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Seanad Éireann debate -
Wednesday, 12 Dec 2012

Vol. 219 No. 9

Shannon Airport: Motion

I move:

That Seanad Éireann approves the following Order in draft:

State Airports Act 2004 (Shannon Appointed Day) Order 2012,

a copy of which Order in draft was laid before Seanad Éireann on 5 December 2012.

I welcome the Minister of State to the Chamber.

When the Minister, Deputy Varadkar, and I were appointed to the portfolio of transport, tourism and sport in March 2011, we made the aviation sector one of our key priorities. One of the issues that needed to be addressed was the unusual relationship between the three State airports since the enactment of the State Airports Act 2004. This Act provided for the establishment of two new public limited companies - Shannon Airport Authority and Cork Airport Authority - for the purposes of owning, managing, operating and developing these two airports, but in reality these functions were never transferred from the Dublin Airport Authority, DAA. Both companies were established in 2004 and have their own boards, but they have very limited autonomy from the DAA, which remains responsible for all significant commercial decisions with regard to both airports.

The onset of the economic crisis in 2008 created severe turbulence in the aviation sector. This is because of the close correlation between trends in the national economy and trends in the aviation sector, which means that the key indicators of both sectors mirror each other with a short time lag.

As the economic situation worsened, there emerged a particular concern for the future viability of Shannon Airport given the quite dramatic fall in its passenger numbers in recent years.

Last week, my colleagues, the Ministers for Public Expenditure and Reform and Finance, delivered the budget for next year and announced expenditure cuts and revenue raising measures amounting to €3.5 billion designed to reduce the general Government deficit to 7.5% next year, down from a projected 8.2% in the current year. The target is to reduce the deficit further in stages, to 2.9% in 2015. We will continue to face up to the challenges which this involves in a sensitive and as fair a way as possible.

What is the relevance of this to our State airports and to Shannon Airport in particular? While we have mapped a clear road to the recovery of our economic sovereignty and to the economic recovery of this country, the scale of our current difficulties requires that every part of the State's business, whether in the commercial sector or not, contributes to this goal. We are, for example, undertaking the most comprehensive reform ever of the public service with the aim of reducing public expenditure and staff numbers while at the same time endeavouring to maintain key services and social supports. This is far from easy but we have to do it and we must succeed. We simply have no choice.

Our efforts cannot be confined just to the Exchequer finances, however. The commercial State sector must also play its part to the full. In current circumstances, this is a moral as well as an economic and financial imperative. Our three State airports operate in the commercial sphere and can play a vital role in our economic recovery. I say "can" because, unless they are actually contributing, they could instead hold back economic development and hinder recovery.

Shannon Airport is currently in this unenviable position. It is loss-making and its passenger traffic has fallen dramatically since 2007. It is being supported by the DAA and it is not delivering to its potential for the mid-west region. Regardless of where ownership of Shannon Airport lies, this cannot continue.

The stark facts are that passenger traffic at Shannon more than halved from 3.6 million to 1.6 million in the period from 2007 to 2011 and is expected to fall further to fewer than 1.5 million in the current year. It was clear to the Minister and me that these trends could not be allowed to continue without putting the very future of Shannon Airport at stake. There was need for some intervention to put the airport on a more viable footing. This in turn required a thorough examination of all the options. Having discussed the matter with the three airports, the Minister commissioned Booz and Company, a leading firm of aviation consultants, to identify and analyse all likely options regarding the ownership and operation of Cork and Shannon airports and to make recommendations as to the optimal ownership and operational structures for those airports.

After consulting widely, Booz found Cork Airport to be performing well under DAA ownership and management and, as such, it concluded that the benefits of any fundamental change in its ownership status in terms of increased traffic and revenue for Cork would be marginal. Accordingly, the Government decided that the existing ownership of Cork Airport by the DAA would be maintained for the present and that our energies needed to be focused on halting and reversing the serious decline of Shannon Airport.

The basic conclusion of the Booz report regarding Shannon Airport was that its decline and financial situation as a loss-making entity would continue unless there was a fundamental change in strategic direction for the airport. Having carefully considered the matter, the Government agreed in principle last May to a new strategy designed to reverse the decline in Shannon and to put the airport on a new strategic footing. This new strategy, which takes account of the Booz recommendations, involves the separation of Shannon Airport from the Dublin Airport Authority, DAA, the merging of a restructured Shannon Development with Shannon Airport to form a new entity with a commercial mandate in public ownership and the development of a suite of aviation-related industries located in the lands contiguous to the airport.

The Government also decided to rationalise the tourism and enterprise support agencies in the region. Shannon Development's tourism functions are being transferred to Fáilte Ireland and its enterprise support functions will be transferred to the IDA and Enterprise Ireland. These initiatives will serve to eliminate the historical duplication of resources and deliver a better service to the region.

A high level steering group was established by the Ministers for Jobs, Enterprise and Innovation and Transport, Tourism and Sport to develop proposals for the implementation of the Government decision and to assess the feasibility of creating an international aviation services centre, IASC, of excellence centred on Shannon Airport. The steering group was assisted by two task forces.

