Dáil Éireann díospóireacht -
Tuesday, 3 Mar 1959

Vol. 173 No. 3

Committee on Finance. - Vote 52—Aviation and Meteorological Services.

Minister for Industry and Commerce (Mr. S. Lemass)

I move—

That a supplementary sum not exceeding £10 be granted to defray the Charge which will come in course of payment during the year ending on the 31st day of March, 1959, for Aviation and Meteorological Services, including a Grant-in-Aid.

The first sub-head of the Supplementary Estimate provides for an additional sum of £67,000 for land acquisition for airport purposes. The second sub-head is a grant-in-aid for the Shannon Free Airport Development Company Limited. There will in fact be no increase in the net total of the Vote as the additional provisions can be offset by savings on other services and the surplus in the receipts appropriated to the Vote.

The additional amounts needed for land acquisition are £29,500 in respect of Dublin Airport, £27,000 in respect of Shannon Airport, and £10,500 in respect of Cork Airport. In the case of Dublin, it was expected that the bulk of the 282 acres of land which were being acquired would be transferred in the previous financial year, but owing to legal difficulties, only two holdings were in fact transferred in that year. The remainder of the lands, excluding one holding, will, it is expected, be transferred in the present year and will create an excess of about £29,500 in respect of these lands.

The lands to be acquired at Shannon Airport are expected to cost about £41,400. That sum is expected to be expended in the present year and will create an excess of about £27,000 over the amount originally voted in respect of these lands. The lands being acquired for Cork Airport will cost about £40,500 and will be paid for in the present year. There is an excess of about £10,500 in respect of that item.

With regard to the second item, when the Government decided to provide all facilities necessary to equip Shannon Airport to receive jet aircraft, they had under consideration also the taking of other measures which would ensure the fullest possible utilisation of the airport and the maintenance of employment there. It was felt that the advent of the new jet aircraft would tend to lower the level of transit activity at the airport, unless some positive steps were taken to promote the use of the airport otherwise than as a transit stop. With the view of securing new traffic, particular attention was paid to the possibility of developing air freight traffic at the airport. The desirability of increasing terminal passenger traffic in order to offset the expected contraction in the airport's transit traffic was also realised and it was felt that this might best be secured through promotional activities directed primarily at the North American tourist trade.

However, no suitable organisation for undertaking the work was in existence at that time. The work was of such a nature that it could not very well be discharged satisfactorily within the framework of departmental organisation; furthermore, there was no State or semi-State body which could be expected to undertake all the varied activities required.

It was decided, therefore, to entrust the responsibility for commercial development of the airport to the Comptroller of Sales and Catering. The House is aware that the comptroller was primarily responsible for the building up of the airport's restaurant and shopping services into the present major industry which employs about 600 persons. The comptroller agreed to accept these additional responsibilities, namely, the responsibility for the development of transit traffic, the development of tourist facilities at or near the airport in order to attract terminal traffic, and the active promotion of freight traffic at the airport.

In carrying out his new duties, the comptroller operated as the "Shannon Free Airport Development Authority" and he was authorised to spend up to £50,000 annually out of the revenues of the sales and catering service to meet the running expenses of the authority.

On a review of the initial working of the authority, it became clear that it would be necessary to give special attention to the promotion of freight traffic at the airport and that progress could also be made in the promotion of industries there. The encouragement of industries at the airport is a matter requiring special treatment. One of the steps deemed necessary is the provision of limited factory accommodation for renting in advance of actual demand. The provision of such accommodation is a matter for the development authority. For this reason, and from the experience which the authority have already acquired in negotiation with interested firms, it became obvious that it was necessary to give the authority legal status for the general conduct of its business and, in particular, for such matters as the leasing or the letting of factory premises, the acquisition of rights in physical assets, such as premises and equipment, and the making of contracts and agreements.

The Government, therefore, decided that the authority should be reconstituted as a limited liability company with the title "Shannon Free Airport Development Company Limited". That company has been incorporated and the Government have approved of the introduction, in due course, of legislation to provide capital for the company by enabling the Minister for Finance to subscribe for shares in it and to provide moneys annually by way of Grant-in-Aid to enable the company to perform its functions.

Negotiations which the company have in hand with prospective manufacturers have reached an advanced stage and it would be harmful to the whole development scheme if the provision of capital had to await the enactment of legislation. The Government have decided, therefore, that for the purpose of providing the company with capital, in advance of legislation, the name of the company should be added to the Schedule to the State Guarantees Act of 1954, so that the Minister for Finance may guarantee borrowings by the company. That is the purpose of the motion which I propose to move seeking the approval of the Oireachtas to the making of an Order under the State Guarantees Act to add the name of the company to the Schedule and so empower the company to borrow £200,000. It would be the intention of the company to use that money for the construction of factory space for letting at the airport.

When the legislation, which I have mentioned, comes before the House, it will be seen that provision is being made to ensure that capital subscribed by the Minister for Finance will be applied, in the first instance, to the repayment of any moneys which the company may borrow on foot of the guarantee under the State Guarantees Act. It will be clear, therefore, that the arrangement now being made is a purely provisional arrangement to ensure that the company will not be handicapped owing to lack of funds between now and the enactment of the legislation.

