I move:
That Seanad Éireann approves the following Order in draft:
State Guarantees Act, 1954 (Amendment of Schedule) Order, 1986;
a copy of which Order in draft was laid before Seanad Éireann on 20 October, 1986."
State Guarantees Act, 1954 (Amendment of Schedule) Order, 1986: Motion.
This motion arises from the Government's approval of the construction of a new runway and associated works at Dublin Airport.
Dublin Airport's runway system dates from the mid forties. The runways were designed to cope with the types of aircraft operating at that time as well as with aircraft developments then foreseen. In the meantime, the runways have been extended, overlaid with asphalt and continuously maintained. Bearing in mind the age of the Dublin runway system, the tremendous developments in size and weight of aircraft in recent years and the need to provide for the long-term traffic needs of the airport, a detailed examination of the airport's future runway requirements has been carried out by a group representative of Aer Rianta, the then Department of Transport and Aer Lingus. The group's main recommendation was that a new east-west runway should be built on the southern side of the airport terminal area.
On the basis of the group's report, a technical analysis of the condition of the runways and an assessment of a number of options, the Government have given approval for the provision of a new 8,650 feet runway, together with associated works, at Dublin Airport, at an estimated cost of £31.26 million at 1985 prices.
The project will be the biggest State airport project to be undertaken for some time. As well as the runway itself, the project will include the provision of a parallel taxiway system, advanced navigational and visual aids, a new air traffic control tower, technical building and consequential road works. The project will provide about 200 jobs at peak during its construction.
As the new runway will have an east-west orientation there will be a significant reduction in aircraft noise levels for large populated areas in Dublin city and county. Aircraft noice nuisance will be significantly reduced in areas such as Ballymun, Finglas, Swords and Castleknock.
The new runway will intersect with the Ballymun-Naul road. Local residents and other users of the Ballymun-Naul road are concerned about the proposal to close the road and to replace it by two new roads running parallel to and located on each side of the runway, linking the Ballymun-Naul road with the St. Margaret's road. An action group has made strong representations objecting to the proposed road closure and seeking in its stead the provision of a tunnel to carry the road under the runway and parallel taxiway. I can assure the House that all representations regarding the Ballymun-Naul Road proposal are being carefully considered and that a final decision in that matter has not yet been taken. It will also be necessary to close a section of Collinstown Lane and it is proposed to provide a replacement road to connect the lane with the Old County Road at Commons Townland.
Development work on the project commenced last August on the provision of water and sewerage services to the proposed new air traffic control tower and technical building. Work has also commenced on the provision of high tension electricity supply for the project and on drainage works. Aer Rianta are engaged in the design and planning work for the runway itself, the parallel taxiway and buildings. Work on these elements of the project is due to commence early next year. The scheduled completion target for the entire project is March 1989.
As Senators are aware, the three State airports are managed by Aer Rianta on an agency basis on behalf of the Minister for Communications. Under the agency arrangements capital expenditure at the airports has traditionally been funded directly by the Exchequer and surpluses earned by Aer Rianta are surrendered to the Exchequer. The company have, however, been given responsibility for the funding of a western fuel terminal at Shannon Airport and the provision of US preinspection facilities at the airport at an estimated aggregate cost of £1.3 million. Given the very heavy demands on the Exchequer, the scale of expenditure involved in the Dublin runway project and the satisfactory financial results of Aer Rianta in recent years — the company had a surplus on trading activities of £11.5 million in 1985 — it has been decided that the company will participate in the funding arrangements for the project. The company will provide 75 per cent of the funds — 25 per cent from their own resources and 50 per cent from borrowings. The remaining 25 per cent will be provided by the Exchequer. As regards the borrowing requirements, Aer Rianta are having discussions with a number of financial institutions.