The aviation business development task force was tasked with seeking out and evaluating aviation-linked business opportunities that could be associated with the merged Shannon entity and to bring forward proposals to address issues relevant to the merger for consideration by the steering group. The change management task force was formed to develop transitional arrangements for Shannon Airport and Shannon Development prior to the merger including matters relating to IT, HR, finance and accommodation. The task force also considered issues around the transfer of Shannon Development functions to the IDA, Enterprise Ireland and Fáilte Ireland and the development plans of these agencies for the region. Both task forces concluded their work last month and their reports have been published on my Department's website. The report of the aviation business development task force strongly supports the potential for the establishment of a broadly-based aviation industry cluster in and around the airport with potential to achieve global recognition while also providing a strong employment stimulus in the Shannon region. Aspects of the aviation sector that will be targeted for this purpose include aircraft maintenance, repair and overhaul, flight crew and other aviation-related training and the development of aviation logistics and cargo facilities, among others.

It is a prerequisite for airport separation that the Minister and the Minister for Public Expenditure and Reform be satisfied as to the state of operational and financial readiness, including business planning, of the three State airports. Detailed business plans for the proposed new Shannon entity, which of course includes Shannon Airport, and for the DAA, post Shannon separation, were prepared and these were subject to independent expert evaluation by KPMG on behalf of the steering group and my Department.

I am here today seeking the approval of the House for this motion because the Government is confident that Shannon is not only ready to stand on its own but will perform far better on its own, free of constraint and control by the DAA.

Of course there is a degree of risk associated with this decision but the risks for Shannon associated with retaining the status quo are, without doubt, far greater. In this regard, I have seen mention of the passenger projections for Shannon and that these seem fanciful. While the business plan is confidential, I can say that over the next five years the Shannon plan projects passenger numbers to grow from about 1.5 million this year to 2.3 million in 2017 and to 2.5 million in 2021. Shannon traffic peaked at 3.6 million five years ago. Yes, the business plan is based on that assumption. It will be a challenge I do not deny, but it is achievable. Moreover, the alternative is worse. The alternative is to accept that passenger numbers at Shannon cannot be improved. That would spell the continuation of decline at the airport and we would soon be seeking to downgrade or even wind down the structures at Shannon. That is not the future I want to see for the Shannon area, as someone who comes from there.

As the Minister announced last week, the Government has confirmed its decision on Shannon and we are now working on the implementation of that decision. I am delighted with the news that commitments for the creation of 850 jobs have been secured by the task force from two companies as part of plans for an international aviation services centre to be located in Shannon. The longer term potential of this centre is projected to create and maintain up to 3,500 new direct jobs within five years, not including construction jobs.

While on this most important subject of jobs, I understand the concern that may be felt by the staff in both Shannon Airport and Shannon Development at this time of significant change. I acknowledge that, as with any new initiative, there are challenges ahead for the airport and for the new Shannon entity, which we will call NewCo for the time being, to be formed from the merger of the airport and the restructured Shannon Development, but I believe it also provides us with a great opportunity for Shannon and the region.

The terms and conditions of the DAA employees working in Shannon Airport will not be diminished in any way when they become staff of the Shannon Airport Authority. This was agreed following intense negotiations with ICTU in 2004 when the State Airports Act was being enacted and these protections are enshrined in that legislation. The terms of the Croke Park agreement apply to the staff in Shannon Development and, in due course, when the State owned NewCo is established, they will transfer to that company with their current terms and conditions. The workers in both Shannon Airport and Shannon Development are vital to the success of the airport and the vision for NewCo. Together with management, I am absolutely convinced that they can and will work together to ensure, not just the survival, but the renewed growth and success of the airport and the region.

I know that some in the unions are unhappy with how these policy initiatives have been progressed to date and felt excluded from that process, notwithstanding the arrangements for consultation that were in place. However, the Minister and I have invited ICTU to nominate a representative to join a steering group of key Departments which he is re-establishing to oversee the implementation of the Government decisions in relation to NewCo. He also wants to ensure that the workforce in the Shannon Airport Authority can have representation at board level as soon as separation is effected on 31 December and in this regard he has also invited ICTU to nominate an employee representative for appointment to the board of the SAA on a temporary basis pending agreement on arrangements for NewCo. This Government decision represents a historic new beginning for the Shannon region, with Shannon Airport playing a central role in a drive to develop a world-class aviation industry. In addition the decisions grant Shannon Airport the long-awaited freedom to determine its own future in the best interests of the airport itself and of the Shannon region. The decision will give the board, management and staff of Shannon Airport, the scope to bring a fresh approach to the future development of the airport. Its merger with a restructured Shannon Development provides the opportunity to open up access to the extensive landbank at Shannon that will facilitate the development of the international aviation centre of excellence.

