Leo Varadkar (Dublin West, Fine Gael)

The State Airports Act 2004 provides the framework for the establishment of Shannon and Cork as independent airports. As part of the restructuring process at the time, the boards of Cork and Shannon airports were required to prepare business plans for eventual separation. These plans were necessary in order that the then Ministers for Transport and Finance could be satisfied as to the financial and operational readiness of the airport authorities before assets could be transferred.

While the three State airport authorities commenced work on the preparation of their business plans, with the Dublin Airport Authority, DAA, co-ordinating the process, a range of issues delayed separation. These included the need to build up the DAA's distributable reserves, the discussion on the allocation of debt to Cork in return for the transfer of assets on separation, the negotiation and implementation of measures to address Shannon's cost base and the funding of the DAA's capital investment programme. While some of these issues had been progressed in 2008, by then the impact of the global recession had begun to be strongly felt in the aviation sector.

In December 2008, the chairmen of the three airport authorities forwarded business plans to the then Minister and drew attention to the impact of the recession on the viability of airport separation. The Minister considered the business plans of the three airports and the opinions of the boards and accepted their overall conclusion that it would be best to defer the separation of the three airports. He took the view that it would be appropriate to provide a reasonable period to enable the boards and management of these airports to address the significant challenges facing the aviation market at the time. Accordingly, he decided to defer a decision on separation to 2011. The Government agreed to this proposal.

Pending a decision on separation, the boards of management of Cork and Shannon airports continued to carry out devolved responsibilities in respect of the day-to-day management, development and promotion of their respective airports with appropriate accountability to the DAA. Under these revised governance arrangements, the chairmen of the Cork and Shannon airport authorities have been appointed to the DAA board and DAA senior executives have been appointed to the boards of the Cork and Shannon airport authorities.

In May, I asked the boards of the three State airports for their opinions on the question of establishing Cork and Shannon as independent airports under the State Airports Act 2004. The three airports have responded and their submissions are being carefully examined. In the context of that examination, I am considering all available options for the future of Cork and Shannon airports. I hope to be in a position to make an announcement on the issue before the end of the year. The critical issue is that, with falling passenger numbers, both Cork and Shannon are loss making and would not be sustainable without the support of the DAA. Given the current financial position of the DAA, this cross-subsidisation is not sustainable in the long term.

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