Brendan Griffin (Kerry South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I thank the Ceann Comhairle for selecting this important issue for discussion and the Minister for attending in person. I apologise on behalf of Deputy Joe McHugh for his absence; he has been unavoidably detained elsewhere. It would be remiss of me not to commend Deputy Dan Neville on raising a matter that is related to the issue I am raising to the extent that access to County Kerry is hampered by shortcomings in the road network. Bottlenecks in Adare, Newcastle West and Abbeyfeale, for example, make road access to the county difficult and increase journey times. It is vital, therefore, that County Kerry retains its air link with Dublin, the main hub connecting us with the rest of the world. Similarly, Donegal does not have a great road network and needs to retain flights to the capital.

The Minister was the first member of Cabinet I met following my election to the Dáil in 2011. At that meeting, we discussed the need to continue flights between Kerry and Dublin beyond 2011 and the Minister, to his great credit, subsequently decided to maintain the air link between counties Kerry and Donegal and the capital. These services provide an economic lifeline for both counties. I welcome the Minister's recent decision to place the service provided on both routes out to tender once the current public service obligation contracts expire in November.

The purpose of raising this topic is to ascertain the current position, including the plans for the routes and the timeline anticipated for realising them. People are concerned that, with the current contract set to expire in November, there may be a hiatus during which flights between Dublin and counties Kerry and Donegal will cease. Will the Minister assure the House that every effort is being made prevent such a scenario?

Kerry Airport has a significant impact on the county and I am sure if Deputy McHugh were present, he would make a similar point with regard to Donegal Airport. Kerry Airport employs 50 people directly and a further 53 people indirectly. The staff payroll amounts to more than €500,000, which goes into the local economy. The air link between County Kerry and Dublin should not be viewed in isolation as it makes the airport viable. It is this viability that has attracted flights from London, Luton and Frankfurt Hahn and a service, primarily outbound, to Faro in Portugal. These international flight connections have a significant impact on the local economy. I have met large numbers of visitors from the United Kingdom and Germany, primarily in summer, many of whom told me that the availability of the air link was the reason for their visit to County Kerry. Most of them would not otherwise visit the county and they spend substantial sums locally.

Kerry Airport is a vital lifeline for the county, which must be maintained and developed. Last week, I contacted Ryanair to ask whether it had plans to establish new routes from the airport, particularly to the north of the United Kingdom with which we do not have a link. If possible, I would also like a transatlantic route established at the airport at some point.

I ask the Minister to provide an update on the current position and commend him again on the support he has shown for Kerry Airport. I know he wants what is best for the airport. Any support or information he can provide will be appreciated.

Leo Varadkar (Dublin West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Under the Regional Airports Programme 2011-2014, Exchequer support for regional airports is provided under a number of schemes, including a public service obligation, PSO, air services subvention. This programme reflects the outcome of the 2010 value for money review of Exchequer expenditure on the regional airports programme. Following the review, a decision was taken to reduce to two the number of routes covered by the PSO air services scheme.

The Exchequer provides supports under the scheme to Aer Arann-Stobart Air for the Kerry to Dublin route and Loganair for the Donegal to Dublin route. The review took account of a number of factors, including the performance of the services, the requirement to make best use of scarce Exchequer resources, improvements to the road network and changes in European Union legislation covering PSO air services. The decision to maintain the PSO air services to counties Kerry and Donegal had regard to the fact that the former is not yet connected to the major interurban motorway network as the Ballyvourney-Macroom road is not complete and the latter is not connected to either the motorway or rail network.

Exchequer funding for PSO air services schemes provides financial support to airlines, based on a competitive tender, to operate essential services serving peripheral or development regions. These services are considered vital for the economic development of the regions in question and would not be provided on a commercial basis. Under the current contract, which ends in November, a total of almost €12 million will have been paid to Aer Arann-Stobart Air in respect of the Dublin to Kerry route and more than €10 million will have been paid to Loganair in respect of the Dublin to Donegal route over the lifetime of the respective contracts.