Some in the Shannon region continue to maintain that Aer Rianta International, ARI, should be transferred to Shannon Airport from the DAA. From the time that separation of the State airports was mooted in 2004, it has been the intention of successive Governments that while the debts associated with the business of Shannon Airport would remain with the DAA, ARI would also remain with DAA. ARI is an integral part of the DAA group and the DAA's balance sheet, funding and credit rating are reflective of the group's business, including ARI. Even if it was desirable to transfer ARI out of DAA, it would damage the latter's viability to do so as part of the Shannon separation process. In short, if the DAA's financial viability was compromised as a result of separating Shannon Airport, separation could not happen.

Both the Minister and I are particularly struck by the degree of support for an independent Shannon airport across a wide spectrum of interested parties including business interests, chambers of commerce, and local authorities. Airport users, service providers, and prospective new airport customers including airlines and aviation companies have expressed an overwhelming desire to deal directly with Shannon airport on an independent basis.

The State Airports Act 2004 provides the legal mechanism for the separation of Shannon Airport from the DAA. In particular, section 5(1)(b) of the Act provides for the making of an order to specify the Shannon appointed day, that is, the day on which the assets and business of Shannon Airport will be transferred from the DAA to the Shannon Airport Authority. The draft order for approval by this House is a straightforward one which simply sets 31 December 2012 as the appointed day for separation of Shannon Airport from the DAA. Once this order has been approved by each House of the Oireachtas, it provides the legal basis to progress with the plan that will secure the future of Shannon Airport. My hope is that co-operating with all interests in the mid-west region and working together we can provide exciting and innovative opportunities that will benefit business, tourism and particularly job creation in the region. The task now is to make these plans a reality.

I thank Senators for their attention and I look forward to what they have to say in reply.

I move amendment No. 1:

After ‘‘5th December, 2012’’ to add the following:

‘‘provided that Aer Rianta International is incorporated in the new, independent Shannon Airport Authority on or before 31st December 2012’’.

As we all know Shannon Airport is an institution in the mid-west region. Shannon Airport and the Shannon Foynes Port Company are the two major infrastructural hubs of the mid-west and we fully support anything the Minister of State might do to enhance and develop both facilities. I accept a great deal of what the Minister of State has said and commend him on the basis that action of some sort needed to be taken with Shannon. The Minister of State just read out the figures and as we clearly did not have the option of doing nothing, I support the Minister of State's initiative.

We believe our amendment is valid and will underpin what the Minister of State is trying to do. My party's bona fides on Shannon Airport is well established. A Fianna Fáil Government conceived and delivered that project back at a time when a very senior Fine Gael Member said that the rabbits would be playing around Rineanna before there would be flights landing there - how wrong he was. Last month Fianna Fáil introduced the Shannon Airport (Amendment) Bill, which provides for much of what the Minister of State proposes with the exception that we wanted a statutory link between Shannon Airport and Aer Rianta International. By incorporating Aer Rianta International into the Shannon Airport equation, the Minister of State's forecasts, which he has said are risky, would be underpinned by the buoyant revenues being generated by Aer Rianta International, which last year returned a profit of in excess of €30 million.

The Government's plan is based on the fairly risky proposition that Shannon Airport can increase traffic in the European and UK markets by winning back traffic it has lost to Kerry and Knock. I have a problem with that hypothesis on two grounds. First, the projected growth is very difficult to achieve. There is some chance of achieving it with the security that incorporating Aer Rianta International would bring, particularly for investors and potential investors. Second, much as we are in favour of Shannon Airport being developed, we are not in favour of any further downgrading of our regional airports such as Knock, Sligo and Kerry. Robbing Peter to pay Paul never worked and will not work here either. Representatives of the executive of Knock Airport, who appeared before the Oireachtas Joint Committee on Transport and Communications last week, expressed very legitimate fears. While they were in no way jealous of the project for Shannon, they want a level playing field, of which the Minister of State will need to be cognisant if this is to be a success.

We believe the timing of this proposal is all wrong. Given the state of the economy, there could hardly be a more difficult time to embark on a project such as this. Shannon has been hit badly lately by the reduction of the profile of Ryanair, and the downturn in traffic and consumer spending generally. There is no secure guarantee for Shannon Airport in this motion. The more we can protect it and ring-fence it with Aer Rianta-type support the better the chance of it being viable.

We are positive about much of the proposal. People from the mid-west region of Clare, Limerick and north Kerry, from where I come, welcome the commitment in the motion to create up to 850 jobs in the in new international aviation centres in Shannon Airport and that this may eventually grow to 3,500 jobs. This is good news and I wish the Minister of State a fair wind - if he can achieve that, it would be a major success and we are not in any way negative about that. However, I regret that SIPTU felt the need to issue a statement on the lack of consultation that had taken place. The workforce there has legitimate fears and concerns. I am somewhat mollified by the Minister of State's statement that SIPTU will have a representative on the steering group, which is good. It is always wise to consult first especially where the good will of the unions is needed.

