Dáil debates

Wednesday, 4 October 2006

Adjournment Debate

State Airports.

9:00 pm

Photo of Pat BreenPat Breen (Clare, Fine Gael)
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I wish to say at the outset how shocked I was recently when the Minister of State's colleague, the Minister for Transport, revealed to me by way of a parliamentary question response that he intended to proceed with the dismantling of the current bilateral agreement at next month's European Council meeting.

This is despite the failure of the EU and the US to sign an open skies agreement. The proposed 18-month bilateral transition period was negotiated by the Minister in the context of open skies being introduced at the end of that period, that is, approximately April 2008. This agreement was the only transitional arrangement in the proposed EU-US agreement and was negotiated squarely in the context of open skies. It proposes to replace the current one for one arrangement with a one-for-three Shannon to Dublin ratio.

Now we learn that the Minister proposes to go it alone with the dismantling of the bilateral, although open skies remains far away. This is an astonishing unilateral action proposed by the Minister, which I am sure is contrary to the provisions of the Treaty of Rome. The Minister will recall that the European Court of Justice decided almost four years ago that the nationality clauses in bilateral aviation agreements were inconsistent with EU member states' obligations under the Treaty of Rome. The Minister, in effect, is now proposing to renegotiate the bilateral outside the EU. I hope he will change his mind and, if not, I hope he fails.

Shannon is not afraid of open skies. We are afraid of the actions of a Minister for Transport who is intent on introducing an economic liberal agenda that takes no account of the regional economic disparities or the special place Shannon Airport has as an economic driver for the west.

The Minister will say that he negotiated the transition agreement in the context of assurances from Aer Lingus to maintain the current level of transatlantic traffic of approximately 400,000 passengers a year between Shannon and New York. On further probing, the Minister revealed that this was a verbal assurance only. As such, I believe it has little or no value.

The response from Mr. Dermot Mannion, when I repeatedly asked him for some indication of his long-term plans for the airport, was short. I pointed out that Aer Lingus, as the then national airline, operated fewer direct transatlantic services than its American competitors. I also pointed out that Aer Lingus was continually expanding its direct European services from Cork and Dublin, with no plans expected for expanding its Shannon services.

In a recent interview in Cara magazine, Mr. Mannion failed to mention Shannon Airport in the context of the development of new services. He also pointed out in that interview his intention to make Dublin a major hub for western Europe. Unfortunately, his response to me was much shorter on detail than that contained in "Cara" magazine. He stated simply:

I apologise if previous correspondence has not been responded to. Aer Lingus remains committed to our Shannon operation and, as I am sure you are aware, I am a frequent visitor to Shannon to meet with staff and discuss their concerns.

It seems then that the airport is a thorn in the side of Aer Lingus and the Government. The Minister's continued commitment to Aer Lingus, despite it now being a private company, is commendable. Aer Lingus has made no secret of its dislike of the bilateral agreement and has made it clear that its continued existence would affect shareholder value.

I am very concerned about the future of Shannon Airport in the context of the west. I question the Government's policy to make Shannon a self-sustaining airport based on an accountant's slash and burn technique. Shannon does not have to be self-sustaining. The Dukes Sorensen report indicated that Shannon Airport could lose up to half its transatlantic passengers in an open skies environment. It recommended the introduction of a public service obligation levy to buoy up Shannon.

The Minister for Transport has ignored the calls for an economic impact study to be done on the effects of open skies on Shannon. He could have negotiated a longer lead-in period in order for the infrastructure and marketing to be put in place prior to open skies. Instead he is now rushing out to Brussels to prematurely dismantle what little protection the airport enjoys. He promised an economic and tourism development plan for the airport in a blaze of publicity last summer, but we have heard nothing since.

Shannon is an international airport serving an economically marginalised part of the country. Its existence is good for international business, the west, domestic business and tourism. Expecting it to compete with the likes of Dublin on an equal footing does not make sense.

I had the pleasure of visiting Doonbeg golf club in west Clare last Sunday. An employer of over 205 people, it is a €175 million complex. Its existence is a tribute to the project backers, the locals who first mooted the idea and to Shannon Development, which first promoted it. It was put there because Shannon Airport is a stone's throw away and because it has direct airline services to the US.

