Timmy Dooley (Fianna Fail)

I join with my colleagues in welcoming the Minister of State to the House on what is an important Bill which is technical in nature. I understand a previous Bill was passed in a previous Dáil and was brought through the House by the current Leader of the House, Senator O'Rourke.

The Bill will give effect to the changing role of the national carrier in our modern economy. The economy has changed and there have been many changes in the aviation sector. Previously, the ethos was for the national carrier to be part of providing for the national interest. That has changed from a position of providing access as a service rather than facilitating a desire to travel to this country. There is no doubt Aer Lingus created that demand in the early stages. It was very much part of developing Ireland as a tourism and business destination.

In light of the many advances, growth in world aviation has seen many changes. There is less of a need for Aer Lingus to focus on the national interest component. That is clear by virtue of the demand that now exists for travel to Ireland, a demand created by Aer Lingus. It is obvious by virtue of the many other airlines that travel to Ireland and provide access, particularly on the transatlantic market, that great credit is due to Aer Lingus which was part of pioneering the routes across the Atlantic and in developing what has become a large market in recent decades.

The changes in EU rules preclude the Government from providing subvention to Aer Lingus. That forms the backdrop to the Bill. It will no longer be possible for the Government to provide Exchequer funding to the airline in crisis. We saw how difficult that was when the airline experienced difficulties associated with creating a restructuring plan without the capacity to revert to the Exchequer. The purpose of this legislation is to provide for a viable future for the airline. It needs to change the focus which was initially targeted at the national interest. That need is no longer as prevalent, but there is a need to develop the airline and ensure the future viability of not only existing jobs, but to build and grow a company that will develop into an international success.

The transition has been painful on many occasions, moving from that ethos of national interest to being focused more on profitability and the delivery of a service. There has been a number of recent crises of which we are all aware. The Government has been involved on all those occasions. I refer to the Cahill plan and the more recent survival plan the effects of which are going through now. The principal reason for that was the weak management, much of which was based on the fact that there was a comfort zone associated with the capacity to revert to the Exchequer or to the Minister for Finance to be bailed out. That has changed as a result of EU legislation in the aviation area. It means airlines no longer have that comfort zone. Many of us were surprised to see the demise of Swissair and Sabena during the past two years. We should keep those in mind when we talk about Aer Lingus because those two airlines were synonymous with their nation state, as Aer Lingus is with Ireland and yet under the new rules they were unable to survive and fell by the wayside. This legislation is critically important from that perspective to ensure we do not see the demise of Aer Lingus in any future uncertainty in the economics of the aviation sector.

It has been clear for some time that if Aer Lingus is to respond and take advantage of opportunities in the world market it needs to have access to capital. Aer Lingus is competing with some well-financed airlines not only throughout the world, but in Ireland. It is competing with Ryanair, a well-financed operation, which has the capacity to change direction and business model because of its access to finance. As Aer Lingus is State owned and the Government is precluded under EU legislation from putting significance finance into it, it is important that whatever decisions are ultimately taken by the Government will allow it to compete on an even footing with its many other competitors. The Bill provides for this and at some point for the disposal of shares, whether in whole or in part. I am happy to note in his contribution that the Minister of State identified the need for regional development, under whatever provisions are introduced, to see the disposal of these shares.

Another important provision concerns ESOP. It is important to recognise the efforts of workers in turning around the company. That is and has been a critical component of the success and the renewed development of the airline. I am pleased their efforts are being rewarded.

I agree with Senator Browne concerning the difficulties for those who have left or are in the process of leaving. There is a real issue here which perhaps the Minister of State will address at a later stage. I am not sure how it might be addressed. Senator Browne said there is a precedent in the ESB, although it concerns a different Department. If the principle could be applied in this case it would be welcome. I have been contacted as I am sure my colleagues have been, particularly by those who have been interested in voluntary redundancy. Following an announcement last week by the company there is a request for 104 redundancies at the station in Shannon. Many of those I spoke with during the weekend were concerned because the timeline for these redundancies may not dovetail with the passage of the legislation. Certainly it will be a problem for Aer Lingus. I spoke with the chief executive this morning who indicated that the redundancies requested are voluntary in nature. There will be a real difficulty if the legislation cannot be passed in time to dovetail with that timeline. Perhaps the Minister of State will say if the Bill can be got through a little quicker.

