Olivia Mitchell (Dublin South, Fine Gael)

I welcome this Bill to the House. The Minister is aware that I inquired as to its status a number of times as I too was anxious that it would come before the House before it rose and would be transposed into Irish law. Consequently, I welcome the fact that it has being taken this week. On behalf of the Fine Gael Party, I am happy to give it my support.

As a result of the 9/11 attacks and reinforced by subsequent international events including rising fuel prices, the entire aviation sector has been subject to a climate of uncertainty, to put it mildly. It brings uncertainty for manufacturers, financiers, lessors, exporters, importers, airlines and for ordinary air passengers. The Air Navigation Bill passed by this House last week was a result and possible manifestation of that uncertainty, whereby the State found itself forced into a position to provide air carriers with insurance cover for potential dirty bomb damage, because the entire commercial insurance business had simply withdrawn from that market. However possibly perversely, alongside that uncertainty the world is becoming increasingly dependant on aviation. At the same time increased globalisation and the changing axis of the world economy towards Asia mean that everyone, including Ireland, needs certain, affordable and easier access to safe skies. It is essential for Ireland as an island country both to have that kind of access and certainty itself and that it is available internationally to the people with whom we hope to trade and do business. I welcome the proposed incorporation of the Cape Town Convention into Irish law as we must welcome anything that brings certainty and predictability to such a high-stakes sector which is so subject to fluctuation, natural disaster and as we saw from the 9/11 attacks, to the evil machinations of Man.

As the Minister stated, the main objectives of the convention are to bring about efficient financing of aircraft and engines by promoting uniformity of contract through the protocol as well as predictability for those with a security interest in the asset concerned. This will bring a win-win situation. It means higher sales for manufacturers as financing becomes easier. It means easier access for emerging economies to such finance, as the level of risk for them — usually it is their Government — is reduced. It means reduced financing costs and enhanced access to different types and sources of funding for airlines. Moreover, younger fleets mean that greater fuel efficiencies are available to such airlines. In addition, this benefits passengers, in reduced air fares, improvements in an increased flow of services as well as more routes. It also increases safety for passengers because it means fleet replacement is made much easier, so one has a younger, and consequently a safer fleet.

It also brings benefits for Governments, in particular for developing countries, but also in developed countries where the national airline fleet purchases have been funded or backed by Government guarantees, as the greater degree of certainty about the enforcement of rights will bring lower costs for them. Even for Governments such as our own, which is contemplating privatisation, the risk reduction associated with the convention means that other cost-effective sources of finance have opened up to airlines that might previously have had — I use the word advisedly — the cushion of State-provided finance or guarantees.

Our own Irish airlines, Aer Lingus and Ryanair, are both expanding airlines that plan to expand their fleet and this legislation comes at the perfect time for them. Both will benefit significantly from the discounts likely to be offered to airlines of ratifying countries. I have read that one US bank is offering a 33% premium reduction for aircraft delivered before September 2005 for ratifying countries. This kind of incentive will be quite common for early participation in the protocol.

Ratification has a particular significance for Ireland in that the bid by Aviareto to operate the international register was successful. I am unsure whether the Minister is aware of the point, but a condition of the contract was that the winning bidder would ratify the convention. As the host country to the registry, other EU countries have been looking to Ireland to give the lead and I hope they will now quickly follow Ireland's example and transpose the convention into their own laws. This will ensure a flow of funds to the registry, which obviously needs funds to function properly.

As the Minister noted, the contract to operate the registry was won against stiff international competition and it is of no small significance to Ireland. It is quite a feather in the cap of this company and the stakeholders. Did the Minister state that it was a joint venture company? It is not an insignificant achievement and it puts Ireland on the world aviation map and puts us at the cutting edge of the financing sector of aviation. Hence, for Ireland and for international aviation, it is a very good day's work. I am happy to support this Bill on behalf of Fine Gael.

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