Each speaker has ten minutes and this time may be shared.
Aer Lingus: Statements.
Acting Chairman
I wish to proceed, in an unsatisfactory manner, to deal with this issue. I would have preferred if the motion that my party had put before the House was accepted because we were calling on the Government to change their mind on the strategy plan for three reasons. We did this because of the damage and the loss to the families of between 1,500 and 2,500 people who will lose their jobs as a result of this plan. Secondly, it also represents the reckless sabotage of the economy of the mid-western region and, thirdly, it signals the absence of a Government aviation policy. The plan is a product of the same discredited Aer Lingus management that, within three years, has reduced a once proud and profitable airline to a debtridden shambles, with projected losses this year of £116 million and a total debt of £540 million.
Is there no one in Aer Lingus, the Department of Transport or at Cabinet level to be held responsible for this disaster, any more than anyone was held responsible for the £17 million that disappeared in Aer Lingus Holidays? Who made the key decisions that brought about this disaster? Will no one pay for the incompetence and the almost criminal mismanagement that resulted in this situation? Are the penalties that are due elsewhere now to be borne by the work-force and the economy of the mid-western region and indeed, by a few politicians of principle and integrity, such as Deputies Killeen and de Valera and their 17 colleagues in County Clare?
The proposal to shed 1,500 jobs is a cynical exercise to shift the blame to the wrong people. We were told redundancies would be voluntary and Labour Deputies put on a great show in the Dáil last week saying that there would be no compulsory redundancies. However, the Minister for Enterprise and Employment, Deputy Quinn, said in the same debate that there would be no compulsory redundancies in so far as it was possible.
I am concerned with the easy acceptance of the clearly flawed recommendations of Aer Lingus with regard to the status of Shannon. The figures in their report on the operational costs of their north Atlantic route were clearly contrived to support an anti-Shannon position and I condemn the weakness and the readiness of the Government to sabotage the economy of that area on what they knew were contrived figures. Aer Lingus, to bolster its anti-Shannon lies, added costs on to the Shannon gateway that did not belong to it. For example, the lease-out and depreciation costs of the two 767's acquired for the Los Angeles route, which were never used, were charged to the Shannon-New York route. This cost alone represented a major element of the supposed losses of the north Atlantic route. Fares totalling £2 million, which were paid on the Dublin-Shannon and the Shannon-Dublin legs of the north Atlantic route were credited to the intra-European routes and their costs were charged to the Shannon north Atlantic operation. The profits from traffic handling in Shannon and New York were not credited to this route but to ancillary activities instead.
For many years, Aer Lingus carried out a well-organised conspiracy against the status of Shannon. The Minister willingly and knowingly accepted this and has immersed himself in that conspiracy. Representatives of Shannon made this known to the Minister in recent weeks and it was done by reputable people in organisations, but he has ignored them. They supplied figures and provided information which questioned the basis of Aer Lingus' case against Shannon. The Minister ignored them, just as he has ignored the actions of the chairman of Aer Lingus in refusing to accept his own directive to prepare a rescue plan in accordance with the Government's decision in relation to Shannon on October 1992.
What will be the effects on Shannon? The US Immigration Service based there, the only one in Europe and, therefore, capable of development and expansion, is likely to close because of insufficient numbers. It is impossible to maintain the basic number of 350,000 people per annum passing through it without the stopover. Its establishment was opposed by Aer Lingus because they recognised that it anchored the position of Shannon and was against their long-held desire to withdraw from there.
Is Aer Lingus' long term strategy to withdraw from Shannon? By abandoning Shannon and opening up the Dublin-New York route, they can then sell out its north Atlantic interest to an American airline that would serve Dublin only. Aer Lingus knows that the Government cannot renegotiate the bilateral agreement with the Government of the United States without opening up the Dublin-New York route to American carriers. Aer Lingus have shown they are totally incapable of dealing with competition and renegotiating the agreement is an invitation to an American carrier to take them out of the north Atlantic route. No one in Shannon has been taken in by the crude public relations effort of stationing a couple of ageing and shortly to be scrapped 747s in Shannon for a few years. The industrial base and the tourism industry that developed from Shannon in the mid-west and along the western coast is now to be sacrificed for a doubtful result.
It has not been shown that Shannon's status has contributed to Aer Lingus' financial difficulties, except on the basis of contrived figures. It is a sad day for democracy when a Government allows the chairman of a semi-State body to regard with impunity the expressed instructions of the Minister and accepts in toto the conclusion of the report, which was based on contrived figures. Tourism traffic will be transferred from the mid-west to Dublin. The main plank of regional policy, and the only successful one in the west, will be gone and direct flights to Dublin, promoted by Aer Lingus and Bord Fáilte in the United States, will be to the detriment of the Shannon area and the west.
This is a false plan. Its authors are largely the same team who have destroyed Aer Lingus over a few years and its unquestioned acceptance by the Government is a recognition that incompetence, mismanagement and reckless administration in the semi-State sector deserves reward. The redundancy figure referred to at the moment is something over 1,500, but this ignores the fact that every part of Aer Lingus, except the core air traffic business, is on the market. When the subsidiaries are sold, nobody can guarantee that further redundancies will not take place. The figure of 1,500 is the minimum that can be projected at this stage, but with the disposal of the subsidiaries that figure will probably increase by at least 1,000. Many thousands of jobs in industry, tourism and construction in my area are at stake.
I would like to develop a number of points in relation to this matter, but this afternoon's vote allowed the Government to limit the amount of time devoted to a discussion on this important issue. They took refuge in procedural technicalities to deny this House the opportunity effectively to discuss and put forward an alternative plan for the benefit of those who will lose their jobs in Aer Lingus and for the economic benefit of the region I represent. The Minister knows this is a disaster. Figures were supplied to him from the Shannon region which undermined the credibility of that report, but he refused to accept them.
The only thing I can give the Minister credit for in this sorry episode is that he has single-handedly undermined and shattered the most successful party machine Fianna Fáil had in the country. It is a sad day for Aer Lingus and the economic development of my region and no amount of waffle will conceal these facts.
The Cahill plan for Aer Lingus focuses almost exclusively on cost cutting proposals to resolve and restore the financial viability of the company. Nobody will question the need for financial viability, particularly those in the Shannon and the mid-west region, but the role of management extends way beyond cost cutting, however urgent that may be. The viability of Aer Lingus, like any other enterprise, cannot be achieved unless there is a well researched and dynamic forward plan for future development. Those charged with the development and implementation of that plan must have a high level of professional competence and imagination given the highly competitive nature of the aviation business. I question whether those at the helm have experience of or competence in the highly competitive aviation business.
They must also have the loyalty and support of the workers which is based on mutual confidence and respect for leadership, as is the case in any enterprise. That has always been a feature, if not a unique feature, of Shannon under the direction and guidance of Brendan O'Regan, his successors and associates in management. It has been a primary example of the kind of commitment and determination we want to see throughout the country.
I know County Clare. I was a student there from 1948 to 1953. I have seen what has been achieved and I will not tolerate any undermining of that special achievement. Shannon has been built and sustained through many difficulties and challenges by the readiness of all involved to row in behind enlightened and concerned leadership. This leadership has always worked in common purpose with Aer Lingus in recognition of the mutual interdependence of Shannon, the region, Aer Lingus and the country, as Brendan O'Regan recently underlined. That same spirit of mutual determination and planning must now be put in place and pursued confidently in the changing international aviation environment.
I regret to say there is no evidence in the Cahill plan of such dynamic forward thinking. Mr. Cahill has experience of rationalisation in Siúcra Éireann and now in Greencore. Unlike Siúcra Éireann — and I was involved at that point — or Greencore as it is now called, Aer Lingus and Shannon do not have the comfortable cushion of a guaranteed protected quota. During that period, under Mr. Cahill's chairmanship, Siúcra Éireann did not seek new options for the development of alternative products from sugar beet, despite my requests to them to do so and the introduction of partners interested in joint ventures. Instead, they relied on a so-called rationalisation programme involving closures and the shedding of jobs to reduce labour costs. Aer Lingus and Shannon cannot survive, much less develop, with such a narrow based strategy. What is needed is an outward looking and confident strategy that is not evident at this time. The question must be asked, rhetorically or otherwise, are the chairman and the board suitably equipped and qualified to meet this challenge? I am not aware of anything in their background, particularly that of the chairman, to suggest that they have this unique and necessary qualification.
It is time to seek new and profitable links with Europe from Shannon and the rest of the country, given the unique attraction of Ireland, particularly the west for tourists and tourist-based activities. Has any thought been given to developing Shannon as an international co-operation centre in view of Ireland's prominent role internationally in development co-operation and the fund of goodwill that exists towards Ireland in developing countries? There is an international co-operation desk at Shannon Airport, but it is not sponsored by Aer Lingus. It is sponsored by those who have always and will always believe in Shannon, those closely associated with the development and building of Shannon. Will Aer Lingus build on that special link?
There was no consultation with Shannon or the entire mid-west region prior to the meeting on 26 June at which the chairman, Mr. Cahill outlined the plan. What thought was given to the fact that there are 449 flights each week to 23 locations in the US direct from London? This explains why 55 per cent of transAtlantic traffic is routed via London.
Recently — and may I add, belatedly because I brought this to the company's attention some time ago — Aer Lingus has at last become involved in common fare ratings from distance locations such as Japan and Australia. It is a great incentive for people to travel from these destinations to countries in Europe involved in this programme. For example, a tourist from Japan or Australia may book from Tokyo, Sydney or Melbourne through Lufthansa, Sabena or Air France, not only to Germany, Belgium or France, but at the same fare and at the same time to other locations in Europe that are part of the common fare rating. The one exception was Aer Lingus. One arrived in Paris, Frankfurt or Brussels and had to pay Aer Lingus to fly to Ireland. How did that affect the development of tourism and Aer Lingus? A short term advantage was achieved at great long term cost.
The failure of Aer Lingus to become involved in this over the years can be seen in the dearth of tourists from such locations to Ireland. Japanese tourists are queuing up to play golf in Belgium, of all places. We have more good golf courses in one county than they have in the entire country. Why are these people not queuing up for recreational activity holidays in Ireland when we have many more attractions and facilities than those on offer anywhere else in Europe?
The development of Shannon is not just about Shannon Airport or County Clare. It is about the determination and confidence of people in any place which as recently as 40 or 50 years ago was regarded as a depressed area. It is about a dynamic regional development policy which has been successful to date and which should be the pilot scheme for all regional development programmes throughout the country. It does not make sense to undermine what has been successful; rather we should follow it in a confident and a vigorous fashion in all regions.
The motion as proposed does not have my support. I do not condemn the Government for dealing with the plan that has been proposed. The executive chairman who was chairman was apparently unaware of the financial implications of the proposals then made, to the extent that when he did become aware of the situation in his capacity of executive director, he could justify that as being a change of the overall strategy which originally envisaged maintaining Shannon. I cannot see how any chairman worthy of the name should not be in a position to get all of the information, whether he is executive or not, and in an executive position, without the necessary experience in the aviation area and without respect for the kind of dynamism that we all know is part of Shannon, I am not so confident that that man and that plan will realise the potential that is there in Shannon airport.