I should explain that the avoidance of delay in bringing into effect the plans of the company to promote activity at the airport is of special importance. The changes in the traffic pattern of air transport over the North Atlantic which are upon us indicate that the probability is that the transit traffic on which Shannon has heretofore depended for the bulk of its revenues may diminish, although, as Deputies will have noted from Press reports, Shannon has had the best year ever in 1958. It is clear that vigorous and prompt measures are necessary to ensure that the level of activity and the employment position at the airport will be maintained.

The purpose of the Supplementary Estimate is to provide the company with funds by way of a Grant-in-Aid to enable it to meet all administrative and general expenses, including, in suitable cases, grants for the construction of buildings and grants towards the provision of industrial plant and machinery.

It is proposed that, as the company supersedes and assumes all the responsibilities of the authority, all expenditure incurred on the service by both the authority and the new company to 31st March next should be met out of the Grant-in-Aid. Provision to meet the authority's expenditure was made in the Estimate for the year by way of a deduction of £50,000 from the receipts of the catering service. The receipts can now be surrendered in full without deduction thereby increasing the Appropriation-in-Aid by £50,000, which, of course, offsets the amount required for the Grant-in-Aid. To that extent, that part of the transaction is merely a matter of book-keeping.

I think I should assure the House that the establishment of this Shannon Free Airport Development Company will not result in any overlapping between the functions of the company and those of the Industrial Development Authority or of An Foras Tionscal. Very full consideration was given to all aspects of that question in consultation with these bodies and I am satisfied that industrial development at Shannon Airport will present very special problems with which neither An Foras Tionscal nor the I.D.A. is equipped to deal with adequately and for the satisfactory solution of which a special company, provided with sufficient powers, is required. There will, of course, be full consultation with and co-ordination between all those bodies in relation to industrial projects at the airport.

Mr. Cosgrave

The Minister's concluding remark that this was a provisional arrangement acted as a reassurance in relation to the procedure it is proposed to adopt in this connection. It will be generally agreed that any steps which can be taken to maintain employment at Shannon should be taken. For a great many years, it has been suggested that modem developments, particularly the introduction of jet aircraft, would militate against traffic at Shannon, since, as a result of increased power, aircraft would be in a position to overfly Shannon. That suggestion has been repeatedly canvassed in different quarters. Strangely enough, last year, as the Minister remarked, was a record year for Shannon. Nevertheless, it is fairly obvious that, with the introduction of jet aircraft over the Atlantic, there is a likelihood of Shannon being more frequently overflown in the future. It is, therefore, in the interests of all concerned that steps should be taken to provide employment for those whose positions may be jeopardised by modern air developments. It is only right that the House should know what arrangements will be made and what new industries are contemplated.

The Minister mentioned that it is not proposed to utilise the facilities provided by the State Guarantees Act, except as a provisional arrangement. I think that is satisfactory. I hope that the permanent legislation will be introduced shortly. It is undesirable that this arrangement should be used for any permanent scheme. Although there is provision in that Act that additional bodies may be added to it to which State guarantees attach, nevertheless, the terms of that Act were, in the main, drawn because of temporary arrangements that had to be made in certain special cases during the emergency or for particular short term arrangements in respect of cases such as occurred when supplies of commodities were short, or where steps had to be taken which required speed rather than the normal consideration which would be given to legislation.

I should, however, like to hear from the Minister what industries have been established and whether there are any similar industries in existence in other parts of the country. I should also like to know if duty-free facilities are essential in these cases. Can the Minister indicate what is the extent of the duty-free business other than that done by passengers either in transit or who embark at Shannon and who purchase commodities in the shop in the course of transit or embarkation? Also, can the Minister state whether there are separate companies or is this development entrusted entirely to one company —the Shannon Free Airport Development Company? Is it possible to segregate from the freight business done there business other than that confined to the shop and the sales available in the airport building?

So far as one can gather, the customs-free airport of itself has not attracted the business which was anticipated. On the other hand, the sales in the shop and the general business done there have increased greatly. It is important, I believe, that, unless the business depends on the free port facilities, consideration should be given to establishing industries adjacent to Shannon rather than in Shannon. It may well be that, no matter what efforts are made either by this company or by the State, with modern developments, unless the freight business depends either on raw materials which are imported and carried by aircraft or, alternatively, depends upon the special facilities available at the Airport, it might be wiser to consider directing the energies and the attention of the promoters to either Limerick or Ennis.

I mention that because I believe that unless the free airport facilities are essential or some special attributes exist there, either because of these facilities or, alternatively, because of the practicability of importing materials by air or exporting them, then, of itself, there are no special attractions or advantages in having an industry established at an airport. In the case of Shannon, it is quite some distance from sizable towns and other normal facilities which exist where industries may be established.

I want to reinforce what I said initially, that this procedure normally is not very satisfactory and I am glad the Minister has undertaken that permanent legislation will be introduced. It is satisfactory for temporary arrangements to meet the particular circumstances that have arisen.

