Eoghan Murphy (Dublin Bay South, Fine Gael) | Oireachtas source

I thank Senator Mulherin for raising this important issue and her serious commitment to it over a number of years. There are two distinct elements to her question: funding for regional airports; and the role of the connectivity fund. I will first deal with the regional airports programme which will set the context for an examination of the potential role for the connectivity fund.

As the Senator will be aware, the Minister for Transport, Tourism and Sport, Deputy Shane Ross, oversees the regional airports programme. The current five-year programme, covering the period 2015-19, provides targeted supports to our four regional airports, namely, Kerry Airport, Donegal Airport, Waterford Airport and Ireland West Airport Knock. The programme acknowledges the key role played by regional airports in supporting the tourism and business sectors in their respective regions. The programme was approved, as the Senator is aware, by the EU Commission in August 2015 under the 2014 EU guidelines on state aid to airports and airlines, and it includes provision for Exchequer support towards safety and security projects at the four regional airports.

Under the 2014 EU guidelines, state aid for capital projects at airports is limited to a maximum of 75% of the eligible cost of the project. However, I understand that the guidelines also acknowledge that investment projects at airports with average traffic flow below 1 million passengers per annum located in peripheral regions may experience a funding gap. In light of this, and subject to a case-by-case assessment, state aid exceeding 75% may be justified in exceptional circumstances. In such a scenario, the EU Commission has indicated that a business case justifying a higher aid rate would have to be approved by it. It should be noted that this state aid is for the eligible cost of the project, namely, the funding gap after the airport has used its own revenue or other funding. It is not for the gross cost of the project. I am informed that the Department of Transport, Tourism and Sport has indicated to Ireland West Airport Knock that it will support the airport's case to the EU Commission to permit grant aid of up to 90%. I understand that Ireland West Airport Knock has also sought assistance from the Department in preparing an application and that Department officials are engaging with the airport on it.

Funding provided under the regional airports programme must have regard to the total funding available each year to support all four of our regional airports. I understand that this year the Department has approved €2 million in grant aid for safety and security investment at Knock. This represents half of all the capital funding that has been allocated to all four regional airports this year.

In that context, we can examine the potential role of the connectivity fund in supporting regional airports such as that in Knock. The connectivity fund was formed to invest the €335 million proceeds from the sale of the State's shareholding in Aer Lingus, with the aim of enabling and enhancing Ireland's physical, virtual and energy connectivity. The connectivity fund is a sub-portfolio of the Ireland Strategic Investment Fund, ISIF. The fund adheres to the broader ISIF mandate, which is known as the double bottom line, whereby each investment must be made on a commercial basis to support economic activity and employment in Ireland.

The Senator's question refers specifically to a potential role for ISIF and the connectivity fund at Ireland West Airport Knock. As outlined, in the context of the fund's mandate, any investment at Ireland West Airport Knock would need to meet the ISIF's double bottom line requirements. Grant aid does not constitute a commercial investment and the provision of grant aid from ISIF or the connectivity fund would not be consistent with the mandate.The ISIF team has advised me that it is available to consult with the Knock airport authorities to explore potential investments. Any such investment would be on commercial terms and may be structured such that it can work alongside any grant assistance from other sources.