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Seanad Éireann díospóireacht -
Tuesday, 13 May 2014

State Airports (Shannon Group) Bill 2014: Second Stage

Question proposed: "That the Bill be now read a Second Time."

I thank the House for giving me the opportunity to introduce the State Airports (Shannon Group) Bill 2014. When we last had a debate about Shannon Airport in this House in December 2012, I was about to make the order that would trigger the separation of Shannon Airport from the Dublin Airport Authority, DAA. Separation took effect on 31 December that year when responsibility for the ownership, management and operation of the airport passed to the Shannon Airport Authority. I will reflect on the performance of the independent Shannon Airport but separation of the airport was just one part of a two-step process designed to deliver a new future for the airport. The second part is the subject of the Bill, the main purpose of which is to establish a new commercial State company, Shannon Group plc, which will incorporate both the Shannon Airport Authority and its nextdoor neighbour, Shannon Development.

The establishment of the Shannon Group will complete the foundations to support a new future for Shannon Airport and the mid-west region as envisaged in the report presented by the Shannon aviation business development task force in November 2012. In that report the task force was satisfied that an independent Shannon Airport, coupled with a restructured Shannon Development, could develop and grow passenger traffic and the route network. It also anticipated that it could create new employment opportunities in aviation-related services in and around the airport. It pointed to the opportunities to develop and grow an internationally recognised centre for aviation services at Shannon. This could draw on its geographical location, good airfield facilities and ample adjacent land. It also has an existing foothold in aircraft leasing and maintenance operations, with a skilled English speaking workforce and US pre-clearance facilities.

When we separated Shannon Development from the DAA, the first priority for the independent airport authority was to halt as quickly as possible the dramatic and constant prevailing downward slide in passenger traffic in the previous five years. A decline on the scale suffered at Shannon - the airport had lost two thirds of its passengers between 2006 and 2012 - was always going to be challenging to address. However, the outturn for last year of 1.4 million passengers marginally exceeded the outturn in 2012 of 1.39 million.

This reversal of the serious slide of previous years was a major achievement for Shannon in its first year as an independent airport and is a tribute to its board, headed by Ms Rose Hynes, and to the management and all the staff. With new routes operational and increased capacity on existing services, Shannon is now looking forward to new and sustainable growth. A renewed energy is evident at the airport.

I will now turn to Shannon Development. The Government decided two years ago to restructure this company. Its functions in respect of indigenous enterprises and foreign direct investment were to transfer to Enterprise Ireland and IDA Ireland, respectively, and its tourism functions were to transfer to Fáilte Ireland. The main benefits of this restructuring included the streamlining of Shannon Development's activities, the elimination of duplication of work by public bodies in the region and a more focussed role for the remaining part of Shannon Development, namely, managing and developing its property portfolio including the Shannon Free Zone adjacent to the airport. That restructuring is complete. It was accompanied by significant staff transfers to the national tourism and enterprise development agencies and redeployments to other public bodies in the Limerick-Shannon area. That exercise was assisted by an independent facilitation process which addressed staff concerns and concluded in May last year. A voluntary redundancy scheme was also successfully implemented in Shannon Development under which 25 staff elected to leave the organisation. Approximately 20 staff remain in Shannon Development, which will become part of Shannon Group under the Bill.

Shannon Heritage is a stand-alone and successful subsidiary of Shannon Development and is unaffected by these changes. The Government decided some time ago that Shannon Heritage will remain within Shannon Group pending a review of its most appropriate permanent location. Considerable attention was given to the optimum legal structure for the merger of Shannon Airport Authority with Shannon Development. A number of different options were considered and my Department and the Department of Jobs, Enterprise and Innovation worked closely with the Office of the Attorney General in this regard and we thank her and her staff for their assistance.

Shannon Group will be the parent or holding company for SAA and the restructured Shannon Development. Under this legislation, it will acquire all the shares of these two companies from the Minister for Public Expenditure and Reform. Both will maintain their separate legal identities as wholly-owned subsidiaries of Shannon Group. In the new scenario, the restructured Shannon Development, which will be renamed Shannon Commercial Enterprises Limited, will have a commercial remit. This structure has a number of advantages. Keeping the businesses of Shannon Development and SAA separate from each other will impose financial discipline on each of them and ensure both will pursue a commercial ethos. The success of Shannon Group will be enhanced by ensuring that its two main subsidiaries are each commercially successful in their own right. This structure will also facilitate greater transparency in the application of state aid rules by Shannon Group and its subsidiaries. Any business arrangements between them will be on a commercial basis and will involve no cross-subsidisation of operations at the airport.

In the case of the SAA, the proposed structure avoids another transfer of staff from the airport authority into another company. When Shannon gained its independence from the DAA less than 18 months ago, all staff working in the airport were transferred from the employment of the Dublin Airport Authority to that of the SAA. Despite the protections for those transferring staff which were contained in the 2004 State Airports Act and in the TUPE regulations, their union representatives expressed serious unease and reservations at the time about the transfer to the new employer. It proved a considerable burden for management in the SAA to assuage those concerns as well as dealing with all of the administrative issues involved. While the transfer went smoothly on that occasion, there is some merit for all concerned in avoiding yet another staff transfer for those employed by the SAA.

Similarly, the staff that manage and deal with the property portfolio in Shannon Development will also remain in that company. The Government's objective in creating Shannon Group is to bring a unification of purpose to the two separate companies for the overall benefit of the business. This will also have indirect positive impacts for the Limerick-Shannon area and the wider region, including the western region. As well as promoting a greater commonality of purpose, the new company will maximise the synergies between the SAA and Shannon Development to promote the development and expansion of the aviation services centre in and around the airport, that is, the delivery of an international centre for aviation services with potential for new job creation as reported on by the Shannon task force. This will be greatly facilitated by the fact that the Shannon free zone lands are adjacent to the airport itself. However, this advantage of physical proximity needs a new dynamism to carry through on the potential of the Shannon campus. On my own behalf and that of the Minister for Jobs, Enterprise and Innovation, I acknowledge the contribution of the chairmen, directors, management and staff of Shannon Development and Shannon Airport in the past two years in ensuring the smooth operation of the companies while working together to prepare for the establishment of Shannon Group.

I know that the pioneering spirit of the people who gave us the airport and the Shannon free zone concept has been rekindled and there is now an exciting opportunity to exploit to ensure a brighter future for the airport and the region.

While the central aim of the Bill is to provide for the establishment of Shannon Group, there are some other important elements in the Bill that I want to mention, including the adoption of the Alternative A insolvency regime under Cape Town convention. This Bill will provide for implementation in this country of the special insolvency regime applicable to aircraft that is set out in the Cape Town convention. Through enactment of the International Interests in Mobile Equipment (Cape Town Convention) Act 2005, Ireland was among the first countries to ratify this convention. The Cape Town convention provides an international legal framework for the financing of high-value moveable or mobile assets such as aircraft, trains and satellites. The convention has no meaning or effect unless and until a protocol is agreed and comes into force for each of the asset types covered by the convention. To date, only one protocol, the aircraft protocol, is operational. The 2005 Act also gave effect to the protocol in national law. Essentially, the convention and protocol provide protection for creditors of aircraft assets in countries that have signed up to the convention.

Ireland has always punched above its weight in the aviation sector and this sector is growing rapidly on a global basis. We have a particularly strong foothold in the aircraft leasing business, with nine of the top ten global leasing companies located in Ireland. It is estimated that an average of 1,350 new aircraft of 100 seats or more will be delivered each year up to 2030 and that the commercial aircraft market will have annual funding needs of over €100 billion in the coming years.

About 40% of world's fleet is currently on lease, and this share is expected to grow to at least 50% over the coming decade. Clearly, we are in a good position to capitalise on the opportunities that will arise in this area in the coming years, to strengthen our position as a leading global centre for the aircraft leasing industry and to develop aviation finance in Ireland. Increasingly, airlines and leasing companies are looking to the capital markets for their funding needs. A particular form of debt financing for aircraft that emerged in the US in the 1990s is enhanced equipment trust certificates, EETCs. These are essentially bonds, an aviation-specific form of asset-backed security, where the secured asset is the aircraft itself. One of the factors underpinning the success of these bonds in the US is the assurance under the US bankruptcy code that, in the event of bankruptcy or insolvency of the airline, creditors can repossess the collateral aircraft within 60 days. This has proved popular for both airlines and investors in the United States as it reduces the risk to investors and facilitates higher ratings from credit rating agencies for these financial instruments. The reduced risk and higher credit rating has resulted in substantial interest cost savings for airlines and lessors.