The persons charged with the responsibility of running this development company have proved themselves competent to run the catering arrangements and generally run the shop and other facilities as well as the airport itself. It is imposing on them considerable responsibility to expect them to go further in establishing and maintaining industries which have probably nothing like the connection with an airport of which they themselves have special experience.

Mr. Norton

I regard this proposal by the Minister and the Supplementary Estimate as something in the nature of an exercise of casting our bread upon the waters in the hope that the process will pay dividends in the long run. I take it that we are discussing the Estimate with the motion?

An Leas-Cheann Comhairle

Yes.

Mr. Norton

But it would be quite futile for us to close our eyes to the fact that there are very definite and growing difficulties confronting Shannon. Some of these difficulties may be of a kind which we cannot control or circumvent, no matter how generous we may be towards Shannon or no matter how ingenious we may be in enacting legislation. I think—and I have expert authority for what I am saying—we are now going to have a substantial upswing in aircraft development. I think all the indications are in that direction.

The upswing may take two forms. One, which has already manifested itself, is the new jet and the other is a possibility of vertical landings by aircraft which may make landings an entirely different problem in the future from what they have been in the past and up to now. One thing is clear. The long-flying fast jet has already entered the arena of commercial aircraft and it is quite clear that an increasing number of these planes are coming on the market, offering such facilities for speedy transport as to make it almost impossible to refuse the invitation to travel by these planes because distances are almost annihilated by the power of the engines driving the planes.

I think therefore, that Shannon, no matter what we may do, will be compelled to face up to really serious problems. So far as I am personally concerned, I am in favour of facing up to those problems, but at the same time I am not in favour of minimising their seriousness or imagining that all we have to do is to make a little manoeuvre here and everything will be all right at Shannon.

Shannon Airport has been an excellent undertaking nationally. It has helped to establish Irish prestige throughout the world. In fact, people know where Shannon is who do not know where Dublin is. I talked with people throughout the world who know where Shannon is located, but who were not so clear whether Dublin is north, south, or in the centre. They are clear enough where Shannon is because they have experience of landing at Shannon in the course of flights between East and West and West and East.

As I said, Shannon carries a very substantial amount of State investment. It carries a considerable number of people on its payroll. People have built themselves into Shannon. Shannon represents permanent employment for many hundreds of workers. It represents in the area a very substantial national asset which should be safeguarded at all costs. I, therefore, look with sympathy and understanding upon the proposal to safeguard what we have invested at Shannon, and at the same time, to minimise the possible adverse repercussions on Shannon Airport which might be brought about by these developments in aeronautics.

The scheme of making Shannon a customs-free area is, I think, in the nature of giving hostages to fortune. I can understand a drive to locate industries at Shannon in order to take up a possible sag in landings there, in consequence of the advent of the new aircraft. I do not see the operation in any wider sense than that, because, for the purpose of producing goods here for sale on the export market, the whole country is a customs-free zone. At present, materials can be imported from anywhere in the world. They can be fabricated here and assembled here. That is permitted so long as they are exported from here. If the rest of the country has obvious attractions for the purposes of the export market it is difficult to see what Shannon has to offer in that field that the rest of the country has not got, so long as the aim of the new industry at Shannon, or elsewhere, is to set up an export market.

As I see it, you could probably justify it on the grounds that you have to endeavour to locate an industry at Shannon in order to take up a possible sag in employment there, but there is a lot to be said for not regarding the Shannon area alone as a possible location for industries which might, for a variety of reasons, thrive and be as good, or perhaps better, elsewhere. Nobody wants to live for ever at an airport. Nobody wants to have to travel 15 or 20 miles a day, every day, to and from work. Some of these attractions which are offered at Shannon could, in fact, be located elsewhere in circumstances which would obviate having to live at an airport or having to travel 20 miles to and from work each day.

I come back to the point that I recognise that Shannon may be up against very serious difficulties and these difficulties may justify doing something on that account which probably would not be justified if that problem were not there. I should like to know from the Minister who has to some extent surveyed the possibilities of Shannon Airport being overflown by jet aircraft, what is his estimate of the future use of Shannon by jet aircraft? As Minister for Industry and Commerce, I recognised that we were then faced with the possibility of these new jet aircraft overflying Shannon Airport and landing, perhaps, in London, or on the Continent of Europe, from which airports people could be shuttled to any place in Europe.

For that purpose, I instituted discussions between the Secretary of my Department and top people in the British, American and Canadian air companies, to ascertain what their intentions were. It was not possible at that time to ascertain their intentions but I was then in favour of extending the runways at Shannon in order to take this new type of aircraft, not that I had any definite reason for believing on the basis of assurances from the American companies, that they would land there, but at least to remove any excuse for not landing there, if that were offered as a reason for the overflying of Shannon by such aircraft.

The position has become clear since then. The jets are now in the sky. They are offering flights from London to New York in six and a quarter hours and it is quite clear they are going to beam their propaganda on the tourist who wants to get across the Atlantic in a short time, even though he has to pay, perhaps, something more for the trip in the fast travelling plane. I should like to ascertain from the Minister what are the possibilities that these new jet planes will land at Shannon. It is vital from our point of view to endeavour to get them to land there, because of the possibility of increasing use of that type of aircraft.

