Michael Noonan
Ceist:1 Mr. Noonan (Limerick East) asked the Minister for Transport, Energy and Communications the progress, if any, that has been made in renegotiating the bilateral air agreement with the USA.
Ceisteanna—Questions. Oral Answers. - Shannon Stop Policy.
Negotiations on an amendment to the Shannon stop policy as set out in the Ireland-US Air Transport Agreement were held in Washington on 27-29 September, when, following some progress, the talks were adjourned. Following the adjournment I visited Washington to meet the Secretary for Transportation, Mr. F. Pena, to impress upon him the political implications of achieving a successful amendment to the Shannon stop policy.
I am pleased to inform the House that following the resumption of talks on 27 October a satisfactory agreement was reached with the US. Under this agreement Irish or US carriers who operate direct services into Dublin must operate corresponding services into Shannon. A similar provision has been agreed for charter services which is broadly in line with the existing regulatory arrangements under which charter services only have to serve Shannon on one leg of a round trip. In return for these concessions the US were granted pick-up rights at Dublin to one point outside the EC.
Pending elaboration of a full text of the amendments in an exchange of diplomatic notes, it was agreed to give effect to the changes from the date of the signing of the Memorandum of Consultations, i.e., 28 October 1993.
(Limerick East): Will the Minister agree that he flew the white flag in Washington and that his capitulation to the Americans not only impacts on Shannon beyond that required under the Cahill plan but also casts doubt on the ability of Aer Lingus to compete competitively on the North Atlantic in the medium term?
If anyone was to put up the white flag if might be Deputy Noonan. It is important to point out that the dynamics of the situation have changed because there is, subject to staff approval, a negotiated settlement which changes the cost structure of the company. Considering the implications of an open skies policy on the Irish aviation industry, particularly Aer Lingus, it is wrong to suggest that this is not an excellent deal. An intrinsic part of the strategy, that is, a Shannon-based transatlantic fleet operated and managed from Shannon, is the availability of an amendment, the sixth change to the Shannon stop policy since its initiation. The position has been evolving down through the years and we now have the best possible deal, which will ensure a Shannon based fleet, operated and managed from Shannon, and the possibility of increased traffic through Shannon. I remind the Deputy that, prior to this strategy being adopted and Government decisions being taken, we were faced with a downward spiral in terms of traffic coming through Shannon. That position has changed dramatically and there is the prospect of a very economically run developmental transatlantic operation, based and managed in Shannon.
I appeal for brevity, for obvious reasons.
(Limerick East): Does the Minister not realise that the requirement of the Cahill plan was that one flight in three would go direct to Dublin whereas the Minister has now negotiated a position whereby one flight in two will go direct to Dublin? Why did he feel constrained to give this further concession to the Americans, beyond what was required in the Cahill plan?
A sell out.
It is very unfortunate that the Deputy does not see the pluses in this deal for Shannon and the Irish aviation industry generally. Under the old agreement, charters had to stop at Shannon on one leg of a return trip, either the outbound or in-bound leg. Under the revised agreement, they can still fly the routes as above and have to do so if they are operating one charter only. In addition, operators can now also fly direct to Dublin and back to the US, a round trip, but only if they do a similar round trip to Shannon, that is, US-Shannon-US. There is incremental traffic available on the charter side. If there is only one flight, there will be no change because of the requirement to stop at Shannon either on the way in or out of the country. In essence, the situation so far as charters are concerned is the same as under the old agreement — operators must match a flight to or from Shannon with a flight to or from Dublin, whether one way or return.
Some people have stated that the change will benefit charters to the detriment of scheduled traffic. The opposite will be the case. Up to now, charter services had an edge on scheduled services but now they must both operate under the same rules regarding the Shannon stop. There is no change in the position regarding charter flights to Cork and Knock airports. As under the old agreement, they do not have to stop at Shannon.
I suppose Farranfore will be next.
The Deputy may not intervene at this stage.
One must also make the basic point that Aer Lingus currently accounts for 70 per cent of the Atlantic traffic moving through Shannon Airport. In terms of expenditure, Aer Lingus pays out more than £22 million annually at Shannon and in 1992 Aer Lingus brought, directly into Shannon, 90,000 US-originating passengers who spent an estimated £40 million while in Ireland. The point I am making is that if there was no Aer Lingus there would be no Shannon. We now have the prospect of a viable Aer Lingus and an intrinsic part of that strategy is a developing Shannon.
Question No. 2, please.
(Limerick East): May I ask a final supplementary?
Sorry, Deputy, we have spent an inordinate amount of time on this question.
(Limerick East): With respect, a Cheann Comhairle, may I ask a final supplementary?
(Interruptions.)
I am proceeding to Question No. 2 in the name of the same Deputy.