I will finish on a local issue. According to the Minister of State, the remit of the new company will be to work on "a suite of aviation-related industries located in the lands contiguous to the airport". What about the land assets that are not contiguous to the airport, such as a massive land bank in Ballylongford, County Kerry, next to the Shannon Estuary? We also have other assets such as Kerry Technology Park in Tralee. Shannon Development is now being broken up and I wish it well. It has a specific brief to work on aviation-related industry. Who will promote non-aviation industries such as the gas-oil refinery in Tarbert and the ongoing successful projects in Kerry Technology Park? The focus will be shifted over which we have concerns.

We will be pressing our amendment but that aside, I wish the Minister of State well.

I second the amendment. While I welcome the Minister of State, Deputy White, I am sorry that the Minister of State who made the opening speech is no longer present. I have major concerns about this matter. It is not that Shannon Airport does not have strategic importance for the west of Ireland or Ireland generally - of course it has and we support giving assistance to it. However, the Government did not follow the recommendations in the Booz and Company report. Even though the Minister of State, Deputy Kelly, said the Government had acted in line with the Booz and Company recommendations, it selectively cherry-picked some and not others. There is no strategic aviation policy in Ireland. The Booz and Company report recommends that before taking action in terms of separation and deciding on subsidising etc., it should define Ireland's aviation policy, which has not been done. While I am not against Knock or the processes that have been put in place, on a personal level - as opposed to the party - I will be making a direct complaint to Commissioner Almunia in the context of state aid.

Referring to the Minister, Deputy Varadkar, The Irish Times on 31 March reports him as stating:

If nothing was done for Shannon the airport stood in danger of being passed out by Knock airport in passenger numbers, despite a current gap of over 900,000 passengers. I think if the trends continue as they are it will happen because Shannon’s numbers are already down 20 per cent this year and Knock is still growing. It is only a matter of time without a change in policy.

According to The Clare Champion, the Minister also stated:

Shannon has less passengers now than it had back in 1997, for example. In that same period, Knock has increased its passenger numbers by 350%. Even though both airports operate in the same economy in the same country, the trend in Shannon is down and the trend in Knock is up.

In the first quote, the Minister implies clearly that we must change Government policy to facilitate Shannon at the expense of Knock. That was not necessary. It is for those reasons that I intend to raise with the European Commission the effective write-down of €100 million in debt and the stripping out of the assets of Shannon Development, giving the good ones to the airport with a rent-roll and giving the rest, I am reasonably reliably informed, at a cost of some €12 million, to IDA Ireland. That €12 million goes onto the balance sheet of Shannon Airport. Shannon not only would have €100 million written off, but €12 million in cash plus a rent-roll. In the meantime, there is the cost to the State of 700,000 passengers a year in Knock, which is, effectively, the gateway to the entire north west region. Sadly, this is a trend in Government policy where north of that Dublin-Galway line and west of Mullingar, whether one is a farmer, a business or whatever, it does not matter. The Minister is now rigging the situation. The Government is effectively manipulating a situation which will guarantee the demise of Knock airport and its potential to act as an economic driver for the region and contribute to national recovery, in favour of Shannon, and that is fundamentally wrong.

Senator MacSharry has less than a minute.

As a former chief executive officer in the chamber of commerce movement, I met IDA Ireland on many occasions over the years. Members from the west will be aware that the challenge in balanced regional development has always been access to the area. The costs in Government subvention to Knock airport is 83 cent per passenger and to Shannon, by comparison, it is almost €5 per passenger. The Government spoke, as reported on 31 March in The Irish Times, by way of the Minister, Deputy Varadkar. It is implicit in that quotation that they must change Government policy to reverse the trend of a community trust-owned airport at Knock performing exceptionally well, contributing almost €150 million to the economy in terms of tourism numbers and, not least, with potential to be an economic driver to attract additional industry.

Senator MacSharry is over time.

I thank the Acting Chairman for indulging me. I am nearly concluded.

I would ask the Minister of State, Deputy Alex White, who has a good legal background, to look at this area. We all are for Shannon but the Minister should level the playing field in some way. He should not make it Government policy to bury one in favour of another. He should empower both to perform to their potential.

I would ask Senator MacSharry to resume his seat.

I welcome here today my youngest brother, Joe, who also lives in Shannon, my PA, Mr. Errol Mulqueen and Bríd. I know I am out of order on that one.

I do not need too many notes to speak here today. I am stunned when I listen to some of the Senators opposite set about a mechanism to undo the work that the Government is trying to do on behalf of Shannon. Senator MacSharry stated he would complain to the Commissioner. Other Senators spoke about timing. This is the problem. It is eight years on and we made a decision. We are moving on. That is the problem with what happened with the previous Government.

The Fianna Fáil Members opposite are at odds with their members in Clare. In 2007, we adopted a motion unanimously. That was after Deputy Dooley's famous incident in regard to the Heathrow slots in Aer Lingus. The Deputy is not here to defend himself but he will not be allowed forget that one either. In 2007, we adopted a unanimous motion to separate the airports. Our position in Clare - I can speak for my Fianna Fáil colleagues on Clare County Council and all of the others - is still clear. We emphatically support the separation of the airport.

