing. They can derive the benefits from the expenditure incurred by Aer Lingus in promoting Ireland for tourist purposes in particular.

I do not want to give the impression, because of the special features that adversely affect Aer Lingus, that ours is the only airline losing money. This is not so. On the contrary, the airline industry — and I include here the airlines of the United States and of Britain, Germany, France and Italy as well as Ireland — have incurred losses on the North Atlantic since 1972. Why is this so? The reality is that the airlines are not able to operate commercially on the basis of relying on market forces alone. This raises the important question of regulation. Regulation which will allow economic operation by the most efficient is imperative and Government intervention is, therefore, necessary. In that context, I am very glad to see that the Minister has intervened in the case of charters for the summer of 1983. I would like to see more regulatory support for Aer Lingus against the dumping exercise in which the United States has engaged over the past several years on the North Atlantic. I would suggest to the Minister that it will be necessary for Ireland to join with other European governments in taking strong collective action against the United States in order to impose a rational regulatory régime on North Atlantic services. Unless some such action is taken the present loss-making chaos will continue with obvious implications for the Irish taxpayer.

Nobody is denying that there is a financial crisis in Aer Lingus and the financial position would be far worse were it not for the highly successful ancillary activities in which the airline had the vision to engage in the early seventies. The ancillary activities investment made a contribution of £90 million to the group's finances up to March of last year. This is a most creditable performance. One of the main reasons for the deterioration in the net results of the Aer Lingus-Aerlínte group has been that their equity base is inadequate and the consequential interest payments have been very substantial.

I see today's Bill as both welcome and necessary in helping our national airline on a very difficult path. The Aer Lingus group have made a major contribution to Irish tourism, to Irish trade, to industrial investment and to the Irish community generally. I heartily support the Bill.

Mr. Kirwan

The Minister and I have broken lances before. This is the first occasion on which I have met him in the Seanad Chamber and I want to assure him that on this occasion I will not indulge in the verbose, caustic criticisms to which I have subjected him on a number of occasions, other than to say that I expect that the Bill is essentially an enabling one, a Money Bill. Any Bill that provides the essential capital injection to the civil aviation industry as represented by Aer Lingus-Aerlínte is indeed a welcome one, although I have the view that perhaps it is not enough.

I wish to make one or two observations on the general text of the Minister's statement. He quite correctly points out that the civil aviation industry in international terms has gone though a traumatic period, not unrelated to the energy crisis which began in the early seventies. He goes on further to make the point that the principal private operator in the United Kingdom, Laker Airways — of not too lamented memory — has gone out of business. Braniff, the fourth largest carrier in the United States, has also gone out of business and he makes the point that the principal United States flag-carrier, PanAm, is also in some fiscal difficulties. This is all quite true. He copperfastens these assertions by making the point that Hammarskjöld of IATA has also concluded that there will be a loss of over $2 billion by the carriers before the end of this year and that these losses have been consistent and systematic since 1979.

I accept all of these facts but what worries me is that later on in the statement he tells the little airline which services somewhat fewer than 4,000,000 people, a tiny little State, an off-shore island off an off-shore island, that unlike the international giants of the civil aviation industry it must operate on a profitable basis. Somewhere along the line I detect the scent of the interdepartmental civil servants, who from positions of unthreatened employment, without having to test their skill or expertise in the market, seek to manage the various institutions that have been set up by the State. The Minister talks about the continuing and, hopefully, growing flow of profits in respect of our little national airline. If Braniff could not do it, if Laker with all his financial ingenuity could not do it and PanAm cannot stay in business, it appears that the Minister is setting our little airlines a virtually impossible task.

There is a mechanism which interests me which is set out as one of the aids towards achieving this viability in civil aviation. The Minister talks in terms of the progress which has been made in Aer Lingus over a number of years in reducing staff and there is the further point that sustainable jobs of long-term value to the community can be maintained only within the framework of commercial viability. I shudder when I hear people talk in terms of an alliance between profitability and the maintenance of long-term jobs because if commercial viability is to be attained at the expense of jobs and if this is to be a regular and a constant phenomenon, if this is an acceptable social evolution, then we are going to be in some difficulty in the years ahead, taking into account the rapidly expanding population worldwide and the effects of the technological revolution upon the work force. It is a long time since we took work out of the home, out of the village, out of the farm and into the factory place. We have to provide for a population that has a greater life expectancy and we cannot do it if in the pursuit of viability and financial rectitude we do it at the expense of jobs.

