Richard Bruton (Dublin North Central, Fine Gael)
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Question 43: To ask the Minister for Transport the discussions he has had within his Department on the break up of State airport authorities; and if he will make a statement on the matter. [17920/10]

Pat Breen (Clare, Fine Gael)
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Question 75: To ask the Minister for Transport the structures that have been put in place to give the board and management of Shannon Airport autonomy to manage and operate Shannon Airport, further to his decision to suspend separation of the three airports at Cork, Shannon and Dublin until 2011; and if he will make a statement on the matter. [17722/10]

Noel Dempsey (Meath West, Fianna Fail)
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I propose to take Questions Nos. 43 and 75 together.

I announced on 22 December 2008 that I would be deferring a decision on the separation of the three State airports until 2011. Pending a decision on separation, the boards and management of Cork and Shannon Airports carry out devolved responsibilities in respect of the day-to-day management, development and promotion of their respective airports, with appropriate accountability to the Dublin Airport Authority. Under these new governance arrangements the Chairmen of the Cork Airport Authority, CAA and Shannon Airport Authority, SAA, have been appointed to the DAA board and DAA senior executives have been appointed to the boards of the CAA and SAA.

The recently published 2009 DAA annual report and accounts indicate that DAA has been adversely affected by the slow down in air travel due to the economic recession. As compared to the previous year, both Cork and Shannon in 2009 experienced a fall of in passenger traffic of 15% and 11.8 %, respectively.

It would be premature to speculate on any decisions to be taken in 2011 on airport separation having regard to the current commercial environment facing the three State airports. In addition to exercising my shareholder and policy responsibilities as regards the State airports, I continue to keep the position regarding the financial sustainability precondition for airport separation under review in my Department.

Simon Coveney (Cork South Central, Fine Gael)
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It is now six years since a Government which included the Minister made the decision to move the three State airports in Cork, Shannon and Dublin towards autonomy and independence. That brave decision was taken for a good reason to encourage competition between the three airports that would result in a reduced cost for passengers and improved service.

Much has happened since and two years ago the Government attempted to resolve the dead issues around the new Cork airport terminal by mediation. That process also collapsed. We are now in a position where the Government has postponed any separation or autonomy within those airports until 2011. That is only seven or eight months away. What is the Government doing now in terms of talking to the boards in the three airports? Is it making an effort to pursue the original strategy of allowing the three airports autonomy? With regard to Dublin Airport, is it not the case that because of financial pressures, decisions being taken in Shannon and Cork are being influenced by difficulties at Dublin Airport?

Brendan Howlin (Wexford, Labour)
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I want to allow questions from a number of Deputies. Deputy Coveney has asked many questions.

Simon Coveney (Cork South Central, Fine Gael)
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Is it not the case that the Government's rationale for independence within the three airports is now stronger due to the recession, when we must see the benefits of competition and autonomy within the three airports?

Noel Dempsey (Meath West, Fianna Fail)
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As the Deputy is aware, the decision to separate the three airports was taken prior to my time in the Department. Had the method of moving forward been accepted by the board of Cork Airport, it would now be an autonomous and independent airport. That did not prove possible and the Deputy has outlined some of the processes put in place to try to bring the matter to a conclusion. Events caught up on that action and in my first year in office, those difficulties were ongoing. We attempted mediation but as the Deputy noted, it did not resolve the matter.

By the time it had concluded in mid 2008, there were wider difficulties in the economy and eventually the chair of the board in Cork and Shannon recommended that I defer the separation in the economic climate as it was, and which has not improved too much since. We agreed to defer the decision until 2011. As the Deputy noted, the beginning of 2011 is approximately eight months away but the end is approximately 20 months away. The decision will be made at some stage during the course of that year.

Tommy Broughan (Dublin North East, Labour)
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The Labour Party is opposed to the breaking up of Aer Rianta, which is an historically strong aviation company which has served the State so well. At the same time we have recently seen a number of State companies in the electricity market, such as Bord Gáis and the ESB, competing strongly against each other.