When people talk about the airport, they compare it to Knock. Shannon Airport is not Knock. On the edge of Shannon Airport, there are 2,000 acres of land, quite a good deal of which is developed and some of which is in disrepair. There are 10,000 persons working in those estates. At one time there were over 26,000 workers. Buses used come up from Golden in Tipperary, from Listowel and from Abbeyfeal to work in Shannon. We are developing a cluster and we will grow that cluster out from there. That is exactly what we are about. It is a business decision. It is nothing else.

I am proud to stand here today, having lived in Shannon for 37 years, reared my family there, run a business and worked for the airport for five years. I thank the Ministers, Deputies Varadkar, Richard Bruton and Noonan, the Ministers of State, Deputies Kelly and Jan O'Sullivan, and above all, the transition team led by Ms Rose Hynes, who has done an incredible job on the ground to bring this about.

It is condescending and an affront to state that this decision will be taken before the European Commission. The Fianna Fáil members in Clare need to be made well aware of what the Oireachtas Members are doing here in Dublin. They need to know and I will certainly inform them. That type of carry-on is what has got this country to where it is.

I support this decision. We will set about bringing Shannon back to where it was in the glory days. It is not all about the airport. There are 2,000 persons working in the aviation industry in Shannon as we speak, in overhaul maintenance service and aircraft leasing. We can grow that, and we will do so with the support of the Government. No doubt we are doing right. On 1 January 2013, Shannon will have the dead hand of the Dublin Airport Authority taken off it. We will survive. We ourselves will make it grow.

I welcome the Minister of State, Deputy Alex White. It is appropriate that the Minister of State at the Department of Health is in attendance because this airport is in an acute condition heading towards a terminal condition, and it has engaged in serious self-harm in the recent past.

The reports on Shannon when it was under regulation by the Commission for Aviation Regulation showed that it had an extremely high cost per workload unit - more than double that in Cork - and extremely low levels of productivity - by far the lowest of the airports at which the commission looked. It was moving 3,591 workload units per member employed at Shannon as against 10,500 in Cork.

I support every measure to break up national airport monopolies. I note that is happening in the United Kingdom, that the last vestiges of the British Airports Authority are being broken up. Airports should compete against each other and this is a start to what should happen here.

Shannon will have to get its act together. It has a record, as the Warburg Dillon Read report states also, of wasteful investment. That report states that, at Shannon and Cork, forecast expenditure per planned extra passenger reaches levels significantly above that spent by the group of airports with which it was compared and that this suggests poor value is being achieved, unnecessary work undertaken or a significant catch-up requirement exists.

Shannon must adjust to the world of low-cost airlines which charge probably approximately 20% of what airlines used to charge in fares. Such airlines have eliminated travel agents. It did not really matter with airports when airlines did not compete because there was a large bundle of money of which the airports took a good deal.

The Government saw this problem happening in 2004 but the legislation has waited for eight and a half years. Cork Airport was also given its independence. Whose foot has been on the brake the whole time? I recall the officers of Aer Rianta opposing the then Government with scant regard to the role of Parliament in passing legislation to create the Cork Airport Authority and the Dublin Airport Authority. I believe Cork should also have what Senators have referred to as the "dead hand of the Dublin Airport Authority" removed from it.

We should not have removed the regulatory role. As I stated, the regulator found important features of inefficiency in Cork in regard to the terminal built there and in Shannon in regard to both labour productivity and capital expenditure.

The regulator also found deficiencies in Dublin. The passenger per gate was two thirds of the best performer. Its passengers per square meter of terminal was one third of the best performer and the air traffic movements per runway are approximately three quarters of the best performer. The labour productivity is approximately half of the comparator airports.

The Government, on 27 October 2009, bypassed the regulator. The then Minister used his powers to ignore what the regulator said. The Government increased airport charges. Shannon lost 61% of its business. A €1 charge became €7.50 and the Government then imposed a €10 passenger tax. No wonder this airport is in trouble.

The solution is to also separate Cork Airport, to restore the prospect of competing terminals at Dublin and to restore the regulator's powers because this high-cost airport sector - all three of them - is imposing serious costs on Irish tourism and transport.

There has been too much low labour productivity, wasteful capital expenditure and going to the Department of Transport, Tourism and Sport to emasculate the regulator for the sector by having the Minister issue orders which appear afterwards on the commission's site. The then Minister did not issue a press release on 27 October 2009 when he ordered the regulator, against advice and his better judgment, to increase the charges.
This is an outer offshore island and we need an efficient airport sector, which we do not have at present. We will hold the Presidency of the EU on 1 January. Other countries for whom aviation is less important, and I include the United Kingdom, impose substantial air passenger charges on travel which really affect island countries. We should call for taxes based as a percentage of the fare or general sales taxes because a high per head tax on some of the lowest air fares one will find anywhere is a serious barrier to people accessing this country and undermines events such as The Gathering.
This should be the first day on which we discuss this issue. We must examine excess costs in Cork Airport as well as in Shannon Airport, although Shannon Airport has the most serious problem. We should also examine those in Dublin Airport. There has been too much complacency in the Department of Transport, Tourism and Sport over the years and too much interfering with the referee when he tried to regulate the charges. This is why Aer Lingus and Ryanair are taking business out of the country. It is too expensive to land in Irish airports. The Government has a major problem on its plate.

