Hildegarde Naughton (Galway West, Fine Gael) | Oireachtas source

I am delighted to have the opportunity to update the House on what the Government is doing regarding the sudden announcement by Stobart Air that it was ceasing operations. I refer to the impact of this announcement on connectivity to Kerry and Donegal, Government support for the aviation sector and affected employees, and the current crisis in the aviation industry and its impact on the mid-west.

As Deputies will be aware, Stobart Air contacted the Department in the early hours of Saturday morning to advise that it was terminating the franchise agreement with Aer Lingus and its wet lease agreement with British Airways, BA, with immediate effect. This resulted in all Aer Lingus regional flights to the United Kingdom operated by Stobart Air also ceasing with immediate effect. Regrettably, Stobart Air's plans to secure a new buyer failed over the weekend and this action resulted in Stobart Air commencing a process of voluntary liquidation. The announcement is deeply regrettable in respect of the 480 Stobart Air workers directly impacted by this decision.

The restoration of regional connectivity is of critical importance to the Government. The market has already moved to fill some of the lost routes, with Aer Lingus and BA CityFlyer now operating temporary replacement services which will cover most of the affected routes operating out of Dublin and Belfast City airports. Together with rerouting options, this will allow passengers impacted by the situation to return home. Regarding the PSO air services from Dublin to Donegal and Kerry, work is under way in my Department to launch an emergency procurement process to try to restore air services on these vital regional routes as soon as possible. My Department plans to issue a request for quotes directly to airlines in the coming days in accordance with applicable EU rules on air service public service obligations. It is anticipated the emergency procurement process will be completed by early July with a view to services being recommenced by the new operator or operators as soon as possible thereafter. The new contract will be subject to a maximum term of seven months and will operate according to EU law.

To mitigate any further disruption to these services, my Department will also launch a procurement process, for a maximum of four years, for the continued provision of the services after the temporary contract has expired. The Minister, Deputy Ryan, and I will continue to engage closely with aviation stakeholders, including those in Kerry and Donegal airports, to keep them informed of plans in this regard. I am happy to advise that several airlines have been in contact to indicate their interest in operating these routes.

The Government is aware of the ongoing impact of the pandemic on the aviation sector and it has put in place a range of supports for businesses, including the aviation sector. These supports include the wage subsidy scheme, the waiving of commercial rates, deferral of tax liabilities and the Covid restrictions support scheme, CRSS. Liquidity funding is also available through the Ireland Strategic Investment Fund, ISIF, pandemic stabilisation and recovery fund for medium and large enterprises, and this is being availed of. The Government also allocated funding of €80 million for aviation-specific support in 2021 in recognition of the impact of Covid-19 on our smallest airports in Donegal, Kerry and Knock. In addition to the €21 million in funding under the regional airports programme, a further allocation of up to €6 million to regional airports under a state aid compliant scheme will also be available in 2021. Applications for funding under this scheme are being assessed by my Department and I hope to be able to allocate funding in the coming weeks.

In acknowledgement of the severe impacts on our two State regional airports and in recognition of the importance of these airports to the south west and mid-west regions they serve, an unprecedented €32 million is also being provided in support to Cork and Shannon airports this year. Additionally, my Department is assessing applications for funding of these airports and Dublin Airport under a €20 million Covid-19 supplementary support scheme, and I expect to be able to provide funding under this scheme shortly. This support will allow the airports the flexibility to provide route incentives and airport charge rebates to stimulate recovery and lost connectivity.

See this speech in context