The Alternative A insolvency regime for aircraft assets under the Cape Town convention and protocol essentially replicates the insolvency regime in the United States, where EETCs have been successfully issued since the 1990s. It is a matter for individual countries to specify the waiting period following which, if a default is not rectified, the creditor is entitled to automatic repossession of the aircraft. The vast majority of countries that have adopted the Alternative A regime have opted to replicate the 60-day period applicable in the US and, under this Bill, we are also proposing to adopt a waiting period of 60 days. Adoption of this Alternative A insolvency regime for aircraft will support the development of aviation finance in Ireland and help maintain Ireland's leading global position in aircraft leasing. It will ensure our leasing companies and airlines will have access to international capital at competitive rates. There is already growing competition in this market from other jurisdictions that have adopted the equivalent of Alternative A.

An exemption from stamp duty was provided by the Minister for Finance in the Finance Act 2013 to facilitate the successful issuance of EETCs in Ireland and make this form of financing more attractive to investors. Together with the proposed implementation of the Alternative A insolvency regime, these measures will enable airlines and leasing companies to access more competitive finance terms and will help sustain and develop the leasing and aviation finance sectors in Ireland.

I also want to make special mention of section 33 of the Bill, which provides for an amendment to the existing statutory provisions governing superannuation schemes in State airport authorities. It will facilitate changes by the trustee to the Irish airlines (general employees) superannuation scheme, which I will refer to as the IAS scheme. This scheme dates from the 1950s and is a multi-employer scheme covering the majority of employees, pensioners and deferred pensioners in the State airports and Aer Lingus.

It also covers some of those who worked for SR Technics before it closed its operations at Dublin Airport in 2009. All issues concerning the IAS scheme, such as its rules, provisions, contribution rates and benefits, are matters for the trustees of the scheme, its members, its participating employers and the national regulator of occupational pension schemes, the Pensions Authority. I do not control the scheme and I cannot impose or prescribe a solution for its problems, but I can help and I am doing so through the expert panel, which I will discuss later in this speech.

Some 69% of the approximately 14,800 members of the IAS scheme work or worked for Aer Lingus, 26% of them work or worked for the Dublin Airport Authority or the Shannon Airport Authority, and 5% of them worked for SR Technics. The members of the scheme are split almost equally into three groups: current employees, known as active members; pensioners; and deferred pensioners - those who have left the company but are not yet drawing on their pensions. The scheme is closed to new members, such as newer staff who started to work for these companies in recent years. Under the IAS scheme, fixed contributions are payable by employers and members regardless of the scheme's funding position. The benefits and contributions are defined in the scheme's rules. The scheme is registered and operated as a defined benefit scheme under Pensions Authority criteria due to the benefits it seeks to provide. It is accounted for as a defined contribution scheme by the sponsoring employers due to the fixed funding covenant.

In March 2013, the IAS scheme reported a deficit on the statutory minimum funding standard basis of €769 million. The priority position of pensioners under the Pensions Act 1990 - prior to the amendments made in the Social Welfare and Pensions (No. 2) Act 2013 - means the residual funds that would be available for active and deferred members in the event of a wind-up of the scheme would be approximately 5% of their benefit expectations. Clearly, this is not an acceptable position. Employers and unions held extensive negotiations under the auspices of the Labour Relations Commission and the Labour Court on the way forward. This ultimately led to the Labour Court recommendations of May 2013. The trustees of the IAS scheme issued fresh proposals to the employers and unions in February of this year. Those proposals include a number of benefit reductions which would affect existing active members and deferred members, as well as pensions which are already being drawn down. The latter approach is permitted under the Social Welfare and Pensions (No. 2) Act 2013. These proposals are the subject of ongoing discussions. The trustees have asked that the positions of deferred members and pensioners be taken into account in those discussions.

As Senators will be aware, an expert panel was appointed in March 2014 following consultations between my Department and the Department of Jobs, Enterprise and Innovation with the Irish Business and Employers Confederation and the Irish Congress of Trade Unions. The panel was asked to carry out an investigation of how a final resolution of the industrial relations issues relating to the IAS scheme can be secured. It has held a series of meetings with all relevant parties, including the Dublin Airport Authority, the Shannon Airport Authority, Aer Lingus, the trade unions and representatives of deferred members and pensioners. It has identified a number of critical issues that it believes should be jointly explored to deepen its understanding of the scope for progress between the parties. Intensive discussions on these issues are ongoing. The panel will issue a further report at the end of this month. It is important that these discussions and deliberations be allowed to proceed in a calm atmosphere so that a resolution to this long-standing and complex issue can be found. I hope the parties reach agreement on the way forward. If this happens, it will be important for the necessary tools to be in place ensure their proposals can be implemented.

The amendments contained in section 33 of this Bill are designed to facilitate the implementation of any proposals that emerge from the negotiations that are under way to resolve the IAS scheme difficulties. I am certainly not pre-empting or anticipating what those solutions might be. These amendments are not intended to undermine the terms and conditions of employment of staff. I will take Senators through section 33 in detail on Committee Stage. In summary, provision is being made for employees, if they wish to do so, to cease making contributions to the IAS scheme when they become a member of another scheme. It is a bone of contention among some employees who are members of the IAS scheme that they must continue to contribute to the scheme even though, given the substantial deficit in the scheme, any such contributions may accrue little benefit for them in the future. However, this will not solve the problems in the IAS scheme, which still must be addressed by the parties. Provision is also being made for new pension schemes to be established, with ministerial approval, that do not have to replicate the inflexibilities of the IAS scheme. This will ensure that if the parties agree that a new pension scheme should form part of the solution to the problems in the IAS scheme, the legislative tools are in place to establish such a scheme.

Clarification is being provided of the powers of the trustee of the IAS scheme, particularly in the context of ensuring an agreement among the parties on the way forward can be implemented. Also, in a situation where, despite the best efforts of the parties, it ultimately proves impossible for the parties to reach agreementon how to deal with the problems in the IAS scheme, provision is being made for an orderly break up of the scheme among the different employers.

With regard to the latter, I have no doubt that all the parties engaged in the current discussions will do their best to find solutions to the problems in the IAS scheme. I am absolutely sure they are all serious and genuine in their approach and determination to find compromises that will have general acceptability. However, we also need to prepare for the possibility that compromise may not be attainable. In such a scenario, the only likely alternative would be a direction from the Pensions Authority to the trustees to wind up the scheme as clearly a continuation of the scheme with an unresolved substantial deficit is not tenable. Rather than have the IAS scheme wound up, the provisions in the Bill will allow the employers to take their members out of the scheme and each can negotiate directly with their staff representatives on a solution without the multi-employer constraint and inflexibilities inherent in the scheme. It is far more preferable that the current discussions should succeed in finding an agreement that will be sustainable into the future. I hope all the parties involved will continue to put all their efforts into finding the most feasible and equitable solution to the matter in a timely manner.

I will now outline the main provisions of the Bill. The main purpose of the Bill is to establish the new commercial State company, the Shannon Group, and transfer to it ownership of the SAA and Shannon Development from the Minister for Public Expenditure and Reform.

Part 1 has five sections that deal with the Bill's Title and collective citation, definitions, expenses, the making of orders and repeals. These are standard sections in a Bill of this nature.

Part 2 relates to the Shannon Group. It is a key part of the Bill and provides for the establishment of the Shannon Group as a public limited company under the Companies Acts, the issuing of 38,100 shares in the company to the Minister for Public Expenditure and Reform and the issuing of one share, to be held in trust by the Minister, to each of the subscribers to the memorandum of association of the company. These are standard minimum requirements for a public limited company under the Companies Acts. The citizens of the country will be the ultimate owners of the new company. Section 9 provides for the payment of dividends to the Minister for Public Expenditure and Reform and for such dividends to be disposed of for the benefit of the Exchequer and society at large.

