Alan Kelly (Labour)

While I welcome the Minister of State to the House, it is a pity the Minister for Transport and the Marine, Deputy Noel Dempsey, was unable to remain. I speak on behalf of the Labour Party and thank my colleague, Senator Brendan Ryan, who is our spokesperson on this subject, for allowing me to do so. I speak as a representative of the mid-west who is highly exercised about events in Shannon in the past few months. The mid-west has been let down by the Government's failure to intervene in this crisis which threatens the livelihood of thousands of people, as well as the region's very character. This is an important matter and the mid-west's morale has taken a hit arising from it.

Given the time allowed for this debate, I will not go into details regarding the decision's impact on the mid-west, except to state it obviously will be detrimental from the perspective of business, tourism and socially, which has been greatly underestimated. Members have already witnessed businesses losing jobs, as well as projects being put on hold. For example, I refer to Dromoland Castle, Doonbeg golf course or the proposed new hotel in Quin, County Clare. Moreover, as someone who has worked for Bord Fáilte and its successor, Fáilte Ireland, for nine years, I am fully aware of the impact this decision will have on the mid-west in respect of tourism. The region suffers from a lack of sustainable tourism agency policies aimed at persuading visitors to spend more time outside Dublin. Shannon Development has spoken out about this matter, but it is deplorable that the other State agencies have not had one word to say about one of the biggest decisions affecting Irish tourism in recent years.

The decision of Aer Lingus, aided by the Government's inaction, to withdraw the Shannon-Heathrow route is nothing short of a disgrace. Nothing has ever mobilised the people of the mid-west in this way. I say this with some knowledge, as I am a representative from that area. As people from all sides have pointed out, we should not underestimate the passion that people feel on this subject. Nothing since the suspension of breast cancer services at Barrington's Hospital in Limerick has exercised people to such an extent — in fact, they are more exercised about the Shannon issue.

I have met members of the Atlantic Connectivity Alliance and Aer Lingus workers' groups many times. I welcome many of them to the House today, where they are present in the front row of the Visitors Gallery, including Theresa, John, Conor, Michael, Eugene, Tony and Michael. Geraldine Morrissey, who is the nemesis of the Minister for Defence, Deputy Willie O'Dea, is also present, as is my colleague from the mid-west, Deputy Jan O'Sullivan. It is great to see that someone with an interest in this issue is here for the debate. I welcome these people to observe the debate, and I admire their determination, the arguments they have put forward and the way in which they have done so, and their professionalism in pursuit of this very just cause. I also admire the dignity with which they are dealing with this issue — something which I cannot say I have always seen among the Government benches.

The motion put forward by the Government in Dáil Éireann some weeks ago on Shannon and Heathrow was one of the most cowardly ever seen in these Houses. The motion expressed disappointment at the decision of Aer Lingus. I will repeat that: disappointment. The Houses of the Oireachtas are not here to be disappointed. They are here to act. However, the Government says it is disappointed. In this, it has singularly failed to look after the people of the mid-west and show solidarity with them. The Government Deputies from the mid-west also showed their true colours as they walked like lambs through the lobbies. They had a choice. They could have put pressure on their own Minister and Government to use its 25% shareholding to intervene in this crisis and reverse the decision, whether by means of voting on the behaviour of management at board level, by a vote of no confidence in the board, or by whatever means was required. However, they have failed to do so.

I have some questions about the former Minister for Transport, Deputy Martin Cullen, who privatised Aer Lingus, and the way in which he did this. Did he really know what he was doing? He was either incompetent or inept. Either way, it does not fill me with confidence. He sold the current Minister a pup, and many people in the Minister's own party believe the same. He botched the privatisation, pure and simple. He stated in the Dáil that through the memorandum and articles of association, the 25% shareholding available to the Government would protect connectivity and the slots in Shannon, Cork and Dublin. The Minister for Transport and the Marine should be in a position to call an EGM to maintain Government policy. We realise the reality: he cannot or, more importantly, will not do this. I ask the Minister of State his opinion on the former Minister's declaration. Does he still agree with what he said in the Dáil? Whether he does or does not agree, I ask him to explain why.

At the start of this crisis the Minister for Transport and the Marine, Deputy Noel Dempsey, stated that we in the mid-west were exaggerating the situation. Does the Minister of State still believe this? The Government said initially that it could not intervene. It is amazing how this has changed so that it is now saying it will not intervene. It will not use its shareholding to call an EGM and reverse the decision. This was confirmed earlier this morning by the Taoiseach. The Government talks about a balanced regional policy, but will not act on it. It is not on the Government's agenda. All the spatial planning in the world will be no substitute in a region that has no connectivity to the central axis point of the world.

When I raised the issue of Shannon and the Government's failure to use its 25% shareholding on the Adjournment last week, the Minister of State, Deputy Máire Hoctor, was wheeled in to read a script, from which I quote: "The Government's legal advice is that, having regard to the duties of the board of directors pursuant to the Companies Acts and the memorandum and articles of association of Aer Lingus, shareholders do not have the power to overrule management decisions on business matters". This is very similar to what the Minister said today. Why did the Government keep the shares at all, if this is its interpretation? Why did it keep the shares if it cannot call an EGM, vote on management decisions or, if necessary, propose a vote of no confidence in the same management? This seems very strange legal logic to me and my party, and also to other observers, including the former Minister for Industry and Commerce, former Deputy Des O'Malley, who in a letter to The Irish Times stated:

The Minister for Transport, among others, is espousing a version of company law with which I am not familiar. He seems to think that management is supreme, to the exclusion of all others. The Companies Acts envisage the board of directors as responsible for the actions of a company. The board in turn is answerable to the shareholders. The shareholders have the ultimate sanction of dismissing the board if they disagree with the company's policy.

