Olivia Mitchell (Dublin South, Fine Gael)
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Question 1: To ask the Minister for Transport his views on whether, in the event of a partial sale of Aer Lingus, it would be possible to include a caveat in the sale agreement to ensure the retention of landing slots at Heathrow Airport by Dublin passengers; if he is actively considering such a clause; the action taken to examine this proposal; and if he will make a statement on the matter. [15715/05]

Martin Cullen (Waterford, Fianna Fail)
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I want to see the slots being retained at Heathrow, regardless of the ownership structure of the national airline. I am very aware of the concerns raised about specific strategic issues in the context of any proposal to reduce the State's shareholding in Aer Lingus. These relate not only to the slots at Heathrow but to the Aer Lingus brand and direct services on the transatlantic routes.

Ireland does not own any Heathrow slots. Aer Lingus holds these slots on the basis of "grandfather rights", which are rights of historic precedence. Aer Lingus has around 4% of Heathrow slots — the fourth largest after BA, BMI and Lufthansa and operates in the region of 25 round trips daily in peak season. Apart from Aer Lingus, BMI is the only other operator on the Heathrow-Dublin route and there is no other operator to Heathrow from Cork or Shannon. It should be pointed out that Heathrow services are a key element in the Aer Lingus product and a key contributor to profits. I have no reason to believe this will not be the position into the future, whatever the ownership status of Aer Lingus.

However, as direct services increase to European and other points, the importance of Heathrow for international connectivity is diminishing. Also, the other major European hubs in Paris, Frankfurt and Amsterdam are continuing to grow and have good direct connections from Ireland with a range of airlines.

EU Regulation 95/93, as amended by Regulation 793/2004 governs the allocation of slots at congested airports such as Heathrow. The current regulation allows for the retention of grandfather slots. It also allows for the exchange of slots but is silent on the issue of the sale of slots. However, this has not prevented the development of a "grey market" in slots where the practice of exchanging slots for cash has developed.

The Commission published a study last year on potential mechanisms to develop market-orientated slot allocation schemes. A consultation paper later in the year was the follow-up to this study. The Commission is now developing its thinking on the potential mechanisms that could be included in draft legislation. My Department will continue to monitor developments at EU level regarding any proposed changes to the regulatory regime for slots.

The current EU regulatory regime may change in the future. Accordingly, there is not an absolute guarantee that access to the current level of grandfather slots at Heathrow can be maintained indefinitely, even if the current ownership status of Aer Lingus remains the same.

However, I assure the House that in the context of any decision to reduce State ownership in Aer Lingus, all the options available within the regulatory framework will be examined to ensure adequate ongoing access to Heathrow for Irish consumers.

Olivia Mitchell (Dublin South, Fine Gael)
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I am inclined to agree with the Minister that there is no reason to believe Aer Lingus will lose the Heathrow slots or that the market will not dictate that those slots will remain and be used for the benefit of Irish passengers. It is probably true that if the market was to change, there is very little the Government, as a minority owner, could do to ensure that a majority owner did not sell on the slots. I know that the EU has adjudicated on similar issues.

Does the Minister agree, given that we will have little or no control over slots in the long term, it is extremely important that Aer Lingus is equipped to develop more direct routes, particularly long-haul routes, to lessen its dependence on Heathrow as a hub? Does the Minister agree that it is worrying that on the very day a private operator launches new routes from Cork to the United States, Aer Lingus is threatening to withdraw routes from Dublin to the United States, for example, the routes to Los Angeles and Orlando? Does he not agree that this is an example of how Aer Lingus is almost being run into the ground through lack of decision-making about its future? Events are taking place all over the world that are placing Aer Lingus at a disadvantage.

Martin Cullen (Waterford, Fianna Fail)
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I have set out as openly as I can, in the context of a parliamentary question, the facts surrounding Heathrow slots. Both Deputy Mitchell and I agree that Heathrow slots are crucial. Any major strategic holding the State would have in Aer Lingus would be very significant in dictating some of the strategic issues. Any company would want to maintain the slots. At a European level, an attempt is being made to develop a regulatory framework to deal with this issue. The Department and I have been closely involved in these discussions but they have not resulted in a definitive mechanism for creating a market for slots at Heathrow.

I agree that the other hubs of Paris, Amsterdam and Frankfurt have experienced significant growth and they will continue to grow. Aer Lingus is beginning to take more advantage of these hubs in terms of route selection. Dublin Airport has an opportunity to become a hub of some significance. I believe this because the airport is well placed in terms of its strategic location for long-haul and short-haul flights. If people with views on the general debate on Aer Lingus would think outside the box, they would see a different picture. There is enormous growth from Ireland into the United States and Aer Lingus is in a position to take advantage of that. Opportunities also exist to expand into eastern markets.

Olivia Mitchell (Dublin South, Fine Gael)
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Does the Minister agree that there is a need for a runway, terminal and a CEO for Aer Lingus before we begin talking about Dublin Airport becoming a hub?

Martin Cullen (Waterford, Fianna Fail)
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We have had great success with the new CEO of Aer Lingus and I wish him well. Any significant airline would have been delighted to recruit a CEO of his quality.

Olivia Mitchell (Dublin South, Fine Gael)
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It would have been better if Aer Lingus could have kept the previous CEO.

Martin Cullen (Waterford, Fianna Fail)
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Aer Lingus has a business plan and I urge all sides to implement it. This plan is crucial to the airline's survival in the long term, regardless of what the future strategic structure of Aer Lingus turns out to be. The plan also provides the basis for enormous growth by developing many new routes, both short-haul flights within Europe and long-haul flights.