Tim O'Malley (Limerick East, Progressive Democrats)

As the Deputy is aware, the European Commission announced its decision on 3 February last on its investigation into a complaint lodged in 2001 concerning financial incentives received by Ryanair from the airport authorities at Charleroi, an airport owned by the local government in the Walloon region of Belgium. The full text of the Commission's decision is not yet available, but in a lengthy press statement of 3 February, the Commission summarised its main findings.

The Commission found that certain elements of the agreement between Ryanair and the airport authorities at Charleroi offended the prudent market investor principle, and therefore a portion of the incentives granted to the airline by Charleroi was deemed by the Commission to be illegal state aid. In general, the Commission objected to a number of elements of the package, including certain discounts on airport charges and reduced ground handling fees, one-off flat rate incentives paid when new routes were launched, and aid provided in respect of routes which cannot be regarded as new.

In its statement last week, the Commission made clear that it supports incentives for airlines to establish new routes provided such incentives are available to all carriers in an open, fair and transparent manner and provided that the duration of such incentives is limited to five years and the overall scale amounts to no more than 50% of the net start-up costs of a new route.

While the full text of the Commission's decision is not yet available, its statement of 3 February does not appear to set out more general ground rules for state-owned airports on an EU-wide basis. The particular conditions and restrictions referred to by the Commission apply only to the Charleroi case. Nevertheless, the basic principles set out in this decision will most likely set a precedent for other state-owned airports in Europe. I am aware that Ryanair is reported as stating that it will study the comprehensive decision when it is available but that it intends to appeal the Commission's decision on Charleroi to the European Court of Justice.

The position of the Minister for Transport on this matter has been, and remains, that the conditions and rules governing incentive schemes deriving either from this decision or from any future formalisation of rules on an EU-wide basis should endeavour to strike a balance between the avoidance of rules which are overly restrictive for airlines and which could have the unintentional affect of restricting or even preventing growth, especially in the low cost sector which has been very important for both Irish and European aviation; and the promotion of long-term airport development by State-owned regional gateway airports, such as Shannon and Cork, which are required to operate on a fully commercial basis and which must be able to grow and earn a commercial return on investment.

The Minister does not anticipate problems for growth and development at our State-owned airports, at Shannon and Cork in particular, arising out of the Commission's decision on Charleroi. By clarifying the parameters for assisting airlines to commence new routes at state-owned airports, this decision may further help both Shannon and Cork to attract new routes, new airlines and more passengers, and grow their business.

The full text of the Commission's decision will need to be carefully examined and reflected upon by the Minister and the other member states. The Minister is aware that, some years ago, the European Commission put forward a proposal for a directive on airport charges, but that proposal never matured. The Minister believes that the member states and the Commission should now take this opportunity to reflect on how the right balance can be achieved between the needs of low-cost airlines and the longer-term needs of airports in the context of balanced regional development. The Minister intends to use the Irish Presidency and the upcoming Transport Council meeting in March to discuss these important issues.

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