The rest of Part 2 sets down the purpose, functions and general duties of the Shannon Group and provides power for the company to borrow, subject to ministerial consent. An aggregate borrowing ceiling of €100 million for the group and its subsidiaries is specified in section 13, but it can be varied subsequently, if necessary and justified, by ministerial order.

Part 3 deals with the administration of the Shannon Group and corporate governance arrangements. The board of the company will have ten members, including the chairman, the chief executive and two employee representatives. The chief executive of the group will also be appointed as chief executive of each of its two main subsidiaries, the SAA and Shannon Development. Initially, it means that the current CEO of the SAA and Shannon Development, Mr. Neil Pakey, will be the first CEO of the Shannon Group.

On staffing matters, provisions are made in section 18 which confirm the transfer of ownership of the SAA and Shannon Development to the Shannon Group and that it will not operate in a way that will worsen the conditions of service or remuneration of staff currently working in these two bodies.

With regard to section 20, I took on board a suggestion made by the Oireachtas Joint Committee on Transport and Communications when it looked at the heads of the Bill, that the members of the board of any subsidiary of Shannon Group should be appointed by the group board rather than solely by the chairman. However, subject to notifying the Shannon Group board, the Minister of the day may specify any subsidiary for which he or she wishes his or her consent to be obtained for board appointments.

Sections 21 and 22 provide for the reporting arrangements for the Shannon Group.

Provision is made in section 23 for a pension scheme in the Shannon Group. Any such scheme will be subject to approval by the Minister, with the consent of the Minister for Public Expenditure and Reform. Standard provisions regarding the conduct of directors and employees of the Shannon Group and its subsidiaries are also included in Part 3, as is a power for the Minister to issue directions and guidelines to the company.

Part 4 contains only two sections, the key one being section 28 which provides that, following the establishment of the Shannon Group, all shares held by, or on behalf of, the Minister for Public Expenditure and Reform in the SAA and Shannon Development will be transferred to the Shannon Group. The SAA and Shannon Development will then be wholly owned subsidiaries of the Shannon Group.

Simultaneously with this transfer of ownership, the existing boards of SAA and Shannon Development will be dissolved. This will allow the board of Shannon Group to make appointments to the boards of these subsidiaries under section 20, which I referred to a moment ago.

Part 5 relates to the restructuring of airport companies and contains a number of provisions that are relevant to the State airports. Section 30 provides for the dissolution of Cork Airport Authority plc. However, the section also provides the power to reincorporate that authority again at a later date. Essentially, the provisions in the State Airports Act 2004, which would facilitate the separation of Cork Airport from the DAA, if such a decision is made, are being preserved. Cork Airport Authority plc was incorporated in 2004 with the intention by the then Government of moving relatively quickly to the separation of Cork Airport from the DAA. However, that never happened and it was never envisaged that the company would remain in existence for a decade without the airport being separated from DAA. The board of Cork Airport Authority has existed only in skeleton form for some time. Even in the period before that, when a board was in place, there were significant corporate governance concerns on the part of directors about being on a board in such circumstances. Fulfilling the normal expectations of the board of a public limited company is difficult, particularly given the statutory and fiduciary duties and obligations on it. I am therefore taking the opportunity provided by this Bill to bring this abnormal situation to an end while preserving the power for the Minister to incorporate the company again at a future date.

I am conscious of the importance of Cork Airport in the context of the social and economic development of the city and the wider Cork region, including its importance for tourism. That is why DAA has established a new high level stakeholder body, the Cork Airport Development Council, CADC, to boost the development of the airport. The council held its first meeting in March this year. The CADC, which is chaired by DAA chairman Pádraig Ó Ríordáin, will provide a forum for stakeholders, including senior representatives from the tourism and business sectors, who have an interest in the development of Cork Airport to engage with management at the airport and to help contribute to traffic and route growth.

Section 31 provides for the renaming of Dublin Airport Authority as "daa". The company has a strong preference to change its current name to the acronymic form, daa, and to cease all references to Dublin Airport Authority. However, each of its two airports at Dublin and Cork will be branded separately. Over the past ten years, the name "daa" has become embedded in public and corporate consciousness as the master brand for the group. The acronym, daa, is already used extensively across infrastructure, systems and other assets.

Section 32 contains a series of technical amendments to existing airports legislation, in particular the Air Navigation and Transport (Amendment) Act 1998 and the State Airports Act 2004, which arise as a consequence of the renaming of Dublin Airport Authority, the dissolution of Cork Airport Authority and the power in section 30 referred to earlier to reincorporate CAA at a future date. I have outlined already the rationale for the provisions in section 33 dealing with amendments to existing legislative provisions governing superannuation arrangements in the State airport authorities and to facilitate amendments to the IAS pension scheme.

Part 6 of the Bill pertains to Shannon commercial enterprises and contains a number of miscellaneous provisions relating to Shannon Development. Section 34 provides for the renaming of the company's official title, Shannon Free Airport Development Company, SFADCo, as Shannon Commercial Enterprises Limited to reflect its future commercial focus. Allied with this new commercial focus, section 35 provides for the ending, on a phased basis over four years, of Shannon Development's exemption from corporation tax and it also removes the company's current exemption from capital gains tax. These types of exemption are only appropriate for non-commercial State bodies.

Section 34 provides for certain technical amendments to other legislation as a consequence of Shannon Development's future commercial remit. This section also removes Shannon Airport Authority and Shannon Development from the scope of worker participation legislation since these two companies will be subsidiaries of Shannon Group and, as I mentioned, I am providing for two employee representatives on the group board in primary legislation.

Section 37 provides discretionary power for the transfer of the Shannon customs free zone land from the Minister to Shannon Development. Since approximately 1959, the Shannon free zone lands have been leased to Shannon Development at nominal rent under long-term leases. When I published the general scheme of this Bill last year, the proposal was that these lands would be transferred to Shannon Development at no cost. It has since been clarified in conjunction with the Attorney General's office that, subject to further analysis, such a transfer for no consideration could constitute state aid. For this reason, section 37 provides discretion, not a commitment or an obligation, for the Minister to transfer the relevant land to Shannon Development.

This will provide time and space, following enactment of the Bill, for my Department to explore, in consultation with the Attorney General's office, options for the proposed land transfer which would be in compliance with state aid rules. The consequential amendment of the Customs Free Airport Act 1947 in section 38 will reflect the change in land ownership from the Minister to Shannon Development if, and when, the lands actually transfer. Sections 39 and 40 provide for the transfer to Enterprise Ireland of Shannon Development's equity holdings in businesses in the Shannon Free Zone and, similarly, for the transfer of any rights, duties and obligations relating to grants awarded or approved to either IDA Ireland or Enterprise Ireland. These equity holdings arose from Shannon Development's enterprise and support development remit for indigenous companies. These provisions follow-on from the restructuring last year of Shannon Development and the transfer of its non-commercial functions in respect of enterprise support to IDA Ireland and Enterprise Ireland. Provision is also made in section 41 for the transfer of Shannon Development's superannuation scheme, its liabilities, duties, obligations and funding, to the Minister for Jobs, Enterprise and Innovation.

This section also enables that Minister to appoint a specified agency of his Department to administer the pension scheme on his behalf. The provisions reflect an agreement between management and staff in Shannon Development, reached last year under the auspices of an independent facilitator, that the staff remaining in the restructured company, which number approximately 20, would maintain their public service pension scheme arrangements.

Part 7 contains a number of miscellaneous provisions relating to the airports.

