Martin Cullen (Waterford, Fianna Fail)

I move:

That Dáil Éireann approves under Article 29.5.2 of the Constitution the terms of the air transport agreement between the European Community and its member states of the one part and the United States of America of the other part which it is proposed should be signed by the Minister for Foreign Affairs, or his nominee, a copy of which agreement was laid before Dáil Éireann on 23 April 2007.

The conclusion of the air transport agreement by the European Union and its member states with the United States is a landmark in the development of international aviation relations. The European Commission has already estimated that over the first five years it will yield €12 billion in consumer benefits and lead to the creation of 80,000 new jobs.

As projected by several studies the agreement will lead to considerable economic benefits for Ireland in the business sector, the tourism industry and the air transport industry, where new possibilities have been opened up. Aer Lingus has already moved quickly to capitalise on the new opportunities with the launch of three new services. This demonstrates the disadvantage we have borne and the economic benefits foregone because of the absence of an open skies agreement with the US. A total of 17 of the 27 member states already had open skies agreements with the US on a bilateral basis.

The Commission considers that over the first five years of implementation the agreement will mean more than 25 million additional passengers between the EU and US, up to €12 billion in consumer benefits and the creation of 80,000 new jobs on both sides of the Atlantic.

There are several key benefits of the agreement. It will bring the EU-US relationship into full conformity with Community law following the findings by the European Court of Justice in 2002 that the bilateral agreements of the eight member states taken before the court were not in conformity with Community law. It will remove remaining market access restrictions on flights between the EU and US, thus creating a level playing field between Community carriers. It will serve to introduce new measures relating to ownership, investment and control that will create new opportunities for EU airlines and investors, including the possibility for the percentage of US airlines' equity that EU nationals may hold to exceed 50% of total equity, although ownership of voting equity will continue to be limited to 25%. It will give EU airlines operating to the US greater access to non-EU capital and allow airlines of several third countries operating to the US to be owned and controlled by EU nationals.

New measures will be introduced relating to ownership, investment and control, that will create new opportunities for EU airlines and investors. These will include the possibility for the percentage of US airlines' equity that EU nationals may hold to exceed 50% of total equity although ownership of voting equity will continue to be limited to 25%. EU airlines operating to the US will have greater access to non-EU capital and the airlines of several third countries operating to the US can be owned and controlled by EU nationals.

The agreement clarifies US rules on franchising and branding, which will facilitate EU airlines or undertakings to extend their network presence in the US market. It will ensure that EU airlines are qualified to apply for antitrust immunity for alliances with US airlines, and that applications will be treated expeditiously. It commits both sides to work towards compatible practices and standards and to minimise regulatory divergence in the field of aviation security.

It facilitates the creation of new co-operation arrangements between competition authorities so as to facilitate the joint assessment of alliances between EU and US carriers and allow for the development of compatible approaches. It will improve co-operation and consultation between the EU and the US in the areas of safety, state subsidies and environment, which have occasionally given rise to considerable difficulties between the two sides in recent years. A joint committee is to be established which will be responsible for resolving questions relating to the interpretation or application of this agreement and for putting in place clear procedures for the commencement and conclusion of a second stage agreement.

This agreement is potentially the most important single step in the development of international aviation relations since the Chicago Convention was signed in 1944. It marks a major departure from the bilateral system of exchange of traffic rights and paves the way for new forms of co-operation on a range of issues spanning safety, security, regulatory convergence etc. I have no doubt that it will become a model for a whole new series of multilateral agreements.

The commitments to second stage negotiations provide a basis for an even greater deepening of our relationship with the US. It will enable the Commission on behalf of the European Union to pursue the original objective of an open aviation area set out in the mandate awarded in June 2003.

I now propose to turn more specifically to the implications of the agreement for Ireland. Throughout the process of negotiations with the US an important consideration for Ireland was that the implementation of an open skies agreement would, because it envisaged the removal of all restrictions on traffic rights, mean an immediate termination of the arrangement relating to Shannon — whereby half of the flights between the US and Ireland must serve Shannon. Arising from this concern a number of contacts with the US took place in parallel with the Commission's formal negotiations.

