Tá mé buíoch as ucht an deis seo a bheith agam labhairt sa Seanad ar an ócáid deireanach agus mé i mo bhall den Dáil seo. Tá súil agam a bheith ar ais go minic san chéad Dáil eile ag labhairt anseo mar Aire Rialtais.
I am going to break all conventional debating ground rules by starting with a string of negatives. First I am not anti-Aer Lingus. I fly no other airline where possible, I do so preferably from Shannon. Fianna Fáil founded Aer Lingus. Fianna Fáil sustained Aer Lingus. These are my roots. I will always be true to them. Second, I am not anti-Aer Lingus employees. For me employees are the company. That is why I always travel Aer Lingus. That is why most people travel Aer Lingus. We must build on that strength. Third, I did not advocate massive redundancies. I did the opposite. I told the board I want maximum employment compatible with a viable company. I also told the board that employment in Ireland is my first priority.
Fourth, I do not want to downsize Aer Lingus to an Aer Aran operation, and I told the board so. I told them to avail of new opportunities I have negotiated for them. I have consistently advocated joint ventures and marketing alliances. Fifth, I did not maintain the Shannon stop to damage Aer Lingus. Aer Lingus Central Representative Council, representing all Aer Lingus employees, the majority of them in Dublin, formally asked me to maintain the stop. So did SIPTU and ICTU.
Sixth, I am not forcing Aer Lingus to keep fares low for tourism purposes. On the contrary, I have spent months pleading with them to put up their fares. I want competitive fares, but I want more. I want sustainable services. Fares on Dublin/London are suicidal. I have spent months trying to get sanity into the market.
Finally, I am not ideologically opposed to equity investment in State bodies. I am not the Minister responsible for such investment, that is the Minister for Finance. He has said the Exchequer currently has no money. If the Exchequer had money I would advocate investment in Aer Lingus provided it made commercial sense. All parties in the Oireachtas accept this proviso, so do most sensible trade union leaders. I also have an open mind on outside equity in the company if that would help it.
I feel honour bound to stitch these facts into the record of the Oireachtas to counter the inaccurate leaks to media and to Aer Lingus employees. These malicious leaks are not only damaging the company they are also causing unnecessary anguish to employees of Aer Lingus.
Let me reiterate what I said in the Dáil. The company has problems but there are solutions. We will find them with the cooperation of Aer Lingus employees and the social partners.
Let us first not just look at the company's problems in an honest and open way but also keep them in perspective. Aer Lingus has financial difficulties. It has lost around £40 million on its air transport operations in each of the last two years and faces further losses of around £40 million in the current year. However, let us remember it is incurring these losses in a period of major recession. In the past, Aer Lingus has been able to absorb losses on its air transport operations with profits from ancillary activities. However, these have also been hard hit by recession and certain remedial action is called for there.
Furthermore, Aer Lingus is facing major changes in the international marketplace. Aer Lingus is facing intense competition both on its transatlantic services, from indirect services over London, and on all European routes. The Single Market conditions to apply in the EC From 1 January next will intensify competition further but it will also open new opportunities which Aer Lingus can and must avail of.
These problems are real but soluble provided action is taken now. I am satisfied that the board and management of Aer Lingus now recognise the scale of the task facing them. The board have promised me that towards the end of this month they will submit specific plans to deal with the situation. I will assess these and place them before Government.
The board and I accept that Aer Lingus' services must be profitable and its fares competitive, if the long term survival of the airline is to be assured. A viable and developmental Aer Lingus will need to urgently address costs and prices.
Aer Lingus need to take action to ensure that its costs are at least as good as, if not better than best industry practice. All costs must be critically examined and ways and means found of reducing them where necessary. If costs are not tackled, the consequences will be severe in the coming years.
Most commentators accept this. For example Deputy Garret FitzGerald, a well known supporter and a former employee of Aer Lingus, in The Irish Times last Saturday expressed particular concern about the level of increase in unit costs of maintenance, overhaul, passenger service and general overheads in recent years. Reducing costs in these areas needs to be addressed vigorously as a matter of urgency. I accept that not all Aer Lingus costs are within the airline's control. However, those which are must be tackled.