I come from County Clare and the announcement of those redundancies is disappointing for the mid-west for a number of reasons. Predominantly, it is disappointing because it seems to give credence to an often stated line that Aer Lingus no longer has an interest in regional development. I am heartened that the Minister has indicated this will continue to be a part of the operation of Aer Lingus. It is difficult to force Aer Lingus on this matter when one considers the focus is now on profitability and maintaining a viable operation in a difficult economic environment. While the national interest does not have the same importance, there is a real need for balanced regional development, a central plank of Government policy, and a need to ensure that air access to the mid-west is maintained.

We often hear of the BMW region, a so-called underprivileged region in terms of investment. However, a recent IBEC report suggests that the level of foreign direct investment and job creation in the mid-west has deteriorated significantly in recent years. While IBEC would attribute this to a number of factors, the continued provision of air access, particularly on the transatlantic route, will be an important factor in trying to stem that decline and promote growth.

There is a vital need to generate balanced development at regional level. Air access is one of the key factors in this regard not just from a business, but a tourism perspective. Recognising the change in airline culture, it is important to take stock of another component involved in regional development, namely airport infrastructure. Much work is going on behind the scenes to resolve the break-up of Aer Rianta and set Shannon Airport apart as an individual airport with its own board of management and its own focus, control and marketing operation.

It must be a function of the airports to attract competition into this environment. If Aer Lingus's focus has changed, a plank of Government policy to ensure continued development of the region must be to provide support to the airport's structure. I have for some time supported the concept of cutting free the airport board at Shannon from the clutches of Aer Rianta. I would welcome the passage of this legislation as soon as possible, notwithstanding the difficulties that currently exist.

Another element which has potentially positive implications for Aer Lingus is the open skies policy, although it has potentially negative implications for Shannon, the mid-west and west. A period of great change is being experienced and Aer Lingus no longer has a national interest ethos. The break-up of Aer Rianta and the proposed open skies between the EU and US will put a strain on the mid-west and west. It will be important, whatever discussions take place between the EU and US, that some type of derogation or a phasing in period, of whatever length, is part of any changes envisaged.

Other critical elements for the future of the mid-west, given the change of focus of Aer Lingus, will be road and rail access. There have been advances in this regard, particularly in the context of the Ennis bypass and the planning associated with the fourth river crossing in Limerick city. Some upgrades are obviously needed, in particular regarding road access from Galway to Shannon, and also in providing a rail link between the main Ennis-Limerick line and Shannon. These critical pieces of the infrastructure jigsaw will ensure the mid-west develops to its full potential along the lines of Government policy on balanced regional development.

I acknowledge the tremendous recent success of Aer Lingus. As with all good things, this has been brought about by necessity — the necessity to survive. Events such as 11 September 2001, foot and mouth disease and SARS have spurred management into a course of action which has resulted not just in the provision of a quick-fix solution to the problem that existed, but a change in the mindset and foundation upon which the airline is based. This, therefore, puts it in a much stronger position for the future.

The strategic decision to change the business model was the most important element in this regard. There is no doubt that the involvement of workers in terms of pay restraint and changes in working conditions was of critical importance. Nonetheless, the change to the hybrid business model of low fares together with good delivery of service has been critical. It is worth putting on record the tremendous work of the management team and, in particular, the chief executive officer, Mr. Willie Walsh, in devising and delivering that strategy over recent months. The disposal of the shares in the airline obviously will be a matter for the Minister for Finance in consultation with the Minister for Transport and his Department. Obviously, the debate will involve some discussion concerning whether it be an IPO or trade sale.

I am particularly concerned in regard to the consolidation of airlines. There is real concern that if a number of the larger airlines buy up the smaller airlines, only a small number of carriers will operate between the US and Europe through perhaps four or five hubs in Europe. This may ultimately lead to a situation in which there is no direct access from Ireland to the US, which would be of great concern to all. I am sure the Minister will consider these matters.