A Leas-Chathaoirligh, thank you for affording me the opportunity to raise this important matter. I wish to share my time with Senator Jackman.
Adjournment Matters. - Air Services.
An Leas-Chathaoirleach
Is that agreed? Agreed.
I thank the Minister for Public Enterprise, Deputy O'Rourke, for inviting the Ryanair chief executive, Michael O'Leary, to establish a number of air services from Shannon to England and various European destinations. I understand that the initial invitation issued from the Minister and we appreciate that. Now that a proposal is before her and the Department we want them to seriously consider the proposals that have been presented by Ryanair.
There has been much media coverage of this matter and the debate seems to have been conducted more in the media than in serious negotiations in the Department and between it and Ryanair. I suggest to the Minister that she would ensure that more discussions take place between the relevant parties to ensure that this proposal does not vanish. It is extremely important because, since the change in the status of Shannon as the sole transatlantic stop-over, there has been an evident decline in business relative to the expansion of other airports. Recent figures show that Shannon is not competing with the expansion rate of Dublin and Cork airports. Between 1996 and 1998 there was an increase of 28 per cent in traffic through Dublin airport and an increase of 17 per cent in traffic through Cork airport, we had only a 6 per cent increase in traffic through Shannon airport.
Wherever Ryanair has located it has generated a dramatic increase in the traffic through that airport. This issue is not just about traffic through airports, it is also about getting people into the region of Clare, Limerick and the west. It is using low fares to get people to spend time as tourists in the west. It is extremely important because there has been a change – there are more American tourists spending time in Dublin and the trend has changed from the west to the east for American tourists. We are now in a position to generate traffic from Europe and England with low cost fares into Shannon to boost the tourism industry.
In addition, there is a problem in Shannon that although there is a reasonable amount of flights to England and mainland Europe, there are not enough. We need to be competitive in the business sector. Many business people would like to set up business in the mid-west but find it impossible to get a proper air service out of Shannon. They must leave at a ridiculously early hour in the morning which is very unsuitable. Ryanair will offer five additional destinations, two to England – London and a regional destination – and three to mainland Europe. It has given a commitment that if it is allowed into Shannon and a deal is made it will make a ten year commitment to Shannon airport. It has agreed to use five airplanes from Shannon which may generate 150 direct jobs in Shannon airport. That is very welcome and, given the decline in traffic through the airport, extremely necessary. I appreciate that the Minister issued the invitation to the management of Ryanair to look at Shannon and to make a proposal to her.
A number of allegations have been made by Aer Rianta and others. We are not interested in allegations or in conducting a debate in the media. We want the proposal examined closely and a deal hammered out in the Department because it is in the interest of regional development in the mid-west. It is important that factor is recognised. Allegations have been made by Ryanair and Aer Rianta about the £12 million for a terminal at Dublin airport. Last week at a joint Oireachtas committee meeting the chief executive of Ryanair said it would give £12 million to Aer Rianta to build a terminal at Dublin airport.
While acknowledging that it is wonderful, we are specifically interested in Shannon and in generating traffic there. The facilities are there – £40 million has been spent on a terminal there – and the infrastructure is in place but, unfortunately, it is under-utilised. Shannon has the capacity to deal with a greater number of people, while Dublin is over-stretched. There is a need to focus on regional development and on this particular issue, making a policy decision in relation to Ryanair and actively encouraging it into Shannon. I understand that the proposal is not contrary to EU legislation or regulations and legal advice has been taken in that regard.
I suggest to the Minister for Health and Children that he brings the message to the Minister for Public Enterprise, Deputy O'Rourke, that the people of Clare, the mid-west region and the west in general want to be able to travel in and out of this country as cheaply as people from the greater Dublin area.
It is very expensive to travel out of Shannon compared with travelling out of Dublin and that is not acceptable, particularly considering we are an island nation on the periphery of the EU. It is important we have access to and from continental Europe at reasonable fares which are not prohibitive. It is also important for the future development of the country, for the opening of the minds of people and for inward investment into the region. Given the Minister's experience, I have every confidence he will convey this specifically to the Minister, Deputy O'Rourke. I thank him for his time.