With your permission, I wish to share my time with Senator Lee.
Acting Chairman
Is that agreed? Agreed.
This is the only plan on the table. It is definitely the one the Government will implement. We must recognise that reality. However one might disagree with particular aspects of the plan, unfortunately it is clear that any survival plan for Aer Lingus will look something like this one. I wish to draw attention to one of the main mistakes which contributed to this regrettable situation. If we recognise and acknowledge our mistakes then we may avoid making the same mistakes again in the future. If we do not recognise our mistakes, then we condemn ourselves to making them again.
The most serious mistake made in the past few years in Aer Lingus was that it was allowed and encouraged by successive Governments to take on more people than it needed from a strictly commercial point of view. The result was that eventually the airline became totally uncompetitive and non-viable and required the surgery we see in this plan. Other mistakes were made but I suggest that this was the central one, and it is the mistake which carries the most important lesson for the future in regard to other situations. Instead of taking people on only when it was commercially necessary, Aer Lingus became a tool of Government jobs policy. Government policy was to create jobs and State companies were used for that purpose. Not only were the jobs so created non-viable but they dragged other jobs down with them.
At a time when competitive forces were strengthening in the marketplace and when the market itself was shrinking, Aer Lingus was adding people to the pay roll. That is commercial suicide in any business and the proof is before us today. Sooner or later the reality of the marketplace catches up with companies who do that and the later it happens the bigger the price that must be paid. Today, therefore is an unhappy day when we see a loss of a potential 1,500 jobs, but it needs to be said that it is not possible to create jobs. No Government or company can do that. It is possible to create opportunities for serving customers' needs in a competitive way. From that, and only from that, sill jobs flow, but if a company is reckless enough to create jobs independently of customers' needs, then that company is creating a serious threat to the viability of the business and eventually to those jobs.
It has been Government policy for a long time that State companies contribute to the job creation effort by taking on as many extra people as they can. I am governor of a Dublin hospital and I remember during the 1970s we used to receive a letter each month from the Department of Health asking us how many people we had taken on in the hospital as part of the Government job creation project. This policy was stopped in the health services during cutbacks in the 1980s, however, the mentality unfortunately persisted in other commercial State companies. That mentality persisted in the case of Aer Lingus with the result that we see today.
If we do not keep the number of jobs in a State company strictly in line with the commercial needs of the marketplace, the eventual correction that has to be made will be much more drastic. It is not just a question of putting off the evil day; what we do is make the evil day much worse when it eventually comes, and by then it is far too late to do anything about it.
A truth we may not yet be ready to listen to but which I hope we are ready for is that jobs cannot be created. Jobs that are not justified commercially by the needs of the marketplace cannot be artificially maintained. We should make sure that this mistake which has brought Aer Lingus to the present state is not repeated elsewhere. How many other similar situations exist in the business world? We should concentrate our attention on ensuring that no other such situations are allowed to continue, while we still have a chance of influencing the outcome.
I will be very brief as I am not an expert on this area. I listened with great interest to Senator Quinn, as I am sure we all did, and I agree in principle with him. Creating jobs which cannot be sustained by the needs of the marketplace is a counter-productive policy which ultimately results in greater hardship, disappointment and dismay. However, I query the Senator's implication that the needs of the marketplace are somehow objectively decided out there. He himself has shown in his own business that needs are not something given, that needs can be created to some extent, and that high quality management can affect the demand for one's services.
I do not want to become involved in the question of the quality of Aer Lingus management. Much of that is water under the bridge now, how far it was a question of management and how far it was a question of almost illegitimate Government pressure. If I understood Senator O'Kennedy correctly, he was at least partly arguing that certain opportunities were not seized by management, and that there other opportunities could be seized by management in the future if that management were of adequate calibre. That must be the case in as dynamic and highly competitive an area as air transport.
I am speaking mainly because of my concern for regional development. The Aer Lingus situation is now essentially one of crisis management and the only aviation policy we have as far as I can see and perhaps the only feasible one in the short term, is one of crisis management. That is the problem confronting the Minister and the Government, but there seems to be very little connection between the policy of the State-sponsored company involved. Government policy towards it, and the problem of regional development. They seem to occur in almost two parallel sealed tunnels. I do not know whether this is the responsibility of any individual, and I am not blaming any individual, but it seems to me that Government policy in general, which we have heard time and again suffers from fragmentation in a range of areas, is particularly vulnerable when an issue of this type arises where there are two legitimate conflicting criteria, the financial viability of the company on the one hand and the question of regional development on the other.
It is a pity Shannon should be suffering this body blow because it has been the engine of development in the mid-west region. In the Culliton report, for instance, one of the few specific proposals for regional development singled out the idea of cluster development in Shannon.
The implications of what is now in store for Shannon and the mid-west region in general seem potentially frightening to me. It may be that in the heat of the moment representatives of the area may exaggerate the possible impact, but that impact is certainly frightening. I cannot see any evidence that the implications have been thought through, in so far as they can be, and that a supplementary regional policy dimension is being put in place. I do not mean task forces and the like; they take the heat off the immediate problem but do not confront the issue for years. It is not only in the area of overloading State-sponsored companies with unsustainable demands from Government for job creation, but also in trying to find a link between the policy of State-sponsored companies and regional development, that the lessons of this unfortunate debacle can be drawn.
There is anger and sorrow in the mid-west, not only over the past week but going back a few months. The sorrow is that we see our fine region almost brought to its knees by fears that the key to regional development is going to be partially removed from us.
The anger is far stronger. It manifested itself publicly at a meeting that was held in Shannon when Mr. Cahill came down to speak to public representatives. Those who were there with me will probably agree that we were never more publicly humiliated or insulted than we were that evening. It was because the decisions had already been made and our opinions simply did not matter. Many of us there were county councillors and, as a county councillor I represent at least 1,000 people. My views were ignored, therefore, the views of 1,000 people whom I represent were equally ignored. Their view is that Shannon is important to the economy not only of the mid-west but of the west, south-west, and north-west. In fact, the whole western seaboard feels that a link is being broken that will never be replaced.
A recent survey of US-based industry in the mid-west showed that about 89 per cent of companies indicated that Shannon airport was a significant influence on their initial decision to set up in the region. Many of these companies are desperately dependent on that link with the US. My sister works in such a company and without that link I am not too sure her job or the jobs of her colleagues are safe. Some 51 per cent of those companies indicated that they would not have located in the region but for Shannon airport. Over 80 per cent of them indicated also that Shannon was crucial for the ongoing development and future viability of their companies, and that they would not consider long term investment in the Shannon area but for the guarantee that was given to them that the status of Shannon would be maintained.
The package presented by Mr. Cahill and his team contained no options. There was no room for manoeuvre. It was a "take it or leave it" situation, Hobson's choice. I and many members of my party, would have been much happier if there had been a closer look at alternatives. I would also like to have seen a study undertaken on the regional implications of this plan which seems to focus narrowly on Aer Lingus and its future without taking the wider implications into consideration. Those implications may, in the long term, be as important as the future of Aer Lingus.
Our market has been too narrow. We have allowed ourselves to look westwards too much when we should have been looking to the east and developing markets there. By that I mean Europe, eastern Europe, into Russia and Asia. As Senator O'Kennedy pointed out, the market is there but we have not developed it.
My one ray of hope is that a management team will be set up to manage Shannon and its traffic. Shannon has not been fully marketed or developed by Aer Lingus. In fact, there have been many public indications of how Aer Lingus and its pilots have deliberately sabotaged Shannon. They have deliberately overflown the airport at times when there was no need to do so. They have given all kinds of excuses, including adverse winds on the runways, when people on the ground waiting for passengers to arrive saw other planes take off. If a plane can take off I cannot see why a plane cannot land. There have been numerous examples of this and I have one personal experience of it. Shannon has been sabotaged at times. It is essential that Shannon should have its own management team.
In the mid-west area we have shown that when SFADCo got around to managing our affairs it did remarkably well, so well that it is the envy of other regions who are calling for their own regional development agency. It is that local expertise which, if applied to Shannon and its traffic, will ensure that Shannon continues as a vital link between the region and the outside world.
I would like the Minister to reconsider the entire regional aspect of this problem between now and the time it takes to negotiate deregulation with the US authorities. We all acknowledge that Aer Lingus is losing money daily, and that is a situation that cannot be allowed to continue. We ask the Minister, however, to please take a look at the effect this is going to have on the entire region before we finally commit ourselves to deregulation.
The Cahill plan for Aer Lingus cannot and will not work. It is a document hastily drafted by the company's board of management, and we all know that this group of people are now panicking for their own survival. Unfortunately, before they pulled this plan together they did not engage in any type of consultation either with the unions and workers in Dublin and Shannon or the various interested parties in the west, mid-west and along the west coast.
The plan fails on a regional development examination. No mesurement whatever has been taken of the effect of the plan, if implemented, on the social and economic fibre of Dublin and the mid-west region. This is fundamental to any national strategy. The plan is a subjective interpretation by the board and management of Aer Lingus who have grossly mismanaged that company's affairs over the past three to four years. The Cahill plan proposes an equity injection of £175 million. About eight months ago the same Mr. Cahill proposed an equity injection of over £400 million for Aer Lingus. How can the Minister justify, or indeed accept this proposal, from a man who has proposed such disparate figures in such a short time?
One must question a Government, which claims that jobs are its top priority, when it proposes that £43 million of the £175 million equity be used to make 1,500 people in Aer Lingus unemployed. Where is the commitment to jobs? Where is the sincerity of the pre-election promises to the people of Dublin, Clare, the mid-west and western regions by both parties in Government and on which they are now reneging? Fine Gael totally rejects this plan. The proposers of the plan have produced neither market research nor financial projections to illustrate how their proposal to divide Aer Lingus into four business centres will rescue the company. The plan is full of hopes and aspirations but it is founded on little substance. On close examination the hopes and expectations of the plan do not add up and cannot be substantiated. It is clear that baggage handling, catering, Cara and Parc will be privatised and sold.
A decision to change the status of Shannon will have a catastrophic effect on Clare, the mid-west region and the west coast of Ireland. The cornerstone of regional development in the area will be removed and tourist traffic will be tunnelled to Dublin and to an already overloaded infrastructure. The future of industrial companies, from Cork and Castleisland in the south to Loughrea in the north, will be put in jeopardy. Many of these companies depend for their existence on early morning flights into Shannon. Changing the status of Shannon immediately threatens 1,500 jobs in the industrial sector in the west and mid-west region. In addition to that, over 2,500 jobs will be threatened in the ancillary services and the tourist sector. The Government must reject this proposal.
When announcing her decision last November the then Minister involved, Deputy Geoghegan-Quinn, said that she was maintaining the transatlantic status of Shannon because she was satisfied, on sound economic, social and regional grounds, that it was in the best interest of the nation. She went on to say that the status of Shannon was a fundamental issue, as was the issue of jobs, and that interference with the status of Shannon would jeopardise jobs. How can the Government now say that this has changed fundamentally during the past six months? Is the Minister now telling us that a change of status will not jeopardise these jobs?