Substantial contributions have been made by the staff of Aer Lingus-Aerlínte to achieve this type of viability and I know the Minister will say that it is not his job to manage Aer Lingus-Aerlínte, no more than it was his job to manage B & I, but when you set financial parameters within which these institutions must work that, in effect, constitutes control and becomes a business technique of some magnitude. I ask the Minister to take into account that in the last analysis the State through its agencies still has an obligation and responsibility to its citizens to provide them with the dignity of work. It is quite clear that the private sector has failed in this regard. I know of no private operator of any substance in the civil aviation industry. We have Avair and others but they are not big and one of them recently threatened to come out of Cork.

I add my voice, too, to the observations made in respect of the Shannon Airport complex. We had here a tremendous vision related to the internal combustion engine when it was absolutely vital to provide a landing place for piston-engined aircraft after a long Atlantic crossing. Unfortunately, the technological development, which constitutes a fear in many respects, has reduced the value of Shannon Airport in the eyes of some people. Overflying it has become the rule rather than the exception. There are some people who would talk of building another airport not too far from Shannon while it has been argued that Shannon is dying, while it has been argued that another airport — which I will leave to the august Senator from Cork who will speak after me — has the same problem.

There is a need to maintain our civil aviation industry. It stands as a milestone to the industrial renaissance of this little State of ours and if it is to be maintained I would urge the Minister that it be maintained with the minimum effects on the staff employed.

Mr. O'Leary

One comment I wish to make on this Bill is a fairly broad ranging one and the other comment concerns a matter affecting my own area of the country. The Bill as introduced by the Minister is bound to have our support because it is a Bill which has the support by and large of both this Minister and his predecessor and no doubt they have carefully examined the position within Aer Lingus-Aerlínte and arrived at the conclusion that this is the minimum necessary for these companies.

I will not join the list of people who prefaced their remarks about this Bill by glowing tributes to our national airline. That is not what this Bill is all about. Basically this Bill, as Senator Kirwan has said, is enabling legislation to allow the Minister to subscribe substantial extra funds to State companies, and it is against this background that the Bill must be judged, not against the background of whether we are for or against the existence of a State company operating an airline, of which everyone in this House is in favour.

The problem is that we have been given no overall idea as to the plan for this company or this group of companies. We have been given no overview. We do not know where we are going. We are told that an inter-departmental review committee was established. That inter-departmental review committee no doubt arrived at conclusions which were made available to the Minister. They were not, however, made available to me. If I am being asked to give my seal of approval, in so far as the Seanad approves a money Bill, to the granting of extra money to this organisation, there is a complete absence of information on which any Member of the Oireachtas can make a rational decision. There are not before us the results of the review group. There are not before us the results of any joint committee of the House of the Oireachtas or a committee of the other House, even if we were not represented.

There is no indication except the word of this Minister and the last Minister that this is sufficient money. I am not saying we should not give them the additional £30 million which they are looking for. Perhaps £30 million is not enough. If so, we should give them more, because if the companies are worth preserving we should establish them on a sound financial basis. Maybe on the other hand £30 million is too much.

There is no way in which we can arrive at a rational conclusion as to the right amount of money to be given to this company. Effectively we are participating in the writing of a blank cheque to this Minister, whose judgment I implicitly trust, but also to any future Minister of any political hue, whose identity I do not know. We are giving him the authority to increase their share capital from £30 million to £60 million and increase the amount of guarantees from £75 million to £150 million. We are giving a blank cheque to the Minister. He does not have to come back. He does not have to ask our opinion. He just makes the increase. I will vote in favour of this Bill because I trust the Minister but this is not a rational way for the Oireachtas to carry on its business. This is an ideal Bill on which to make this comment because it is a Bill which is the creature of two administrations. It is not the right way to carry on. Obviously certain targets were set for the company. Senator Kirwan has referred to profitability targets. I am sure there were such targets but I do not know what they were. Therefore when this Minister or another Minister comes in six or seven years time and asks for more money, I will not know whether these profitability targets have been met. No doubt there were targets with regard to either maintenance of the existing employment, the reduction of employment or increased employment. No doubt there were targets like that but I do not know. Therefore the next time this matter comes before the House. I will not know whether they have succeeded in meeting these targets. No doubt there was another plan, no doubt there was another inter-departmental committee and no doubt the result of their investigation was equally a mystery to those who were called upon to vote for substantial increases in the amount of guarantees being given to State companies. I am not saying that the amount of money is too much; I am not saying it is too little. I am just saying I do not know. That is not a reasonable way to ask Houses of the Oireachtas to make a decision.

