Dáil debates

Thursday, 18 October 2007

3:00 pm

Photo of Fergus O'DowdFergus O'Dowd (Louth, Fine Gael)
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Question 3: To ask the Minister for Transport the way he will prevent further loss of connectivity of Irish airports, such as Cork and Shannon, to major air traffic hubs, such as Heathrow; if the delay in appointing new directors to the Aer Lingus board is jeopardising the connectivity of Irish airports served by Aer Lingus; and if he will make a statement on the matter. [24669/07]

Photo of Noel DempseyNoel Dempsey (Minister, Department of Transport; Meath West, Fianna Fail)
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The Government will seek to ensure that connectivity at Irish airports is maintained and developed through the continued implementation of its aviation strategy, which is to promote the development of as wide a range as possible of competitive international air services to and from Ireland to underpin our economic growth and competitiveness.

We need regular, safe, cost-effective and competitive air services linking the country to key business and tourism markets around the world. To this end, within the European Union, Ireland has consistently supported market liberalisation measures which have served as the platform for the rapid expansion of aviation generally. We have also promoted liberalisation on a wider basis, most recently in pressing for the conclusion of the EU-US open skies agreement and in concluding a more liberal agreement on a bilateral basis with Canada.

I should add that our approach to the encouragement of air services is complemented by our policy on the development of airport infrastructure within the country. The main objective is to ensure that the three State airports have sufficient capacity to respond to the growth opportunities of a competitive airline sector and to provide vital international access. In addition, the six regional airports have a key role to play in promoting regional development.

It is open to each airport authority to introduce incentive schemes to attract new business, subject to EU competition and state aid rules. I welcome the initiative taken by the Shannon Airport Authority to introduce a new hub airport incentive scheme to encourage airlines to commence new services to and from Shannon, including Shannon to Heathrow.

I have decided to appoint two further directors to the board of Aer Lingus. I will ask the State appointees to seek to ensure that all future decisions of the company that have significant implications for wider Government aviation or regional development policies are considered at board level. That will give the State appointees the opportunity to raise the public policy implications of each decision and to ensure the full commercial implications for the company are taken into account. The State appointees to the board do not, nor will they, have a veto on board decisions. All directors, including the State appointees, will be bound by their fiduciary responsibilities under the Companies Acts.

Additional information not given on the floor of the House.

Under company law it is not possible for the State or any other shareholder to overturn a decision taken by the company on day-to-day business matters. The legal advice to the Government has been clear and unequivocal. Neither is it possible for the State to avail of its shareholding to seek to impose non-commercial obligations on the company. By appointing our full board complement it will be possible to seek to ensure that the full ramifications of all significant strategic decisions are fully discussed by the board.

The appointment of these extra directors would not have changed the decision on the Shannon to Heathrow service. The board gave the management a mandate to pursue all commercial opportunities for the airline. On foot of this mandate, management decided to discontinue the service between Shannon and Heathrow. It did not have to get the further approval of the board. The appointment of two extra directors would not have made any difference to this decision. Even if board approval was a requirement, the emphasis that the company has put on the commercial advantages of Belfast over Shannon suggests that a better understanding of the wider implications for the Shannon region and wider commercial issues for the company would not have tipped the balance in this case.

Photo of Fergus O'DowdFergus O'Dowd (Louth, Fine Gael)
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Is the Minister's reply not an example of total incompetence on the part of the Government? I asked about the vacant seats on the board of directors of Aer Lingus, but in reply the Minister talked about what the directors will do when they are appointed. He refused to appoint them when he could have done so and, therefore, when the slots were being discussed, two of the Government seats were vacant and no one could articulate the policy for Shannon, the region or connectivity to Heathrow.

It is utterly unbelievable that, while everyone seems to have known about the decision of Aer Lingus; the Dublin Airport Authority knew, the board of Aer Lingus knew, the Department of Transport knew and the Belfast groups knew, the only person who did not know was the Minister. Not alone did he not know but for 44 days he sat in the Department and no one told him that he was not the mighty Minister, but the mighty mouse.

Photo of Noel DempseyNoel Dempsey (Minister, Department of Transport; Meath West, Fianna Fail)
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Was there a question there?

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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There may have been.

Photo of Noel DempseyNoel Dempsey (Minister, Department of Transport; Meath West, Fianna Fail)
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I did not notice it. The Deputy's original question was concerned with how we will continue connectivity, it had nothing to do with what the Deputy then said.

The appointment of the extra directors, which is referred to in the question, would not have changed the decision on the Shannon to Heathrow service. The board gave the management a mandate to pursue all commercial opportunities for the airline. On foot of that mandate, management decided to discontinue the service between Shannon and Heathrow. Management did not have to get further approval from the board. The appointment of two extra directors would have made no difference to that decision, even if board approval was a requirement. The emphasis the company has put on the commercial advantages of Belfast over Shannon suggests that a better understanding of the wider implications for the Shannon region and wider commercial issues for the company would not have tipped the balance in this case.

Photo of Fergus O'DowdFergus O'Dowd (Louth, Fine Gael)
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The decision was made by the board. The board discussed it before the executive went ahead. The Government seats on the board were vacant. The vow of omerta of the Government about Aer Lingus was in operation.

Did the Taoiseach's monitoring unit, which costs so much and which he praises so highly, not report to him the article in The Examiner on 13 June that stated that Aer Lingus hub plans would mean 1,000 jobs for Belfast and a loss of services in Shannon? The question is simple. The Taoiseach's office must have known about this because it monitors the media, even if the Minister was unaware of it. Was the Minister informed and, if not, why not?

The Minister is incompetent, he has failed in his duty of care and has shown an incredible lack of competence. He should tell the whole truth now.

Photo of Noel DempseyNoel Dempsey (Minister, Department of Transport; Meath West, Fianna Fail)
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If the Deputy is let shadow me for the full five years, he will find that is exactly what I always do, sometimes at great inconvenience to myself. He is incorrect when he says the board decided on this issue, discussed it and knew all about it.

Photo of Fergus O'DowdFergus O'Dowd (Louth, Fine Gael)
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On a point of order, I said it was discussed by the board and that the Minister was not represented by his regular nominees.

Photo of Noel DempseyNoel Dempsey (Minister, Department of Transport; Meath West, Fianna Fail)
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That is not true.

Photo of Fergus O'DowdFergus O'Dowd (Louth, Fine Gael)
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It is.

Photo of Noel DempseyNoel Dempsey (Minister, Department of Transport; Meath West, Fianna Fail)
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The Deputy is confusing two separate issues, but I hope we will be able to give him clarity later. As far back as the IPO launch and the documentation for it, it was made clear that an expansion of Aer Lingus was envisaged and that at least there would be one other hub. Even on 13 June it was generally known that Aer Lingus was examining possibilities for other hubs. The Deputy is confusing the issue that all the slots were going to be taken from Shannon for that particular hub, which was not known.