Fiona O'Malley (Dún Laoghaire, Progressive Democrats)
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The European Commission's ruling on Charleroi begs the question of whether there is coherence in EU policy. On the one hand, competition is a live and vibrant issue within the EU and the cornerstone of commercial viability. On the other is the all-important issue of subsidiarity. The recent judgment on Charleroi appears to place the two in conflict. Is there a lack of joined-up thinking on EU policy?

Subsidiarity came into our lexicon during the debate on the Amsterdam treaty when we became enthused by the notion that decisions would be made within the regions. I offer the arrangement made by the Walloon Government for Charleroi as the classic example of very good subsidiarity and working for a region. At the risk of offending any Walloons who may be listening, I offer a grim depiction of Charleroi before Ryanair's involvement with its airport: "Ryanair's arrival at Charleroi in 1997 and its decision to transform a small and disregarded airport into a European hub has proved a blessing for an industrial city hit by the gradual collapse of its traditional coal and steel activities."

This shows how bad things had got in the area. Local government there was required to solve a difficult situation on behalf of the people. It took the decision to enter into an agreement with Ryanair and has transformed the region. I am sure the Minister of State will agree that if one can get private enterprise to do local government's job one should let them at it, particularly if they are doing it successfully.

I offer the House a quote from a gentleman who moved to Charleroi after the collapse of Sabena in Brussels and who found a job in Charleroi airport after almost a year of unemployment: "Politicians keep producing new plans to create jobs but then they are punishing a company that has provided the lifeblood to Charleroi." These are the people for whom we need to see results.

What is the implication of the judgment? We need only look at our own airports and at regional development within Ireland to see what happens. Regional development has always been based on the fulcrum of accessibility, which is provided by the regional airports. If ever there was an example of how well regional development can be done, it is the involvement of Ryanair with the Walloon Government.

The Commission has ruled and we must look for a positive result of that ruling. The judgment may bring an element of clarity to the market figures for airport costs and the conditions which Ryanair have enjoyed in Charleroi may be endorsed by the Commissioner with responsibility for competition and provided to other operators.

Would any of us have heard of such numbers of people going through Charleroi ten years ago, prior to Ryanair's arrival? We would not because it was an area in decline. The effect of increasing air transport to that area has been phenomenal. The Minister may reflect on this when considering the future for Shannon and other regional airports.

Tim O'Malley (Limerick East, Progressive Democrats)
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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.