Timmy Dooley (Clare, Fianna Fail)
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Question 25: To ask the Minister for Transport; Tourism and Sport if he will outline in further detail the proposal in the jobs initiative that the Dublin Airport Authority will rebate substantial levels of airport charges to airlines in return for additional passengers. [13861/11]

Leo Varadkar (Dublin West, Fine Gael)
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The Government's recent jobs initiative includes a three-pronged strategy to encourage inbound tourism. The first element is the proposed abolition of the €3 travel tax; the second is a new growth incentive scheme recently introduced by the Dublin Airport Authority, DAA; and the third is a more targeted co-operative marketing of new air routes from key source tourism markets by Tourism Ireland, the DAA and the airlines. My officials and I have held a number of discussions in recent weeks with the DAA and the four main Irish airlines about this initiative, and I have also written to all the other airlines operating services to and from State airports. The response has been broadly positive.

The DAA's growth incentive scheme is due to run for the period 2011-14. Passenger service charges at the three State airports will be rebated to the airlines once the threshold of the previous year's traffic total has been surpassed at the airport in question. The rebates to airlines will be in line with their contribution to the overall growth at the airport.

The Finance (No. 2) Bill is currently being debated in the House and will make legislative provision for the suspension of the travel tax. The Government is only prepared to commence this provision if the airlines demonstrate a willingness to respond positively to these initiatives. This position will continue to be reviewed in the context of traffic performance in the current year as well as stated plans by airlines for growth in future years.

Timmy Dooley (Clare, Fianna Fail)
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The new incentive is based on passenger numbers for the previous year. However, there has already been a considerable increase in numbers in the year to date, in the region of 4% or 5% across the airports, in line with a growth in economic activity in areas outside this jurisdiction. In light of that, is it wise to use 2010 as the base level against which a rebate will be given to the airlines? One must take into consideration that passenger numbers were depressed last year as a result of disruption arising from the volcanic ash cloud. Would there be a better saving for the Dublin Airport Authority if there were a nominal growth level and an adjusted figure for 2010 to take account of the depressed figures arising from the ash cloud?

Leo Varadkar (Dublin West, Fine Gael)
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The figures for this year so far may be somewhat misleading in that the numbers are down across the three airports, particularly Shannon and Cork. The numbers were down for January, February and March, but up for April as a consequence of low figures for last year as a result of the ash cloud disruption, and will probably be up for May for the same reason. It will be interesting to see whether they are up in June, July and August. The increase thus far this year arises from the relatively low figures for the corresponding periods of last year when there was disruption due to the ash cloud. We will have a better idea in June or July whether passenger numbers are rising anyway apart from this factor. A major aspect of the decline in passenger numbers is the reduction in domestic travel, and this will further reduce when the PSOs end in July. In the absence of an incentive, most commentators would expect the figures to be quite flat this year. That is why we are introducing this incentive.

It was the DAA which proposed that 2010 be set as the baseline. Under the old scheme it was 2010 adjusted for the effect of the volcanic cloud. When we asked the authority to come up with a more attractive airline incentive scheme it proposed that the unadjusted 2010 figures be used as the baseline.

Timmy Dooley (Clare, Fianna Fail)
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The Minister's discussions with other airlines are welcome. We understandably tend to focus on our own airlines, but many tourists are attracted to this country through non-national airlines. Engagement with the latter should continue in order to encourage inbound tourism.

What impact will the incentive scheme have on the fiscal position of the DAA? We hear regularly about the authority's difficulties in terms of its continued financing of its debt. Has the Minister sought to have any analysis carried out on the impact of the scheme on the viability of the company and, in particular, on its debt rating and on the re-servicing of its debt if that becomes a requirement in due course?

Leo Varadkar (Dublin West, Fine Gael)
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On the first point, I have had discussions with the chief executive officers of Aer Lingus, CityJet, Ryanair and Aer Arann, as well as the chairpersons of three of those airlines. I have been in correspondence with the international airlines. Engagement with the latter is important because just as Irish people tend to fly with Irish airlines, even in these modern times, so too do people from Germany, France or wherever tend to fly with their own airlines. Non-national airlines, therefore, are particularly important in terms of attracting inbound tourists.

In coming up with the incentive scheme the DAA looked at the issues as to its own financial position, as did the board, before it was signed off. My guidance comes from the DAA in that regard and if it is satisfied the scheme will not damage its financial position then I too am satisfied. There is no point in having an incentive scheme which damages the DAA itself and the future of the airports it manages. It is a case of finding a balance.

It is always a challenge with issues like these where, for example, a company which is in trouble or is losing business may succumb to the initial temptation to increase prices and charges in a bid to attract more revenue. The risk in that strategy, however, is that one may lose customers. That is the decision-making process we have to go through. The DAA did that work itself before its board signed off on the growth scheme. On that basis I am satisfied there are no concerns about the authority's financial position arising from this scheme. Moreover, there must be growth before the incentive even comes into play. If there is no increase in passenger numbers, passenger revenues and commercial revenues then the scheme will not come into effect.