Section 43 creates a new offence of dazzling, or attempting to dazzle, a pilot or air traffic controller. This is in response to incidents of lasers being shone at aircraft which could distract the pilot. Following consultation with the Department of Justice and Equality, this issue has been the subject of a joint approach by my Department and the Irish Aviation Authority to the Attorney General's office. The shining of lasers at aircraft is increasingly a problem at airports throughout the world. In 2013, the IAA received 281 reports of lasers being shone at aircraft operated by Irish airlines and more than half of those reports, 158 or 56%, related to incidents within Irish airspace. These incidents can affect safety and have potential to cause serious side-effects such as flash blindness and glare which can distract pilots and air traffic controllers. While, thankfully, there has never been an accident as a result of such irresponsible behaviour, it is in the public interest that it be an offence to use powerful lights to deliberately or recklessly dazzle or distract aircraft pilots and air traffic controllers. The section provides for penalties on summary conviction of a class A fine, namely, up to €5,000, or up to six months in jail or both or, on conviction on indictment, a fine of up to €250,000 for a corporation or €50,000 for an individual or jail for up to five years, or both. Section 44 provides for the updating of by-laws at airports in relation to the immobilisation, removal, detention, release or disposal of illegally parked vehicles.

Section 45 makes it a requirement to move a vehicle, when occupied, upon being asked to do so or, where such a vehicle is unoccupied, it provides power for the airport authority to move the vehicle. The section also provides for the costs associated with such removal to be borne by the owner or person in control of the vehicle. Section 46 is a standard provision which provides "authorised officers" and "authorised persons" with immunity in any proceedings relating to the exercise of their duties, subject to the court being satisfied that such exercise was carried out in good faith and on reasonable grounds.

Section 47 is a technical amendment updating the definitions of "authorised officers" and "authorised persons" to take account of the change of name of Dublin Airport Authority and the fact that Shannon Airport is now vested in the Shannon Airport Authority. Section 48 amends section 27 of the State Airports Act 2004 in respect of fixed payment notices at airports where offences under by-laws are alleged to have been committed and includes a new provision, section 27A, whereby the registered owner of a vehicle used in the commission of an alleged offence, if that owner was not using the vehicle at the material time, can declare who was using the vehicle. This is in line with the fixed charge provisions in the Road Traffic Acts.

Section 49 provides the Minister with the option - not an obligation - of approving appointments to the boards of subsidiaries of the airport authorities generally. Unless there is good reason for doing this. I believe the Minister of the day should not involve him or herself in appointments to the boards of subsidiaries of the airport authorities. This should be left to the main airport authority board. That was the position under the Air Navigation and Transport (Amendment) Act 1998 but an amendment introduced in paragraph 13 of the Schedule to the State Airports Act 2004 made prior ministerial consent for appointments to subsidiary boards obligatory in all cases.

I am, therefore, returning to the position under the original 1998 Act. Section 49(2) provides that no conflict of interest will arise for directors of subsidiary companies because of their relationship with the parent company. This is simply common sense. The issue has arisen at Dublin Airport Authority subsidiary board meetings and for clarity the company requested that it be put beyond doubt.

Part 8 relates to Article XI (Alternative A) of the Protocol to the Convention on International Interests in Mobile Equipment, the Cape Town Convention, on aircraft equipment. I have referred to the need for Ireland to adopt the Alternative A insolvency regime under the Cape Town Convention to support the development of aviation finance in Ireland and capitalise on the opportunities that will arise in this area in the coming years. Section 50 of this long Bill provides for the legal mechanism to do this by amending section 5 of the International Interests in Mobile Equipment (Cape Town Convention) Act 2005 to provide that the Government may make an order to implement this specific Alternative A insolvency regime. Subject to enactment, it is my intention to arrange for the Government to make the order under this section as soon as possible.

The final part of the Bill, Part 9, contains two related sections amending elements of the Transport (Tour Operators and Travel Agents) Act 1982 and the Package Holidays and Travel Trade Act 1995. Two aspects of the 1982 Act have been deemed by the European Commission to be incompatible with EU law - in particular, the statutory requirement for tour operators and travel agents wishing to sell their services in Ireland to be in possession of a valid licence from the Commission for Aviation Regulation and to lodge a bond as security against potential insolvency with the aviation commission. One difficulty posed by these provisions is that where travel businesses within the European Union meet the requirements of the member state in which they are established, we cannot impede their right to trade in Ireland by requiring them to meet additional requirements, such as licences and bonds. A reasoned opinion was received from the Commission in October last. We accepted the findings and undertook to the Commission to make the necessary statutory amendment at the earliest opportunity. I am taking this opportunity to do so.

Section 51 is intended to overcome these difficulties by making several amendments to the Transport (Tour Operators and Travel Agents) Act 1982 to clarify the position with regard to travel businesses established in another member state offering travel for sale from Ireland. Section 52 amends the Package Holidays and Travel Trade Act 1995 to bring penalties in line with the amended 1982 Act. Discussions are continuing with the European Commission to ensure that these amendments make our national laws regulating the travel trade compatible with the EU services Directive. I may propose a further amendments on Committee Stage following the conclusion of discussions with the Commission.

I believe this Bill will provide for a better structure for the State assets in Shannon. It will serve to promote renewed growth in passenger numbers at the airport and new job creation opportunities, particularly in the aviation sector. I commend the Bill to the House and look forward to comments from Members in the debate.

I thank the Minister for his detailed explanation of the Bill. The Minister is welcome to the House, as always. I intend to focus specifically on the pensions area, which is dealt with in section 33. My colleague, Senator Ned O'Sullivan, who is our transportation spokesperson, will deal with other elements of the Bill. I intend to have a more detailed discussion on the matter on Committee Stage and I will be tabling amendments specifically to set aside or amend section 33, which relates to superannuation schemes, and particularly section 32A of the 1998 Act.

When the Social Welfare and Pensions (No. 2) Bill was going through this House, I debated the Bill directly with the Minister's constituency colleague, the Minister for Social Protection, Deputy Joan Burton. The Government has been going through the process of teeing up the Irish airlines' superannuation scheme and other private pension schemes like it by way of removing fundamental pension rights.

As Minister for Transport, Tourism and Sport, the Minister has said time and again that he cannot get involved in the commercial running of a private company, nor should he. I happen to agree with the Minister on the matter. I will quote specific details presently, but what the Minister proposes to do in the new section 32A in respect of a private company's defined benefit pension scheme amounts to the most fundamental change to pension rights of any pension scheme in Ireland.

Before dealing with the details of the Bill, I have a question regarding the ongoing discussions to which the Minister referred that are being led by the expert panel. My colleagues, Senator Averil Power and Councillor David McGuinness, the latter a constituency colleague of the Minister, have met a number of people, including former Aer Lingus, SR Technics and Dublin Airport Authority employees, who do not have a seat at the table of the expert panel. That is a massive problem, particularly in respect of deferred members. We are talking about allowing scheme members and employers to transfer members into other schemes in a situation in which one third of the membership - nearly 5,000 members - do not have an employer per se and will, based on the current proposals, take nearly a 50% hit on what they expected to receive under a defined benefit compulsory pension scheme. People who had to join the scheme at age 20 and have paid into it ever since were aware of the difficulties with the scheme. However, deferred pensioners are arguing that they should have a seat at the table of the expert group, which is reporting to Laura Gallagher of KPMG. I am asking the Minister to re-examine this issue. Everybody realises that there is no magic bullet that will solve the deficit issue within the Irish airlines' superannuation scheme, but when one recalls the €1.5 billion of taxpayers' money that was given to AIB to recapitalise its scheme, there are questions that arise.

Returning to the Bill itself, section 32A(11)(b) of the 1998 Act, as inserted by section 33, provides that, "The consent of the members of a company or other employer participating in the IAS scheme or of any other person referred to in any provision of the IAS scheme shall not be required by the trustees for the exercise of the powers conferred on them by this subsection". That is a broad-reaching and very significant provision. While we all wish to see an agreement being reached, the Minister is bringing forward this Bill to facilitate a situation whereby there is no agreement. The subsection is premature and most unhelpful in bringing about an agreed solution among the people who have a stake in the IASS. While we do not intend to oppose the Bill on Second Stage, we will trenchantly oppose the changes the Minister is proposing to bring about with regard to the rights of pension scheme members in the IASS. What the Minister is effectively proposing is that if there is no agreement, any member of the scheme can be transferred to any other scheme or transferred out of the scheme and any rights they had as members will be set aside. This follows on directly from the Social Welfare and Pensions (No. 2) Bill 2013 introduced earlier this year, which I opposed.

