Written Answers. - Aer Lingus.

Nora Owen


193 Mrs. Owen asked the Minister for Public Enterprise if she will report on all discussions she has had with the EU relating to Aer Lingus since the Council of Ministers meeting on 16 October 2001; and the further case she will make to the EU regarding Aer Lingus. [27426/01]

The Transport Council, at its meeting on 16 October, agreed a horizontal emergency aid package for all European airlines following the events of 11 September. This package essentially consisted of compensation for losses suffered by EU airlines as a result of the four day closure of US airspace from 11 September, coverage for insurance to end of the year and discretion for States to cover additional security costs. Since then, my Department has put arrangements in place in relation to the insurance cover. It has also written to Irish airlines outlining the basis for compensation for the four day closure of US airspace and the criteria to be used in applying for such compensation. Obviously, Aer Lingus will be a major beneficiary as it is the only Irish airline operating on the transatlantic route. However, such compensation will result in a relatively small amount of cash for Aer Lingus in the context of the current crisis.

In relation to security costs, my officials are in contact with Irish airport companies and airlines to establish the additional security costs attributable to the events of 11 September. I still believe that the compensation measures for all European airlines for the four day closure of US airspace is minimalist and insufficient, given the impact of the terrorist attacks, particularly when you take account of the US aid package. I am continuing to press for an extension of this measure and my officials have formally put the European Commission on notice that we will be making a strong case for the extension of this measure.

Deputies are aware, from my recent statements to the House, that the European Commission has been unyielding in its view that any State injection of funds into Aer Lingus would be in breach of the State aid rules. In any event, any such proposal would take a minimum of 12 months to be examined by the Commission. Notwithstanding this position of the Commission, my officials are reviewing all competition and State aid rules in consultation with the Attorney General's office.

As I advised the House on 23 October last, the Government has decided in principle that provided the survival plan is rapidly agreed and implemented in all its essential aspects, the Government will facilitate private sector interests in an investment in Aer Lingus in order to provide a source of funding to support the survival plan. The Government also decided that it should be open to the staff of Aer Lingus to invest further in the airline. My officials are urgently discussing with Aer Lingus management the process involved in implementing both aspects of this decision. Let there be no doubt about this Government's commitment to the survival of Aer Lingus with as many jobs as possible. I would urge all parties to work with me to ensure we reach that objective.

Liam Lawlor


194 Mr. Lawlor asked the Minister for Public Enterprise her views on the fact that internal air travel in the United States appears to be picking up; and if she will ensure that no precipitate action is taken so as to weaken Aer Lingus, thus making it impossible for it to quickly respond to changing circumstances in the transatlantic market. [27473/01]

Far from taking precipitate action, the absolute necessity is for rapid action so that the Aer Lingus survival plan is agreed between the management and staff of the airline by the end of this month. The Aer Lingus survival plan sets out to build a robust, flexible business model to ensure long-term viability by being able to compete successfully in a fundamentally changed marketplace. Its focus is to retain the premier business service together with a simplified economy/leisure product. This plan is the first vital step in securing the future of the company with as many jobs as possible. It will also provide a basis from which the company can grow in the future when markets improve.

Aer Lingus has responded to the fall-off in passenger numbers as a result of the events of 11 September by introducing fare sales to stimulate traffic on all its routes. There has been a substantial uptake of the reduced fares which has halted the rate of decline in passenger numbers. However, the average yield earned from these passengers is significantly below last years level.

Question No. 195 answered with Question No. 192.