Aer Lingus has claimed that Shannon created extra costs. That is untrue. Two thirds of all passengers coming into Ireland disembark at Shannon and the Shannon stop is the most economic way of meeting this cost. In addition, revenue in excess of £2 million is generated by Aer Lingus from passengers who travel on transatlantic flights between Shannon and Dublin. If Shannon created extra costs, how can Aer Lingus pretend it will save money by flying Shannon-Dublin-New York-Dublin-Shannon? How can the Minister say the company will save money when, in some instances, it will cost more to fuel in Dublin direct flights from Dublin to New York than to fuel in Shannon? Where is the reduction in cost there? I have yet to get an explanation and when we had the opportunity to meet with Mr. Cahill and his people in Shannon they were unable to answer any question put to them. I concur with Senator Kelly's comments in that regard.
Misleading statements have been made in relation to the higher proportion of Irish-bound traffic travelling through London and Manchester. This is due to the greater number of access points in the United States. Aer Lingus and the Government should attempt to negotiate additional access points for Aer Lingus in the US. Instead, they are undermining their trump card, namely, the bilateral agreement. Shannon and the Irish tourism industry need more connection in relation to the bilateral agreement.
Unfortunately, the Government is being led by the board and the management of Aer Lingus, a group which, because of its inaction in the past three to four years, is ridiculed as a disaster in the semi-State sector. Our sympathy goes to the unfortunate workers of Aer Lingus who are victims of this mismanagement and of the lack of political action on the part of the Minister's predecessors, in particular the former Minister, Deputy Séamus Brennan, who failed to take any action on Aer Lingus. If he had taken the action that was required over two years ago Aer Lingus could now be in a strong position in the European context.
Shannon, the mid-west and the west coast of Ireland have been betrayed. The Government's hasty, unplanned and unstructured proposed reversal of the Shannon stopover has taken away the region's main negotiating card and the cornerstone of regional development. The plan is not part of an overall aviation policy or part of a transport policy. Therefore, there is no framework to make decisions about Aer Lingus or any other transport matter. At best this plan will only provide short term relief for Aer Lingus. It does nothing to help the company to adapt to the realities of the air travel market in Europe or in North America. Aer Lingus urgently needs links, agreements or joint ventures with other companies. An airline that is close to insolvency and which needs Government assistance to sort out its balance sheet is not in a good position to make such agreements. It has nothing to offer potential partners except routes and they can be taken over by serious competition.
The Government must reverse this decision to adopt the Cahill plan. The plan was drawn up without consultation and without examination of the social and economic effects on the regions, particularly the Clare, mid-west and western regions. It was drawn up in haste and after a subjective interpretation of company accounts. The Minister has been misleading in his statements during the past week, in suggesting that there is an urgency to change the status of Shannon because the change cannot occur for at least 12 months. I call on the Minister to look again at the calibre of the people who make this proposal, people who have proved their inability by their failure to manage their own company. It would be foolhardy of the Minister or the Government to be led by such people on a fundamental issue of regional policy. If the Minister pursues the proposed plan there will be economic disaster in the entire mid-west and western region.
The Programme for a Partnership Government contains a commitment to ensure the commercial future of our national airline as part of our overall air transport policy. This has been the Government's primary objective in its consideration of the serious financial position of Aer Lingus.
The Government's decision to endorse the broad strategy for the future of Aer Lingus, prepared by the board, was taken in the context of the unprecedented crisis facing the airline which called for a fundamental change of course. The general thrust of the Aer Lingus strategy is to restore the company to a strong and viable position at the core of Irish aviation. As shareholder, the Government will make a major contribution to the achievement of this goal.
While we can be justly proud of Aer Lingus' past contribution to the national-economy and of its aviation expertise, we must be equally aware that past achievements alone will do nothing to revive the company's fortunes. We must not lose sight of the fact that this is a commercial company operating in a tough international environment. Its competitor airlines must operate in accordance with strict commercial criteria to survive. Aer Lingus is no different in that regard. It must face up to the situation in which it now finds itself in order to safeguard its future prospects.
The airline's annual internal operating costs must be reduced by £50 million in order to restore it to day-to-day commercial viability. Now that the extensive public debate on Aer Lingus' problems has taken place and the political decisions have been made, it is up to the management and unions in the company to come up with the necessary cost savings in the negotiations which are now starting. This crucial aspect of the strategy must be tackled with the utmost urgency if the company is to secure its own future. The Government has already approved a voluntary retirement severance package to help achieve this. How precisely it is to be achieved in terms of the £50 million cost reduction, is a matter for negotiation between the two parties.
I welcome the fact that the Labour Relations Commission has been asked to give advice on the best industrial relations practice to be followed. The involvement of the Labour Relations Commission, with its expertise, will ensure that meaningful negotiations can take place with a view to the urgent resolution of the issues involved. As I have already stated, these negotiations must be accelerated in the interests of saving the company.
The strategy which Aer Lingus management has had to devise, and the Government's decision to broadly endorse it, did not involve easy choices. Time is fast running out and the time has come to act in order to save Aer Lingus and to preserve its role at the centre of Irish aviation.
In taking its decision, the Government noted that at a meeting between the Cabinet sub-committee on aviation matters and the Irish Congress of Trade Unions on 22 June last, it was recognised and agreed that: the underlying financial position of the company was very grave and unsustainable; the core airline business would have to be returned to operating viability; all sides are committed to achieving the reduction in numbers required in Aer Lingus through a voluntary scheme; the question of participation by Aer Lingus employees in the future success of the company should be explored as a tangible form of recognition for the additional contribution being asked of the workforce at present; a special enterprise development unit would be set up immediately, to consist of representatives of the unions and Aer Lingus, together with the IDA, Fingal Council, FÁS, and the Department of Enterprise and Employment, to identify new employment opportunities within the Aer Lingus structure. I want to reaffirm here and now the Government's commitment to fully honouring this agreement with the Irish Congress of Trade Unions.
The Government, as shareholder, has agreed to invest £175 million of taxpayers' money in support of Aer Lingus' strategy, £75 million in the current year and £50 million in each of the next two years. The payment of these equity injections would be futile without the other key elements of the strategy being in place. Accordingly, the shareholder's contribution is subject to the following conditions: a full and comprehensive agreement having been reached between management and unions in Aer Lingus on the necessary £50 million annual reduction in internal costs essential for the return of the company to commercial viability; production of satisfactory evidence that the necessary measures proposed are being implemented in full; and a formal indication by the European Commission that it will raise no objection to the proposed State equity injections. I intend to seek, as a matter of urgency, formal clearance from the EC Commission for the Aer Lingus strategy.
The role of EC competition law and State aid regulations may not be fully understood at this point. I point out that the European Commission may decide in certain cases that aid may be granted to individual airlines which have serious financial difficulties provided certain conditions are met.
One of these conditions is that the aid must form part of a programme, to be approved by the Commission, to restore the airline's financial health so that it can within a reasonably short period operate viably without further State aid. In other words, the financial assistance must be once-off and it must be an integral part of a restructuring programme to restore the financial viability and competitiveness of the airline.
In this context an intrinsic element of Aer Lingus' strategy for survival is the judicious disposal of a number of assets which are not essential to the core airline business. This is essential in order to relieve the current huge burden of the company's debt and to achieve a fundamental reduction in interest charges.
When the debate on Aer Lingus took place in Dáil Éireann last week I deliberately approached it in a non-contentious manner because I believe that partnership and a consensus approach are the best way forward. I intend to continue in that vein.
Constructive criticism is to be welcomed. I regret to have to say, however, that some of the political reaction to the Aer Lingus strategy has been purely negative in tone and at times opportunistic in nature. There have been calls for the rejection of the strategy put forward by Aer Lingus, despite the broad acceptance of the fact by all concerned that its general thrust must be implemented if the national airline is to be saved. This is not helpful in view of the gravity of the situation and its national importance. No other realistic solutions have been put forward by those who find it convenient to knock.
There have been claims that the Government has no aviation policy despite the fact that I have articulated on numerous occasions exactly what is our aviation policy. Some people have tried to portray the Government as working in a policy vacuum. That is not true. We have now, and have had for some time, a consistent and coherent framework within which we have developed the Irish aviation sector, with considerable success I may add.
Some people's idea of an aviation policy is basically a return to the preliberalisation era in Europe and elsewhere. This is pure fantasy. We cannot live in the past. As I stated in Dáil Éireann, times have changed and so must we.
As both I and my predecessor have already dealt publicly with the subject of the Government's aviation policy on a number of occasions in the past, I do not intend to repeat here the details what has been said before. However, for the benefit of this House I can summarise the essence of the Government's aviation policy as being to get access for Irish operators to as many international markets as possible and to ensure that they can compete on an equitable basis with competitors in these markets.
This policy has been devised and pursued against a background of the international economic regulatory environment which has become more deregulated and liberalised; Ireland's peripheral geographical location in Europe; and national agreements with the social partners where the emphasis has been on expanding existing air services, introducing new services and ensuring access costs are competitive in the interests of tourism and business travellers alike.
The aviation policy the Government is pursuing is evolutionary in nature. It continually takes cognisance of changes in the external environment and is adapted to reflect these changes. It is essential that the policies pursued by the Government be flexible and capable of adapting to change in a rapidly changing environment. Aer Lingus itself must also be capable of facing this change.
The foundations of current policy have been laid down by successive Governments during the 1980s, including Governments in which the main Opposition parties have participated. I readily acknowledge this. It is, of course, the prerogative of anyone to disagree with elements of the Government's aviation policy. However, I believe that, in fairness, it should also be acknowledged that both this and the previous Government's policy has been unreservedly endorsed by both the Culliton and Moriarty committees. The membership of these committees included representatives of a wide variety of national interests including distinguished representatives of the banking and business communities, as well as the Irish Congress of Trade Unions.
Finally on this subject, I quoted in Dáil Éireann some statistics which bear testimony to the success of our aviation policy. I want to put them on the record of this House also: visitor numbers to Ireland rose to 3.1 million in 1992, an increase of over 50 per cent on 1987; over 27,000 jobs have been created in tourism between 1987 and 1992; increased income generated in both the tourism and air transport sectors amounted to over £500 million since 1987; travel by business travellers has increased by almost 50 per cent since 1985 which undoubtedly has helped our merchandise export drive; and at least 3,000 direct jobs have been created in the air transport and related industries since 1987.
It is important to point out, as Senator O'Kennedy said, that the issue is not simply a cost cutting exercise. There is no down-sizing of the existing routes proposed in this strategy and the same level of service is envisaged. What is clearly required is a more efficient provision of that service in order to maintain the successful indicators continuing on an upward trend as I outlined already.
Before taking its decision on the Aer Lingus strategy, the Government considered very carefully the position regarding the Shannon stop policy. The following key facts were among those taken into account: Aer Lingus accounts for 70 per cent of scheduled traffic through Shannon; without Aer Lingus there would be no Shannon; Aer Lingus' transatlantic operations lost £9.5 million in 1991-92, £14.4 million in the current year and if nothing changed that would be expected to increase to £22.8 million in 1993-94.