That is my only point with regard to the general structure of this Bill and this type of legislation. I am not blaming the Minister. I am not blaming this Government or the previous Government. It is a matter of the way we are controlling or failing to control our State enterprises. Senator Kirwan and I are approaching the matter from a different angle but arriving at the same conclusion. I do not know what the civil servants have in mind for Aer Lingus, but if I did it might improve my input to this discussion and enable me to make a rational decision as to whether to play my small part in giving this increased money.

My second point concerns Cork airport. It is true to say that a confusion seems to exist in the minds of many people concerning the future of each and every airport in the country. It is quite obvious because of its closeness to the major centre of population that the future of Dublin airport is as secure as the airline industry.

The problems of Shannon airport and the need for its confirmation as our international airport have been rightly stressed by both Senator Alexis FitzGerald and Senator Michael Howard. They are welcome contributions which should have our support. The role of Cork airport has not been properly defined, and the way in which Aer Lingus have been talking about downgrading the services into Cork airport has been disturbing, especially for those like myself who use the airport quite a lot. There is a need not only for feeder flights to Dublin but for regular services to London and to the Continent of Europe. It should not be outside the wit and ingenuity of those who control Aer Lingus and Aerlínte to make use of the facilities provided by Cork airport to service the very substantial number of people who live in the Cork and Kerry regions.

I do not want to ascribe to Aer Lingus motives which suggest that they are unfavourably disposed towards the airport at Cork. It is fair to place them on warning that every public representative in the south of Ireland is looking with interest at the way in which they treat their services in and out of Cork airport, the way in which they develop their services and the way in which they ensure that the airport remains as a service both to the economic and social life of the southern region.

Certainly the Minister will have our support and we wish him well with regard to this Bill. It is really up to the House itself rather than the Minister to look carefully at the cavalier fashion in which we increase the guarantees for a State company by such a dramatic amount of money with so little information before us.

Mr. Cregan

May I first compliment Senator Tras Honan on her appointment as Leas-Chathaoirleach? I hope she will be there for a long time to come. Secondly, while welcoming the Bill I have to admit that I am confused about the Minister's statement because I fail to understand how he can admit a few times in the statement that in actual fact the North Atlantic over the last ten to 12 years has been a loss-maker and it has been admitted that the profits — we had profits in four years only — have been coming from European operations. Now we see a situation where Aer Lingus are downgrading particular airports, that it is readily admitted profits were made out of, to keep the North Atlantic going.

I fail to understand that, and it is only right that it should be questioned. Indeed other Senators before me have questioned it. It has been brought to my attention over the last few months because of the information about Aer Lingus downgrading, in particular, Cork and Shannon. It cannot be denied that flights are overflying Shannon when there is no need for it. Senator Howard has covered that point. At the same time, why should we allow a situation where extra money must be allocated to these people without seriously questioning whether they are doing the right thing generally for the people who pay the money, the taxpayers?

I admit that the North Atlantic is a very important area. We hope there will be a 5 per cent increase in tourism this year. I will not deny that is a very important area. At the same time, it is only proper to point out that, in particular, in the Cork area serious concern is being shown by industrialists in that area. I will give one example. It was brought to my attention yesterday that in actual fact off the south coast of Cork rigs will be working there by next summer and $600,000 a day can be spent in that area and up to $1 million a day on oil rigs. Concern has been shown by the people engaged in this work that no services are available at Cork Airport. The State could be losing out generally because of this. The onus lies on the management of Aer Lingus. The way they are going about their services from Cork Airport and Shannon Airport is causing people very serious concern.