I hope the Minister will, at the very least, set aside this subsection, allow negotiations to continue and ensure stakeholders have proper representation at the table. This is particularly important for deferred pensioners. I understand the Retired Aviation Staff Association has been unable to secure a meeting with the Minister. Has that situation been rectified? This is a private pension scheme and the Government, through the Minister, is introducing changes that will remove people's pension rights as members of the scheme. That has not been done in respect of any other defined benefit scheme in this country, but it is backed up by the provisions of the Social Welfare and Pensions (No. 2) Bill. This Government is allowing what is called a single insolvency - that is, the wind-down of an insolvent scheme that was flagged a number of years ago even though the company itself is solvent and profitable. That is what the passage of the Social Welfare and Pensions (No. 2) Bill allowed. We all understand that where a company is wound down and its pension scheme is in deficit, there has to be a winding down and splitting up of the scheme. However, that is not the situation here.

Thankfully, Aer Lingus remains profitable. However, the Minister is allowing it and the DAA to effectively run down the pension scheme. I remind the Minister that in the past and under successive Governments - I am not laying blame solely at the door of the current Administration in this regard - the scheme was used as an incentive to encourage people to retire early from Aer Lingus and the DAA. This was done by means of offering unco-ordinated early retirement. Actuarial reports, benefit statements and annual reports on the scheme indicate that no provision was made to cover the cost of early retirement, particularly that of an unco-ordinated nature, whereby social welfare was not deducted from people's pensions. Management at Aer Lingus used the scheme as a means of reducing the company's workforce. The existing members of the scheme, some of whom I have met, paid into it for 36 or 37 years and were expecting to receive reasonable pensions in return. However, they will now be obliged to contend with significant reductions to these pensions.

While we agree with most of what the Bill contains, I must point to the fact that the section which governs the issue to which I refer will effectively act as a Trojan horse. The Minister is stating he does not care whether anything is agreed at the negotiations which are taking place because the law will, subject to the Oireachtas passing the legislation before us, back him up. If the Bill is passed, what the 15,000 retired and deferred pensioners and current employees paying into the scheme have to say will not matter because the law will be on the side of the Minister. That is my fundamental concern about the section to which I refer. I intend to table specific amendments to it on Committee Stage and, in that context, will be interested to hear what the Minister has to say. Both politically and in the context of the way in which he manages his Department, it is most unhelpful for him to be seeking to have the section in question implemented in advance of the negotiations being concluded. There is no point in people negotiating because all the power will be vested in the company and the scheme trustees who, at the Minister's direction, will substantially reduce pension benefits into the future. That is a major concern for me and my colleagues. Perhaps the Minister might address the matter.

I welcome the Minister, Deputy Leo Varadkar, and the Bill. One of the most important aspects of the legislation is that it deals with Shannon Airport which, for whatever reason, was downgraded by successive Governments. When I was young, there were two main airports in the country. If one was flying transatlantic, one travelled via Shannon Airport. Likewise, if one was flying to England or elsewhere in Europe, one passed through Dublin Airport. In the past five years there was an alarming drop of 61% in the number of passengers flying into Shannon Airport. In the same period, the number flying into Dublin only fell by 19%. I accept that the withdrawal of the Heathrow Airport routes and the ending of the transatlantic stopover had an effect in this regard. Since the separation of the State airports into different entities, the Shannon Group has gained focus and there was an increase of 8% in numbers coming through Shannon Airport during the past year. It is welcome that the Heathrow Airport service has been reinstated and that Ryanair is operating out of the airport. There are also new transatlantic routes serviced by US carriers to Chicago and Philadelphia. In addition, Aer Lingus and Ryanair are offering flights from Shannon Airport to continental Europe. These are all welcome developments.

Shannon Airport is a catalyst for the mid-west. Let us consider the figures for the Shannon free zone which is divided into free zone east and free zone west. Shannon Development owns 50% of the free zone west and 10% of free zone east. Over 7,700 people are employed by 100 companies which operate in these zones and which generate over €600 million annually in the local economy. They make €3 billion in sales each year, some 90% of which are in the export market. The Bill before the House will ensure the Shannon Group's operations will be streamlined. This will be to the benefit of the mid-west which has been ignored because everything has been focused towards the capital city, Dublin. It is important that employment be retained in the mid-west.

There are approximately 40 companies in the Shannon free zone, one third of which are related to the aviation industry. Of the top 12 companies supplying aeroplanes, 11 operate out of Ireland currently. Therefore, it is important that this continues under the Cape Town convention and that this Bill puts this into practice to continue to support our economy.

Besides the companies in the free zone, Shannon Development has 54 businesses in the technological area across the region. The Minister mentioned Shannon Heritage, which will remain a separate company that will be concerned with visitor attractions and the like. Kilrush Creek Marina Limited is responsible for the promotion of the Kilrush marina. We also have the national technological park in Limerick, which is tied in with the University of Limerick through Enterprise Ireland and the private sector. Together, these are researching companies for the area.

The most damning issue for the Shannon Group was the report issued by Booz & Company, which stated:

The airport lacks sufficient integration with the surrounding industrial land bank, with current management having no function in developing alternative ventures within a mixed aero-industrial complex. On balance, and unless there is a change in strategic direction, we think there is good reason to believe that Shannon Airport will continue to require subsidies from the DAA, and that traffic will not recover to previous levels, at least in the short run.

This report was damning and the Minister and the Department acted on this when the report came through. We have seen what has happened. Shannon Airport has been separated from the DAA and we have already seen an increase in numbers because the Shannon Group has become more focused as a result.

I was amazed when I heard this Bill dealt with the issue of dazzling, in section 43. The Minister stated in his speech that there were 281 reports of lasers being shone at Irish aircraft in the past year and that 156 of these happened in Irish airspace. I know we cannot stop people doing this, but if we have penalties in place, we may be able to deter them.

It is welcome that the relevant bodies will deal with the pensions issue in the Labour Court. There will be significant discussion on this on Committee Stage, but it is important that the workers are taken care of in respect of their pension rights, through this Bill and through whatever agreement is made in the Labour Court.

I commend the Bill to the House and support the Minister on it. I believe it will help the mid-west become vibrant again and will support rural Ireland. There is much talk about development in rural Ireland, and Shannon Airport supports this. Rural Ireland is important in the context of employment, education and visitors, particularly in regard to helping the economy grow again. I thank the Minister for bringing the Bill to the House and offer our support for it.

I welcome the Minister and the Bill. Competing airports are a feature of modern aviation. Once we deregulated airlines, the deregulation of airports followed. I gather that it was stated in Westminster today that Gatwick and Heathrow will compete against each other in regard to where capacity in the south east of England should be installed. When they were both part of the British Airports Authority, this sort of competition did not take place.

I have been keen in my writings and research to try to release the competitive dynamic between airports that we have already seen between airlines. Therefore, I wish the project of the launch of Shannon as a separate airport and its enshrinement in this legislation well.

The briefing document prepared for us in the Oireachtas refers to the precipitous decline in business "as a result of the general economic downturn and other operational changes". As the Minister said, passenger traffic fell from 3.6 million at the peak to 1.4 million. There was also a sizeable increase in charges. I spoke to some of the airlines that left Shannon during the period in question and learned they believed the charges were excessive. That is a matter Shannon will have to address under its new regime. I might have some proposals later regarding that.

Shannon is located very close to Cork, which had 68% more passengers in 2012. There should be a Cork airport authority. I would give the airport its independence; it is bigger than Shannon. The whole emphasis, particularly in the Ryanair model, is such that airports that might previously have been regarded as very small are quite well able, on their own account, to look for business and attract passengers. Consider in this regard the national monopoly model that the British Airports Authority used to represent; it never achieved that, and I believe that is wrong. Airports should compete and not collude. I ask the Minister to think again about the possibility of giving Cork the same freedom as Shannon, given that it had 68% more passengers in 2012. It had 2.35 million as opposed 1.4 million in Shannon.