On contrived figures, the Minister knows that.
Excluding the B767 operations, the pre-interest losses in 1993-94 would be about £12 million as compared with £9 million in 1992-93. Aer Lingus have confirmed that these losses are based on a uniform pro rata allocation of both costs and revenues on their transatlantic routes. Unless these losses are reversed, given the precarious nature of Aer Lingus' present position, it would have to pull off the transatlantic service completely.
Aer Lingus maintains it must tackle losses on all routes if the company is to be returned to viability. This is patently obvious. A change in the Shannon stop policy is an integral part of its strategy to return the transatlantic operations to profit. It states that its transatlantic strategy has been specifically designed to protect its interests in Shannon and emphasises its commitment to the Shannon region.
This is underlined by the fact that for the first time Aer Lingus will have a separate business unit to run its transatlantic services. When I met interests from the Shannon region it became very clear to me that one of the great bones of contention is the absence of that cost transparency, where the Shannon operation was not looked at and operated independently. What is now being set up is a separate business unit for Shannon for the transatlantic fleet which will be operated, marketed and managed in Shannon by people who believe in Shannon. This unit will have its own management team based in Shannon whose absolute priority will be the championing of the transatlantic business in and out of Shannon. As a substantial down payment of the company's new strategy, Aer Lingus is committed to the location of the B747 fleet at Shannon, as well as accompanying technical and cabin crew staff.
Until they are scrapped.
Both I and my officials have met delegations representing public representatives in the region, the Status Signal groups, and I have had discussions with Shannon Development, members of the Shannon task force and Aer Rianta. The Government carefully considered their strongly held views before deciding on a change in policy. However, there were other considerations which had also to be taken into account, principally developments in world aviation. While we have decided to seek a change in the Shannon stop policy, I want specifically to reassure the people of the west and the mid-west that this Government's commitment to the development of the regions is as firm and resolute as ever.
Tell that to the marines.
In this connection, I want to reaffirm the commitment that the Government will substantially increase investment in other transport infrastructure in the region. This will be evident in the provisions of the national development plan when it is published later this year.
As a further example of the Government's commitment to the Shannon region, I would ask the House to note the results of the Shannon Estuary Initiative which the Government has been pursuing in recent years. There has been an enormous increase in port activity in the Shannon estuary in tandem with spectacular port development which has seen the volume of trade in the estuary increase from 400,000 metric tonnes in 1966 to over 7 million tonnes in 1992.
Tonnes do not mean jobs.
They do, in fact. The outcome of these efforts is that the Shannon estuary is Ireland's premier deepwater port and the aim of the Government, as outlined in the Programme for a Partnership Government, is to have the Shannon estuary developed as the best deepwater port in the EC. In this regard, the feasibility of establishing a strategic economic trading bridgehead in the Shannon estuary to boost maritime traffic and create jobs is being examined at present. I mention that only to say that there are a number of ways in which one can provide regional development initiatives. In relation to the one we are discussing this evening, Shannon airport itself, as I stated in the Dáil last week, the Government's decision to seek a change in the Ireland-US bilateral air agreements to modify the current Shannon stop policy was made in the context of developments in European and US aviation policies. In addition, there is an increasingly strong movement within the International Civil Aviation Organisation, ICAO, which is the international organisation responsible for the regulation of world aviation, for a much more liberal regulatory regime worldwide for civil aviation, in line with a freer trade regime for goods and services under the GATT.
I emphasised in the Dáil, however, that because of our commitment to the people of the west and mid-west, we will manage the change proposed in a constructive manner by seeking to ensure that Shannon will be sufficiently developed to a point where it can stand alone as an airport operation and the existing level of air services to the region will at least be maintained.
In this context, I am pleased to inform the House today that I have granted rights to Aeroflot to operate a new service between Shannon and Barbados as an example of this. Aeroflot will operate the service using IL62 aircraft with 156 seats on a once weekly basis to cater for the growing leisure market travelling to Barbados from Ireland. The service is planned to commence in mid-August. Surely this is further evidence of a confident and outgoing policy direction.
The granting of these traffic rights is further evidence of the Government's continuing support for Aer Rianta's strategy to develop a north Atlantic hub at Shannon for Aeroflot.
Why not for Aer Lingus?
The Government's support for the Aer Rianta strategy has already resulted in the introduction of new services to Shannon from Russia, Ukraine and the Republic of Belarus. A special traffic development task force to boost traffic for Shannon has already been set up for the airport with a budget of £1 million over the next two years. In addition, in negotiating the bilateral air agreements with the USA, I will seek to ensure that traffic through Shannon can be developed further in the future.
Returning to the Aer Lingus strategy, I need hardly emphasise that it is the responsibility of the board to ensure the continuing viability and development of the company. The board have fulfilled their obligation in this regard by presenting to Government, as shareholder, a strategy to return the company to commercial viability. It is now imperative for all concerned that the strategy be implemented without delay. The strategy cannot be treated as á la carte. It must be implemented in full.
In conclusion, I believe it is timely to repeat the words which I used in Dáil Éireann on 12 March last in a statement on Aer Lingus:
Adapting to change is rarely easy. The whole airline industry is now operating in a much changed scenario. These changes can reach right down to local communities and families, causing uncertainty and anxiety. Our task is to confront the challenges of change, calmly and resolutely. These challenges are not something which can be resolved overnight. What we must all seek to do together is to set ourselves on the right path. Change is now a reality, not just in the airline industry, but in every business, in life itself. There is a quantum leap to be negotiated. The whole competitive culture has changed. We are no longer dealing with cyclical or intermittent change, we are dealing with constant change. We must be as fast as the rest in adapting if we are to survive.
I am pleased to have the opportunity to contribute to this debate today as it is of great importance not only for the country but for the Aer Lingus workers and particularly for the Shannon region. One of the frustrating features of the debate is that the entire Cahill rescue plan for Aer Lingus has not been published in full. This is totally unsatisfactory because, as I said, the whole situation is so serious not just for the future of Aer Lingus but for the thousands of people it employs and the implications for the west of Ireland which is facing a future of total uncertainty.
Despite the fact that the Government has not published the Cahill plan in full, if reports are to be believed we all know that Aer Lingus is bankrupt and is currently losing £1 million a week. Therefore, major corrective action is required. This may be the last chance we have to rescue the airline and to restore it to operational profitability. If Aer Lingus were any other business it would have ceased some considerable time ago. It owes its bankers some £550 million. The real disgrace is that instead of taking action earlier the airline's problems have been allowed to fester for some years now. Apportioning blame at this stage serves no useful purpose. The company's sorry state is a dreadful indictment of all those who have had responsibility for it in recent years.
If the company's problems are to be successfully and permanently dealt with we must learn some lessons from the mistakes of the past. While British Airways was reducing costs to compete in a deregulated market, Aer Lingus was employing an extra 4,500 people. Whereas Aer Lingus is on its knees and facing a huge crisis, British Airways is one of the most successful airlines in the world.
The Aer Lingus approach to air transport has not been sustainable since 1986. Instead of facing up to the challenge posed by deregulation and grasping the opportunities it became obsessed with its sole competitor, Ryanair. By chasing Ryanair into the regional airports it ensured that neither would succeed. Instead of losing £8 million a year I think Aer Lingus should be capable of making £20 million. Its failure to recognise that Ryanair had its own niche market shows a frightening lack of judgment on the part of those who were running the company. I think it also explains some of the other blunders that were made in the 1980s. It indulged in a spending spree buying new aircraft without properly evaluating the return. This explains why some of these aeroplanes have been sitting in Dublin airport at a cost of $750,000 a month. We must also ask, what of the Aer Lingus Holidays debacle? Nobody has ever told us what happened to the £17.5 million involved there. Why has nobody ever been prosecuted for that scandal?
Deregulation has been good for Irish tourism. Since 1986 the value of foreign tourist earnings has doubled and, contrary to predictions, average tourist spendings have not fallen. A different approach to the question of deregulation would have been the life blood of Aer Lingus. We must look at what needs to be done now if Aer Lingus is to be turned around and be capable of operating successfully in a deregulated market.
I believe Air Lingus should publish the full report. If taxpayers are being asked to spend £175 million in equity for Aer Lingus, then they should be allowed to evaluate the whole package. The Irish public should be able to look at the facts for itself and should be told whether the proposals being made by the Minister are capable of succeeding.
The Minister has insisted, rightly so in my view, that the investment must be in the form of equity and not in the form of subsidy. As he has said, Aer Lingus must reduce its operational costs and increase its revenue. However, if there is gross overmanning and bad work practices in Aer Lingus it is the fault of past management and cannot be laid at the workers' feet. The workers in Aer Lingus feel genuinely betrayed. We must have comprehensive and meaningful negotiations with the workforce representatives if we expect them to take the huge redundancies being demanded at present.
We must welcome the strategy involving the Government, Aer Lingus unions and the Irish Congress of Trade Unions, establishing a framework for dialogue. The suggestion from the trade union movement that the workforce be afforded some form of equity participation would be supported by the Progressive Democrats. It would mean that if the workers are expected to share in the pain they would inevitably also share in the gain of an efficient, competitive Aer Lingus which we hope will be the case soon.
If Aer Lingus is to succeed it must concentrate on its core business which, obviously, is running an airline. It would have to sell its other assets but this must be done at the right time; I do not think it can get rid of them immediately. For example, this is not a good time to sell the Copthorne Hotel group. Rushing into something such as this should be avoided. With regard to increasing its revenue and reducing its costs, payroll costs account for 80 per cent of the controllable costs and obviously there is no way to avoid significant redundancies. It is quite obvious that Aer Lingus is top heavy with management and if there is to be restructuring of staff and redundancies then management will also have to take its fair share.
I hope the necessary redundancies can be secured on a voluntary basis but this will be quite difficult as Aer Lingus offered a redundancy package in recent years with the result that there are few workers over the age of 55 years left in the company. In order to achieve the savings required by the Minister there will have to be approximately 1,500 redundancies and approximately 250 of those will come from TEAM Aer Lingus. I understand over 700 will come from contracting out the cleaning and catering services and that the present workers will operate on a sub-contract basis. However, there is still quite a substantial number of redundancies to be found and I think it will be quite difficult to get these on a voluntary basis. The Labour Party said in the other House last week that all of the redundancies would be on a voluntary basis but I understand there will be some sort of privatisation, for example, in the catering and cleaning services, and there will have to be forced redundancies to achieve the number required by the Minister.
The workers in Aer Lingus are being expected to bear much of the pain and the taxpayer is being asked for a substantial injection of capital. I believe the banks must also carry some of the restructuring costs involved. I know the Minister has said that the loans that are outstanding to the banks have been secured on the assets of Aer Lingus. However, the assets of Aer Lingus would not meet the total outstanding loans to the bank at the moment. As happened with other companies such as Goodman International and GPA, the banks should take some of the pain. I believe they should be asked to be involved in the restructuring and carry some of the costs.