While you may sell second-class travel on a railway line which has all its wheels on the ground, it is questionable whether you can sell second-class travel on a plane, where the emphasis on safety is much greater than it is when deciding whether to travel first or second class in a train which has its wheels on the earth. Therefore every possible effort must be made to get these aircraft to land at Shannon, because in the course of time, the position may become still more difficult for us, unless perhaps public taste might turn to the attraction of using the slower jet or piston-driven aircraft at lower prices and that would necessitate the continued use of Shannon for that type of aircraft, but it is not the best or the safest bet. From our point of view, it would be better if we could manage to get the fast flying jet planes to use Shannon, now that facilities for landing, there have been made available or are being made available. There are some very obvious attractions in the high standard of catering at Shannon, plus the duty free airport, but even the duty free airport may not be left to us as an exclusive monopoly. Other airports are already using a duty free shop; other airports are advertising a duty free shop; other airports are endeavouring to arrange, where planes start from these airports, that passengers will have a long time to look around the duty free shops so that they may be attracted by the goods and the commodities displayed there.

I should like to know if, at this stage, the Minister could give us any more information on the subject of the utilisation of the airport at Shannon for the fast flying jets than we have had up to now. I appreciate his difficulties. I know how difficult it is to get precise information from companies which are concerned not with our economic welfare but with their own balance sheets, but it is a matter on which the Minister might do a good deal of good by taking the House into his confidence so far as possible to do so.

Another possible difficulty, too, in respect of Shannon is the future operation of aircraft across the Atlantic. I do not think we are very far from the day when there will be a merger of five or six companies which are at present using Shannon, or if not using Shannon regularly, are using the Atlantic route. One of these fine days, I think we will wake up to discover that five or six of those companies, now operating as separate companies, will have merged into one. Obviously, there are financial attractions in such a merger.

Mr. Dillon

That is, K.L.M., S.A.S. and those companies.

Mr. Norton

Including Air France, Lufthansa and Sabena. I think there are considerable opportunities for those companies in a merger of that kind. That again will have repercussions on us. If we were ever to get into such a merger and continue to use Shannon, of course we shall have to stay in the air between Shannon and the United States; otherwise we will have very little voice in the direction of a policy of a merger of that kind. I think such a merger is bound to come and I think it is going to bring consequences to Shannon in many directions. It is not wrong to think for a few minutes of the economies which could be effected by a merger, and to realise the possible repercussions.

That brings me to the last question I want to ask the Minister. I do not know if it is possible for him to give us the information, but I understand that the contract with the firm for the hire of the present Aerlínte aircraft on the Atlantic route will expire in about 12 or 18 months. I am not quite certain of the date, but already the question as to whether that agreement will be continued with the company at present operating, or whether we are to continue on the transatlantic air route is a question which must be under consideration at the moment.

In that connection, I should like to ask the Minister if, in order to hold our place on the Atlantic route, it is intended to buy these new jet aircraft instead of continuing to rely on the type of plane at present in use? I think everybody will agree that there is a very decided preference for jet aircraft and I do not know if the Minister feels we can withstand that criticism by using the existing type of aircraft on the Atlantic route. If the new fast-flying type of aircraft is to be purchased it is going to involve a very considerable sum of money, but it may be, in the long run, the best policy to spend that money at this stage rather than risk a sagging in our reputation by continuing to use the present type of plane. I should like to get information on these points. I do not know if the Minister can furnish it now or not, but we can get it at a later stage on the main Estimate.

Mr. Dillon

I hope I did not misinterpret the Minister when he said the State Guarantees Act Schedule is being applied to the Shannon Free Airport Development Company only until permanent legislation is introduced. May I ask him if he will indicate to the House that, when that is done, part of the permanent legislation will remove the Shannon Free Airport Development Company from the Schedule of the Act?

Any of us who have been in Government have known the anxieties that attend on the Minister for Industry and Commerce's deliberations—whoever he may be—in regard to the future of Shannon. I remember drawing down on my head, some 14 years ago, universal execration because I ventured to prognosticate that the future of Shannon was extremely precarious if energetic measures were not taken to gather into the airport all the large-scale facilities that, at that time, were available nowhere else in Europe. I do not know if the Minister remembers me pressing him on that point some 12 or 14 years ago. I foresaw a time in the reasonably early future, in which the facilities of Shannon Airport for transatlantic passenger craft would become supernumerary, owing to the improvements in the form of aeroplanes that would be available. I suggested that when it would be possible to travel from an airport in Europe to Idlewild, New York, in a matter of six hours, or to cross from Scandinavia across the North Pole to San Francisco in a very little longer period, the likelihood of passenger traffic using Shannon extensively would begin to recede, but there was a use for Shannon which, in my suggestion at that time, even in the event of jet aircraft materialising, could be developed. That was the transport of goods.

