Seanad debates

Tuesday, 31 May 2005

Aviation Action Plan: Statements.

 

5:00 pm

Michael Finucane (Fine Gael)

I wish to speak on the issue of Shannon, which concerns people of the mid-west region. We debated the State Airports Act 2004, the break-up of Aer Rianta and the creation of the Shannon authority on an autonomous basis but have not as yet reached a conclusion. The chief executive, Mr. Pat Shanahan, and his board have approached their business in a serious manner. Shannon, which has a current debt of €77 million, has lost money for many years. The Minister for Transport made a promise to this House that, with the break-up of Aer Rianta, Dublin Airport Authority would take over the debt of Shannon. Last year, Shannon lost almost €3 million. Passenger numbers there experienced a decrease of 0.3% compared to 2003, whereas Dublin experienced an increase of more than 17%. Shannon Airport Authority, in order to attract Ryanair's business, made the generous concession of €1 per departing passenger, thereby incentivising air travel in that area. We are grateful to Mr. Michael O'Leary for opening up four further airports to travellers from Shannon.

However, much uncertainty remains over Shannon Development's future as an organisation to promote industrial development in the mid-west region. For a long time, it has acted as a catalyst for industrial development and as a stimulant to tourism in the region. A cloud of uncertainty hangs over this organisation. I have often been critical of it but ultimately praise its work. Recently, the Tánaiste stated that the Shannon free zone would have to bankroll the new Shannon Airport Authority. Shannon Development was correct to say that this would have a catastrophic effect on its viability.

A further cloud of uncertainty hangs over the dubious decision to decentralise Enterprise Ireland to Shannon. It is dubious in that a mere two or three people have volunteered to transfer from Dublin to Shannon. The belief within Shannon Development is that it will be absorbed by Enterprise Ireland when the Minister of State at the Department of Finance, Deputy Parlon, finally decides, over the preferences of the Dublin staff, that the latter organisation will move to Shannon. It is significant that within a few days of signing his contract with the Shannon Airport Authority, Mr. O'Leary claimed that the collapse of an Italian airline, Volare, meant that up to six Italian airports were competing to attract Ryanair at more attractive terms than those offered by Shannon. This serves as an example of the existing uncertainty and competition.

The discontinuation of the bilateral agreement is a cause for concern in Shannon. This must be examined in the contexts of the Minister of State's speech and Aer Lingus. If the bilateral status of Shannon is discontinued, followed by the sale of 51% of Aer Lingus, that airline will then become more profitable through the opening of the American market. How is this reconciled with a situation where a prominent director from Shannon said that the discontinuation of the bilateral agreement would be accepted on condition that it is phased over five years? These five years would help Shannon to remain economically sustainable.

How will the Minister of State square the circle? Will obfuscation recur until the next election in two years time? Decisions may not be made on the sale of Aer Lingus or the bilateral agreement because local politics dominate the thinking of the Government, as was always the case for Shannon. However, many of the unfavourable changes which took place in Shannon were brought about by Fianna Fáil.

We await action on the bilateral agreement. It will have the economic effect of displacing approximately 400,000 US passengers to Shannon each year. One million customers of low cost carriers are needed to make up for this economic loss. Clearance of Shannon's debt will require an estimation of the airport's viability. Not only is Ryanair's expansion needed but other low cost carriers must also be attracted.

I am critical of Aer Lingus outside of its transatlantic base. The serious deficiencies that exist in terms of providing a viable service to customers are noticeable if one attempts to make connections between Dublin and Shannon. I wish that Aer Lingus would look more favourably on domestic business and at least provide the opportunity to fly between Shannon and Dublin. Regrettably, that service is not offered at present.

Shannon is important to its region. It has long been an economic catalyst and has employed many people. Uncertainty exists in the region and many pieces of the jigsaw will have to be put in place before satisfaction will ensue. I look forward to a reply which will address the concerns I expressed.

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