I wish to ask about the debt situation. The Minister was not in his current portfolio before the last general election, but his party made a promise to the people of Cork that their airport would be established on its own debt free. The Government then came along in a cavalier way, tried to lumber the airport with €113 million in debt and put pressure on it to sell some of its 500 acres. How does the Minister stand in respect of this question and that on Cork Airport's viability?

Cork and Shannon airports have suffered grievously from the recession and the downturn in numbers. Has the Minister spoken with the DAA in the context of putting major new initiatives into the two sister national airports?

What does the Minister expect Dublin Airport's debt levels to be? When Mr. Declan Collier, chief executive of the DAA, attended the Joint Committee on Transport, he mentioned debts of €500 million in light of Terminal 2, T2, and other works. He then stated the debts could escalate to €1.2 billion in the next decade. Is the Minister concerned by these debt levels and what does he intend to do? Is he just trying to pass the task on to the next Government?

Noel Dempsey (Meath West, Fianna Fail)
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No, as I hope to be a part of that as well. What I intend to do is what I try to do at all times. When one sets up a semi-State organisation, particularly a commercial one, it should be allowed to do its own business, organise its own affairs, pay for itself and, if at all possible, pay a dividend to the State. This is basically my approach to the DAA, as it would be to any other commercial semi-State organisation.

Regarding the question on debt in Cork, the position was made clear and a proposal was tabled and eventually accepted following the mediation process.

Simon Coveney (Cork South Central, Fine Gael)
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By a board that then disbanded.

Noel Dempsey (Meath West, Fianna Fail)
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If Cork Airport were to separate, it would be responsible for its debt and be able to meet the cost of that debt from its substantial Aer Rianta property. This was a reasonable approach and, had it been accepted, there would probably have been an independent Cork Airport by this stage.

Pat Breen (Clare, Fine Gael)
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I congratulate the new chairman of the Shannon Airport Authority, Mr. Brian O'Connell, who will meet Oireachtas Members next Friday. The situation in the aviation sector has changed dramatically since the idea of a separation was mooted several years ago. Does the Minister believe Shannon Airport could survive if it completely separated from the DAA? I am sure the Minister agrees with me when I say it is important that Shannon Airport has the autonomy to make decisions about its future. We all know of the airport's current problems. For example, Ryanair provides a limited service into it. Could Shannon Airport survive separated from the DAA? This is an important question.

Regarding the airport's debt, does the Minister know how much money it is making or losing? I understand that it has lost much money in recent years.

Brendan Howlin (Wexford, Labour)
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The question has been expanded on somewhat, but the Minister has the information to hand.

Noel Dempsey (Meath West, Fianna Fail)
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Yes. I do not have detailed information, but I can tell the Deputy that circumstances for all of the airports are difficult. We saw the fall-off in passenger numbers in the past 12 months. Shannon Airport's numbers fell by almost 12% and Cork Airport's fell by 15%. It is a difficult time.

At the time of the proposed separation, Shannon Airport needed investment. The DAA had already invested approximately €40 million in it, but further investment was necessary. The Deputy asked whether it could survive independently. If the airport wants to be independent - this matter will be reviewed next year and we will talk with the DAA - then it must be truly independent. It cannot be independent when making decisions but dependent on the DAA to pay for them. If there is to be independence, it will be true independence. The call that must be made at that point is whether the airport can survive on its own economically or whether it would be better served being part of a two-airport or three-airport company. It is too early to speculate on that question at this stage.

Brendan Howlin (Wexford, Labour)
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Two Deputies are offering and I will allow both of them if they are brief.

Fergus O'Dowd (Louth, Fine Gael)
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The key point is that the heavy hand of the DAA is felt in all airports. When T2 was opened to competition, vibrant international companies failed to get through the process. Is it not time to re-examine the principle of the DAA running those airports and to invite tenders? International airport companies have assured me that there is vibrancy and competition among the international airlines, which were prepared to work T2. The DAA should consider opening up and making the other airports in the country financially independent, as I agree with the Minister on the latter point.

