Joe Costello (Dublin Central, Labour)
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Question 94: To ask the Minister for Transport the amount of subsidy paid to each of the regional airports by the Government annually; his plans for each of the regional airports in receipt of State subsidy; the number of persons employed at each regional airport; the way he proposes to deal with the partial withdrawal of an airline (details supplied) from Kerry Airport; if he will give a commitment that the public service obligation will be retained for regional airports going forward; and if he will make a statement on the matter. [35229/10]

Simon Coveney (Cork South Central, Fine Gael)
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Question 95: To ask the Minister for Transport the level of capital subsidy that will be available to regional airports in 2010 and 2011; when he intends to provide certainty on the Public Service Obligation levies available to airlines operating out of certain regional airports; and if he will make a statement on the matter. [35401/10]

Noel Dempsey (Meath West, Fianna Fail)
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I propose to take Questions Nos. 94 and 95 together.

The core airport management operational subvention scheme provides for an annual subvention to regional airports. The amount payable is based on projected losses by the airports in providing core services, after taking account of any surpluses from commercial activities or other income. This is in line with the view underlying the mandatory EU guidelines on state aid that, as a general rule, airports should be self-financing.

I have made arrangements for the table below setting out the amount of operational subvention paid to each of the regional airports in 2009 and 2010 to be provided to Deputies Costello and Coveney.

My Department does not collate details of the number of persons employed at the regional airports. I am 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 which run from July 2008 to July 2011.

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 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 in order to operate the service. Based on that bid, Ryanair was awarded the contract and is receiving payments in accordance with that contract.

I refute recent claims by Ryanair in relation to the PSO contract. I have met my obligations under the terms of that contract. I have considered the company's notification to reduce frequencies on the route to one daily return service from 1 November on a commercial basis outside the PSO arrangement. A response has issued to Ryanair in the matter.

With regard to the PSO programme in general, the special group on public service numbers and expenditure programmes recommended that the public service obligations for air services should be discontinued when the current contracts expire. In addition, under updated EU legislation governing these services, more stringent conditions will apply to future PSO arrangements, having regard, for example, to the availability of other transport connections, and especially rail services, with a travelling time of three hours or less.

I have considered the recent value for money review of Exchequer expenditure on the regional airports programme. This was carried out to assist me in evaluating the appropriate scale of a regional airports programme in future years bearing in mind aviation policy objectives, the updated EU legislation, the improved surface links under the NDP and Transport 21 and the difficulties with our public finances. The review will be considered by the Government. It would be inappropriate for me to comment on any likely PSO scheme beyond 2011 in advance of the Government decision.

With regard to the funding of capital development at the regional airports, because of the difficulties with the public finances we decided in July 2008 that in so far as capital development projects are concerned, expenditure should be focused on project elements where the airports had already entered into contractual arrangements.

The provision in my Department's Vote to fund the capital expenditure grant scheme for all the regional airports in 2010 is €3 million. Grant aid for urgently required works at Knock and Donegal Airports was approved for this year together with the completion of projects which had been contractually committed. The amount available for 2011 will depend on the Government's consideration of the VFM review on the regional airports.

"Operational Subvention paid to Regional Airports"

Joe Costello (Dublin Central, Labour)
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I thank the Minister for his reply. The figures on the page he has supplied only refer to the operational subvention and there is no reference to the breakdown of the PSO obligation that is being paid. Perhaps the Minister will distribute those figures as well.

I understand that the operational subvention for regional airports amounts to a total of €1,696,503 and that the PSO subvention amounts to approximately €50 million. Every unemployed person costs the Exchequer approximately €20,000 in terms of tax forgone and social welfare payments. Therefore, the €50 million cost to the Exchequer is the equivalent of what it would cost to support the 750 people who might be made unemployed by the withdrawal of the PSO obligation. The Border midland and western region carried out a survey which shows there are 400 people employed in the Donegal, Sligo and Galway region and Kerry Airport employs 150 people. Therefore, if the PSO obligation was withdrawn, we would very quickly reach a figure of 750 jobs lost. I am looking at the effect of this loss on the basis of the current cost-benefit in terms of employment. Is it not foolish, therefore, for the Minister not to take this into consideration when conducting his review and deciding whether to go along with the McCarthy proposals to withdraw the public service obligation?

Brendan Howlin (Wexford, Labour)
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I call the Minister to reply, but will call the Deputy again.

Noel Dempsey (Meath West, Fianna Fail)
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The figures I provided refer to the operational subvention and capital expenditure, which was the area referred to in the question. I will get the information on the PSO for the Deputy.

Joe Costello (Dublin Central, Labour)
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Not just the operational figures.

Noel Dempsey (Meath West, Fianna Fail)
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I will get the figures for the capital expenditure, CapEx, the operational expenditure, OpEx, and the PSO. With regard to the PSO, the airports are not dependent on the PSO alone. The PSO to which the Deputy referred is paid directly to the airlines rather than the airports. Obviously, it is a help to the airports because once there are passengers flying in and out, there is an income from that. However, the PSO is paid to airlines and not airports. The other two schemes in question are the OpEx and CapEx subsidies, which are paid directly to the airport. These are subject to a value for money review, but no decisions have been made in that regard yet.