It does not matter how far jet development goes. I believe there will always be plenty of traffic for the less expensive form of transport than jet transport, for the relatively slow moving traffic of goods. If Shannon has a future, is is as an entrepôt distribution centre for goods to the Continent of Europe and, if we had got into that business energetically, some 12 or 14 years ago, and provided warehousing facility at Shannon, in all its various forms, for breaking bulk goods, I believe we would have a very considerable business there now, employing a very large number of persons, and with a degree of security which we can never hope to have in regard to passenger traffic in that centre.

I do not know if Deputies have forgotten the fact that Hamburg and Rotterdam on the Continent of Europe have become great ports as transit ports for goods. I do not know what advantage we are to confer on Shannon by making it a free port for the purposes of establishing factories there. As Deputy Norton pointed out, the whole of Ireland is a free port for the purposes of establishing factories for the export of manufactured goods, bringing in raw materials and exporting them after manufacture free of duty. It is true, of course, there is a good deal of administrative work, but there is an immense advantage in a free port, as an entrepôt depot, because there you can bring in any form of goods in bulk, break in bulk, and distribute them without going through the whole cumbersome procedure involved, if you bring them in within the tariff wall that surrounds this country.

In addition, and I do not profess to be an expert on transport matters, it is astonishing how specialised warehousing problems can become in regard to various types of merchandise that pass between the United States and the Continent of Europe, and how difficult it is for bulk exporters to find warehousing accommodation, which is essential for the safe conduct of their produce, at the existing air terminals in the world, especially where it is their intention to break bulk and redistribute from a point of contact with the European Continent.

I believe that the increased load capacity of a freight aircraft, which can make Shannon its terminus in preference to Paris, is a very considerable advantage for Shannon that could be exploited, but only where speed is not a primary consideration. But, if an air transport company can carry ten or 15 more tons of merchandise to a distribution point at Shannon, because it has to carry that much less petrol to come as far as Shannon than it could carry if its destination were Paris or Rome, it is a valuable natural advantage that Shannon has which could be exploited and one on which, I think, it is reasonable to hope that a permanent and valuable trade could be built up for that airport.

At present, that airport costs us between £200,000 and £250,000 a year to keep in being, and it is impossible to collect from the transit traffic fees sufficiently high to meet the full burden of that charge. I think I am right in saying the net cost, after crediting everything else to the Exchequer, is something between £200,000 and £250,000 a year.

I support what Deputy Norton has said. There are now a great many men employed there and there is a large investment involved. Anything, within reason, that can be done to preserve the investment already made ought to be done. I think we ought to try to make up our minds, as Deputy Norton suggested, to face the probable future honestly and courageously. None of us can foresee with certainty what will happen, but I think we should ask ourselves, if it is possible to fly to London from New York in six hours, or perhaps less, is it likely that you will get traffic for an aircraft that takes 12 hours to do the journey, more especially when at the present time, I understand the big jets are providing second-class accommodation at the tail and first-class at the top or vice versa and that for a large part of the year, jet liners, being so large, will not probably be fully occupied. That would suggest that sooner or later fares will be more competitive on jet planes in order to draw more traffic on them because if they have to fly at all, they might as well fly with a full load as half full.

If one can get a non-stop train, nobody will travel on one which stops en route. On the other hand, if you can transfer freight or goods cheaper and faster by using Shannon airport as an entrepôt or depot, we may develop a most valuable trade which no other country can take from us.

I should like to know from the Minister how far this development company he speaks of will cater for that and how far they will consult with the experts in this business as to the kind of warehouse facilities that would have to be provided, if this trade is to be adequately catered for—and we must cater for it before we get it. We cannot wait to provide facilities until the demand is made upon us. Our only hope of getting this trade is to make a gamble by providing facilities because it will be a very competitive struggle to get that trade into our hands.

I think the Minister would be justified in advising the Government to consult transport experts in America and elsewhere to find out what sort of facilities would attract trade and make the gamble of providing such facilities, in the full knowledge that we might fail to get the trade. I am thinking of such things as refrigeration and insulation and various other forms of unusual storage that cater for the highly specialised entrepôt trade I have in mind.

Finally, I would ask the Minister is he yet in a position to tell us what are the enterprises that we are to contemplate being set up at Shannon Airport? One never knows whether it is wise to ask these categorical questions in the Dáil or better to leave them unspoken, but if you do not ask them and get the information authoritatively stated, all sorts of fantastic rumours circulate; if you do ask for them, you are told: "Now, you have done great injury to some grand prospect that might have matured if nobody talked about it". In the long run, I believe it is best to get the truth.

Is it true that we are to manufacture bubble-gum? Is it true that we are to manufacture juke-boxes; and is it true that we are to make nine-pins there? If it is, if we can legitimately manufacture anything which would employ Irish labour and procure foreign currency, I would not have the slightest hesitation in embarking on it. Nor ought we to deride any enterprise which is of a legitimate character and calculated to employ labour, pay good wages and earn foreign currency. I am not in the least worried about the nature of the enterprises, provided they are legitimate, remunerative and calculated to give employment at a reasonable rate of wages, but I think it would be useful if the Minister would tell us what the present prospects are, so that incorrect rumours can be laid and legitimate hopes based on solid authoritative information.