I also understand that when other people are prepared to give a service to these particular airports very strong objections have been raised by Aer Lingus about the services. One particular service that has been running out of Cork for the last 18 months is Danair — from Cork to Gatwick. There were strong objections by Aer Lingus at that time as to whether Danair should fly out of Cork. Danair gave a commitment that they were prepared to give a service from Cork at 9 o'clock every morning and Aer Lingus, I understand, said that if they were going to give a service at 9 o'clock Aer Lingus would give one at 8.30. That is very bad management, and I fail to understand why they could not give this service before Danair said they would give the service at 9 o'clock. That is a very serious question and a very serious allegation.

We are now saying we must give extra money to these same people today. I am not going to sit here and be a yes man for anybody and say that we must allow it. I welcome anything that will better the people of this country, but I seriously question whether Aer Lingus' priorities are right, and serious questions must be asked. Avair are giving a commuter service from Cork to Dublin and because these people have come up with this particular service, a charge of £45 is charged for the return trip. Cork to Dublin via Aer Lingus early in the morning was costing in the region of £38, and the day after Avair started their commuter service between Cork and Dublin, the Aer Lingus charges were increased from £38 to £45.

I do not know if they are prepared to compete or if they should do what the other person is doing. They say the next week that they should be doing the same as Avair. Why did they not say that before these people started? Why are they now readily admitting that turbo-prop planes are now the thing to be in? A large amount of money has been spent over the years on 737s in particular and 111s and now they are admitting they are too big for these particular services. I fail to understand that. It should be seriously questioned why they are now prepared to give these particular services when other people are now doing them.

Another matter was brought to my attention and I feel that it is only right that it should be mentioned. We subsidise a State company to provide services to the people of the State, yet I understand that when these particular aeroplanes land at Heathrow they are told that they must fuel there, I imagine, because the fuel is cheaper. At the same time if the State is subsidising a company to fly aeroplanes and they are not prepared to buy fuel in the same State I question it. I now understand that Shell who provide the fuel in Cork Airport are leaving the airport and are allowing somebody else to provide the service, because no fuel is being bought at that particular airport. We also have a situation where the people providing the airport are losing vast amounts of money by air. Why are the semi-State company not providing the fuel? If we are seen to be creating employment, why is it that we do not allow the semi-State company. Air Rianta, to provide the fuel themselves? Why should we be allowing a private company to do it at all?

I would like also to refer to the foreign carriers. Why are Aer Lingus showing so many objections to other people who are prepared to come in and give services to these airports and they are not prepared to give the service direct out of Cork? They are saying that we must now go to Dublin if we want to travel to Manchester or Paris. We can just imagine what it means to people who are getting on in Cork and being told that they cannot get a flight to Paris or to Manchester direct. We must not give the impression that the south west region will accept that they cannot fly direct. Aer Lingus have a responsibility to the people of Ireland as well as to the North American people. The priority should be the people of Ireland because they are getting the money from them to provide a service to the people who are giving the jobs in Ireland. Yet, when the industrialists want to get out of this particular south west region they cannot get out direct.

If an industrialist wants to go from Cork to Brussels — it only takes in the region of 55 minutes — he has to stop off in Dublin and he can be three or four hours waiting. That is crazy, long-term thinking. It is most unfair to people down the country to be giving the impression that there is only one particular airport. Priority must be given throughout the country to everybody in it.

I readily admit that in comparison with the Dublin airport, Cork airport is not as busy. The population is not as great. At the same time it is only fair to say that the impression must not go out of here implying that Aer Lingus are calling Cork airport and, indeed, Shannon airport second class airports. That is most unfair with the amount of money that is being put into them. Serious questions must be asked about that. They should not go unanswered.

Minister for Transport (Mr. J. Mitchell)

I would like, first of all, to express my gratitude to all those who participated in this debate and who were kind enough to congratulate me on my appointment as Minister for Transport and Posts and Telegraphs and welcome me to the House. I have been very stimulated by the debate and very interested in the points that have been raised. I will endeavour to answer the points raised as best I can.