While costs are important, so too are prices charged or yields. Aer Lingus' long term interests are best served not only by competitive fares but also by economically sustainable fares which will provide the necessary resources for the long term development of the airline.
I have, for some time, been very concerned about the low level of fares charged by both Aer Lingus and Ryanair on the Dublin/London routes. You should all know my views that these fares are suicidal in the long term. I have, therefore, been calling for an increase in the lowest fares charged by both airlines. Aer Lingus is the predominant carrier on the Dublin/London routes. It has been given much greater freedom in its pricing policy on these routes in recent years. If Aer Lingus will not or cannot increase its income by higher fares as well as cutting costs, it must cut the level of its operations.
I hold these views strongly. However, I have not imposed them on Aer Lingus. There is a board in place to run the company. I have emphasised to the board that I want to see Aer Lingus retain the maximum employment possible consistent with commercial viability. This has been read in some quarters as placing Aer Lingus in an impossible position. On the one hand, it is forced to keep current employment levels while it is also expected to produce a profit. Let me clarify my position. I want to see all solutions examined and costed. The board can best judge its employment needs and how to meet them. However, I do not want Aer Lingus, as a first resort, laying-off staff to cut costs if there are other solutions.
It has been suggested by a leading trade union official, who should know better, that my policy is to downsize the airline, not true, simply not true. I hold the contrary view and told the Aer Lingus board so. I want a strong and vibrant Aer Lingus expanding into new markets. It has shown itself capable of doing so in the past. It can do so in future by being once again better than its competitors in the marketplace. This is the only way to long term survival.
I acknowledge that in the short term the airline may have to reduce frequencies on some services and cut out a number of its uneconomic services. However, I made it clear to the board that this is not to be the start of a general winding down of the airline. I specifically told them that the US experience of deregulation shows that downsizing the airline is not the solution. Let me reiterate my conviction that Aer Lingus can have a strong future if the right decisions are taken now in relation to improving competitiveness for the years ahead.
I would now like to address the thorny issue of equity. In a recent debate on Aer Lingus in Dáil Éireann, Deputies from all sides of the House agreed that there may be a case for funding provided there is a credible business plan for the company showing profit into the future. That proviso is very important. It must make commercial sense. Money is not free; equity cannot be either. We must get a return on it.
The Minister for Finance has already made clear on several occasions that the position of the Exchequer finances is such that the Government are not currently in a position to invest additional equity in semi-State companies, including Aer Lingus.
It was against that background that the Taoiseach spoke about Aer Lingus engaging in joint ventures or strategic alliances where future expansion of Aer Lingus might be funded in ways other than direct State equity. I expect the board to come up with its own views on this matter in the coming weeks.
Finally, I would like to set on the record as I did in Dáil Éireann, what the Government's air transport policy is. I want to do so to nail the lie that we do not have such a policy. We have an air transport policy which has been developed against the background of trends in the world economy in general and in world aviation in particular. As with all Government policies for other sectors, our primary objective for our aviation industry is job creation. We must be competitive in international markets if we are to achieve this objective.
Our approach to air transport policy is, and has been, based on this philosophy to prepare the Irish airline industry for the European Single Market conditions which will apply from 1 January 1993. My Department will then no longer have any control over the allocation of routes between carriers who meet certain criteria. We will also have no power to prevent any EC nationals from establishing an operation in Ireland.
We have been preparing for this eventuality by strengthening the Irish presence on existing air routes to and from Ireland and by opening new opportunities for our airlines to compete in international markets. I have done so through the negotiation of new and extensive bilateral agreements and, within these, the pursuit of fifth freedom rights to further widen access to markets for Irish airlines
Since assuming office, I have concluded six new bilateral agreements with Austria, Hungary, Belarus, Malaysia, Russia and Bulgaria. That is not a bad start for eight or nine months. In addition to route rights for the airline, I have personally instructed my officials to seek extra business opportunities across the whole range of activities that the Aer Lingus group are involved in. To this end, a senior Aer Lingus official is part of the Irish Government's negotiating team.
