Michael McCarthy (Cork South West, Labour)
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The Fastnet line has been placed into interim examinership. The genesis of the service was a co-operative movement in west Cork. It is hugely valuable and has been very important economically in the Cork and Kerry region. The service has been hampered by fuel costs. It will be shelved and from 2012 will no longer run between October and March. Fastnet predicts that services will resume on 6 April 2012 until the end of September, as per its restructured viable business plan.

As part of a broader restructuring of the management team over the past four months, with the principal focus on improving and stabilisingthe financial statusof the company, the decision to cancel the service between Cork and Swansea has happened in a sudden and unexpected manner. It is of profound concern to people across the south west, including passengers, staff members and shareholders. The business employs several full-time shore employees in Cork and there is an average of 53 full-time contract staff on board the MV Julia at any given time.

The move has also had immediate implications for the 400 shareholders who have generously invested in the company and whose unprecedented support for the service since its inception can never be underestimated. These people need comprehensive assurances and explanations on the appointment of the examiner and the implications for them.

Ciarán Lynch (Cork South Central, Labour)
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I thank the Leas-Cheann Comhairle for allowing this debate. The Cork to Swansea ferry has announced the suspension of sailings. The service was launched on 10 March 2010 following the acquisition of a new ship, the MV Julia, and has carried 150,000 passengers to date. Fastnet suspended all services on 1 November following its placement into examination by the High Court. The company has debts in excess of €10 million. However, all intending passengers have been offered refunds on their fares which is a welcome development.

The original service linking Cork to Swansea ran from 1987 to 2006. Following the wind-up of the company it was terminated and recommenced in 2010 when a new company set up under a co-operative which engaged with many small local businesses in Cork, Kerry and Munster. It was seen as a venture which would have a mutual and broad beneficial gain for businesses in the region, particularly those involved in tourism. It was also perceived that the roll-on roll-off freight service from the UK to Ireland would benefit other ancillary businesses. As Deputy McCarthy said, current fuel prices have also contributed to the difficulties the company has faced.

I welcome the Minister for Transport, Tourism and Sport to the Chamber to discuss this important issue. The news of the Fastnet line examinership has come as a huge shock to many in Cork and Kerry. I spoke to Deputy Arthur Spring this morning. In the second quarter of this year tourism figures increased by 15%, which must be related to the reintroduction of the ferry service.

The company has stated its intention to resume sailings in the summer period next year, albeit on a more restricted basis. It is a welcome development. I will be interested in hearing what assistance, if any, the Minister's Department can provide in the context of recommencing the ferry service between Swansea and Cork.

Leo Varadkar (Dublin West, Fine Gael)
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I thank the Deputies for raising this matter. I share their concerns and their disappointment regarding this development.

Neither the Department of Transport, Tourism and Sport nor any of its agencies has any function in respect of or, more pertinently, finance for the subsidisation or provision of ferry services for this or any other route. Following the suspension of the service offered by the Cork Swansea Ferry Company in 2007, the West Cork Tourism Co-Op was formed in early 2009 with the objective of relaunching the service. In September of that year, the co-op purchased a vessel, the MV Julia. This transaction was financed through equity raised from local small investors and a bank loan. I take this opportunity to acknowledge the substantial local support afforded to this project.

In October 2009, the co-op announced further investment opportunities through an additional share offer and by means of a sale of secured corporate bonds. As a commercial State entity under the aegis of my Department, the Port of Cork Company took a commercial decision to purchase bonds totalling €300,000 in the service. This was a small investment relative to the size of the port company. The most recent investment was approved by my Department and the Department of Public Expenditure and Reform. Four other parties took up the public offer to purchase bonds. These include three public bodies - Cork County Council, Cork City Council and Kerry County Council - and the Clona Milk Co-Operative. In 2010, Enterprise Ireland approved an investment in Fastnet Line Operators Limited of €1 million in redeemable preference shares, on full commercial terms, to complete the funding round. This investment represented less than 10% of the overall funding round.

Enterprise Ireland made investments in Fastnet Line Operators Limited in 2010 and 2011 totalling €1 million by way of redeemable preference shares, on full commercial terms. Furthermore, Finance Wales, a body under the auspices of the Welsh Assembly, also agreed to invest in the business. The Fastnet Line had sufficient funds to launch and operate the service from March 2010. In that year, the ferry service recorded a €2.5 million operating loss over ten months. This was despite the increase in the number of passengers using ferry services as a result of the volcanic ash crisis.