I will start with Senator Killilea. He referred to the burdens being carried by the tourist industry. He suggested that Aer Lingus's task of attracting travellers to Ireland would be more difficult as a result. One of our strengths in attracting tourists to Ireland in recent years, and particularly from the United States, has been the very attractive air fares. That will continue to be the case this year. I am confident — I know that my colleague the Minister for Trade, Commerce and Tourism is of the same view — that Bord Fáilte's target of 5 per cent increase in tourist numbers from the US can be attained in 1983. I note from a report in this morning's Irish Times that the major charter operator into Ireland, Mr. O'Connor of Old Country Tours, is also confident of a good year in 1983. The longer term situation is something that the Government will be giving attention to in the next few months.

Senator FitzGerald referred to the turnaround at Shannon, as did Senator Michael Howard. Senator FitzGerald referred to the use of jumbo aircraft between Shannon and Dublin. The question of turning around at Shannon was one of the main items discussed during the course of the Second Stage debate on this Bill in the Dáil. Conflicting points of view were expressed, with a number of Deputies arguing forcibly for a turnaround of services at Shannon and the other side making the point that it should be at Dublin. I want to repeat the point that I made in the Dáil, that Shannon is our transatlantic airport. In terms of the Aer Lingus situation I must stress again the fact that the national carrier depends almost equally on Shannon and Dublin to provide the traffic for its transatlantic operation.

That is in contradiction of a point made by one of the speakers. He suggested that two out of every three passengers either landing at or embarking from Ireland used Shannon. That is not the case. It is very much even steven between Dublin and Shannon. Aer Lingus depend almost equally on both airports. The turnaround option is one that has been looked at from time to time. All the analyses indicate that for many reasons, including key marketing and operational ones, a continuation of the present pattern of operations is in the best interests of the airline. Therefore, there is no question but that Shannon airport is, and will continue to be, our transatlantic airport, and that there will continue to be a dual stop at Dublin and Shannon on the transatlantic service.

Senator FitzGerald spoke of the £20 million-plus loss which Aer Lingus incurred on the air transportation side, losses that are cushioned by profits from their ancillary activities. The whole point of Aer Lingus' involvement in the ancillaries was to provide such a cushion for what has traditionally been a cyclical operation, with peaks and valleys recurring frequently on the air transportation side. The North Atlantic operation is in fact the root cause of Aer Lingus' losses. The operations on cross-channel and into Europe, broadly speaking, break even or turn in a small profit. I have to qualify that by saying that that is so as long as they can share the overheads with the Shannon transatlantic route. Nevertheless the fact that the air transportation side is turning in losses makes it incumbent on Aer Lingus to take every step to improve efficiency and to reduce their costs.

I dealt with this aspect in some detail in my opening speech. There is no question but that Aer Lingus will have to continue their efforts in cutting their expenditure and achieving economies and savings wherever possible. Senator Kirwan referred to the point that Aer Lingus were expected to make a profit when such airlines as Laker, Braniff and Pan Am have closed down or have difficulties. The fact is, Aer Lingus, as I said in my speech, have had profits in every year except four over the past 20 years and, therefore, according to Aer Lingus' performance a profit is a thing that we can expect and ought to expect. Aer Lingus' management and Aer Lingus' work force want to be in a profitable situation. They do not want to be a burden on the State. It is, therefore, right for this House and for me to encourage them in that direction.

Senator Kirwan saw implicit in my speech an insistence on job losses. I want to say that I cannot guarantee that jobs will not be lost. I can guarantee that I have given every encouragement to the State bodies under my control to avoid job losses where possible. If there are other ways of saving money the protection of jobs should be very high in their consideration although job losses may be unavoidable. I would certainly like all other ways of saving money to be found first.

Senator Howard referred to our experience with Pan Am and TWA in terms of their case for landing rights at Dublin. As Senator Howard pointed out, both airlines lost interest in providing scheduled services between the US and Ireland, underlining the point that the only airline on which we can rely to give the year round scheduled service that is vital for the development of Irish trade, industrial development and tourism is Aer Lingus. It is for that very reason that the Government see it as essential that Aer Lingus must continue to provide a service on the Atlantic.

Senator Howard also raised questions about the frequency of Aer Lingus over-flights at Shannon. He said that they are almost fifty-fifty, one overflight for one landing. That simply is not the case. Overflights are very much the exception and, for scheduled flights, the only grounds for overflying are safety considerations. I will get details of the extent of and the reasons for overflights in the past year and write to Senator Howard shortly. He requested that information but it is not to hand. The Senator also inquired about the basis for the improvement in the airline's financial fortunes in 1981-82. The improvement came about largely through the efforts of the airline's cost reduction programme that extends over the entire range of the airline's operations and covers items such as staff, overheads, fuel conservation, etc.