With regard to regional airports generally, questions must be asked, particularly in the current economic climate. We have nine of these airports, from Derry down to Waterford - one State airport and nine regional airports - and must question the feasibility of keeping them all operational with PSO support. We must also question whether the limited funds we have available should be spread out over the eight regional airports and whether this will hasten the demise of all of them. Perhaps we should decide which are the more strategically important from the point of view of tourism, access and regional development and decide to support them.

Simon Coveney (Cork South Central, Fine Gael)
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People living in places like Waterford, Donegal, Sligo, Kerry, Galway or Knock will not get any positive news from what the Minister has said today. I know that the number of people living in Knock is small, but a significant number from the broad surrounding area use the airport. The Minister has stated there are three sources of funding support for regional airports, operational funding, capital funding and the PSO. Even though the PSO money goes to airlines, Aer Arann, and Ryanair in the case of Kerry, it is because of the PSO that those airlines can continue to use the regional airports. Therefore, there is a symbiotic relationship between the PSO and the operating costs of regional airlines.

I would like to focus on the operational subvention, because we will have many more debates on the PSO levy and whether it should be changed or abolished. I do not think we should abolish the PSO, but we could change it to make it more effective to try to drive more passengers through regional airports. The Minister has provided the figures of the operational subvention paid to regional airlines for 2009 and 2010. The year 2010 is not yet over, but based on the figures the Minister has provided, the subvention for 2010 is less than half of what was paid last year. The effect of that will be to shut regional airports. Is there still a consideration in the Department for further operational subvention for regional airports like Waterford? The subvention listed for Waterford this year is approximately €600,000 although it was almost €1.5 million last year. Does the Minister expect airports like Waterford to stay open? Waterford Airport is one that does not have a PSO subvention. Does the Minister expect Waterford Airport to survive when he has more than cut in half the subvention under which it operates? Are there further operational subvention funds to be allocated to regional airports on a priority basis to ensure we keep them open?

Noel Dempsey (Meath West, Fianna Fail)
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The Deputy is right. However, I am sure it has not escaped his notice that there were severe cuts in the two budgets in 2008, the budget in 2009 and that we will have severe cuts in 2010. The transport budget was cut by €60 million last year and while some of that cut fell on the regional airports, I tried to protect them as best I could. A major portion of the cut was applied to local and regional roads, but I then had to provide extra discretion due to the weather situation. I also cut provision to CIE in the public transport area. There will be further cuts in the transport budget this year in the coming budget. There is no way we can get out of our current difficulties if we do not have those cuts. This year -----

Simon Coveney (Cork South Central, Fine Gael)
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Does the Minister accept that Waterford Airport will close?

Brendan Howlin (Wexford, Labour)
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Please allow the Minister to answer the questions put.

Noel Dempsey (Meath West, Fianna Fail)
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The Deputy asked whether the money provided is all that is available. At the moment, that is all I have available for the airports. We try in so far as we can to pay it out as early as possible to assist the airports in meeting payments. Like in every other area, we must cut our cloth to suit our measure.

Brendan Howlin (Wexford, Labour)
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We are over time and I want to take a brief supplementary from each of the Deputies. I call Deputy Costello to put his question. We hope it will be succinct.

Joe Costello (Dublin Central, Labour)
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Absolutely. The combined operational subvention, which has been halved to €1.6 million from what it was last year, and the PSO amount to less than €70 million. This amount will be lost to the Exchequer due to job losses, the contributions the State will have to make and the tax that will be forgone. How will the Minister build that consideration into the equation? My second question relates to Kerry Airport. The airport has lost two thirds of its services even though Ryanair had entered into a contract with it. Is the Minister pursuing Ryanair for breach of contract or is he in breach, as Ryanair says?

Noel Dempsey (Meath West, Fianna Fail)
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We have replied to Ryanair's letter about withdrawing and breaching its contract at Kerry airport. I do not want to elaborate on the basis that it may have to go further but we have made our views known on this. There is a procedure in the contract whereby six months' notice should be given by either side and that has not been respected in this case.

Joe Costello (Dublin Central, Labour)
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What about my other supplementary question? I have asked twice about the cost benefit analysis of the €70 million in the context of jobs.

Noel Dempsey (Meath West, Fianna Fail)
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I can only spend money that I have or that I get. If I do not have it, I cannot give it to airports or other bodies. I have to divide the cake I have among the various areas of responsibility.

Joe Costello (Dublin Central, Labour)
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The PSO is worth more than €350 million.

Noel Dempsey (Meath West, Fianna Fail)
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No, it is not.

Simon Coveney (Cork South Central, Fine Gael)
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I respect the fact that the Minister's budget will be cut. We all face difficult decisions and responsible politicians on this side of the House understand that. However, his budget was not cut by 50%. Has the Department analysed how many of the regional airports will have to close as a result of a cut in their operational subvention of more than 50% in some cases? In light of the amounts involved, which are relatively small, for example, €600,000 in the context of a regional airport's budget, will the Department ensure that, although cutbacks are necessary, no regional airports will have to close before the end of the year because of the level of cutbacks it will apply?

Noel Dempsey (Meath West, Fianna Fail)
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We have conducted a value for money review of the regional airports. We took all their values and otherwise into account and recommendations, which have yet to be considered by the Government, were made on foot of that. I assure both Deputies that all aspects of the value of such airports and what they mean to local areas were fully analysed, as they were in the provision of greatly enhanced infrastructure such as road and rail to various parts of the country. The recommendations are based on a thorough review of all that.