The change in the Shannon stopover is of particular interest to me as all my family live in Shannon. The genuine fears of people in the region are understandable. Much of this arises from the alteration in the present policy but it is compounded by the apparent chopping and changing of the elements in the Cahill plan affecting Shannon airport. I do not accept that Shannon is the essential problem dogging Aer Lingus; yet, it appears the Government is intent on doing a u-turn on the promises made last October in relation to its policy on the airport. If the Govenment is going to do this, then it must be in a position to offer legally binding and meaningful guarantees on future operations and agreed practices. The Government cannot gamble with the future of the people of the mid-west.
One of the difficulties of not publishing the plan in full is that the people cannot see what is going to happen. They have been given figures by the Government, many of which they do not accept, and I think it is difficult to blame them. The full facts should be laid before them. They are distrustful of Governments due to the promises made in the past and any future agreements will have to be all-party agreements and everything will have to be signed, sealed and legally binding. Otherwise the people will not be prepared to move forward. Most of them are concerned about what can be salvaged from the situation. It was interesting to listen to Brendan O'Regan on "Morning Ireland" last week who said that the people in the mid-west would be united in their adversity and would move forward. I think they will move forward but they cannot do this until all the facts are laid before them.
Essential in all of this is that none of the changes should be brought about until the bilateral agreement is renegotiated and signed, sealed and delivered. The Government is giving the impression that it can bring about changes in the bilateral agreement. It must be made clear that the present arrangements about Shannon are terminated if any airline inaugurates scheduled services between Dublin and the United States. This could mean, in effect, a transatlantic free-for-all irrespective of the consequences for Shannon, Dublin or Aer Lingus generally. It is not acceptable for the Government to give guarantees or assurances regarding the future of Aer Lingus. As has been said already, other services must be developed. The Government has already given a commitment to this and I think these will have to be put in place. We will have to open the airport up to Europe.
I would first like to acknowledge the presence in the Chamber this afternoon of the chairman of Clare County Council and many members of the council who are apprehensive, as are many people in the county, about the future of Shannon.
The Senator is an experienced public representative and is aware that he should not refer to any person in the visitors' gallery.
I think that in the circumstances you will appreciate that there is widespread anxiety which has been reflected in the debate. I would like to avail of this opportunity to express my regret that many Fianna Fáil members of the county council and Dáil Deputies representing Clare have resigned the party Whip. I am especially worried about that in view of the fact that Shannon has been inextricably linked with the development of Fianna Fáil and Fianna Fáil with that of Shannon. Fianna Fáil established the airport, the development company and invested huge amounts of money——
Drained the Shannon.
——in successive years in the development of the whole region. I think it is inconceivable that a Fianna Fáil-led Government would take actions which would in any way damage Shannon. The questions must be asked why this decision was taken, what will be the immediate and long term effect on the region as a whole, can the decision be reversed and, if not, how can the Government guarantee to the people of that region that the long-term prospects for security, stability, employment opportunities and development in the region will be vigorously pursued?
I want to put on record my own total commitment to Shannon, a commitment I demonstrated positively during my term of office in Government. In Cabinet I made no secret of my position on Shannon because I recognised, as many Members do, the vital importance of the development of Shannon from a regional point of view and to balance the developments that have taken place in this city. It is important to keep in mind the huge developments in Dublin which have created enormous problems for people living here while we in the west still have the problems of emigration and unemployment. We need major development and investment to enable the regions to keep in with the developments here.
I would also like to acknowledge the work done by Signal and the Status organisations, both of which actively compaigned for many years on this matter and brought to our attention some of the shortcomings in the Aer Lingus strategy for survival. We take the point that the future of Shannon is linked to the success of Aer Lingus: we in Shannon know Aer Lingus' value in terms of employment and the opportunities for further industrial development. Nevertheless, there are fears in the region that must be allayed by strong Government commitment.
One of the major fears in relation to the establishment of Aer Lingus Shannon is that, in the event of its not being viable after a period in operation, because it is a separate subsidiary company it could be wound up. There is also a fear that the jumbos that will be based in Shannon as part of the transatlantic fleet are planes that are nearing the end of their commercial viability as aircraft. We would like firm assurances from the Minister that this fleet will be replaced and that the time frame for replacing it will be brought forward. These are really serious questions that are causing many people doubts and anxieties. Many believe that the viability time schedule set down in the proposal is too short and that, even with the best will in the world and taking account of Government investment in the strategy, setting down a firm deadline for viability is putting undue pressure on finance and staff. If there was an extension of that time limit over, for example, a two to five year period we could have a viable airline company and, at the same time, save many of the jobs that are threatened at present.
We in the mid-west region also need to know the outline of the procedure for the renegotiation of the bilateral agreement on which negotiations will commence soon and which is a key element in this strategy. We need firm indications from the Government as to how the bilateral agreement will be renegotiated to ensure, as the Minister says, that more business will be available at the end of the day through the renegotiated agreement for Shannon than under the present arrangements. There is a genuine fear that the proposed viability plan includes the present passenger throughput with Aer Lingus; if there is no increase in passengers there is a fear that part of the business which is at present done in Shannon will be transferred to the Dublin area and that is totally unacceptable.
I want to say a quick word about the motion which the Opposition wanted to put forward in this debate. The Senator who was quoting from the motion earlier did not complete the wording. I want to put the second part which he left out on the record, and I quote: "and urges [the Government] to bring forward a fully costed alternative plan to put Aer Lingus on a sound footing". This is a totally blanket motion without any mention of the preservation of jobs in Shannon.
The Senator's colleague in Clare voted for it in the Dáil.
Acting Chairman
Senator Daly, without any further interruption. The Senator has just one and a half minutes left.
There is no way a motion of that kind can be supported because it leaves the possibility of Shannon's being totally wiped out——
Deputy Killeen voted for it.
——in the event of some other proposal being put in place. Listening to Clare Radio on my way here today I was impressed when I heard Dr. Brendan O'Regan say that Shannon has a good future, that we have to be positive about the proposed developments and handle them in a way that ensures we get the maximum benefit for the economy of the region. A similar view was expressed by Stan Power of the hotels association in the mid-west who said we have to take urgent steps to minimise any adverse effects these decisions might have and repeated by Séamus O'Sullivan, the vice-president of Ennis Chamber of Commerce, who said we have time to rebuild and to be positive. Unless we adopt that attitude we will do further damage to Aer Lingus, to Shannon and to the national economy.
Neither the country nor Shannon can afford to be left at the mercy of international carriers, without a national carrier to enable us to continue the national development in which we have invested so much time, money, effort and human resources in since the foundation of Shannon Airport. It is vitally important that wherever possible we contribute as best we can — between now and renegotiation of the bilateral agreement and putting the final details of this package together — in an effort to ensure the same kind of prosperous development in the mid-west region as we have had since the foundation of Shannon Airport.
I wish to share my time with Senator Neville.
Acting Chairman
Is that agreed? Agreed.
You might be good enough, Acting Chairman, to let me know when my time is up.
Acting Chairman
Tá go maith.
The Cahill plan proposes an equity injection of £175 million into Aer Lingus. A sum of £43 million of that equity is now earmarked for redundancy payments. It is proposed that 1,530 employees at Aer Lingus will be made redundant. It is very sad that a Government which claims its top priority is job creation in using taxpayers' money to destroy so many jobs in the Dublin region, which has the highest unemployment in the country. Like many others, I believe the redundancy figure is not finite. This week we have seen 300 workers let go on a temporary basis from TEAM Aer Lingus and I understand 150 will be let go shortly. When the subsidiaries are sold the redundancy figure is likely to be well over the 2,000 mark.
The case for Shannon has been put very well here by Members who represent the mid-west and I welcome the contributions they have made for their regions. However, in the time available to me I want to point out the effect these redundancies will have on the economy of Dublin. The Minister scored an extraordinary goal tonight. He made a speech running into 14 pages and never mentioned Dublin — an area where there will be 1,500 redundancies. When Digital was lost in Galway it was all over the papers and the television; the Minister and the Mayor flew out on a rescue mission. Dublin was not mentioned once tonight.
The enterprise and development unit was mentioned.
Is that in Dublin?
Yes, it is.
It is in Fingal.
The Minister did not mention the word "Dublin". Manufacturing employment has declined significantly in the Dublin area over the past two decades. This has happened through a combination of market induced and policy factors which encouraged location away from the traditional core. While this drift from urban areas is a common phenomenon, it is now a matter of serious concern for Dublin.
Dublin has 29 per cent of the population, 31 per cent of the labour force and 32 per cent of all unemployment. The proportion of national unemployment in Dublin has risen constantly for many years. There are now 90,000 people out of work in Dublin, many of whom are long-term unemployed. If nothing is done to improve Dublin's unemploymernt problem, by 1996 the figure will be 120,000.
The decline in Dublin's industrial employment was no accident. A recent study by the chamber of commerce showed 48 per cent more industrial grants were spent per head outside Dublin. As a result, Dublin did not get its share in the industrial sector. The increasingly competitive environment arising from our entry to the EC and changes in demand for older industrial products placed traditional firms in a difficult position. Many contracted or closed and the most significant losses occurred in the food, drink, tobacco, textile, clothing and footwear industries.
It is ironic that while we are discussing 1,500 redundancies at Dublin airport, Guinness which at one time employed 4,000 people in this city is now seeking to reduce its workforce from 900 to 500. An undue concentration of the nation's unemployment problems in the capital city has a depressing effect socially, economically and commercially. In deprived suburbs and inner city areas, 70 to 80 per cent of people are unemployed.
Dublin has many features which have not been fully utilised. Tourism must be vigorously promoted, making use of Dublin's all year attractions. To start this a national convention centre capable of catering for 3,000 people is needed. This would have an immediate effect on tourism development. Birmingham has such an investment. Like other cities that fought their way back to economic growth through tourism the convention centre is now the core investment in that city. Tourism-related jobs in Birmingham increased from 10,000 in 1975 to 100,000 last year. The conference centre is expected to lead to the creation of 12,000 to 15,000 additional jobs. The former Taoiseach, Mr. Haughey, set up an interdepartmental committee to examine the feasibility of having such a centre in Dublin but no decision has been made yet.
I hope, as the Minister promised tonight, that substantial funds will be invested in the mid-west region and also in Dublin to overcome unemployment problems. With high unemployment in the capital, one can appreciate public representatives are alarmed by the redundancies in Aer Lingus and Guinness. Some 2,000 people may now be added to the unemployment figures.
The notion has been abroad for some time that Dublin could look after itself while the rest of the country was given employment. I wish to dismiss that notion tonight. Dublin has serious economic and unemployment difficulties. It is impossible for the city to bear another 2,000 redundancies in one week.
The Cahill plan for Aer Lingus will not work. The outcome within the predicted life of this Government will be that Aer Lingus will either cease to exist or will continue only as an airline with a small commuter air service.
The change in the status of Shannon is a shameful betrayal by the Government parties of the mid-west and west of Ireland. It is a vote of no confidence in the concept of regional development. The one instrument that successfully promoted regional growth has been removed. The mid-west has now been downgraded to a marginalised, peripheral area rather than the jewel in the crown of Irish regional development policy.