The Booz & Company report mentioned by Senator Pat O’Neill found that the operational cost at Shannon Airport, though reduced from historically high levels, remained relatively high. The Senator quoted a statement to the effect that Shannon Airport, unless something unforeseen happens, will continue to require subsidies from Dublin Airport Authority and that traffic will not return to previous levels, at least not in the short run. That is the challenge the Minister puts before everyone in the Shannon area, the new board and its staff. Studies show that when Shannon was regulated by the Commission for Aviation Regulation, it had serious problems.

In 1999, the IMG report stated that the operating cost per workload unit – a passenger or the equivalent amount of freight – in Shannon was €20.6 and that in Cork it was €8.2. Staff productivity at Shannon, according to the study, involved the handling of 3,591 passengers per employee per year, whereas the figure for Cork was 10,400.

Other productivity indicators are air traffic movement per runway and passenger revenue per square meter of terminal. We had a phase in Irish airports when the building of a new terminal was regarded as the goal, irrespective of whether anybody used it. Cork was particularly unlucky in that it opened a terminal just when business was going into decline.

The Commission for Aviation Regulation has a role in assisting airports in performing according to the efficiency indicators. We did not have a great record in Dublin either. It was a pity the powers of the regulator were virtually destroyed by the former Minister, Mr. Noel Dempsey, when he just ordered it to increase the charges by over 40% to pay for the second terminal. It is important not only to invest but also to ensure that assets in which an investment has been made are efficiently used. We still need to achieve this. The Booz & Company report makes that point.

The aviation finance and leasing sector is huge. The late Tony Ryan made Shannon the centre of it through GPA. I attended recently the Ireland-Mexico international trade conference and noted there is a very large business involving the leasing of aircraft to Mexico. The great tradition set up by Tony Ryan in Shannon can be developed and improved.

The Cape Town convention facilitates the leasing of aircraft. It is highly regarded and was referred to in very favourable terms at the Ireland-Mexico Chamber of Commerce seminar in the Conrad Hotel on Friday two weeks ago. It also deals with mobile assets. As I have previously mentioned to the Minister, I have received representations from the shipping industry in regard to whether, as this has been such a success in one area, the model could be followed in the shipping sector, which is another area in respect of which the Minister, Deputy Leo Varadkar, has responsibility. All of these are positive developments.

I understood that under insolvency law a person declared bankrupt or who is in arrangements with creditors was precluded from becoming a director. Are such persons barred from being on the board of Shannon Airport?

Ireland's success in aviation financing is well worth building on. I note there was some pressure to increase the borrowing limit beyond €100 million, but that what was provided for has been retained. I support that. Broadly speaking, this legislation is going in the right direction. I propose that we look again at what the Commission for Aviation Regulation can do to assist in ensuring that our airports are run efficiently. While the commissioner first had power over all three airports, this was later reduced to one and then none by virtue of the decision to go ahead with extra terminal capacity. There was evidence that Shannon had a productivity problem and that both Shannon and Cork Airports had invested excessively in infrastructure. The development of aviation finance is well worth proceeding with and the Cape Town convention is a model worth developing. I ask that the Minister consider whether it could be extended to cover the shipping sector.

I am pleased to endorse the Bill. What is provided for therein is the direction in which airports are going, in that instead of being part of a national airport they now compete. I wish Shannon and Cork airports the best of luck. I hope that Kerry and Knock airports also thrive in this new competitive environment.

Once again, my apologies for interrupting the Senator.

I welcome the Minister. I also welcome the substance of the Bill in relation to Shannon Airport and its continuing fortunes. It is worth repeating the credit given by the Minister to the management at the airport, who have reversed the decline of traffic at the airport, which for some years was an issue of great concern. The board, headed by Ms Rose Hynes, and the management and staff deserve credit for their efforts in developing Shannon and putting it back on the right path.

In terms of tourism and the efforts with regard to the Wild Atlantic Way, this is a good time to be talking about Shannon Airport and its tourism and business potential. While Shannon Airport does not automatically follow into the Wild Atlantic Way, bringing passengers to the heart of that area is very important. Every effort that can be made to build stronger tourism on the west coast is very welcome. As I have said previously in this House, the Wild Atlantic Way has been an inspiration in terms of marketing the west coast of Ireland. I believe this Bill will in its own small way support that, although I accept that is not the intention of the Bill.

Like Members opposite, I have concerns about the pensions aspect of this legislation. I have received representations from the deferred pensions committee, which is of the view that it has been left out of the negotiations and its rights are being thrown out the door. I hope the Minister, if he is in a position to make some observations today, will give them some reassurance in this matter.

I know that the negotiations are ongoing and that a panel has been set up. There is a view among the group of people - which is a substantial group - that they have been left out of the loop and, obviously, they are anxious about the potential outcome. Some of the language that they have used is quite alarming. It is a matter of whether they have used such language because they are out of the negotiating loop. Perhaps they have not been kept in the loop by their own side. Perhaps they feel that this is a moment that they need to raise their concerns with us and, therefore, with the Minister.
I do not have a huge amount to say. I take the opportunity to say the Yeats 2015 celebrations, as of today, have been approved by Cabinet and it would be remiss of me not to say so.
In terms of what happens in Shannon and on the west coast we are all linked. On a very small island like Ireland it is impossible to say that Shannon Airport is not relevant because it is and so is the aviation traffic that comes to Ireland. I hope that we will do our bit to encourage and support the Wild Atlantic Way. Of course, through the Yeats 2015 celebrations, we will talk to Shannon Airport during that time and see how we can connect with each other. We want to ensure the continued success of the Wild Atlantic Way.
I welcome the Bill. Even though it is not my particular area of specialisation I can see that it is good and that there is progress in the right direction. As my colleague said earlier, it is good for rural Ireland to see investment and growth, and particularly to have the business side of the area assisted by the growth of the airport.
Lastly, Senator Sean D. Barrett made reference to Cork Airport. I agree with him that it is a strong airport which has a good track record. I am sure that it is delighted to have been signed off in the legislation and that its development plan will grow as the years go by.

I welcome the Minister and, in general, give a broad welcome to the Bill. I find it regrettable that it must deal with the section 33 and superannuation situation. That fact makes it almost impossible for me to support the Bill without an amendment at least, as mentioned by my leader, Senator Darragh O'Brien. My colleague, Senator Averil Power, concurs but regrets that she could not attend because she is in a meeting with the Minister for Education and Science at the moment. However, she is very involved with the workforce and pension group concerned.

We seem to be jumping the gun a bit by debating the Bill today because the expert group is due to report later this month. It would have been nice to see what it had to say and whether progress was made. The pensions issue has generated an awful lot of industrial turmoil. I do not blame the Minister for that because the turmoil has its genesis in issues that long predate the drawing up of the Bill. Clearly, the matter must be dealt through the promulgation of the Bill. That is just one part of it. My side of the House will not be able to support it.

Shannon Airport, as said by Senator Pat O'Neill, is hugely important to the mid-west region. I live less than an hour's drive from the airport and can attest to the fact that it has been a driving force for industry, growth and movement in the mid-west region for all of our lives. Many of the hub industries have been a spin-off from Shannon Airport and they moved into Limerick and along the Shannon Estuary. Many of them would not have been possible were it not for a vibrant Shannon Airport. We, like everybody else, were distressed at the figures returning from Shannon Airport in the past five years when its passenger numbers were down by 61%, its business was going nowhere and a huge debt was created. Therefore, the development in the Bill and the unyoking from the Dublin Airport Authority is good for Shannon, and is welcome. I commend the Minister on doing so.

The period of nil growth and the depression in numbers was not unique to Shannon because Dublin and Cork Airports had the same experience. However, the problems were aggravated in Shannon Airport because we fell from a peak of 3.6 million passengers down to 1.3 million over a five-year period. The withdrawal of Ryanair for a period was a serious blow to the airport. Also, the removal of the compulsory stopover created great challenges that are now only being addressed.

The good news is that there was a small upturn in figures last year and the anticipated figures for 2014 are good as well. Therefore, I am happy to commend the board and its chairman, Rose Hynes, on what they have managed to do in a short period and look forward to their further successes.