Simon Coveney (Cork South Central, Fine Gael)
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Is the Government still committed to the principle of competition between three independent airports, namely, Dublin, Cork and Shannon? As a policy position taken by the Government, I believed it to be correct. Is the Government still committed to trying to make it work next year or is the policy up in the air in light of the review and the decision to be taken next year?

Can the Minister stand over a situation whereby Cork Airport's largest competitor is Dublin Airport despite the fact the former cannot take any decisions without getting the latter's approval? It is a farcical position and we have the worst of both worlds, namely, a half-way house that has all of the structures of autonomy in decision making but none of the responsibilities. This is a major contributory factor to Cork Airport's poor figures.

Noel Dempsey (Meath West, Fianna Fail)
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I do not accept that. Cork Airport is suffering like the other airports from general economic trends. It has been given a considerable amount of autonomy in its day-to-day decision making on the airport's management. I am unaware of any significant conflicts that have arisen between Cork Airport and the DAA as regards plans to promote the former since the new arrangement was put in place.

The same applies to Cork as applies to Shannon. If it is to go independent, then it must be independent. This means that, at some point in the future, it will be unable to ask the Government for further injections of capital. This would not be allowed under State aid rules.

Simon Coveney (Cork South Central, Fine Gael)
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Nor will the DAA.

Pat Breen (Clare, Fine Gael)
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It has all the assets.

Noel Dempsey (Meath West, Fianna Fail)
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Nor will the DAA, but it is financing its operations out of its own pocket. The taxpayer has not paid for anything at Dublin Airport.

The principle of the separation of airports outlined in the relevant Act still remains as Government policy. It is subject to review in 2011, but it is the principle on which we are operating at the moment. Probably the fairest way to say it is that this is the default position. In 2011, a final decision will be made, but we are looking at the situation from the point of view of three separate airports.

Mary Upton (Dublin South Central, Labour)
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Question 44: To ask the Minister for Transport the position regarding his request for the Dublin Airport Authority to confirm that it has the capacity to operate Terminal 2 satisfactorily within the parameters set by the Commission for Aviation Regulation; when a final decision will be made in this respect; and if he will make a statement on the matter. [17873/10]

Noel Dempsey (Meath West, Fianna Fail)
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Following the decision to terminate the facilities management procurement process relating to Terminal 2 at Dublin Airport, I announced, on 10 March, that I was mandating the Dublin Airport Authority, DAA, to operate the terminal, while requiring it to demonstrate that it can do so within a benchmark set by the Commission for Aviation Regulation. In this context, the Dublin Airport charges determination for 2010 to 2014, made by the commission, in December last year, has set very specific and stringent operating cost targets for operating an efficient Terminal 2. I asked the DAA to report back to me within three months on its capacity to operate Terminal 2 satisfactorily with effect from November 2010. I understand from the DAA that it will report back within the specified period.

Tommy Broughan (Dublin North East, Labour)
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On the previous occasion on which the Minister took questions, we engaged in a lengthy discussion in respect of this matter. It is extraordinary that a dummy competition or tendering process, in which many distinguished companies were involved, was run by his Department, only for the latter to then fall back on the Commission for Aviation Regulation's basic charging determination. In view of the fact that it was already in possession of that determination, it appears that the Government, on behalf of the State, has spent €700,000 on something which did not yield a result.

The Minister indicated that the DAA must provide him with an outlook on its capacity to run Terminal 2. When does he expect to be presented with the DAA's report? Will it emerge before November? What would happen if the Minister decided that, in effect, he needed to fall back on a competition process? Would it then be necessary to run a second tendering competition. He indicated previously that none of the bidders, such as Ferrovial, the British Airport Authority, and so on, met the requirements set down as part of the tendering competition. This is despite the fact that many of those bidders run massive operations elsewhere. When does the Minister expect to be in a position to approve the DAA's plan? Does the Minister expect Terminal 2 to open, as planned, in November?