I welcome the Minister of State to the House. I commend Senator Mulcahy for his contribution, and he knows more about Shannon Airport than anybody else in either House. He outlined exactly what is needed for Shannon Airport, those who work there and those who are affected by it. The Minister correctly stated in his speech that the number of passengers using Shannon Airport declined from 3.6 million to 1.6 million in a four to five-year period. The Government has decided to arrest this situation. It established a strategy to separate Shannon and Dublin airports and proceeded to eradicate duplication. Responsibility for tourism will be transferred to Fáilte Ireland and the business interest surrounding the airport will be transferred to Enterprise Ireland and the IDA. It has established a change management task force to develop the aviation industry to its full potential including aircraft maintenance and repair, aviation training and overhaul. Most importantly, the Government recognises that no business will survive without the workforce being brought along with the process. The Government has now provided permanent and temporary positions for staff representatives to be included in the full process. As an active trade unionist I know the importance of this. I worked in Eircom for many years. It was one of the first companies in the country to establish a partnership process. It works extremely well because it gives responsibility and accountability to staff for their own job survival. This is exactly what Shannon Airport will do.

Of course this opportunity carries risk, and I acknowledge what Senator O'Sullivan said, but I ask him to show me a business plan anywhere in the world which does not have a risk attached and I will buy him a pint because every business has a risk attached. This process has been examined by experts who have taken time, used best practice and gone through all of the processes required to ensure the best business plan is put together. The Government will proceed to put in place this new system on 31 December.

This action by the Government is supported by the local authorities in the region. When I speak about local authorities, as Senator O'Sullivan well knows, I mean elected members because to me that is what local authorities are. They are the people who feel the pulse on the ground as to whether this is the right or wrong decision. If those elected by the communities throughout the mid-west support it, then quite frankly it is good enough for me. It is also supported by the chambers of commerce and business interests in the Shannon and mid-west regions. Most importantly, it is supported by airport users.

The amendment tabled by Fianna Fáil seeks to halt the process. It has been halted for long enough and it is now time to press the go button and move on and ensure Shannon Airport has a future. I fully support the motion.

Sinn Féin will support the amendment to the motion. We believe it is very positive that Shannon Airport will be given more independence as it was never likely to be given the appropriate priority under the DAA. I understand this has also been welcomed by the local community, as has been outlined. However, while it is clear Shannon Airport needs more independence it also needs a secure revenue stream to put its new model into practice and make a real drive for achieving a more sustainable set-up. We are not convinced this will be the case, and the Minister needs to outline how Shannon Airport can be supported in increasing passenger numbers, making more routes available and promoting itself, in particular with regard to its key catchment area in the mid-west and south.

I was in Kilrush last night where the issue was raised. We are pleased, as I believe the local community is, that the airport remains in public hands. I hope this remains the case. I commend all those involved in planning for Shannon Airport's future. We believe the plan, while it is laudably ambitious, is not realisable in current circumstances. In particular I am of the view it is being hampered by the stripping of Aer Rianta International from the airport. Aer Rianta International, which has a long history in Shannon Airport, makes a profit in excess of €30 million per year. It is an essential part of what can make Shannon Airport sustainable and turn the tide back in its favour. To remove it is short-sighted and endangers the ability of the airport to live up to its plans. Pointing to removing Aer Rianta with regard to the cancellation of debt is not credible. Those debts could never have been paid and in doing this the Minister is threatening its long-term sustainability. I fear the effect of stripping it of its only means of making a profit and leaving it in the wilderness with a view to it being privatised in the future.

The plan is also flawed as it pertains to Ireland West Airport Knock, County Mayo, and Kerry Airport, as other Senators have alluded to. Much of what the plan involves is dragging business away from Knock and Kerry airports to Shannon Airport. Knock airport is lean and well-run, which is all the more pleasing given that it is community-run. It has 28 scheduled international destinations throughout Ireland, the UK and Europe and more than 65 weekly flights with passenger numbers for 2012 set to reach almost 700,000. It has a much lower operational subvention per passenger than the State airports. It has a turnover of €12.5 million and a net loss of only €390,000. It directly employs 101 people in the local economy and supports an additional 900 jobs. We should not seek to undermine the good work in Knock by setting up Shannon Airport in competition with it. We should seek to strike a balance whereby the airports can complement each other, and the west of Ireland can support two significant airports. Taking the approach proposed will only lead to a situation where we will be examining Knock Airport in a few years time wondering what went wrong.