This is also our understanding, but it is not the Government's. Instead, the Government has found a convenient way of avoiding its responsibilities. I have never seen a board take a strategic decision of this magnitude without first consulting its shareholders. I share with Senator Davis Norris a belief that this must have been known by the Government prior to the decision.

When the crisis initially rose, Government Deputies in the mid-west assured us that things would be fine — either the decision would be reversed or connectivity would be established by a different carrier. Now that neither of these is possible due to the Government's own position, what will Government Deputies say? What are we going to do now? It is a simple question. They seem to be speaking out of both sides of their mouths on this issue, and they want to be both in government and in opposition. My Seanad colleague, Senator Mary White, asked in a letter to The Sunday Times: "If the Government's 25% stake in Aer Lingus was not intended to influence the strategic development of the company, what was it envisaged for?" I ask the same question. What was it envisaged for? Perhaps the Minister of State will explain what it was envisaged for, because I am still unclear. Senator White agrees with the Opposition that connectivity through Shannon is key, and many other speakers have said the same. She stated:

The key issue is the likely setback to the region's development. Heathrow is a gateway to the wider world, and in this era of globalisation international connectivity is more important than ever.

I could not have said this better myself if I tried. Perhaps the Minister of State's colleagues in the Dáil, when they were voting, might have thought of this and voted in accordance with what many of them actually believe. I make an honourable exception of the Deputy from Cork who went missing, and a few others who did not seem to have time to turn up for the vote.

My party, the Labour Party, opposed the privatisation of Aer Lingus. It was the only major party in the Oireachtas to do so. This was not on ideological grounds, but because we believe in a simple economic philosophy called externality, which implies that in certain circumstances the greater good must be protected. In this case, the greater good of the mid-west should have been protected. Unfortunately, the Government did not believe this.

Last week's announcement by BMI that it has no intention of instituting flights to Shannon Airport did not surprise me in the least. Those of us who have been following this crisis closely, as I have, knew that this was never on the agenda, especially as BMI had announced a week or two before the Aer Lingus announcement that it intended to establish 17 new routes. If this were the case, how could it be expected to create a new route to Shannon? It was never going to happen — it was a smokescreen, plain and simple.

The Minister for Transport and the Marine stated that the Government was in talks with BMI and that these were going up and down. I presume they were down quite often. When exactly did the Minister's officials last correspond with BMI prior to Thursday's announcement? As I said all along — many of my colleagues agree with me — Aer Lingus is the only sustainable option at this time for the Shannon-Heathrow route, despite the Taoiseach's assertions today. This is because it is the only company that has slots at Heathrow, apart from British Airways, which is not interested, and BMI, which has already stated that it will not participate. Thus, Aer Lingus is the only possibility, if its decision can be reversed.

There has been talk of airlines' establishing flights to Shannon from other hubs. Of course they would be welcome, but they cannot provide the connectivity that the business and tourism interests of the mid-west need. We need sustainable connectivity for the business people of the mid-west. If airlines do come into Shannon from other hubs in the future, whether from Amsterdam or anywhere else, we do not know how sustainable this will be, particularly with regard to subsidies. We need a sustainable option for the mid-west that will allow strategic and spatial planning towards various objectives.

I appeal to the Minister of State from another point of view. If he will not intervene based on the arguments outlined by me and my colleagues today, which are based on the good of the mid-west, he might consider it from a more commercial angle. I will provide the facts in this respect for the Minister. Aer Lingus is leaving a very profitable route on which it has no competition. People do not like the word "monopoly", but that is, in reality, what the company has on this route from Shannon. It is going onto a route on which it will have serious competition, where one sees from the statistics that there are low bookings from Aldergrove to London. In 2001, British Airways ran this route for a couple of years. It was not viable and BA gave it up. It did not give it up without a reason. It gave the route up because it was not worthwhile. If it is not worthwhile, why is Aer Lingus going in there?

Aer Lingus is also giving up all the goodwill and the subsidies the Shannon Airport Authority has been willing to give it in the recent period and has improved in recent times. The following is an important statistic. According to the industry average, it is eight times more difficult to get new customers for an airline than to hold onto one's current customers.

There are other reasons the Government should intervene in the running of this airline. Last year this airline launched the Dublin to Dubai route with great fanfare and now it is giving it up. I raise a question mark over that. One must also look at the dispute with the pilots. There is a view across the House which was expressed earlier today, that the dispute is not exactly being handled with great authority.

We all know the reality is that Mr. Dermot Mannion wants to move this airline into a zone where it is principally a long-haul airline which will work out of Heathrow, principally serving the US. If this means cancelling Cork and some other services in Dublin, so be it. The representatives from Cork should recognise this. He wants to create an airline that can be put up for sale without any social responsibilities or baggage.

The State airline is no more. The Government and the Minister, Deputy Noel Dempsey, know this and that is why he is making two new appointments to the Aer Lingus board. Wait until we see what comes out of the next two world slot conferences.