I met with the then US Secretary for Transportation, Mr. Norman Mineta on 9 November 2005 to negotiate transitional arrangements for Shannon which were included in the EU-US text. This provided that the 1:1 Shannon stop requirement — one stop at Shannon for every stop at Dublin — would change to 1:3 for the period November 2006 to end March 2008 after which the Shannon stop requirement would end. During the transitional period Irish airlines would have access to three additional US destinations. Being part of the proposed EU-US Aviation Agreement these were conditional on its conclusion. In the event, some delay arose in the conclusion of the agreement largely because of political difficulties that emerged on the US side and persisted throughout 2006.

It was agreed with the US at the final round of negotiations which concluded on 2 March this year that these transitional arrangements would stand as originally agreed and enter into effect immediately following approval of the draft EU-US agreement by the Council of Ministers.

At the time I negotiated the transitional arrangement relating to Shannon, I sought and obtained assurances from Aer Lingus that, in the context of a level playing field between the airline and its competitors, it will maintain the current level of transatlantic traffic — approximately 400,000 passengers a year — with regular year-round scheduled services between Shannon-Boston and Shannon-New York.

The Brattle report for the European Commission, the report of the tourism policy review group to the Minister for Arts, Sport and Tourism, and the Air Transport Users Council report of the Chambers of Commerce of Ireland all supported moving to open skies with the US, and emphasised the significant benefits to Ireland when this happens.

The proposed Air Transport Agreement between the European Community and its Member States on the one hand, and the United States on the other, is now to be signed at the EU-US Summit on 30 April. While it will not enter into effect until March 2008, the transitional arrangements relating to Ireland are already being applied. From the perspective of air carriers the most immediate benefit is that Irish and other European carriers are permitted to launch services on three new US routes. Aer Lingus has moved quickly to exploit the opportunities presented by the more liberalised arrangements under the transitional arrangements. The airline intends to commence services to and from Dublin as follows: Washington on a four services per week basis from 3 September 2007; San Francisco on a four services per week basis from 28 October; and Orlando on a three services per week basis from 28 October.

The airline has commenced marketing of the new services. From 30 March 2008 it will be possible for Irish and European carriers to provide services between Ireland and any US airport. The benefits for Ireland will be significant in terms of increased tourism and economic activity. The opportunity for increased tourism is obvious. The Irish Hotels Federation has estimated that the open skies deal could double the number of US visitors to 2 million within seven years, generating an extra €1 billion for the Irish economy. From a business perspective new direct connections will open access to new markets and business linkages. This will provide a further impetus to the close economic relations that already exist between Ireland and the US.

I undertook when I announced the transitional arrangements for Shannon to prepare an economic and tourism development plan for it in consultation with the Ministers for Arts, Sport and Tourism and Enterprise, Trade and Employment to ensure that Shannon Airport sustains and grows transatlantic air services. A group under the aegis of the mid-west regional authority and comprising Clare County Council, Shannon Development, Shannon Airport Authority, SIGNAL and IBEC submitted a report in 2006 entitled Mid-West Tourism & Economic Development Plan. The recommendations of the report include infrastructure development, a regional conference centre, a tourism promotion fund and an airline route support fund. These will be taken into account by my Department in finalising the plan.

In conclusion, the EU-US Open Skies Air Transport Agreement is a good deal for Europe and represents the best possible opportunity at this time to reach a deal following several years of negotiations at EU-US level. From Ireland's point of view the new open skies deal creates a level playing field among EU airlines. The benefits for Ireland will be significant in terms of increased tourism and economic activity. It will in particular liberate Irish and other European carriers to inaugurate new services potentially to any city in the US over time. That Aer Lingus has moved with such alacrity to launch three new transatlantic services is indicative of the opportunities that exist in the marketplace and, by implication, the potential economic and tourism benefits. I commend the motion to Dáil Éireann.

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