The Bill terminates the existence of a number of entities, not quite terminates but changes them radically. Some of them had given very good service. In particular, and I shall be parochial, Shannon Development from the Kerry experience was very good. One rarely hears a public representative praising State agencies. However, I am from north Kerry and we had a great experience with Shannon Development. We found it to be hands on, comprised of excellent staff and it dealt particularly well in setting up small and medium sized enterprises. It was brilliant when it had the brief of tourism promotion that was taken from it after a while. We found it easy to deal with as opposed to IDA Ireland which has a bad name in my region because we never see them. I do not know how many potential industrialists were brought to north Kerry in the past couple of years. I can honestly say that we see Santa Claus more regularly and he only arrives once a year. That is a small bit of a problem. I hope that a hands on attention and engagement will not disappear now that we have the new entity of Shannon Group Plc because small can very often be beautiful.

I wish to mention one or two more minor issues. The Minister indicated that when the amalgamations, rationalisation or whatever one wants to call it was going ahead that staff were secure and redeployment would be a priority. Am I right or wrong in saying that this has not happened? I know that the vast majority of staff have been facilitated by being moved into the new organisation, IDA Ireland, local authorities or Fáilte Ireland. However, I have seen that there is a small number of people who remain in limbo and do not know what their jobs will be under the Bill. I ask him to look at the matter. The number concerned may be small but regardless a promise was made regarding their jobs.

My next question for the Minister is on property. Up to now the properties had been vested in Shannon Development, whose business it was to promote them. I refer to the huge land bank of 600 acres located on the southern banks of the Shannon estuary near Ballylongford that has been mooted as a site for a gas project.

Perhaps more particular to this debate, I wish to mention the Kerry Technology Park in Tralee. It has been a huge success and is a fantastic hub. It has led to many spin-offs that have resulted in the creation of many jobs under Shannon Development. I understand that the Institute of Technology Tralee shares a campus with Kerry Technological Park. ITT is greatly engaged and fused with it over the years and would be interested in taking over that side of things. The Minister for Education and Skills does not have a problem with the initiative. Perhaps the Minister present might expedite that matter.

I know that the Cathaoirleach is anxious for me to finish. However, Cork Airport seems to be the poor boy in this situation. The decoupling has suited Dublin and Shannon Airports. The Cork authority seems to be getting wound up. We have no date for a new one and know nothing about the budgetary inputs necessary to get Cork back to normal.

I agree with Senator Sean D. Barrett that Knock Airport, Kerry Airport and the small regional airports are equally important. They are especially important for tourism in both the counties of Mayo and Kerry and in the west and south-west regions. Let us not forget them either. I thank the Acting Chairman for his latitude.

The Minister is very welcome. The Bill is pertinent to the part of the country that I represent, County Clare. The Minister, although he represents himself, urban Ireland and Dublin, has shown a tremendous commitment to Shannon Airport. One would be forgiven for thinking that he possibly represents a constituency in the mid-west due to the significant commitment that he has shown to the region.

I shall reserve all my absences for the region.

He would be very welcome to the mid-west if he ever chooses to move there. Depending on next Friday's by-election results he may opt to do so.

That said, it is very welcome.

When the Government entered office, the situation at Shannon Airport was critical and matters could have gone either way. There was absolutely no direction on offer and what had obtained for almost a decade was decidedly lacklustre. Although there had been growth at the airport, it had been driven by the Celtic tiger and was not due to any focused business plan or determined strategy. It was more a result of luck than design. Until recently, the business cards of all senior and marketing managers at Shannon Airport who travelled abroad to negotiate with airlines listed their e-mail address as that of the Dublin Airport Authority. It was bizarre. All of the stakeholders in Shannon Airport - those involved in the tourism sector, local authorities, the chambers of commerce, etc. - wanted it to become independent and be free from that restriction. The Minister has responded to their concerns.

I accept that the strategies being pursued are risky. In that context, the best one can do is to try to ensure one minimises the risk by putting in place structures which incorporate checks and balances. Not only has the Minister given Shannon Airport its independence, he has also included Shannon Development in the equation. I agree with Senator Ned O'Sullivan that Shannon Development punched way above its weight for many years and was extremely successful. Unfortunately, in the past one or two decades the level of that success has waned significantly. It was bizarre - again, as a result of the Celtic tiger - that Shannon Development was able to offload property assets in order to keep the ship afloat. This was not how the State was supposed to be served by the company. The correct way to proceed is to bring the two together in the form of a single entity, while allowing them to maintain their separate identities. This will ensure one will not be obliged to feed the other. There is absolutely no point in having an airport that is losing money and obliging the development wing to subsidise it or vice versa.

Aviation policy as it affected the west was outlandish in the past. The then Government supported the development of airports in Donegal, Sligo, Mayo, Galway, Clare, Kerry, Cork and Waterford, despite the fact that it was possible to travel from one end of the country to the other in four or five hours. That just did not make sense. Of course, the politicians who represent these counties will fight to have their airports subvented, but we are obliged to take a national, holistic approach to the matter. It was difficult when the subsidies for Galway Airport, in a county adjacent to the one in which I live, were removed, but this was the correct thing to do. What we now have is a clear and coherent policy on aviation development on the west coast. It is focused on the centre of excellence which Shannon Airport has the potential to become. There are so many related aviation industries based in the Shannon area and the Minister outlined the potential in this regard in his comprehensive contribution. Nine of the ten aircraft leasing companies have bases in Ireland. There remains massive potential to drive economic development in the west through aviation and the Shannon Development wing of the new entity will have specific responsibility for driving it.

As opposed to aviation development, there is a need to seek to attract aviation industries from abroad. For example, no one in Europe is exploiting the huge potential in the dismantling of end-of-life aircraft and selling the spare parts. Shannon Airport has huge capacity in that regard.

I have not referred to what I term the "aviation omnibus" element of the legislation, whereby issues such as people shining lasers at aircraft at night, other health and safety aspects, the Cape Town convention, etc., are dealt with. The Minister is correct to take the opportunity to deal with these matters in this legislation. I have no doubt that the issue of pensions will resolve itself. I welcome this comprehensive legislation and look forward to steering it through the House.

In view of the fact that there is very little time left, I will be as brief as possible in order to allow Senator Kathryn Reilly to contribute.

The Senator is fine for time. The debate will be adjourned if it does not reach a conclusion today.

I welcome the Minister. I also welcome the Bill which is moving us in the right direction.

I visited Ireland West Airport Knock and it was a joy to witness the enthusiasm and pride of the people in the area who had come together to try to ensure the airport succeeded. If we can do the same at Shannon Airport, the same level of success will accrue. Shannon Airport is the right place in which to seek to progress so much development. For example, the aircraft leasing business to which Senator Sean D. Barrett and others referred will give rise to many opportunities. The late Tony Ryan first developed this concept in Ireland and I hope we will be able to develop it further into the future.

The Bill does not refer to subsidies for Shannon Airport or other airports. Will the Minister expand on this issue and comment on whether estimates have been made of how these will be reduced if the Shannon Group is a success? I presume there are some targets in place in reducing subsidies and I would be interested to hear more details if that is the case. In addition, how will the proposed new European Union rules to bring subsidies to an end affect regional airports here? Are these airports likely to suffer or even be forced to close as a result of the imposition of these rules?

Will the Minister also expand on the tourism targets? How many more passengers need to be brought through Shannon Airport in order to meet these targets and how many flights will there have to be? Some airports in other jurisdictions give specific subsidies to airlines to encourage them to offer services on certain routes. Given that the Shannon Group is commercial in nature, could it offer some incentive to new airlines to fly into Shannon Airport? For example, could it offer Chinese airlines a good incentive to start flying into the airport? Obviously, Ryanair and Aer Lingus cannot offer links to China but perhaps China Airlines might try out the connection if there was less risk involved for it. I am approaching this matter from a business perspective. What would happen if the new entity were to offer an incentive such as that to which I refer to an outside company? The benefits for the economy, the west and the country as a whole would be massive. I am not sure if this idea is viable, but if the Shannon Group is completely commercial, it must consider all options, including the one to which I refer, in order to give the economy a real boost.

Small airlines in Japan offer free flights to regional airports. This is another option which could be worth considering in order to get the ball rolling in encouraging people from abroad who would otherwise not fly into Shannon Airport or smaller airports to think about doing so. This could help to boost tourism in the region. Local communities in Japan have been encouraged to subsidise their airports in order to facilitate the free flights to which I refer.