It would be remiss of me during a debate on Shannon Airport not to make reference to the illegal use of it for military and rendition flights. A total of 1,382 permits were issued, largely to US military flights, by the Department of Transport, Tourism and Sport to carry munitions or dangerous goods on civilian aircraft through Ireland or Irish airspace. According to the Minister, Deputy Varadkar, fewer than 250,000 US troops transited through Shannon Airport last year. It is difficult to see how this fits with our view of Ireland as a neutral entity, and successive Governments have relinquished all interest in maintaining an independent Irish foreign policy. It is certainly an issue which must be addressed and I hope we will have further debate on it.

I welcome the Minister of State to the House again. Senator Mulcahy eloquently dealt with this poorly thought out motion which, were it to come to fruition, would be very dangerous because of the consequences to which it could lead. I will not go over them but I will state the notion of history and history making is a cliche used far too often. However, in this particular instance it is highly appropriate given the fact Shannon Airport has had such a phenomenal history as a driver of economic development throughout the west of Ireland from Donegal to Cork.

People have come from all over to work at Shannon. Some of the best industries this country has seen have been incubated and developed in Shannon, thus creating thousands of jobs there. Shannon is recognised internationally as having a human resources facility for aviation that is second to none. Shannon also has a phenomenal reputation in aviation finance and engineering. Effectively, the Government has finally taken the bull by the horns to recalibrate Shannon and allow it the flexibility and space to develop. Aer Rianta International will go to the Dublin Airport Authority, but Shannon will have a rental income of between €13 million and €14 million from the industrial estate alone, despite these economically challenging times. I have no doubt this rental income will increase substantially because the Government has effectively ring-fenced aviation related industries to the new company.

It is appropriate that tourism-related businesses should go to Fáilte Ireland and that foreign direct investment should be in the IDA. We are a small island and need to bank our resources properly. Shannon will win because thousands of new aviation jobs will be created there. I have spoken to people in the aviation industry who are excited about what is happening. There is absolutely no reason Shannon cannot be a European centre of aviation excellence. I beg the Acting Chairman's indulgence.

I have other contributors, so the Senator will have to resume his seat.

I commend the Minister of State, Deputy Alan Kelly, on his tireless efforts in this regard.

I had the honour of being chairman of Fáilte Ireland for the north west from 2008 to 2010. I would like to be in that position still but because I was re-elected to this House, I had to relinquish the chairmanship of that organisation. One of the key elements of the development plan by Fáilte Ireland in the north west, in consultation with other tourism organisations in the west, was to improve access into the island of Ireland. That was the main focus. We dealt with Donegal airport and with our counterparts in Northern Ireland concerning Derry and Belfast. That necklace of airports included Donegal, Knock and Shannon. There was always a danger that it could develop into a war between Knock and Shannon airports, but they were seen to be complementary to each other. Shannon had a deserved history of developing transatlantic flights, as well as a fledgling aerospace industry which developed, and the industrial zone, all of which was absent in Knock.

Last week, Mr. Liam Scollan of Knock airport attended the Joint Committee on Transport and Communications, of which I am a member. He has voiced serious concerns on behalf of the airport's management about the business plan that has been put forward for decoupling Shannon. It is on that business plan that my colleagues, including Senator O'Sullivan and others, have been focusing. There is a genuine belief that, as it stands, this plan is risky. As Senator Ó Clochartaigh has said, one of the elements of that business plan, in terms of improving traffic numbers through Shannon, is to take back passengers that have been gained by Kerry and Knock airports.

The figure for passengers that Knock has put forward is in excess of 700,000, which it wants to grow to 1.5 million. The airport management believes it can realistically grow to at least 1 million over the next couple of years. The Shannon business plan is seeking to double passenger numbers as well. No more than with the property tax, is this the right time? It is not that Fianna Fáil is against the notion of decoupling, in principle. After all, it was the late and much lamented Seamus Brennan who introduced the primary legislation for decoupling Cork and Shannon from Dublin. I was in this House when he did it.

Two basic points need to be made. First, the Minister for Transport, Tourism and Sport, Deputy Varadkar, should attend this House to explain exactly what the aviation policy is within his Department into which Knock airport fits. Knock airport's management have said that in their discussions with the Department of Transport, the officials do not see it as a strategic airport. I do not understand that. Second, there are serous question marks about the future of the Dublin Airport Authority which are also inhibiting the orderly and successful development of an aviation policy in this country.

The Minister of State is very welcome. The development of Shannon Airport on its own has a good chance of winning, but only if everybody gets behind it. I have been in Ireland West Airport Knock on a number of occasions recently and was impressed by the way the people in the area got behind it. When Monsignor Horan started it, people said it would be very risky and would not succeed, but it succeeded because local people were behind it. The same thing can happen in Shannon, but only if the people get behind it. I was stunned and shaken by the figures provided by Senator Barrett, including the high costs of trying to run that airport. If it is going to work, it will be because everybody in that area, including those working in the airport, get behind it and show their enthusiasm for doing so.