The second priority in our aviation policy has been to provide and develop top quality infrastructure for our airlines. We will continue to ensure that our airports are of the highest international standard and have the capacity needed to meet the growth in traffic arising from future economic growth.
We have backed this policy with resources. Substantial investment has been put into the State airports in recent years to enable them to keep pace with traffic growth. In the four years to the end of 1991, investment in infrastructural improvements amounted to £82 million. The projects funded in recent years included a new runway, a multi-storey car park and extension of the departures and arrivals levels at Dublin Airport. We also financed the extension of the terminal building and of the main runway at Cork Airport, and a new self-drive car park at Shannon Airport.
An additional £30 million Exchequer money has been invested in high technology radar and communications equipment which have revolutionsed Irish air traffic control systems. Irish controlled airspace is now among the most modern in Europe.
The continuing growth in traffic, particularly at Dublin Airport which is reaching capacity levels due to the success of our policies, will necessitate further substantial capital investment in infrastructure in the years immediately ahead. We will make that investment. We will provide over £138 million in the period up to 1996.
Projects planned at Dublin Airport include a major extension of the passenger terminal, construction of a new passenger handling pier and extension of the apron, as well as further phases of the multi-storey car park. Improvements to the passenger terminal at Shannon and further terminal expansion at Cork Airport are also planned.
I have emphasised the need for competitiveness. We have taken specific action on this front to ensure that our airports make a contribution. We have frozen airport charges at their current levels since 1 April 1987. This Government's policy is and has been to keep charges at the lowest possible levels for the main users, Aer Lingus and Ryanair, in the interests of low access transport costs for tourism and other economic development.
Apart from the State airport, the Government, in pursuit of their commitment to balanced regional developments, have also pursued an active policy of developing regional airports. The six regional airports at Waterford, Kerry, Carnmore, Connaught, Sligo and Carrickfin are operated by private limited companies. However, this Government have already invested a total of £14.2 million Exchequer moneys in the development of these airports.
In addition they have obtained from the EC Commission the resources for a capital development programme costing over £20 million. This programme which is funded jointly by the European Regional Development Fund and the airport companies is due for completion by the end of 1993.
In the time available to me, I would like to conclude with the reference to the final major component of the Government's aviation policy, this is to develop Ireland as a centre of excellence in aviation. Employment in aviation and in aviation related activities in Ireland has been buoyant and is expected to expand in the coming years.
The development of a world aviation park in the Shannon area has been a major factor in this success. This caters for industries involved in the manufacture, service and repair of aircraft, spares and components and also developments in relation to attracting additional aviation services from Eastern Europe. The aviation park has already got off to a good start and it is estimated that about 5,000 people will be employed in the aviation park by the end of the decade.
We also have the magnificent TEAM facilities at Dublin Airport. I have had the privilege of examining these personally in depth and comparing them with similar enterprises abroad. In my view the TEAM facilities and workplace are the best I have seen.
In conclusion, let me put unequivocally on the record of this House that I acknowledge the role played by Aer Lingus over the years in the development of Ireland's trade and tourism. I appreciate the contribution of its employees over the years in enabling the airline to fulfil that role. I recognise the serious financial difficulties currently facing Aer Lingus. It is a matter for the board in the first instance to determine the urgent remedial action necessary to restore the airline to profitability. I have asked them in doing so to take full account of the Government's objectives of job maintenance and job creation. We are living in difficult times. However, let me assure this House and the Irish people that this Government have a fully integrated and well thought out air transport policy to take Irish aviation through these difficulties. We can and we will take Aer Lingus through its difficulties also. We are determined to do so while maintaining employment in the airline at the maximum possible level, consistent with maintaining a viable commercial operation.
May I add it will be necessary for me to leave the House for approximately 20 minutes during the course of this debate, though no fault of my own? That is the slot I have on the Government motion in the other House. I will be back to reply.