I wonder whether we might do more in promoting Ireland's and Shannon Airport's aviation history. I would love to see the Air Corps' historic aeroplanes being put to better use. Instead, as is generally the case, of being locked away from the public at Baldonnell Airport, they and other old aircraft should be displayed at a new museum at Shannon Airport. A recent film showed some of the events in aviation history which occurred in Ireland. A museum such as that to which I refer would be a real attraction and could for a very small cost be an international draw. Shannon Airport would be the perfect location for it. As a customer, I would love that sort of museum to be established. All new ideas should be explored in the light of the revamp of Shannon Airport and the surrounding area.

I wish the Minister success with this legislation. I will be interested in his responses to the questions I have posed. We have all been approached about the pension scheme. I accept that this is an extremely difficult matter with which to deal, particularly, as is the case elsewhere, there is a shortage in the pension fund. Will the Minister allay the major concerns of those who paid into the scheme for many years and are worried about what will happen in the future?

I welcome the Minister and appreciate his work since he took office. A few of his achievements include the abolition of the travel tax, which has increased airline seat capacity to Ireland by millions; the rejuvenation of the tourism industry, thanks to the reduced VAT rate; The Gathering; and now the Wild Atlantic Way. The west has not gone without notice by the Minister. Last Friday, he and the Taoiseach officially turned the sod on the much-needed Gort-Tuam motorway. This is a huge €550 million project in respect of which 450 construction jobs are predicted. The motorway will be toll-free. The sod-turning happily ties into today's discussion in that the new motorway will allow for an excellent new means of access from Galway and the western seaboard to the revitalised Shannon Airport.

Only yesterday the independent Shannon Airport announced some impressive figures. The really significant news, however, is that the airport, thanks to the Minister, has severed its umbilical tie to the State's airport group and stopped the five-year decline in passenger numbers it had been experiencing. That is truly remarkable after only one year operating as an independent entity. The airport recorded a 140% increase in continental passenger numbers over the April period last year. American traffic has increased significantly. This increased traffic has considerable knock-on effects in the western region, both in commerce and tourism. Good news does not attract headlines, but the Minister for Transport, Tourism and Sport and the Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, are to be sincerely congratulated on this.

Has the Minister for Transport, Tourism and Sport carried out an impact assessment on the provision in the Bill relating to the Cape Town Convention? Is there any indication of what additional revenue to the State the change might bring about? What level of aviation debt issuance is predicted? Is the Department predicting new financing sources?

I very much welcome the Bill. The changing of legislation regarding the Cape Town Convention, the new M17–M18 motorway and the significant increase in passenger numbers in Shannon Airport comprise a very positive news story for the west.

I, too, welcome the Minister. On the face of it, this Bill would seem to be a fairly acceptable housekeeping exercise in order to streamline the operation of Shannon Airport and the various bodies charged with utilising the airport for the development of the Irish aviation industry and local region. From reading the Bill, I believe it is a Jack-of-all-trades Bill. We can see from the extensive eight-page speech the Minister gave that there is a lot contained in it. Like other Senators, I have concerns about the superannuation scheme and section 33. This section was mentioned in terms of the contact made with Senators by the deferred members committee of the IASS. I thank the committee for some of the assistance and information it provided. In the Minister's response later or on another date, perhaps he will deal with some of the issues raised by the committee and respond specifically to its concerns.

I will now deal with some of the points made by the committee, specifically in terms of section 33, which gives employers of the IASS the ability to transfer members to a new scheme without consultation. It empowers trustees to amend benefits and contributions. There is concern that this will affect 15,000 members of the scheme who, on average, have a pension of approximately €16,000. Under the terms of the Bill, the employers can direct members to transfer to a new scheme, and the trustees can determine how many are transferred.

Specifically, the areas of contention that the deferred members committee of the IASS raised in respect of section 33 concern the proposed paragraph 32A(11)(b) and subsection 32A(12). These should be read in light of the repealing of section 9 of the Aer Lingus Act 2004, which states that anyone transferring to another scheme could not have less favourable terms. It seems to the members of the committee and many others that, in three fell swoops, the Bill sets the IASS members up to be put into a new scheme with less favourable terms. Obviously, many issues arise in regard to this.

The Minister stated previously that he does not interfere in the running of private commercial companies, but he should realise there is concern in this case about the undermining of conditions for employees. The Minister's script states, "All issues concerning the IAS scheme such as the scheme's rules and provisions, the contribution rates, the benefits under the scheme, etc., are matters for the trustees of the scheme, its members and its participating employers and, of course, the Pensions Authority." He said he does not control the scheme and cannot impose or prescribe a solution for its problems. For this reason, I ask him to explain in a little more detail his position to the concerned groups who have contacted Members. It seems to them and many others from reading the section in question that it represents an attack on the rights of workers of a private company to their pension. Sinn Féin will seek to have this section deleted from the Bill on the next Stage.

Various Senators and the Minister have mentioned that the proposal is subject to ongoing discussions and that there is to be a further panel report later this month. He stated that it was important that the discussions and deliberations be allowed to proceed so a resolution can be found to this complex issue. Could any proposed changes not have been deferred until the issuing of the panel report and the finding of a resolution? Why make the provision at a sensitive time when talks are ongoing? These are just some of my concerns about the Bill.

Although the Minister spoke sensibly on section 33 in his speech, I had to outline the concerns that have been relayed to us. As I stated, we will be seeking an amendment on Committee Stage. The matter is of concern to many people.

Nobody else is offering to speak. According to the Order of Business, this debate is due to finish at 5.30 p.m. Therefore, the Minister has three minutes in which to conclude. Alternatively, we could suspend at 5.30 p.m. and he could complete his Second Stage speech on another day.

With the agreement of the Acting Chairman, I will conclude within three minutes. I will undertake to address on Committee and Report Stages any issue I do not address today.

Probably the most important issue that has been raised on many occasions by Members concerns pensions. The Government has a duty to plan for the best outcome but also to prepare for the worst, if the worst is to happen. In this legislation, I want to prepare for a solution and have the legislative tools in place to make it a reality. I also need to prepare for the possibility that a solution may not be found.

Unfortunately, what has happened to the IASS is not dissimilar to what happened with many other schemes. The amount of money put into it over the years by the employees and former employees in the companies was not enough to match the benefits expected or promised. Therefore, the only solution is a combination of the companies putting in more money and the members and pensioners accepting reduced benefits. It is always worth pointing out that in a case such as this it will not be good enough just to have the support of the staff of the airport. Any money that is to be injected into the pension scheme by Aer Lingus, for example, would require a shareholder vote. Last week, the Government was on the losing side of a shareholder vote on a CEO's remuneration. Aer Lingus staff and former staff need to have regard to the fact that in order to get an agreement, it is not enough for them and the Government to agree, as they will also need the agreement of the shareholders, including, potentially, institutional shareholders and shareholders such as Ryanair. The penny may not have dropped in that regard but it does need to at some point.

AIB was mentioned. I understand it transferred €1.5 billion in assets - loans - into its pension fund rather than taxpayers' money. That is exactly what is being proposed as part of the solution for the aviation workers. I refer to the companies putting cash assets into the pension fund.

I understand what Members are saying in suggesting we might set aside section 32A. I have heard that argument and I understand that this is a sensitive time. The panel is meeting and we do not want to do anything that would undermine the possibility of a solution. However, in what position would staff and pensioners be left if the scheme were wound up and we had not prepared for a wind-up or break-up?

In the interests of those people, we should make provision for the possibility that the Pensions Authority will wind up the scheme. I will not be winding up the scheme. I do not have the authority, but the Pensions Authority does have the authority and there is a risk that it could do so. We need to prepare to protect people as much as we can should that happen.

I will conclude there. I have noted all the points made and I will address all of them on Committee and Report Stages.

I am grateful to the Minister for his brevity and the content of his contribution, which was very comprehensive. I thank him for facilitating the House.

Question put and agreed to.
Committee Stage ordered for Tuesday, 27 May 2014.
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