Mr. O'Malley

I did not intend to speak, but I should like to stress, in regard to points raised by Deputy Dillon, that I think it is a very dangerous precedent to establish to give information to this House on any proposed industrial project. We know from experience that great damage has been done by facts being publicised in the past and I do not think the Minister for Industry and Commerce, particularly in these instances, should be requested to give details. Those of us who live in the area contiguous to Shannon Airport, Deputies on all sides, members of my Party as well as Deputies Russell and Carew, are united in this. We wish Shannon to prosper and I think we are all satisfied from our contacts with the people who have the duty of seeing that these projects will be a success that they have a very good chance of succeeding.

I am amazed that Deputy Dillon should be critical because 12 or 14 years ago facilities were not established at the airport for the provision of warehouse accommodation. Surely Deputy Dillon must have a very short memory, because it was he, in the first instance, who "wrote off" Shannon Airport completely and forecast that we would have a knitting factory for the rabbits running wild there. We do not have rabbits there at present, but we have chinchilla, which, I am glad to say, we are exporting even though in a very small way. I do not consider that chinchilla, or even the manufacture of bowling alleys, is the limit to which we can go. Those are two very minor projects, but I am satisfied, as are my fellow Deputies from the area on all sides of the House, that very big projects are being considered for the Shannon area.

I think it is fatal in dealing with the national economy or with any project of this nature to suggest that we must have an absolute guarantee that everything is cut and dried before we venture to risk any State backing for the project. Aviation is a most unpredictable business as we can see when we consider the trends it has taken through the years. I doubt if ten or 15 years ago anyone envisaged the time would come when transatlantic airliners would be flying the Atlantic in six hours or less. I do not think that even Sir Frank Whittle, when he invented the jet, in his wildest dreams envisaged that. The Government have faced up to their responsibilities in providing this jet runway at Shannon and I think it will be money well spent and that the soundness of the decision to spend it will be proved in the years to come, both from the point of view of the warehouse facilities that are to be provided and also from the tourist point of view.

Tourism does not come under discussion at present, but the two things are linked as both bring people into the airport and the contiguous area. If the State had not provided this jet runway, Ireland would definitely be by-passed. This is a most commendable project. To attract international operatives, we must make the facilities and the incentives more attractive than in other places in the world. It is an admitted fact that we are doing that. Anyone who studies civil aviation journals can learn of the high praise given to the Irish Government and the Minister for Industry and Commerce for their foresight in taking this step. It may be that in years to come other countries will copy us. It has happened with regard to the customs-free airport shop. Other airports have tried to cash in on that brilliant idea, but it is the people who are concerned in the initial venture, those who get in on the ground floor, who succeed in the long run.

Deputy Dillon mentioned—he did not stress the point very much, to give him his due; he must be hopeful about the outcome of all these projects—that Shannon Airport costs the State between £200,000 and £250,000. I am not aware if those figures are correct, but no one can discuss in terms of money the invaluable asset to this State constituted by the 1,800 employed in the airport. No one can assess in terms of money the value of our second biggest industry after agriculture, namely, tourism. I would ask Deputy Dillon: what would it cost the State for the payment of unemployment or social welfare benefits if those 1,800 workers and their families had to suffer as a result of unemployment?

I welcome this measure, and those who have the welfare of Shannon at heart welcome it. From what I know —and I know as much as any other member outside the Government—I think, and those on the Opposition Benches who live in the area will agree with me, that the greatest success will result from the efforts of the authorities in the customs-free airport. If there were less talk about what will happen to Shannon in the jet age and more enthusiasm and more co-operation towards seeing that the proposals of the Shannon Free Airport Authority are a success, I for one would not have any fears for the success of the venture.

Mr. S. Lemass

I was asked to express an opinion as to the extent to which companies operating on the North Atlantic air routes will utilise Shannon Airport in the jet age. I do not know that it is possible to give any confident opinion on that question at this time, but there are some observations which I think I could make. Passenger-carrying companies on the North Atlantic routes used Shannon Airport for two reasons: one, operational and the other, traffic. They used Shannon Airport when the limitations of their aircraft or other operational considerations made it necessary for them to do so, and they used Shannon Airport when there was a prospect of getting traffic on the routes to and from Shannon. It is reasonable to assume that, with the advent of the jets, the operational need to use Shannon Airport will diminish, although it is to be noted that the jets now in use have had frequent operational cause to come into Shannon during recent weeks, mainly because of adverse weather conditions in the places to which they were bound.

The extent to which these companies will be inclined to continue to operate services scheduled to stop at Shannon because of the traffic potential there is difficult to estimate. It is probably true to say that the terminal traffic at Shannon, the number of passengers embarking and disembarking there in this year, will not fall very far short of the total number of passengers who used Shannon ten years ago, and the purely commercial considerations that will determine the policy of the companies in regard to the use of Shannon will be based upon their estimate of what the volume of traffic is likely to be. All the experts anticipate that the number of people flying across the Atlantic will increase each year, and if we assume that the proportion of them starting or terminating their journeys in Ireland will be the same each year, then we also can expect a corresponding expansion in the terminal traffic at Shannon. What the influence of that may be on the policies of the companies, I cannot say.