I thank Senators for their contributions on this debate on the future of Shannon Airport. I am glad there has been so much interest in the debate as the airport is vital for the mid-west. As someone who comes from that region, I know that only too well. Even though I am a Tipperary man, I live quite close to the airport on the Clare border near Killaloe. I am therefore very passionate about the airport and have many friends who work there, as well as in Shannon Development and other related companies.

The days of political ambivalence towards the airport had to end. It had been left in that situation since 2004 and it needed to be addressed. The stranglehold over the airport by the DAA needed to end as well because it has to compete. One must remember that this airport is the lifeblood of a whole region. It has major assets which we need to leverage. This plan is about leveraging those collective assets into the future.

I wish to deal briefly with some of the comments Senators have made. A number of Senators referred to the issue of Aer Rianta International, but it was always the intention for ARI to stay with the DAA, even back in 2004 when the Act was passed under an Administration led by Senator O'Sullivan's party. The spokesperson here at the time, who is now Deputy Dooley, voted for it. It was always intended, therefore, that ARI would stay with the DAA. In short, the DAA's financial viability would be compromised if it did not. One must remember that €100 million is being written off Shannon Airport's debt. It is integral for balance sheet purposes that it stays there. I appreciate as much as any Member of the Oireachtas what ARI has achieved and the fantastic innovative thinking behind it.

Senators also referred to Knock airport, which should not be an either-or situation. It is about growing the total number of passengers collectively across the west and, dare I say, the mid-west. I think they should grow together. The airport has received substantial funding of up to €40 million in State aid, but that is sometimes forgotten by those who think this is an issue of competing to the detriment of Knock. Knock can do very well and I admire many of its achievements. By the way, there is no issue with State aid whatsoever regarding this move.

I know many of the workers in Shannon. In a previous life I used to work for Fáilte Ireland so I got to know many people both in Shannon Development and the airport. There are 254 workers in the airport and 109 in Shannon Development. It is guaranteed that they will transfer under the same terms and conditions. It was protected for the airport workers under the 2004 Act. It is important to ensure the ICTU has representation on the steering group and also on the board, which will be announced in due course.

The transfer of functions to Fáilte Ireland and Enterprise Ireland is a very positive step, which gets rid of many layers of bureaucracy. I am sure Senators would agree with me on that.

Passenger numbers have halved in the airport but we have ambitious targets - 1.5 million this year, 2.3 million in 2017 and 2.5 million in 2021.

I wish to point out that in the recent past, that is, in the few weeks since this proposal has been mooted and announced, a number of airlines, including United Airlines, Aer Lingus and others, have announced flights into Shannon, which I consider to be highly positive. This had no impact on Knock. I want this to continue and believe this measure will help it to do so. Ultimately, the Government wishes to create an international aviation services sector in Shannon that can generate new non-passenger revenue streams. This is what will ensure that the airport can work.

I ask the Minister of State to conclude.

The Government already has memorandums of understanding for 850 jobs and is considering the potential for 3,500 jobs. I do not envisage any Member of either House having an issue with that. This is about using Shannon's assets as leverage. Shannon is a unique airport with the longest runway in western Europe. It has preclearance and lands that simply are not available to any other airport in Europe and these advantages must be used as leverage. I ask Members to support this measure, which is a fantastic opportunity for the region. I am from the region and was deeply involved in setting up this process and strategy. It is a new dawn and a new future for an airport for which the worst thing the Government could have done would have been to do nothing.

Does Senator O'Sullivan intend to press the amendment?

Yes, I must do so in full support of Shannon Airport and the initiative.

Amendment put:
The Seanad divided: Tá, 13; Níl, 28.

  • Byrne, Thomas.
  • Cullinane, David.
  • Daly, Mark.
  • Leyden, Terry.
  • MacSharry, Marc.
  • Mooney, Paschal.
  • Ó Clochartaigh, Trevor.
  • Ó Murchú, Labhrás.
  • O'Brien, Darragh.
  • O'Sullivan, Ned.
  • Power, Averil.
  • Reilly, Kathryn.
  • Wilson, Diarmuid.

Níl

  • Bacik, Ivana.
  • Barrett, Sean D.
  • Bradford, Paul.
  • Brennan, Terry.
  • Burke, Colm.
  • Clune, Deirdre.
  • Coghlan, Paul.
  • Comiskey, Michael.
  • Conway, Martin.
  • Cummins, Maurice.
  • D'Arcy, Jim.
  • Gilroy, John.
  • Harte, Jimmy.
  • Hayden, Aideen.
  • Henry, Imelda.
  • Higgins, Lorraine.
  • Keane, Cáit.
  • Kelly, John.
  • Landy, Denis.
  • Moloney, Marie.
  • Moran, Mary.
  • Mulcahy, Tony.
  • Mullins, Michael.
  • Noone, Catherine.
  • O'Keeffe, Susan.
  • O'Neill, Pat.
  • Quinn, Feargal.
  • Sheahan, Tom.
Tellers: Tá, Senators Ned O'Sullivan and Diarmuid Wilson; Níl, Senators Paul Coghlan and Aideen Hayden..
Amendment declared lost.
Question put and declared carried.
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