What is the result of the change? I quote from last Thursday's Limerick Leader:
Jobs and money have been lost to the region within hours of the Government decision to end the Shannon stopover.
One air tour operator confirmed this Wednesday that the company will now switch its base to Dublin. The real fear is that this is just the start of the loss of thousands of tourists to the region.
[The reporter quotes:] "I have already been speaking to one tour operator whose company would be bringing 40 people a week into Shannon during the summer and they are now definitely going to Dublin with that business".
Less tourists, a loss of the pre-clearance customs service and hundreds of jobs losses in tourist and allied trades are now feared...
"What they have done is transferred the stopover to Dublin for the winter."
The sop offered by the Minister originally was that three redundant jumbo jets were to be put into Shannon. This has now been reduced to two. This is not going to work.
Once the present bilateral treaty is changed there will be a free-for-all on the US route. Mr. Frederick Sorensen, head of the Transport Policy Division of the EC Commission was quoted in a Sunday newspaper as saying the Irish Government has no legal right under EC law to renegotiate its agreement with the US.
He also said we would not get £8 billion.
Mr. Sorensen has said the EC has exclusive competence in this area and member states cannot renegotiate bilateral agreements with a non-community country unless given a specific mandate to do so by the Council of Ministers. If this mandate was given, why was the Dáil not informed of this?
Mr. Sorensen has further said the EC was currently formulating a common external aviation policy and negotiations were to open with the US within 12 months. I ask the Minister to confirm this is the case. If it is, we are not being told the full story. If this does happen, the status of Shannon will be completely abolished according to Mr. Sorensen.
It is just as well he is not negotiating the bilateral agreement with the US.
Is Mr. Sorensen wrong?
I am negotiating the bilateral agreement.
The EC has said it has now exclusive rights. He has said any amendments made in the interim by member states to their bilateral agreements with the US will not be acceptable to the EC. Is that not so?
It is not so.
I quote from the statement of the Minister, Deputy Geoghegan-Quinn, from eight months ago:
The decision to retain the stopover was made on sound economic, social and regional considerations. A change in policy would lead to over-concentration of aviation and tourism investment in Dublin and the east coast. It would also cut the real time tourists spend here. At present US tourists arriving in Ireland via Shannon are proved to spend more time in Ireland that those who arrive via other routes. Shannon airport's status and air services have been a major factor in attracting US investment to the region and to the west of Ireland generally. Many industries are dependent on these services.
I fully agree with her and suggest to the Minister he consider the statement. Deputy Geoghegan-Quinn further stated:
In examining this issue over the last few months I have not seen solid evidence that additional US carriers would use Ireland if we had done away with the stopover. What I have seen is a Dublin-based push for a change in policy which would ensure that Dublin would grow at the expense of the regions and which would add to the pressure on Dublin's already overloaded infrastructures.
I agree with the Minister previously responsible for Transport.
When I spoke in the Seanad in November 1992 and March 1993 and at other public meetings, I outlined the gravity of the financial position in Aer Lingus as I saw it at the time through daily contact with the company. This was done at much cost to me electorally.
On June 22 of this year the Government and the Irish Congress of Trade Unions said in a statement there was a clear recognition by both sides that the underlying financial position of the company was grave and unsustainable. In that context it was agreed the core airline business would have to be returned to operational viability. That is the kernel of the overall problem.
We listened tonight to Senators rightly representing their areas. If the financial position of the company is not recognised there will be no Aer Lingus in Dublin, Shannon, Cork or elsewhere. We must recognise this fact before we make any other proposals.
The statement issued by the Irish Congress of Trade Unions and the Government reiterated the belief I held many months ago. At that time I tried to be constructive by proposing various ideas which I thought would be in the interests of the company. Unless Aer Lingus becomes commercially and financially viable, we will have another Irish Shipping debacle on our hands. Those on the other side of the House would know all about that. It is something of which the Government does not want to be part.
Some of the proposals I made at the time were that a viable plan must be forthcoming, that equity must be made available, the compulsory Shannon stopover must be dealt with, employee share option schemes should become part of the company's policy and EC funding for mobile assets should be vigorously fought for.
The Cahill plan is the only plan on the table at the moment. It is now Government policy and we must all work within that to ensure it is successful in the interests of the company. It is now clear from the statement issued by the Irish Congress of Trade Unions and the Government that it is their intention to work towards this aim.
I listened to the debate this evening and plan B from the other side of the House is a blank sheet of paper. There have been no constructive ideas from Members on that side. They are bankrupt of ideas. This is not in the interests of the company or the employees.
With regard to equity, Members on the other side of the House may argue that not enough money has been given to Aer Lingus. However, the Government has put £175 million of taxpayers' money into the company. I say to the Minister for Transport, Energy and Communications, Deputy Cowen, that if various issues, which are in the interests of the company, are dealt with in the negotiations between management and the unions and if other moneys would help the company to become viable, I hope the Government will not be found wanting.
I asked that the compulsory Shannon stopover be dealt with and I welcome the development in this regard. Does anyone here seriously believe that the number one tourist spot in this country will not be promoted by the Government, the State's agencies, Bord Fáilte and so on, or that market forces will not decide they want to land in Shannon? I quote from a recent speech which was given by Dr. T. A. Ryan, chairman and chief executive of GPA at the official opening of Shannon Turbine Technologies on 28 June 1993. It states:
Neither Lindbergh nor de Valera nor Brendan O'Regan nor their successors looked for guarantees when they selected Shannon as the launch place for Ireland's entry into the world of civil aviation.
We should not waste time looking for guarantees now. We should press ahead with the development of the World Aviation Park in Shannon — offering quality products and services to a vast international customer base.
Would Dr. Ryan look for guarantees?
I heard many people from the commercial world in Shannon echo those sentiments on the radio today. It would help if those who represent the area would support people who have been successful in business and who believe that Shannon has a lot to offer. I have no doubt——
With the guarantees they got?
——that in a few years time Shannon will be a thriving enterprise area because market forces will dictate that and the Government and its agencies will respond.
I said we should look for funding for our mobile assets. Throughout Europe the roadways and highways are the link between the various European countries and they are important for tourism. Our link is our planes and ships. I hope the Minister will let us know if funding is still being sought because it has been granted elsewhere and it is something we can seek.
I am aware that the morale of the work-force is extremely low. Many months ago I suggested that an employee share option scheme should be part of any proposal to revive the company. I am confident that those involved in the company want this. The unions would like to see it happening and it would boost the morale of the company. I have no doubt Air Lingus will return to profitability and those who have played a major role in the company, the employees, should be part of any profit-sharing arrangement. The Government should do all in its power to ensure that legislation, if it is needed, is introduced to deal with this issue. We must be seen to support the employees of Aer Lingus in their efforts to make the company successful in the future.
I ask the Minister will Aer Lingus be allowed to compete on all air routes in the future? I live among the Aer Lingus employees and their families and I am aware of the human cost of the Aer Lingus crisis. The success of the company was achieved by the endeavours of its employees and its future will depend on its employees. The long-term viability of Aer Lingus depends on the Government. Those who represent public opinion and have a role to play should support the company instead of criticising it. The last thing any employee in Aer Lingus wants to hear about is——
Did that happen before the election?
——who said what at the recent meeting in Dublin Airport.
The Senator should ask them.
The Senator was worried about it for a long time.
No one suffered more than myself with regard to what was said and done before the election. It is not——
And others.
——in the interests of the employees of the company that we are throwing brickbats across the floor. We need to promote ideas.
We cannot afford any injury time.
I want to put on the record that the employees have never been found wanting with regard to sacrifices for the company and I have no doubt that will continue.
I wish to share my time with Senator Dardis and Senator Sherlock.
Acting Chairman
Is that agreed? Agreed.
Is it any wonder the public have no regard for politicians? This evening we were reminded of the promises made by the then Minister for Tourism, Transport and Communications, Deputy Geoghegan-Quinn, about the Shannon stopover issue and the reasons it should not be removed. We also heard about the promises made by the Leader of the Labour Party, Deputy Spring, and the Deputy Leader, Deputy Quinn, at the meeting in Dublin airport about the viability of Aer Lingus, the provision of equity and the assurance that no redundancies, other than voluntary redundancies, would take place. We know what has happened since then and what the position was at that time.
I take issue with what the Minister for Enterprise and Employment, Deputy Quinn, said last Tuesday night in an interview outside an hotel in Galway about the vote in the Dáil on the Aer Lingus issue. He was asked about the promises that had been made and he said they had been made in good faith. In other words, the Minister was trying to tell the people that at the time of his visit to the hangar in Aer Lingus he was not aware there was a serious problem in the company.
The Minister for Transport, Energy and Communications, Deputy Cowen, and I, when I was a Member of the other House, were invited by the then management of Aer Lingus to learn about the serious situation facing Aer Lingus. Each Member of the Dáil had an opportunity to visit the Shelbourne Hotel and we knew about the situation in Aer Lingus. It was unfair of the Minister for Enterprise and Employment, Deputy Quinn, to say last Tuesday night that promises had been made in good faith during the election on the basis that he was not aware of how serious the problem was in Aer Lingus.
We are aware of the situation that has developed. Some 1,500 jobs will be lost. The Cahill plan will not provide the future which Aer Lingus requires. There will be more job losses and by the time interest payments are made and all of the other sales of assets are completed, at a time when it is nearly impossible to sell anything in Ireland, there will be far more redundancies and many more people will be put out of work to satisfy the partners in Government.
I read today with interest a call by the people in north County Dublin for a task force, and rightly so as they are entitled to call for whatever help may be available. There are many Aer Lingus employees who live in my constituency and who were all informed at the time of the last election that they would be looked after when the new Government was formed. I would like to think that in the eventuality of a large number of these people in both constituencies being made redundant that the same help will be made available to provide jobs for those who will lose their employment as a result of compulsory redundancies that will have to be implemented under this plan.
It is easy for the trade unions to agree with the Government, given that the Labour Party is in Government, in saying that this number of voluntary redundancies will be found. However, if you listen to the people who represent the Aer Lingus workers in the different sections of the unions they say that in one area where there is a total of 700 people employed in no way would the required percentage of voluntary redundancies be reached, that only ten people would choose to take voluntary redundancy. Both parties in Government, by agreeing to the Cahill plan, are responsible for this situation.
We have no long-term plan and I agree with the comments made by Senator Doyle. In the Minister's speech there was not one word about the 1,500 people who will be made redundant or about the effect in Dublin and throughout the country. I would like to think that these people would have had top priority quite apart from the change in the Shannon status. The bottom line is that the Government has hung its hat on the change in the Shannon status as the saviour of Aer Lingus and it will not work.
On a point of order, will the House agree to an extension of ten minutes in the debate to allow other people to speak?
Acting Chairman
Is that agreed? Agreed.
What we are seeing this evening demonstrates how correct we were on the Order of Business this afternoon. This debate is a cod. It is not even a debate but a series of statements. We cannot even move a motion at the end to test the validity of the rhetoric we have heard from the other side of the House.