Apart, however, from the scheduled services operating on the North Atlantic routes, there is a great and indeed increasing volume of business in servicing charter planes. The charter traffic across the Atlantic has been quite considerable and it is certainly likely to be many years before jet aircraft are utilised on that charter work. Again, the volume of that traffic depends upon a number of considerations not all of which it is possible to calculate.

As regards freight business, the potentialities there must be considerable. We are only at the beginning of the air freight age. I have often argued here that it is certain that, as the years go on, more and more freight will tend to travel by air where there is any commercial advantage in doing so. We are anticipating that development at Shannon. At the present time arrangements have been made with Seaboard and Western, which is the only American company licensed to operate an all-freight service across the Atlantic, to centre their maintenance business at Shannon, and a hangar is now being erected there for the purpose of servicing their aircraft. Heretofore, there was no aircraft hangar at Shannon. In addition, a transit shed is being erected to facilitate growing business in freight and new freight handling facilities are being installed.

There is not much point in guessing what the future of Shannon may be. So far as the Government are concerned, we have taken the decision to provide at Shannon the runway facilities and the air navigational aids which the jet aircraft require. We are providing the freight handling facilities which will enable the airport to cater for a growing volume of freight business and we have set up this development company to promote all forms of activity at Shannon. It is possible that, by improving the facilities there, particularly the attractions of the duty-free shop, air companies operating the North Atlantic route may find that some of their passengers may prefer to be routed on flights which stop at Shannon, in which case they will certainly seek to meet the wishes of their customers in that regard and it is certainly reasonable to anticipate an increase in terminal business. One of the activities of this company will be directed towards extending tourist traffic through the airport. That can be done, first of all, by the promotion of package deals, which is the term now used—that is, holidays in Ireland involving air transport to Shannon, where the customer pays the all-in cost in one sum—and also by improving, of course, the holiday amenities in the vicinity of Shannon and in the West of Ireland generally. Indeed the Chairman of this Shannon Airport Development Company is also at present Chairman of An Bord Fáilte. Therefore, in so far as the development of the North American tourist traffic is concerned, there is an assurance of complete co-ordination of activities between Bord Fáilte Éireann and the Shannon Development Authority.

Arrangements which are being made to facilitate freight business will help Shannon to attract a growing share of that business. At the present time, it cannot be said to be very considerable in actual tonnage, but it is notable that the freight coming into Shannon in transit is, nevertheless, more substantial than the freight coming into Shannon on terminal flights. Certainly, the freight operators on the Atlantic are abundantly confident of a very substantial continuing increase in transatlantic freight business in the years ahead. The development of the industrial estate at Shannon should help the growth of freight business.

Deputy Cosgrave asked me what type of companies are being established there. Apart from mentioning any names, I can say that the Shannon Development Company are in negotiation with a large number of companies. The procedure is that, when they have made their arrangements and agreements with these companies, the question of a licence to operate at Shannon, under the Act which we passed last year, arises. I have decided to utilise the Industrial Development Authority as my adviser in regard to the issuing of such licences. That procedure ensures that there will be no possibility of conflicting projects being developed—one by the Shannon Development Authority and another by the Industrial Development Authority. On receipt of a favourable report of the Industrial Development Authority, I will issue a licence. It will be appreciated that some of these discussions which have been proceeding between the Shannon Free Airport Development Authority and individual concerns have had to mark time, until the authority was converted into a limited company which could enter into binding agreements, and until it got the necessary authority—which it will have from this Vote—to commit itself to the definite expenditure which will be involved in some instances.

I found the members of that company, when I met them recently, quite confident that they could promote a substantial degree of industrial activity there. The type of industrial activity which they are trying to encourage is that which involves the utilisation of air transportation. Indeed, I consider that, under the Act which we passed last year, there is an obligation on me, before issuing a licence to any company to operate there, to satisfy myself that it is a type of development suitable for the airport in the sense that air transportation is likely to be utilised, as well as the obligation of seeing that the development will not prejudice the interests of any existing firm in any other part of the country.

Deputy Cosgrave asked to what extent the existence of duty-free facilities at the airport was important in that industrial promotion campaign. It is not easy to answer that. It is true, as Deputy Norton said, that almost equivalent facilities can be given in any part of the country and, indeed, it seems clear that the main attraction— apart from the tax concession for which we legislated a few months ago —is the availability of these air transport facilities on a very substantial scale, on a scale which is hardly reproduced at any other airport, where connections across the Atlantic to termini in Europe or U.S.A. for freight business are available daily. It is true that, in one instance, a company which came here with the intention of establishing an undertaking at Shannon Airport decided on reconsideration to establish the undertaking elsewhere in the country, having come to the opinion, apparently, that the facilities available at the airport were outweighed by the facilities available elsewhere. The belief is, however, that when the factory accommodation is provided—and there is none there at the moment—it will all be utilised and that some quite important industries are likely to be located there.