The Minister has experience of transport and will be very much aware of the problem at Shannon. When looking at the national development plan to be published next week, we will be asked to consider the whole concept of decentralisation since Dublin is dominating the economic and social life of the country. That is certainly true in regard to transport. I am sure there will be many ideas as to regional development and Shannon is of vital importance in that debate.
I agree with Senator Taylor-Quinn that we have attended various presentations where there has been a personality clash between strong-minded people, be they from Ryanair or Aer Rianta, and at the end of the day the issue is generally lost. Why are Ryanair competitors so worried about taking Michael O'Leary and Ryanair at their word and afraid to invite them to come into Shannon and see whether they can survive? I believe Ryanair can survive but we are hearing the negatives about its type of aircraft and that it is using Shannon to get its second terminal in Dublin, that we should not be so foolish as to think it is for the good of Shannon. If we were always to say that, we would have the same debate on how well it is doing in the UK. I do not know why Ryanair wants to come to Shannon, but I can only guess that since it is a profitable commercial body it can see the potential. The bottom line for Senator Taylor-Quinn, business people in the area, the people on the west coast and myself is competitiveness. If it survives well and good, but at least it should be given the chance to operate low-cost fares from the region for the economic good of the area. What are people afraid of?
Let the Minister make the decision. Let it come in to see if it can be competitive. The bottom line is the passenger will benefit. I totally agree with the sentiments expressed by Senator Taylor-Quinn and hope the matter will be resolved from a commercial viewpoint.
I have been asked by the Minister for Public Enterprise, Deputy O'Rourke, to apologise for her inability to attend to reply to this Adjournment matter raised by Senator Taylor-Quinn and commented on also by Senator Jackman.
Ryanair's proposal of recent months to open ten new routes to European destinations, five of which would be from Shannon, is in itself very welcome. The Minister has publicly welcomed the proposal on several occasions, as indeed has the chairman of Aer Rianta.
This proposal comes at a time of unprecedented growth in passenger numbers and air services at Shannon. Ten new services have been introduced at Shannon in the past year alone. This is a clear indication of the successful and active promotion of Shannon Airport by Aer Rianta. These new routes and the positive passenger statistics flatly contradict the doom-laden claims that Shannon Airport is not growing. Only last month Virgin Express announced a Shannon to Brussels service starting in December, with connecting services to Berlin, Rome, Madrid and Barcelona. Aer Lingus commenced a Shannon/ Paris service last March. Additional transatlantic services were launched by Delta and Aer Lingus. Further transit traffic was secured from Pakistan International and Royal Jordanian. City Flyer Express started a flight to Gatwick in October, replacing the AB airlines service.
This year alone the passenger numbers are expected to grow by more than 20 per cent, which is significantly greater than the growth which will be recorded at either Cork or Dublin Airports. Total passenger traffic at Shannon this year will be more than 2.2 million, up from 1.84 million last year. Over the past five years from 1993 to 1998 Shannon Airport has recorded a 40 per cent increase in transatlantic passengers. Cargo operations are also very buoyant with 73 per cent growth in the past five years in air freight traffic at the airport.
Aer Rianta is strongly in favour of any proposal to further increase traffic at Shannon Airport. It has developed a marketing policy which is geared to provide very attractive incentives. Judging from the positive results in terms of new services at Shannon, these incentives are working. Aer Rianta has, in fact, been actively promoting its incentive package to Ryanair in a bid to encourage it to establish operations at Shannon. Both parties have held detailed discussions in recent times. What would those incentives mean for Ryanair's proposal to develop five new routes out of Shannon and to increase passenger growth by 750,000 within the next three years? Ryanair would pay no airport charges for the first three years in respect of either new routes or additional passengers on existing routes. Aer Rianta would then give a further 50 per cent discount on airport charges for the following two years. To assist with the start-up costs and advertising the route, Aer Rianta would also provide substantial marketing support to Ryanair. This is the same very generous incentive package which has been successful in attracting ten new air services to Shannon in the past year. Hopefully Ryanair will be persuaded of the value of Aer Rianta's marketing proposal.