There was rhetoric from Senator Dardis' party.
Rhetoric is no harm if it can be mobilised for the benefit of the people. I have no objection to rhetoric at all.
So, your rhetoric is of benefit to the people and everybody else's is bankrupt, is that it?
We were lectured from across the Chamber about rhetoric and now Senator Roche wants to intrude into the time so that we will not have a chance to debate the issue properly.
I was only asking a reasonable question.
We have just agreed to give extra time but when we asked for more time today it was not given to us.
It is obvious that there is no wish on the part of this Government to consult this House or possibly the other House. There is a majority large enough to ensure that consultation is not necessary and, given the way the Government is proceeding, arguments as to why this House should be abolished seem to gain validity by the hour.
Maybe the Senator would resign.
The question before us is whether Aer Lingus can be restored to commercial viability by this plan. I submit it cannot. We are going to provide £175 million pounds of equity to Aer Lingus but it will be phased in over a three year period. In view of the debt servicing the airline is faced with at present, is the Minister confident that amount of money will be adequate to solve the problem or are we going to be back here in five years time doing the same thing and looking for more equity?
With regard to the Shannon stopover is it essential that it be brought into the debate at all? It is a red herring. We have gone to Brussels to seek £8 billion to address the peripherality problem that exists in the European Community and we have argued our case. However, when it comes to addressing peripherality within the country we are sadly deficient. There is also the rhetoric of our commitment to regional development and that is not evident. Will we get to a point where all we have in Shannon is a museum that the tourists coming to the country through Dublin may visit and see aircraft that flew 20 years ago? I imagine that is the case and what is being proposed does not fit with regional development or tackling peripherality. It is a red herring.
We should be debating the motion outlined by Fine Gael. It should be put to the House and we should vote on it so that at least we can find out how people on the other side of the House would vote. At least there was that satisfaction in the Dáil which we are not afforded in the Seanad.
The crisis in Aer Lingus is a problem the Government has not inherited but one it has caused. Therefore, it is doubly unacceptable that it should repeatedly stand back from it. The laying off of 500 TEAM Aer Lingus workers is the beginning of the bloodletting. TEAM Aer Lingus and its staff have been subject to a whispering campaign since the beginning of the Aer Lingus controversy and now they are apparently seen as the first and softest target for job shedding.
I ask the Minister if it is true that TEAM Aer Lingus is owed £32 million and that, as I am told, it has turned away work in the past few weeks from Ryanair and from Teamlift? We were not told either that TEAM Aer Lingus does not carry out the servicing of some of Aer Lingus's own fleet, the Fokker 50s. The Cahill plan will destroy Aer Lingus as an independent national airline. Aer Lingus will not survive the loss of 1,500 jobs although there seems to be an opinion, especially in the Labour Party, that the job losses are acceptable if they are voluntary. This takes no account of the effect on the company itself of such large-scale job losses.
The change in the Shannon stopover is a huge blow struck at the region. It proves beyond doubt that the Government is to sacrifice the livelihoods of the people in Aer Lingus and Shannon in the interests of their policy of fiscal rectitude. The Government is to put £40 million into redundancies for Aer Lingus workers while they should instead invest the recommended amount of equity in Aer Lingus, that is £400 million, together with a fair share of the £8 billion of Structural Funds in the Shannon region and show that the people really matter. I am reliably informed that it was the Government who instructed Mr. Cahill and that is why he was not able to have proper discussions with the Minister at Shannon. It was the Government who instructed Mr. Cahill that the Shannon stopover must go. In so far as this Government is concerned, the people do not matter anymore.
On a point of order, may I ask the Leader of the House how many speakers he is talking about on the Government side because we have other speakers also and if we are going to agree to extra time we are entitled to a share of it.
On a point of order, we have now agreed to an extra ten minutes contrary to what was agreed to on the Order of Business so that we can hear one side of an argument without concluding the argument on the other side of the House. I propose that we accord a further ten minutes so that we can conclude on this side of the House.
I second that proposal.
The Leader of the House does not dictate who speaks. That is the function of the Chair. I have no difficulties with extending the time for statements by a further ten minutes or until 7.20 p.m. if necessary.
Could it be established how many Members wish to speak and may I suggest that four or five minutes should be allocated to each?
That suggestion by Senator Fahey is more sensible.
Acting Chairman
There was a proposal from the Leader of the House to extend the time to 7.10 p.m. which was agreed. It was then proposed and put to the Leader of the House that time be extended to 7.20 p.m. and that was agreed. I now propose to allocate five minutes to Senator O'Sullivan and five minutes to Senator Fahey.
In fairness, I am inclined to agree with Senator Dardis because I believe he was under the impression that he had two and a half minutes to speak. There are a number of Senators who have an interest in this issue and if the House is going to extend the time for debate there should be a proper extension and the remaining speakers should be allowed address the House.
There are five speakers remaining and I propose that the remaining 20 minutes be divided between these five, with four minutes per speaker.
This is making up as we go along.
It was agreed by the House and the House is proceeding as per that agreement. If the House wishes to conclude the statements on Aer Lingus it will be done immediately.
Acting Chairman
I now propose five speakers, namely, Senator O'Sullivan, Senator Fahey——
On a point of order——
Acting Chairman
I have received a proposal from the Leader of the House and I ask him to make the proposal.
I propose that statements on Aer Lingus conclude at 7.30 p.m. which allows approximately four minutes per spokesperson. If this is not acceptable, the statements concludes as previously agreed.
Acting Chairman
Is that agreed?
There are a number of Senators who would be in the House to speak if they thought they were going to be afforded the opportunity of doing so.
Acting Chairman
It was agreed earlier that statements on Aer Lingus would conclude at 7 o'clock and it is not any ruling, interrpution or interpretation by the Chair that has resulted in this situation. There is a proposal from the Leader of the House that the statements will now conclude at 7.30 p.m. If these interruptions continue no Senator will be able to speak. I call on Senator O'Sullivan.
I understand I have four minutes to speak. It is almost incomprehensible that Aer Lingus was able to continue on a flight path over the past two years, not to the Shannon stop or a Dublin stop but almost to a full stop. Even more incomprehensible is that Members of the Opposition in the House today appear to believe that Aer Lingus should continue on that course and that there should be no plan to save the airline.
That is not true.
Action must be taken immediately, otherwise Aer Lingus will come to a full stop. In this context the Government had to take a decision and had to take it quickly. I believe the injection of equity of £175 million will secure the future of Aer Lingus if we all work together on that task. However, there is one aspect of the Cahill plan I do not agree with and I have indicated this publicly and also within my party. Mr. Cahill included the Shannon stopover in his plan——
He was told to include the stopover. The Senator should check her records.
——despite the fact that initially this was not to be part of his brief. This should not have happened. I do not believe the Shannon stopover should have been part of the solution to the problems in Aer Lingus.
The Senator now blames Mr. Cahill.
There were many difficulties in the mid-west region over the past number of weeks regarding the various statistics presented by Mr. Cahill in relation to his plan and, as other Members have said, there is still concern about the future of Shannon in the Cahill plan. I accept that in the world of aviation competition some action has to be taken. However, I do not accept it will be good for the future of Aer Lingus that the Shannon stopover should be included in the Cahill plan.
There are many questions I wish to ask today and while, I am aware that the Minister will be unable to provide immediate answers, there are concerns in the Shannon region especially over the whole question of regional development. As was said by some Members in the House today, the EC has a policy of regional development and a policy of strengthening the peripheral regions. While I accept that the EC also has policies regarding competition, I suggest that the attempt to weaken the emphasis on regional development in the mid-west is in contravention of EC policies on regionalism.
Regarding the question of renegotiation, there has been some disagreement on the part of some of the MEPs from the Munster area and EC representatives quoted in this House. I do not know myself the EC position on this question and I believe that this must be answered before the issue of going forward in the mid-west region can be resolved. I am quite sure there will not be any changes in the status of Shannon until the bilateral agreement is renegotiated and I understand this could take anything from six to 18 months. In the meantime there are many questions being asked in the mid-west region.
Aer Lingus is hoping to have managed change in the bilateral agreement. What will happen if that is not possible? There are many other questions, for example, on the pre-clearance facility at Shannon, and what will happen to winter flights? I accept there will be tourism traffic in the summer but there is worry about the winter and the jobs that are dependent on flights in the Shannon area at that time of year.
Those are many of the concerns and questions being raised in the Shannon region. I have said many times in this House when discussing other issues that there should be monitoring of progress in relation to the implementation of Government policy. The same should be true of the Cahill plan. I believe the plan should be monitored as it may not be perfect. The mid-west region is resourceful and its people will fight back and will, as Brendan O'Regan has said, seek to develop the region. However, there are many questions being asked by people in the region and I believe they should be addressed.
Acting Chairman
I call on Senator Fahey who has four minutes to speak.
The Government decision to end the Shannon stopover will not have the catastrophic effect that many people in the mid-west region fear. There are three reasons I believe the Shannon stopover as we know it will disappear in any event within the next two years. First, there has been a fundamental change in the past four years due to deregulation. The stopover was a restrictive practice introduced in 1958; it is a policy that is completely outdated in the context of aviation development and is no longer practical.
Secondly, the number of passengers from the USA entering Ireland indirectly has increased dramatically over the past few years, from 40 to 55 per cent in 1992 alone. An aviation expert has predicted that if this situation were to continue, by 1994 some 70 per cent of the people entering Ireland from across the Atlantic Ocean would be entering via London.
That is not true.
The facts are there for this year.
The Senator knows this is not because of the Shannon stopover.
The facts are there for 1992, up from 40 to 55 per cent. The Senator has only to walk down the street to ascertain that one half of the visitors arrived via London.
The Senator should address the question why this is so. It is not because of Shannon.
Next year there will be negotiations between the EC and the USA who are both committed on an open skies policy. Notwithstanding that, and I accept the difficulties that many people in Clare and the mid-west region have regarding this decision, I am convinced that Shannon has a great future.
That is a contradiction in terms.
The leader of the Senator's party travelled to Brussels last week with great expectations but not much was heard about the results of his visit. Let us be realistic.
Does the Senator want my party leader to act in loco Government? Does the Senator want people to undertake the Government's work in Brussels?
Shannon has great development potential but it is essential to that development that the Government put in place a strategic development plan for Shannon as the gateway to the west of Ireland. Fundamental to that development plan is a realisation by Government, which I have to say is not there at the moment, that Ireland's economic future lies not in manufacturing industry and not in agriculture, both of which are contracting, but in making Ireland the most prestigious destination in Europe from the US, mainland Europe and from the east. Central to the implementation of that policy will be the development of direct flights from the US into Shannon throughout the year and from 12 major European cities. The challenge for all politicians from the west at local and national level is to get a commitment from the Minister and from the Government that this policy and plan will be put in place and that it will receive significant Government and ESF funding over the next five years to market Shannon——
Policies on paper; people on the ground.
——direct from both the US and Europe. Therein lies a great future for Shannon and for the rest of Ireland. We are fooling ourselves if we want to continue a policy that has long since become outdated. There is a challenge for us now to get an agreement from the Minister and the Taoiseach that we will get a proper bilateral agreement which will be in the interests of the development of the west——
It is not outdated for Switzerland or Germany.