Recent media reports indicate that companies such as Air India are considering establishing a European hub to be based at Terminal 2. Is there any basis to such reports?

The new Terminal 2 will be a valuable national facility. However, there are grave fears that the wages and conditions of those who work there will be significantly less favourable than those enjoyed by employees at other airport terminals throughout the country. Does the Minister possess any information in respect of this matter?

Noel Dempsey (Meath West, Fianna Fail)
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The result of the tendering process to which the Deputy refers was that none of the outside operators submitted tenders that were sufficiently robust. I would not agree with running a process and then stating that even though none of those who tendered for the contract met the criteria, one should be given it in any event. That would not be very smart.

Tommy Broughan (Dublin North East, Labour)
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So it was not possible to return to them in the interests of seeking improved tenders.

Noel Dempsey (Meath West, Fianna Fail)
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We returned to them to establish why their tenders were not sufficiently robust to allow us to proceed to the next stage of the tendering process. We also tried to establish whether the result would have been any different if the process had been reopened at that stage. Consultants that were involved were satisfied that the result would probably not have been any different. On that basis and rather than delay the opening of Terminal 2, I decided to place stringent conditions on the DAA to operate the terminal within the parameters of the limits set down by the Commission for Aviation Regulation.

We have given the authority until mid-June to decide whether, and to show us if, it can operate the terminal in this way. If it cannot prove to us that it can operate the terminal, we will be faced with a problem because we will probably be obliged to put the contract out to tender again to try to obtain the best possible price. That could delay the opening of Terminal 2. However, if that is what it takes to obtain the best value possible, then we will just have to proceed.

Fergus O'Dowd (Louth, Fine Gael)
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Is it not the case that at least two of the companies that tendered for the contract have experience of running international airports that are far bigger than Dublin Airport? Notwithstanding what the Minister said, would it not be possible to ask those companies - which, having met certain criteria, were pre-selected before entering the tendering process - to put forward the best deals they can draw up? These could be compared with the DAA's plan and the contract could then be awarded to the most competitive bidder. If the DAA ends up running Terminal 2 in addition to Terminal 1 and the other airports throughout the country, there will be no competition, no choice, consumers will be obliged to pay more and taxpayers will ultimately lose out.

Noel Dempsey (Meath West, Fianna Fail)
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That is not strictly true because the DAA is a regulated entity. In that context, the Commission for Aviation Regulation acts in the interests of several different parties, but mainly the stakeholders in and customers of the airport. It has decided on a level of charges it believes to be reasonable from everyone's point of view. This is not quite the same as an open market scenario where the DAA could just decide what it wants to charge and impose increases whenever it desires.

The companies which tendered in respect of this project operate airports in other countries. It was only natural that they should tender for the contract relating to Terminal 2. As already stated in quite diplomatic terms, they did not submit sufficiently robust tenders. In all good conscience, I could not accept tenders that were less than robust.

Deputy Broughan referred to media reports which indicate that certain companies might have an interest in establishing operations at Dublin Airport. Speculation is not helpful and I would prefer not to comment directly in respect of individual companies.

Brendan Howlin (Wexford, Labour)
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We must proceed to the next question.

Fergus O'Dowd (Louth, Fine Gael)
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I wish to withdraw Questions Nos. 45 and 49.

Brendan Howlin (Wexford, Labour)
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Those questions were not submitted in the Deputy's name.

Fergus O'Dowd (Louth, Fine Gael)
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No, but I did submit them.

Brendan Howlin (Wexford, Labour)
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I am afraid I am guided by what is indicated on the Order Paper. If he wishes, the Minister need not read the reply. It can be included in the Official Report.

Fergus O'Dowd (Louth, Fine Gael)
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We lost time earlier. Let us not waste further time now. The Minister can read the reply.