The Cork-Swansea ferry resumed sailings in March 2011, after the winter months, and it was planned to extend the sailing schedule in 2011. On 1 November 2011, ferry sailings were suspended when the High Court appointed Grant Thornton as an interim examiner to the company. As the Deputies will be aware, this is a court process over which neither Parliament nor the Government has any control.

In addition to the commercial investment made by the Port of Cork in the ferry service, as well as Enterprise Ireland's investment, my Department, from the tourism side, has been supportive of the development of the Cork-Swansea route by the Fastnet Line. However, we are bound by the EU state aid rules and limitations these impose. That said, however, early on both Fáilte Ireland and Tourism Ireland were - as is the case with other air and sea access routes - involved in discussions with the promoters to support the service through active promotion and marketing. Subsequently, advertisements were placed, on a co-operative marketing basis with Tourism Ireland, in UK national and regional newspapers in order to promote the service to British tourists.

Fáilte Ireland also worked with the Fastnet Line to provide it with business support training. The training on offer ranged from web to marketing, finance, sales and practical culinary and hospitality-customer service supports. These were designed not only to ensure a quality passenger experience but also to deliver benefits such as cost savings and increased sales and revenue and, ultimately, to improve viability. In addition, Fáilte Ireland granted BES certification to the enterprise to assist it in raising finance and the line launched a drive to raise €1.5 million in funding. That kind of support from Fáilte Ireland and Tourism Ireland will remain available to the current operator, if it can resume sailings, or to a replacement operator.

I am disappointed that the service has run into difficulties. I am aware that there is a great deal of community and business support behind it. An access route such as this into the south west is beneficial to the region and I hope that the operator can find new financing to continue the service. I understand that a restructured business plan has been presented by the company as part of the examinership process and forecasts that the ferry service will resume in April 2012. However, ferry services must operate on a commercial basis and to do so must have the support of a sufficient customer base. It is not the function of the Department of Transport, Tourism and Sport - nor is the facility available - to provide finance for such ferry services. Moreover, to do so could, if traffic from unsubsidised services were to be displaced as a result, constitute illegal aid on the part of the State.

Michael McCarthy (Cork South West, Labour)
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I thank the Minister for coming before the House to take this matter. To date, the service has carried over 150,000 customers, 75% of whom have UK addresses. This highlights the absolute dependence of the south-west region on tourism. The Minister came to the region during the summer to open the Mizen Head Bridge, which has been short-listed for an international engineering award. The ferry service is vital and the benefits to be had from tourism have an impact throughout the entire south west. In many ways, retention of the service would have the knock-on effect of reducing the reliance people who have lost their jobs have on social welfare payments. This matter highlights the importance of tourism to the region.

Ciarán Lynch (Cork South Central, Labour)
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I thank the Minister for his reply. I acknowledge his comments to the effect that no State intervention can be made because this could be perceived as a breach of European Union state aid rules. It is a matter of EU law that neither this nor any other member state can subsidise private ferry operators.

In view of the unique structure relating to the company which provides the service, that is, the fact that businesses, local authorities and other interests in the south-west region were involved in getting it up and running, will the Department provide assistance in the context of analysing where the company went wrong? If such an analysis were carried out, it might facilitate the putting in place of a business plan whereby a new ferry service could be provided, albeit on a more limited basis, during the summer months. I am of the view that there would be merit in the Department carrying out a detailed analysis with regard to how a new service might be put in place and how it might operate.

Leo Varadkar (Dublin West, Fine Gael)
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Deputy McCarthy was absolutely correct when he stated that rising fuel costs have not been of assistance in this matter. The difficulty we face with regard to ferry and airline services is that fuel costs are going to rise in the long term. Such costs may fluctuate but their long-term trajectory will be upwards. When new environmental regulations relating to the sulphur content of fuels, ferry services will become much more expensive. That is an underlying problem with which we will be obliged to deal.

While State aid has not been provided, a great deal of assistance has been forthcoming in the form of commercial investment. Such investment was made not just by local people, but also by the county and city councils, Enterprise Ireland and the Port of Cork Company. However, there comes a point where investment of this nature is no longer commercial. The support provided by Tourism Ireland and Fáilte Ireland remains available and will still be in place in the future. I recognise the tourism benefits of facilitating direct access to the south west. People have the alternative of entering the country through Rosslare. Given that the latter is situated quite a distance from the south west, however, tourists may not be prepared to continue their journey to the region. I will make representatives from Fáilte Ireland and Tourism Ireland available to work on business plans and marketing and co-operation initiatives. I am happy to take on board the suggestions put forward by the Deputies in that regard.