Deputy Norton asked if I could give some indication of the future intention regarding the Aerlínte services. It is not easy to do that. As he assumed, this is under very active consideration at the moment, but all the factors which have to be taken into account have not yet been ascertained. No one knows, for example, what the economics of jet operation are. The companies which are operating the jet aircraft hardly know that themselves; they have not been in the business of jet operation very long; and whatever they do know they are not telling. There is a general assumption that jet planes are an economic proposition, but that has yet to be proved. It was only in the past few days that the International Air Transport Association came to a decision on a differential in fares between jet aircraft and propeller aircraft; and I have not even yet secured the opinion of the Aerlínte management as to the effect they think that decision of the international organisation is likely to have on the traffic available for either type of operation. Clearly, we will have to take decisions fairly soon; but, having regard to the importance of the decisions, we would not like to do so until we are clearly satisfied that we have all the information we should have.

Deputy Norton said that we are now in the beginning of a new technical development in regard to transatlantic air operations. That is true; but it would be wrong to assume that developments of that kind are occurring year after year. The amount of money which is invested in a transatlantic aeroplane is very considerable; and no company will invest money in such a plane without having a reasonable assurance that it will be able to use it, that it will not become obsolete, for the period of years required to depreciate it. Air companies generally, I think, try to depreciate their equipment every ten years. The effect of that in this very important commercial undertaking means that changes in the technical design of aircraft generally come over ten-year periods. When the Aerlínte project was first mooted in 1947 and the decision then taken to buy the Super Constellation aircraft, there was a great volume of expert advice that no major development in aircraft design or performance was likely to occur over ten years which would make those aircraft obsolete during that period. The same considerations which led us then to take the decision to acquire them were affecting the policies of all the companies operating on the North Atlantic.

Many of the aircraft which have been used on the North Atlantic have not been fully depreciated. There are some companies which have been getting deliveries of new propeller aircraft in the past couple of months and the need to recover the capital they invested in them will be a very important factor in their decisions as to how they will operate their services in the North Atlantic in the years immediately ahead of us.

Similarly, at the present time, the main volume of expert opinion appears to be that the jet aircraft as it is now coming off the production lines of the various manufacturers is more or less stabilised for a period of maybe ten years. Technically, they say it is possible to build aircraft that will travel three times the speed of sound; technically, it is possible to build aircraft which will take off vertically; but, at the present stage of development, these futuristic types are completely uneconomic, so uneconomic that no company would entertain for a moment the idea of acquiring aircraft capable of these performances and, indeed, it is quite certain that the very competent individuals controlling the destinies of these vast air corporations are not committing themselves to the purchase of the type of aircraft now coming into use without being reasonably certain that they will have the necessary ten years in which to depreciate them. Consequently, we can make our decisions, when we have to make them, reasonably satisfied in our own minds that we are in for another eight or ten year period of reasonable stability in aircraft types.

Deputy Dillon appears to be under some misunderstanding regarding the financial results of the operation of Shannon Airport. Shannon Airport is now earning revenue which is substantially in excess of its outgoings. No doubt, if one were to prepare a balance sheet of the traditional type, with provision for depreciation of the assets, a book-keeping deficit would be thrown up, but even that deficit would be substantially less than the figure which the Deputy quoted. However, we can be reasonably satisfied with the present situation in which this surplus of income over outgoings is being realised.

Shannon Airport is the largest single employer of industrial labour in the West of Ireland and, whatever arguments might be advanced regarding the future pattern of air transport development, as far as we are concerned, the existence of the airport is a fact that we must always keep in our minds when making our calculations and, in so far as there has grown up around that airport a social situation which is dependent upon the availability of employment there, we have the obligation of ensuring that the level of employment will be at least maintained, if not increased. We assume that in the circumstances ahead it may not be possible to maintain that employment solely on airport operations and, therefore, the decision has been taken to supplement the sources of employment by the development of an industrial estate in the vicinity of the airport. It may well be that the success of that operation will increase employment there. I hope it will have that result. Indeed, already, we have had to give some consideration to housing problems arising in that connection and amongst the activities of the new company will be the development of a housing estate there for the convenience of the executives of the new industrial concerns. I think discussions with the local authorities will be necessary in regard to the housing needs of their staffs. It is clear that every development of that kind will make more secure the whole organisation established there and that it will tend to grow of its own dynamism into something still more substantial in the future.

When I met the board of this new company, I gave them my views as to how they should operate and as to the circumstances against which they had to make their plans. I also expressed to them the idea that if, in fact, they did succeed in the industrial sector of their operations, it could well be that they would have brought to our attention a device, an instrument, a method of procedure which might be applied with equal success in handling some economic or social problems that may arise from time to time in other parts of the country. Therefore, I think we can encourage this company to go ahead, with our good wishes for their success, success far exceeding, if possible, the immediate object of maintaining the level of activity generally in the airport area. I was very much encouraged by the competence, the enthusiasm, the energy which the company have shown up to date and I am quite certain that it is bound to pay off in substantial results.

Mr. McQuillan

May I ask one question? May I take it from the Minister's concluding statement that if the new company in Shannon prove successful with regard to industrial development, it is quite possible that the Minister will consider the setting up of similar companies to handle social and economic problems in other areas in the West?

Mr. S. Lemass

I said that it would bring to our notice a method that might be employed in certain circumstances.

Vote put and agreed to.

Progress reported; Committee to sit again.