Another point that Senator Howard raised was the question of Federal Express locating at Shannon. This would be a very welcome development though, unfortunately, Federal Express, having examined the matters in detail, recently decided, we understand, that to extend its operations into Europe at the present time of recession is not on. So, the proposal has been deferred at least for the present. On the customs pre-clearance question this is a complex proposition with many different considerations having to be weighed up from an Irish perspective. Aside from that the concept could only be advanced with the active participation of the US authorities. On that score, a fundamental requirement from the US point of view is a minimum throughput of US-bound passengers. At the moment Shannon is below this maximum figure, but I know that Aer Rianta are still keenly interested in the concept. When customs pre-clearance becomes a live issue there will, of course, have to be an effort to try to strike a balance between the pros and cons being advanced by those in favour of and those opposed to the introduction of this concept at Shannon.

Senator Hillery spoke of the need for regulatory action on a wide front between the United States and Europe. That is, in fact, happening. I am glad to say that my Department have played an active role in the process which led to the conclusion of an experimental memorandum of understanding between the member countries of the European Civil Aviation Conference and the United States in regard to North Atlantic pricing. That is but a first step back from the road of total de-regulation or open skies as it is sometimes called, but I would hope that it represents a first step on a road back to airline profitability.

Senator Howard inquired about Aer Lingus' involvement in the provision of internal air services. The airline have, of course, operated services between Dublin, Shannon and Cork for many years. Over the past year or so Aer Lingus have joined in arrangements which are there to provide supplementary internal air services, most notably between Cork and Dublin. Interest in internal air services has been stimulated in recent years and, at the moment, I am examining applications from a number of private operators to expand into this sector. At the same time, Aer Lingus have been looking at whether an all-jet fleet is the correct approach at the present time. In fact, the company have recently concluded that they should again become involved in the operation of turbo-prop equipment. Aer Lingus are currently in the process of acquiring a Shorts 330 aircraft on lease for an experimental period. I am confident that the scene in terms of internal air services will see considerable evolution and development over the next few years.

I have dealt with Senator Kirwan's point. Senators O'Leary and Cregan were understandably concerned about Aer Lingus' operations out of Cork. I should say that Aer Rianta are very concerned about the traffic scene at Cork and any proposals that are made to me for services to and from Cork will be very carefully examined. It should be said, in relation to Aer Lingus, that the original proposals were indeed for very stark reductions in direct services from Cork. Following the intervention of the Lord Mayor and other people in Cork and discussion between them and Aer Lingus a compromise set of proposals has been arrived at which greatly improves the situation. I want to thank Aer Lingus, the Lord Mayor and those who were with him for their positive contribution to a compromise and sensible solution.

I have dealt with all the points that have been raised by Senators. I want to thank the House for its expeditious dealing with this Second Stage. I commend the Bill to the House.

Mrs. Honan

May I ask the Minister one question?

An Cathaoirleach

Yes.

Mrs. Honan

When the Minister is inquiring for Senator Howard about the over-flying, which he did not seem to really take his word on, would he also inquire from his Department about the number of persons landing at Shannon as against Dublin? I am afraid the Minister is not up-to-date. The same number of passengers do not get off at Dublin airport and Shannon Airport. The Minister said it was on a one-to-one basis. That is not correct. When the Minister inquires for Senator Howard about the over-flying I would like him to inquire also if his statement a few minutes ago regarding the number of passengers landing at Dublin and Shannon is correct.

Mr. J. Mitchell

In relation to the last point raised by Senator Honan, the fact is I was talking about Aer Lingus. The number from Shannon and Dublin for Aer Lingus is roughly equal. The overall figures are different because more airlines go into Shannon. On the over-flying situation the Senator will appreciate that I am personally not watching to see what happens. I am only as good as the information I am told. I understand the number of over-flights is negligible. I will certainly get the figures and I will also convery them to Senator Honan.

Mrs. Honan

Maybe I am wrong but——

An Cathaoirleach

The Senator may raise it on the next Stage.

Question put and agreed to.

Agreed to take remaining Stages today.