However, Ryanair's proposal for Shannon is not a stand alone one. It is linking it with a requirement that Ryanair be allowed to invest £12 million in facilities at Dublin Airport and that Ryanair obtain in return a low-cost charging arrangement of £1 per departing passenger for 20 years. Ryanair's proposal is, therefore, conditional on its being allowed finance new facilities at Dublin and securing low-cost charging arrangements in return.
Much as she would welcome a return by Ryanair to Shannon Airport, the Minister for Public Enterprise has indicated that she would not be in favour of the provision of services out of Shannon being linked to the level of airport charges obtaining at Dublin Airport. The linkage of service provision at one airport to the charges applied at another smacks of special arrangements and special deals. The development of services out of Shannon and investment in facilities at Dublin are two distinct issues and should be considered separately on their merits.
The Minister, Deputy O'Rourke, has stated that, as a general principle, any proposal for an airline or other private funding of terminal facilities at Dublin Airport, even if it were structured on an equitable commercial basis between Aer Rianta and the airline concerned, could not be permitted exclusively for one airline. Indeed, it is her stated position that any such proposal would have to be on the basis of an open competitive tender process accessible to all interested parties to ensure fairness, transparency and value for money. An opportunity to conclude such a deal with Aer Rianta, or alternatively to get from Aer Rianta airport charges arrangements of equivalent effect, would have to be offered to all airlines.
At its heart, the Ryanair proposal is about the level of airport charges. The Minister has made it clear that the best way of dealing with the economic regulation of Irish airports and, in particular, airport charges is by appointing an independent regulator. To that end, last July the Government approved the drafting of legislation to establish an independent regulator and that process is now well under way. Therefore, the next regulatory decision on any revised airport charges regime should be taken by the regulator as early as possible, rather than by the Minister.
I assure the House that the Government is fully committed to the development of Shannon Airport and we intend that the airport should continue to expand and adapt to the needs of Irish business, industry and tourism.
As the House is aware, the regulatory policy for transatlantic services at Shannon Airport owes its existence to the desire of successive Governments to promote balanced regional growth. Shannon Airport's commercial success is seen as a very important driver of the economy of the mid-west region. Aer Rianta shares the Government's commitment to Shannon Airport and to growing its business. This commitment is borne out by the extensive capital expenditure, amounting to more than £32 million, which was invested by Aer Rianta in Shannon Airport in the period 1990 to date to upgrade the facility.
Construction totalling £40 million is currently under way to provide a new terminal building at Shannon to give capacity for 4.5 million passengers in the year 2000. This investment not only ensures that the airport is fully equipped to exploit new traffic opportunities to the benefit of the mid–west region, it also confirms Aer Rianta's commitment to and belief in the future success of Shannon Airport.
It is clear that the Minister and Aer Rianta have been very positive in their response to the Ryanair proposal for Shannon. Cabinet colleagues, of course, may have their own views and it may be that completion and presentation to the Government of the Warburg Dillon Read consultancy report on the strategic future of Aer Rianta over the next few weeks, or the Minister's considered recommendations to Government in due course arising from that report, could afford opportunities for the Government to consider any of these issues.
We are aware of the War burg Dillon Read consultancy report which is awaited and we would not like to think that the Shannon proposals currently before the Minister will hinge on that particular matter. We appreciate that it is intended to have an open competitive tender process. We suggest to the Minister, as I am sure would Ryanair, that she goes ahead with that tender process to seek openness, transparency and value for money.
An Leas-Chathaoirleach
I am sure the Minister will take the Senator's points on board.
The Seanad adjourned at 9.05 p.m. until 10.30 a.m. on Thursday, 11 November 1999.