Regional airports were developed in the 1980s to provide for improved connectivity both nationally and internationally. However, the development of the major interurban roads programme and improvements to the rail network in the intervening period have reduced the importance of regional airports for connectivity within Ireland. Today, regional airports are largely viewed as being important because of a level of international connectivity that they bring to a region for tourism and business.

Arising from the Ireland West Airport Knock study, the Government decided to continue the funding for regional airports under a new post-2014 programme, which is being developed in my Department. This is in line with the draft national aviation policy which will be finalised in the coming months. The new programme will have to comply with the revised European Union guidelines on state aid which came into effect in April this year. While the 2014 EU guidelines on state aid to airports and airlines have application to other Union guidelines on state aid, the current PSO air services scheme and any future air services schemes must comply in particular with Regulation (EC) No. 1008/2008. These regulations require that a notice of invitation to tender must be published in the Official Journal of the European Union, with a deadline of two months for submission of tenders from the date of publication of the notice.

It is planned to shortly hold a new PSO air services competition, that is, a public tender process, for the Donegal to Dublin and Kerry to Dublin routes post-2014. As part of this process, it is planned to extend the current contracts to next February to ensure continuity of service pending the outcome of the tender process. It is expected that a limited budget of some €12 million per annum will be available for current and capital expenditure under the regional airports programme from 2015 onwards. With an average cost per annum for the two PSO routes from Kerry and Donegal of more than €7.5 million per annum based on existing figures, a final decision on whether to maintain both routes post-2014 will be taken when the cost of subvention becomes clear from the tenders submitted.

Brendan Griffin (Kerry South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I thank the Minister for his response and welcome the extension by three months of the current contracts. As I stated, I was fearful that, with the clocks ticking, time could run out before a new arrangement was put in place. The extension is, therefore, a welcome development. While I welcome the commitment to further examine the issue, the Government's approach must take account of factors other than the immediate cost of the subsidy for services on the Kerry to Dublin and Donegal to Dublin routes, including the wider benefits to the economy. I referred to tourism but I note also that a large number of international companies, including FEXCO, the Kerry Group and Liebherr, are based in the county. Their executives and clients use the PSO route frequently to connect with Dublin and the rest of the world. If we wish to attract foreign direct investment to County Kerry, particularly now that it will be on the regional aid map again from 1 July onwards, it is crucial that air connectivity is maintained.

I thank the Minister for providing for an extension to the services to ensure flights do not cease on 1 November. I ask him to do everything in his power and to be as flexible as possible to secure new operators for the Dublin to Kerry and Dublin to Donegal air routes. As I indicated, the Government must consider the matter in the context of the overall economic impact of the routes, as opposed to their immediate costs to the State.

Of that subsidy, €600,000 goes back into the Dublin Airport Authority, a State body, through airport charges alone. It is not all one gross expenditure figure. There is a lot of that coming back in to the State directly as well.

Leo Varadkar (Dublin West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I want to confirm for Deputy Griffin that the existing contracts will be extended to February to ensure continuity and no loss of service over the winter period.

The Deputy makes some valid points. Government decisions should take account of not only the simple narrow balance sheet but also the wider economic benefits that derive from air connections, whether they be tourism, investment or business. He is, of course, correct to say that there are benefits for Dublin Airport as well as Kerry and Donegal in that landing fees are charged and the routes from Donegal and Kerry help to feed routes from Dublin to Britain, Europe and other parts of the world and make them more sustainable. That is true.

Notwithstanding all of that, the budget for regional airports is €12 million a year and, unfortunately, I do not expect that to increase. Of that, approximately €7.5 million goes on those two PSO routes and I do not expect that to increase either. I am not in a position to write any blank cheques to anyone at this stage. We need to see what tenders come in. If I can give any signal from here, it is that we expect the airlines to put forward good value propositions so we can continue these routes well into 2015 and beyond.

Alan Farrell (Dublin North, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The next topical issue, in the name of Deputy Penrose, on the need for immediate review of the public service obligation levy is to the Minister for Communications, Energy and Natural Resources. As we await the Minister, we will move on to Topical Issue No. 4 in the name of Deputy Ó Cuív.