The question as to whether the position of Aer Rianta should be changed to that of an autonomous commercial State company has been examined in the past. Previous examinations of this issue, including a report in 1979 by the then Oireachtas Joint Committee on State-Sponsored Bodies, concluded that the company's status should not be changed on the grounds that their financial performance cast doubts on their ability to service the accumulated debt on past State investment and to provide for the future capital needs of the airports. In the difficult environment of recent years, Aer Rianta have turned in a creditable performance. Against this background and Aer Rianta's direct involvement in the funding of the Dublin runway project the Minister for Communications has initiated a further appraisal of the future structure of the company. The appraisal is being carried out by a review group representative of the Departments of Communications and Finance and Aer Rianta.
Dublin Airport is the busiest State airport; in 1985 it handled a throughput of 2.6 million passengers. This year there has been satisfactory traffic growth at Dublin Airport in a difficult economic environment for air transport. Traffic in August last showed a spectacular increase, 17 per cent above August 1985 and was in fact the airport's busiest month. This growth is due in no small measure to the introduction of reduced fares and approval of an additional Irish carrier on the Dublin-London route. As Senators may be aware, the long held view of the Minister for Communications is that there should be greater liberalisation of air transport services which proceeds in a balanced way and avoids over-hasty expansion of capacity in the market.
On the financial side, Dublin Airport continues to make surpluses; last year the Dublin Airport surplus was £7.8 million or 68 per cent of the total surplus of Aer Rianta. The provision of the new runway will enhance the future prospects of the airport and meet its traffic needs well into the next century.
This project is indicative of the Government's commitment to the development of the State airports at Dublin, Shannon and Cork for the promotion of traffic growth to the maximum extent possible. I have already referred to a number of projects at Shannon. In 1986 a total of £1 million in Exchequer funds is being provided for capital works at Shannon.
As regards Cork Airport there has been substantial support by way of Exchequer funding. During the past three years, £750,000 of Exchequer funds has been spent on capital works at Cork Airport. During the present year Exchequer funds of the order of £1 million are being provided for a number of capital projects at the airport, the principal one being the provision of a new instrument landing system. In addition, Aer Rianta have recently received approval for expenditure of the order of £250,000 for improvements to the terminal building. This work will be carried out in 1987.
Aer Rianta have submitted a proposal for an extension to the main runway at Cork Airport and the provision of improved navigational aids. The up-to-date position is that the project is being actively considered by the Minister for Communications.
Senators will be aware that the Minister has adopted a series of measures aimed at liberalising air transport generally and he has taken a number of initiatives on air fares including in recent times the refusal of an application by carriers operating to the UK from Cork Airport for an increase in basic air fares.
He has also recently announced reductions in air fares from Cork and the other State airports to continental destinations for the winter.
As regards new services from Cork, Ryanair have applied for approval to operate air services to Luton from Cork. A decision on the application will be taken in the light of the outcome of discussions taking place between the Irish and UK authorities on a revision of the Ireland-UK Air Services Agreement.
The motion which is now before the House, if approved, will facilitate the provision of a State guarantee for up to £25 million of borrowings by Aer Rianta. It is unlikely that Aer Rianta's borrowings will amount to £25 million but the draft order provides for a maximum of that amount to ensure that the amendment will be adequate to meet the cost of any unforeseeable developments. As I have stated, it is proposed that the company will borrow 50 per cent of the funds for the project.
The guarantee necessitates an appropriate amendment to the Schedule to the State Guarantees Act, 1954, and it is in this context that the motion arises. Approval of the amendment by the House and by Dáil Éireann is necessary in order to complete legal formalities in respect of the guarantee.
The cost of the works being carried out on the project in 1986 is being met by Exchequer funds of £0.9 million. Next year it is planned to spend some £11.5 million on the project and Aer Rianta's share of the funding will entail borrowing. It is, therefore, necessary to have the State guarantee in place in good time before the start of next year.
Therefore, I recommend the motion to the House.
I welcome any money that would be of aid to Aer Rianta. For a long time, as a Senator in this House, I have wondered about these draft regulations being laid before the House. My worries are confirmed today in that we are talking about an allocation of £25 million to Aer Rianta. It is laid before the Seanad in draft form. This type of funding and this type of money would warrant a Bill on which we could have a long debate.
Debate adjourned.