Jimmy Deenihan (Kerry North, Fine Gael)
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Kerry Airport is one of the main drivers of the County Kerry economy. Some 148 people are employed at the airport, 66 of whom are employed directly, a further 84 in car hire and taxi services and the bar and restaurant franchise and a further 30 are Ryanair staff. It also supports thousands of jobs in the county where the live register for August shows unemployment at 16,029 or 17% of the workforce. Last Thursday the people of Kerry were shocked when Ryanair announced its withdrawal of the PSO contractual obligation it entered into with the Minister and the reduction in flights from Kerry to Dublin from three to one. If the current PSO payment of €1.75 million, which goes directly into the running of the airport, is withdrawn the airport's future viability will be seriously compromised.

According to a comprehensive response to the Department of Transport on the operation of the PSO at Kerry airport by Dr. Sean Barrett, if the airport was to close the social welfare payments per year for the staff made redundant would be €2.585 million, which is 48% more than the PSO payment of €1.75 million per year. Dr. Barrett also pointed out that 432,000 passengers who use Kerry Airport currently pay €1.9 million to €2 million in airport tax. The €10 tax is paid by 148,000 departing passengers to the United Kingdom, Germany, sun destinations and ad hoc overseas charters, resulting in Exchequer revenues of €1.48 million. The passengers on the Dublin-Kerry route pay €2 departure tax at both Kerry and Dublin, yielding Exchequer revenues in excess of €500,000. The airport taxes paid on Kerry trips are thus 14% greater than the amount paid in the PSO to Kerry Airport.

The value for money report carried out by the Department of Transport on regional airports in regard to PSOs, which I am aware will be considered by the Government shortly, will show that Kerry Airport is in a very good position as regards value for money. In 2009, outbound flights from Kerry to Dublin facilitated 56,000 passengers. The new arrangement proposed by Ryanair would result in just one flight from Kerry to Dublin each day, leaving Kerry at 9.45 a.m and returning at 4.45 p.m. If one wants to travel from Dublin to Kerry to do business or for any other purpose by air it could result in two overnights in Kerry unless one has an early morning meeting at the airport.

The possible closure of Kerry Airport reduces its connectivity, not just on the United Kingdom and German routes but to Dublin and onward connections through Dublin. From Dublin and the connecting points Kerry would become a significantly more remote place, with enhanced accessibility costs. When people decide to stay away from Kerry and relocate their business and tourism elsewhere, output in the Kerry economy will be drastically affected and unemployment and emigration will rise.

In conclusion, I call on the Minister of State to convey to the Minister that every pressure must be put on Ryanair at this stage to fulfil its contractual obligation with the Government to complete its PSO arrangement, which ends next July. If that does not happen it must select another airline, and I understand Aer Arann is now in a position to take on this task in the very near future.

John O'Donoghue (Kerry South, Fianna Fail)
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Deputy Deenihan has outlined the facts in regard to Kerry Airport eloquently and there is no need for me to reiterate them. However, this much must be added. There are salutary lessons to be learned from the behaviour and performance of Ryanair at Kerry Airport. In 2008 Ryanair made a bid for the PSO contract at the airport in order to run flights three times a day from Dublin to Kerry and back again. It did so by undercutting the price of Aer Arann, which was then operational and successful at the airport. It removed Aer Arann from the route by an old method which is known as predatory pricing. It resulted in Aer Arann getting out of the marketplace in so far as the Dublin-Kerry route was concerned and being replaced by Ryanair. Ryanair replaced Aer Arann with three enormous aeroplanes on the route comprising 189 passengers per plane. I doubt if it filled the aeroplane on any day. In any event, we are into the third year and Ryanair is to pull the plug on Kerry Airport and says it will not fly the route three times a day any more, but only once a day.

It is very clear what has happened. Aer Arann went into examinership. Ryanair saw that the coast was clear and decided that it would then leave Kerry Airport for the most part and retain one flight per day, and do so on a commercial basis without the aid of the PSO. Interestingly, in its statement to the press Ryanair said that it did not believe the public service obligation should exist any longer. So much for Ryanair's commitment to regionalisation. It was, I suppose, a purely commercial decision but the predatory nature of it is something of which all governments should take heed.

Monopolies in dominant positions in the marketplace are always undesirable. They are always dangerous, and they always end up with a sad tale. This is a particularly sad tale, as Deputy Deenihan has outlined, because of the serious adverse consequences it has on tourism and commerce for the people of County Kerry. Ryanair did not simply walk out of County Kerry. It did leave a commercial route, as it stated, to Dublin each day and operates international flights from the airport. In the interest of balance I will say that much of the work done by Mr. O'Leary and Ryanair in this country has been fairly laudable. However, I find some of their practices to be despicable and in this particular instance it cannot be described as anything other than despicable.

The company was obliged to give the Government three months' notice of its intention to leave Kerry County Airport. It decided to give no notice whatsoever. It waited until the contract was beginning to run out — next July — and when it saw that it could possibly get away with it without perhaps being sued, it simply upped and left. That is not good enough and it is not acceptable.

As an island nation we must think very deeply about the way we are going to deal with aviation and the kind of policies we will keep and implement for the future because if we are going to allow monopolies in dominant positions in the marketplace decide the future of our people, in so far as aviation is concerned, the future of our people, particularly in the regions of this country, and more particularly in the peripheral regions, is fairly bleak.

Billy Kelleher (Cork North Central, Fianna Fail)
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The Minister for Transport sends his apologies to the two Deputies and realises that this is a serious issue and one that is close to the hearts of the Deputies' constituents.

The Minister is very aware of the possible implications for Kerry of Ryanair reducing its level of services on the Kerry-Dublin route. This service is operated under the current public service obligation, PSO, contracts for services linking Dublin Airport with the regional airports at Derry, Donegal, Sligo, Ireland West in Knock, Galway and Kerry.

These contracts commenced on 22 July 2008 and are due to expire on 21 July 2011. Exchequer subvention is paid in respect of these services on the basis that they would not be provided by the airlines on a fully commercial basis.

In the case of the Kerry route, following an EU public tendering process, a bid submitted by Ryanair emerged as the winner. The bid met the requirement in terms of proposed operating timetables as set out in the specifications published in the EU Official Journal, which stipulated that three return flights per day would be provided. The bid from Ryanair also set out the compensation it required to operate the service. Based on that bid, Ryanair were awarded the contract to provide the scheduled air services over the three year contract period and are receiving payments in accordance with the contract.

The Minister for Transport refutes recent claims by Ryanair in regard to the PSO contract and states that he has met his obligations under the terms of that contract. The Minister is currently considering the company's notification to reduce frequencies on the route from three daily return services to one daily return service with effect from 1 November 2010 on a commercial basis outside the PSO arrangement. A response will issue to Ryanair once all options have been examined, having regard to the terms of the contract, the obligations on Ryanair to provide a service under that contract and EU legislation. I will convey the views of the Deputies who spoke on this important issue to the Minister.