I ask the Minister of State to implore his colleague, the Minister for Transport, to do us a big favour by remembering the Government's national spatial strategy, its obligations under the national development plan and its commitment to the people of the west.

Photo of Pat GallagherPat Gallagher (Minister of State, Department of Transport; Donegal South West, Fianna Fail)
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I thank Deputy Pat Breen for raising this matter on the Adjournment and thereby giving me the opportunity to outline the current situation.

Transitional arrangements for Shannon were agreed with the US authorities in November last year in the context of the impending implementation of the EU and US open skies agreement. This provided that the 1:1 Shannon stop requirement would change to 1:3 for the period November 2006 to the end of March 2008, after which the Shannon stopover requirement would end. During the transition period, Irish airlines would have access to three additional US destinations. Ireland was the only European country to secure transitional arrangements in the proposed EU and US agreement.

The transitional arrangements were intended to allow time for a smooth transition to full open skies, which would allow the Shannon Airport Authority to explore and exploit the opportunities arising from the agreement while allowing Irish airlines access to additional destinations in the US.

A number of reports — the Brattle report for the European Commission, the report of the tourism policy review group to the Minister of Arts, Sport and Tourism, and the Air Transport Users Council of the Chambers of Commerce of Ireland report into open skies — all support moving to open skies with the US, and they emphasise the significant benefits to Ireland when this happens.

In the context of the agreement on transitional arrangements, Aer Lingus confirmed that subject to market conditions and in the context of a level playing field between the airline and its competitors, it would maintain the current level of transatlantic capacity. Following the very positive approach by our European colleagues and the US authorities to providing for an orderly change to the Shannon stopover arrangements, it is very disappointing that the EU and US open skies deal still has not been finalised due to difficulties about relaxing US ownership and control restrictions for airlines. It is understood that more time is required on the US side to take account of the concerns of Congress, which can only now be properly addressed following the US mid-term elections.

The Minister has publicly stated his commitment to the view that the liberalisation of air transport services between Ireland and the US will deliver major benefits for Irish business and tourism. The conclusion of an open skies agreement would have particular benefits for Ireland compared to the 15 of 25 EU member states that already have open skies agreements with the US. These member states already enjoy an advantage in unrestricted access to route rights for the development of air services to and from the US.

In this context, the Minister informed Government last month that he proposed to continue to pursue all possible avenues through contacts with the European Commission, ministerial colleagues in other member states and the US to provide for the entry into force at the earliest possible date of the EU and US open skies agreement, including the transitional arrangements relating to Ireland already agreed between the EU and the US. He also proposed that, to the extent that agreement at the level of the European Union is not achievable within a reasonable timeframe, to seek to implement, in accordance with the applicable community law, the essential elements of the transitional arrangements by way of an amendment to the Ireland-US bilateral air services agreement. Finally, he proposed to issue a letter to Aer Lingus setting out these intentions.

The prospectus relating to the sale of shares in the company reflects this commitment. Specifically, it states:

The Minister for Transport has assured the company that he remains confident that an EU-US open skies agreement can be reached within a reasonable timeframe, and that he intends to pursue the earliest possible implementation of the transitional agreement. The Minister for Transport has confirmed to Aer Lingus that, in the event that an EU-US agreement is not achievable within a reasonable timeframe, he intends to seek to implement, in accordance with applicable Community law, the essential elements of the transitional agreement by way of an amendment to the Ireland-United States bilateral treaty.

In announcing the agreement reached with the US authorities on a transitional arrangement for Shannon Airport in the context of the proposed EU-US open skies agreement, the Minister gave an undertaking to prepare, in consultation with the Minister for Arts, Sport and Tourism and the Minister for Enterprise, Trade and Employment, a tourism and economic development plan for Shannon and the west of Ireland. The draft plan is nearing completion.

Under the aegis of the Mid-West Regional Authority, an open skies liaison group has been established to work with the Departments to ensure that Shannon Airport and the west receive adequate investment and compensatory measures when open skies is finally approved.

An official from the Department of Transport attended meetings of that open skies liaison group in an information-sharing capacity. The group recently presented its report and key recommendations.

The Dáil adjourned at 9.20 p.m. until 10.30 a.m. on Thursday, 5 October 2006.