Dáil debates

Thursday, 24 November 2005

3:00 pm

Photo of Olivia MitchellOlivia Mitchell (Dublin South, Fine Gael)
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Question 1: To ask the Minister for Transport his views on the impact of the reformed bilateral aviation agreement between Ireland and the US on Irish airlines and airports; and if he will make a statement on the matter. [36200/05]

Photo of Martin CullenMartin Cullen (Waterford, Fianna Fail)
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As I have stated in the House on many previous occasions, it is clear that an EU-US open skies agreement is inevitable and I am delighted with the successful conclusion of the negotiations in Washington last week that bring open skies even closer. I expect that all member states will find the contents of the draft agreement to be acceptable and that the only issue left to be considered before finally approving the agreement will be the outcome of US moves on revising its policy on control of US airlines by foreign airlines or investors. The final position of the US is likely to be known in the early months of 2006 and I expect this will allow EU-US open skies to come into effect in November 2006.

The impact of open skies on Irish airlines and airports will be positive. For Irish airlines, open skies will give them access to every city in the US and enable them to negotiate with different airports to obtain the best commercial deals for new services. Aer Lingus, for example, has stated that it expects to double its transatlantic passenger numbers in the first few years of open skies and that it has been approached by several US airports with a view to starting new services. The additional access to the US, as well as the increased numbers of US tourists into Ireland, will greatly benefit Irish tourism, aviation and business links generally.

This is the conclusion reached by a number of recent reports for the European Commission, the Minister of Arts, Sport and Tourism and the Chambers of Commerce of Ireland, all of which support the move to open skies. Under open skies, each airport in Ireland that can physically receive transatlantic aircraft, including non-State owned airports, will be free to negotiate with Irish and US airlines for business. Another possibility the EU-US agreement will offer is that EU airlines will also be able to operate from Irish airports to the US and it will be a matter for Irish airports to draw in as many of the huge number of EU airlines as possible.

I have also been aware all along, however, that open skies will present challenges for Shannon and that transitional arrangements are needed to allow the airport to meet those challenges. I have at all times made it clear that Ireland's support for the EU-US open skies deal is contingent on a satisfactory transitional period for Shannon. For this reason, I travelled recently to Washington to secure such a transitional arrangement for Shannon, details of which I published on 11 November. That arrangement, which is folded into the EU-US agreement, will give Shannon Airport a total of two and a half years of Shannon stop arrangements before open skies is fully introduced in Ireland in April 2008. This additional time for Shannon will enable it to plan an orderly move to open skies and to explore how it can exploit the opportunities that open skies offers.

I have 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 per year, with regular year-round scheduled services between Shannon and Boston and New York.

Additional information not given on the floor of the House.

All of these transitional arrangements will allow Shannon Airport to plan the move to open skies in 2008 in an orderly way.

Over and above the transition secured for Shannon, the Government's recently approved €34 billion Transport 21 investment plan will greatly enhance the infrastructure of the Shannon region and broaden the catchment area of the airport. In addition to this, I propose to prepare an economic and tourism development plan in consultation with the Minister for Arts, Sport and Tourism and the Minister for Enterprise, Trade and Employment to ensure that Shannon Airport sustains and grows transatlantic air services.

Overall, I am pleased with the new opportunities that open skies will offer Irish airlines and airports. Open skies will mean even more prosperity for Ireland through increased services, tourism and trade links. I am convinced that the transitional arrangements secured for Shannon Airport means that, through its own proven resourcefulness, it will fully share in that prosperity.

Photo of Olivia MitchellOlivia Mitchell (Dublin South, Fine Gael)
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I agree that open skies offers opportunities as well as challenges for airports and airlines in Ireland, the EU and the United States. We are most concerned about what is currently the State airline, Aer Lingus. If it is to compete for routes, it must be present from the outset or it will miss the boat. Aer Lingus hopes to capitalise on the opportunity for additional long-haul routes and is gearing up for this in terms of staffing.

Everything hinges on the availability of capital to buy new planes. Aer Lingus has lost value as a result of Government inaction and indecision in recent years but it is clawing its way back. It has the opportunity to prosper if it gains access to capital in time for the open skies opportunities. Can the Minister commit to a deadline of the third quarter of next year for access to capital and for privatisation by flotation or private placement? According to Aer Lingus, this is the last date possible if it is to capitalise on the opportunities.

Photo of Martin CullenMartin Cullen (Waterford, Fianna Fail)
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I do not mind answering the Deputy but the matter about which she asks her supplementary is entirely different to that covered in Question No. 1. A question on capital investment in Aer Lingus will be dealt with later. This question is concerned with the EU-US aviation agreement.

Photo of Olivia MitchellOlivia Mitchell (Dublin South, Fine Gael)
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My question concerns the implications for Irish airlines and airports. Aer Lingus is an Irish airline.

Photo of Martin CullenMartin Cullen (Waterford, Fianna Fail)
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There will be another question on investment in Aer Lingus and I suggest that we wait until it is asked. We want to move quickly to secure investment for Aer Lingus because this is important for the new fleet. Three criteria are always required when a public or private company goes to the market: that the market is in a good position, that the sector is healthy and that the company is in a good situation. My expectation is that all three criteria will be fulfilled next year.

I do not accept Deputy Olivia Mitchell's assertion that the value of the company has decreased substantially as a result of Government inaction. If we had been obliged to privatise the company three years ago, the value would have been much less. Good work has been done by management and unions over the past few years compared to other national airlines, many of which have closed and more of which will do so. Aer Lingus is probably the most successful of the traditional national carriers in the way it has turned its business around.

I am confident about the future of Aer Lingus, its staff and the potential customers in Ireland who would like to fly to destinations in the United States. A number of destinations in the United States are interested in having direct flights to Ireland with Aer Lingus. All of this is made possible through open skies. The conclusion of an EU-US open skies agreement enhances the value and attraction of Aer Lingus.

Photo of Olivia MitchellOlivia Mitchell (Dublin South, Fine Gael)
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Has the Minister given his advisers a deadline for an interim report on the means of attracting equity capital?

Photo of Martin CullenMartin Cullen (Waterford, Fianna Fail)
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That matter will arise later and I suggest we wait until the relevant question is dealt with.

Photo of Olivia MitchellOlivia Mitchell (Dublin South, Fine Gael)
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I have no guarantee that the question will be reached. Priority Questions should be a priority. To what question is the Minister referring?

Photo of Martin CullenMartin Cullen (Waterford, Fianna Fail)
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I will check.

Séamus Pattison (Carlow-Kilkenny, Labour)
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Priority Questions Nos. 2 and 5 on today's Order Paper are shown in the name of Deputy Shortall. The Deputy is unavoidably absent and Deputy Broughan is substituting for her.