——and that we will get the money needed. Let us be quite clear about it, we have had our heads in the sand in the west in the last number of years with regard to its marketing as a holiday destination. We are not bringing in a fraction——
And we are now sticking them further into the sand.
I did not interrupt Senator Taylor-Quinn, maybe she might give me an opportunity——
I know the Senator did not interrupt but I am surprised at him.
We are not bringing in a fraction of the people we could bring from the US and Europe to the west. We have one flight from Paris to Shannon; that is our total European network at the moment. There are vast opportunities for the development of Shannon as a hub for Europe. The opportunity now presents itself and I hope that those people in the gallery and those of us involved at national level will get together once and for all and put forward a plan to the Government which I believe will be accepted by it and will lead to a major new era of development for Shannon.
That is all pie in the sky.
It is planes in the sky.
At least it is an idea.
Acting Chairman
Senator Roche, are you offering?
On a point of order, Members on this side of the House should finish the debate.
(Interruptions.)
Is it in order to make a contribution?
Acting Chairman
The Government parties have nine minutes and they can divide it as they wish. The other side of the House will have nine minutes and the debate will finish at 7.30 p.m.
The Government is using the Cahill plan as a means to demolish Shannon. Birds are the only things that will be flying through Shannon in a few years' time. The western region will be decimated when this plan is fully implemented. If the two previous Ministers, Deputy Brennan and Deputy Geoghegan-Quinn, look after their present portfolios as they looked after their previous one, they should resign because they were both faced with this problem and did nothing about it. Last October Deputy Geoghegan-Quinn endorsed the Shannon stopover but today we are presiding over the abolition of Shannon and the decimation of the west.
It is interesting to hear Senator Fahey talking about bringing tourists to this country because, today and yesterday, there were calls from the Opposition spokesperson on tourism and the Government side of the House to implement a new emergency plan to bring tourists back to the country. We have had no tourists this year. Senator Fahey spoke about his great expectations and the future route which would be the lifeline for Shannon. The present proposal to fly Shannon-Dublin-America was discussed on the "The Pat Kenny Show". Mr. Kenny could not believe his ears and made a mockery of the proposal. That will not last.
The people in the public gallery, the public representatives from the Shannon region know only too well what has happened. It is obvious because only statements are allowed, there will not be a vote. The Government side are afraid to vote. It is amazing that a Deputy from the Government side was carried shoulder high when he returned to Clare because of his stance in the Dáil last week. The only reason he was in that position was because a Fine Gael motion was put during Private Members' Time in the Dáil to try to save Shannon.
I do not think that Dublin Deputies in Fine Gael thought that was the purpose of the motion; maybe it should be explained.
The Senator is talking sense.
He has not made as many u-turns as members of Senator McGennis's party.
I have not made any u-turns.
Shannon and the whole western region is banjaxed. There is absolutely no commitment from this Government to the west. For years we have heard from Fianna Fáil, the major Government party in the last number of years, details of its commitment to the west, how it has won two of every three seats in most constituencies and that it is the party for the survival of the west. It has no commitment to the west. We have seen the Digital episode and now Shannon. In view of the fact that there will be no major international airline in the west I call on the Minister to at least put something in place to enable us to upgrade the railway lines into the west. All the tourists coming into this country will be coming into Dublin, they must be dispersed throughout the country and we need proper railway lines in order to bring them to the west.
Over the last three or four days I was in the west and I took particular notice of the infrastructure in that area. Anybody who gives the impression that this infrastructure does not depend on Shannon is lying. It is immoral and devastating to that region that people can decide that aeroplanes which have been relevant to Shannon since 1958 will not be landing there any more. People might say that those involved in the Shannon region should get up off their knees and get on with it but I do not think so. Much of the money which has gone into that region is because of Shannon airport, it is unbelievable that a politician on any side of the House could suddenly decide that there should be one stop and that the eastern side of Ireland should gain everything.
There are more important decisions to be made and it is wrong that the capital should get everything. It is totally immoral to limit the role of Shannon airport. How could Aer Lingus create a situation where the people on the western side of our country are without a service? It is untrue to say that the losses are the fault of Shannon airport. Two parties that claim to represent the working class propose to spend £43 million on eliminating 1,500 workers. That is not my idea of creating jobs or of saving a company. The idea of putting in £100 million over a three-year period and then £50 million over every other year confuses me. The infrastructure set up in the west, as regards Shannon Airport, from the town of Gort to Limerick is so vital to the region that no politician of any party could agree with the plan. They should have looked at the case as a whole. I compliment Mr. Cahill on railroading this through — it was not within his brief to refer to Shannon at all — and annihilating all of the west in one stroke.
There are three points I wish to make. First, this debate has typified old and ancient politics. Governments, irrespective of their colour, only look at State enterprise when it is far too late and it is in dire trouble. When the Labour Party were in Government with Fine Gael, we had to recognise that it was not financially possible to save Irish Shipping.
Irish Shipping is still there.
Senator Cregan knows that it is not there and we sat in the same councils and decided that we could not conceivably save Irish Shipping.
Before the high moral tone of Senator Dardis and the Progressive Democrats, Deputy O'Malley sat on the problems in the PMPA for over two years which were eventually faced up to by the late Deputy Cluskey. We are all guilty of those sins and do not pretend that we are not. If what came from the other side today is leadership, then God help not only Shannon but the rest of the country. The remedy they have is to dispense liberally a huge amount of money because they have nothing else to offer. It was said earlier this evening that the alternative to the Government plan — no one said that it was perfect; even the Minister accepted that it was imperfect — is a series of mini-criticisms. Not a single big idea has come from the Opposition, either in the Dáil or this House, that could be tested on any logical grounds.
Where is the plan? We did not get the full plan.
Before people talk about destroying economies, one must remember that we have all faced these situations, When we were in Government, Senator Cregan and I faced it together in Cork city in relation to Dunlop and Ford. Many said that not alone would we not be re-elected, but we should be hung from lamp posts.
In your policy of fiscal rectitude.
Senator Sherlock supported dear old C.J. back in the 1980s. I can produce that record as well.
There is no one in this House, including the Labour Party, who has clean hands in regard to such issues and their argument is full of cant and hypocrisy.
Senator Quinn and I have clean hands.
I would not mind giving the Opposition up to the middle of August if they could produce a single idea, but I am afraid I will die of boredom if the debate goes on any further.
I will share my time with Senator McGennis.
The only truth that has been said here has come from Senator Magner. We have had a betrayal of enterprises in this State since the first one was set up; Aer Lingus is only the latest in a series of crises. I heard Senator Taylor-Quinn protesting that she did not get the figures. The Senator was in the last Oireachtas and if she had any interest in this issue, like me and other Members, she could have been briefed by Aer Lingus. The reality is——
On a point of order, Chairman——
——that everybody knew that this company was going down the drain and no one wanted to call a halt to this. We have had parochialism in this House all day long——
Acting Chairman
If you have a point of Order, Senator Taylor-Quinn, will you please make it?
On a point of order, Chairman, the Senator has attempted to mislead this House by making an allegation in relation to figures that were available. The Cahill plan was not made available to any member of the Opposition, despite repeated requests.
That is not a point of order but a point of contention. We had the boards of management of both Aer Lingus and Aer Rianta before the Oireachtas Joint Committee on Commercial State-Sponsored Bodies a year and a half ago. They both produced sets of figures.
Mr. Cahill was at Shannon a week ago and he did not answer one question.
Any public representative who was interested could have been briefed at that time. Why have we had crisis after crisis in the State sector? We will not solve it here with this parochialism. We have had such crises because we set up State-sponsored bodies and refused to fund them. I agree with Senator Honan that at least the contribution now being made by the Government is by way of a capital injection and not loan capital. We have also betrayed everybody who works in, and contributes to, the State sector because we have had lamentable management structures in place and we have all tolerated this.
And lamentable and inactive Ministers, particularly ex-Minister Brennan.
The management in Aer Lingus has been lamentable over the last few years. We still do not know where the £17.5 million lost by Aer Lingus Holidays has gone. The management from both Houses of the Oireachtas has been appalling. We have not yet debated one specific report of the Oireachtas Joint Committee on Commercial State-sponsored Bodies on the wide issues of any individual company. We also do not have the expertise to control the State-sponsored bodies within our departmental sector. Each time we have a crisis, we look for a scapegoat and in this case, it is Shannon airport. I am from the East coast and I do not believe that Shannon is the centre of this issue. When we come back for the autumn term——
Does Senator Roche admit to this?
At least we have now officially heard that Shannon is being used as a scapegoat.
——if we are serious about any of the statements made today, we will have a lengthy and protracted debate on how we control and fund the State-sponsored bodies and how this House makes them answerable like the other House.
In the few minutes available to me, I would like to ask the Minister to take on board some of my points, which were made to me by the staff of Aer Lingus. The Cahill plan, as has already been said, is the only one before us. I have reservations about the plan. I believe it is flawed for two reasons. First, there has been no input from the staff representative organisations and, second, it takes a totally narrow view, based purely on bookkeeping, and the commercial decisions taken do not appear to me to have been fair.
The core of the plan states that Aer Lingus must become cost-effective and that it must be competitive. It is difficult to insist that they become more competitive when it is operating under different commercial guidelines from other airlines. Their costs are higher, especially on the Dublin-London route, because they cannot land at Stansted. The cost of the Shannon stopover also has to be borne by Aer Lingus because of a decision in relation to regionalisation.
I want to raise the matter concerning semi-State jobs and was surprised by the comments made by Senators Lee and Quinn. I do not have any problem with semi-State organisations being used as a vehicle for creating jobs. I ask the Minister to tell me what is a productive job. I know there are problems with Aer Lingus, but I want the Government to listen and to answer this question. What is the cost of the dole being paid out to 60 per cent of those in parts of my constituency? The Government may save money in Aer Lingus, but what is the knock-on effect of that kind of unemployment? A Senator from the other side of the House said that creating unsustainable jobs is a mistake. I totally dispute that statement.
I welcome the provision of £175 million in equity. It is lamentable that this was not referred to by Members on the other side of the House. I commend the Minister for making a decision. Members on the other side of the House have said that nothing was done, yet when something is done it is wrong.
At this late stage it is disastrous for a Government to admit that it only has a fix on the Aer Lingus problem. The Minister in his statement mentioned aviation policy. I dispute that we have an aviation policy. We may have had an aviation policy, but we do not have a future policy. The Minister said this is evolving. Policies do not evolve, we decide on them. Part of the plan states that Aer Lingus cannot fly on new routes until its old routes become profitable. That is not a policy.
Regarding Shannon, the Minister must be doing something right because one Fine Gael Senator berated him for making a decision said to be anti-Dublin while another made a similar remark about Shannon. Perhaps they are confused. I support Senator O'Sullivan's call that this plan should be monitored. We must not look back in three years and say this is still not right. I do not want the Aer Lingus workers who will lose their jobs to pay that price for nothing.