Hildegarde Naughton (Galway West, Fine Gael) | Oireachtas source

I apologise for having to leave the session early, as the Acting Chairman said I must attend a Cabinet meeting. While I have had the opportunity in recent weeks to update the House on aviation matters in general and what the Government is doing to support Irish aviation during this unprecedented crisis, I welcome the opportunity to discuss how the pandemic has affected Shannon Group.

Shannon Group is more than just Shannon Airport. The airport is the core of Shannon Group plc which was incorporated in August 2014 following enactment of the State Airports (Shannon Group) Act 2014. Shannon Group is a commercial State company and comprises two wholly owned subsidiaries, Shannon Airport Authority designated activity company, DAC, and Shannon Commercial Enterprises DAC trading as Shannon Commercial Properties. Shannon Heritage DAC is a subsidiary of Shannon Commercial Enterprises. A fourth business unit of the group is the International Aviation Services Centre, which is focused on further development of the aviation business cluster in Shannon.

Prior to the separation of Shannon Airport from the Dublin Airport Authority, DAA, group in December 2012, both the airport and Shannon Development, now Shannon Commercial Enterprises, had been in decline for many years. While the loss-making operations at Shannon Airport were supported by the DAA group, control by the DAA was also seen as an obstacle to Shannon's potential for growth. Restructuring at the time was also intended to make better use of State assets to promote high levels of specialist employment in aviation-related services in a new centre of excellence in and around Shannon; to rationalise and consolidate the delivery of enterprise and tourism functions, which would eliminate duplication of work by public bodies in the region around Shannon; and to provide a more streamlined and focused role for the restructured Shannon Development in the new entity. Importantly, there was also a strong desire at the time from stakeholders in the Shannon region to separate from the DAA and be given the opportunity to independently manage the airport. I am pleased to inform the House there is plenty of evidence to show that Shannon Group project is a success. Prior to the onset of Covid-19, Shannon Group was on a growth trajectory with significant progress made in pursuit of its mandated objectives. Since its formation in 2014, the group has achieved a number of successes, including: growing passenger numbers at the airport by 23% since separation from the DAA; increasing commercial occupancy in the Shannon free zone from 40% to 90%, adding almost 1 million sq. ft of space to the market; increasing Shannon Heritage visitor numbers to 963,000 people in 2019 from 377,000 in 2013; and delivering an €18 million new wide-body aircraft painting hangar at Shannon Airport capable of accommodating some of the world's largest aircraft. This was the first hangar built in the State in almost 20 years. Before Covid, Shannon Group employed more than 600 people across its businesses and supported four in ten tourism jobs in the mid-west region.At the start of this year, it was projecting growth across each of its businesses. Shannon Airport had secured new routes and expanded capacity on existing services. The group's strong investment strategy at Shannon Commercial Properties was ongoing and marginal growth at Shannon Heritage visitor sites was anticipated. Unfortunately, as was the case for so many other businesses, Covid-19 changed all of this. The group's CEO, Ms Mary Considine, best described the impact of the Covid-19 pandemic in her address to the Special Committee on Covid-19 Response last week when she said that it has been catastrophic.

The impact on Shannon Airport and Shannon Heritage, in particular, has been devastating. Like other airports in Ireland and, indeed, globally, Shannon has witnessed an almost total collapse of traffic, connectivity and revenues. I am aware of the enormous efforts that have been made by Shannon Group over the past six to seven months to, first and foremost, keep staff and passengers at the airport safe and, second, keep the airport open in order to facilitate cargo operations, essential passenger travel, emergency flights, repatriation flights and diversions. I wish to put on the record my appreciation of all the management and staff of the entire Shannon Group for the commitment and the dedication shown as the country navigates its way through these unprecedented times.

I wish to mention Ms Rose Hynes, whose terms as chair of Shannon Group recently concluded. I thank Rose for her many years of dedicated service to the company. A competition to fill the position of chair of Shannon Group is under way via the Public Appointments Service and I hope this key position will be filled shortly.

In the difficult circumstances relating to Covid-19, the decisions taken by management to reduce costs have been all the more difficult. Such decisions, including those relating to temporary lay-offs, reduced working hours and the temporary closure of Shannon Heritage tourist attractions, cannot have been easy to make. Shannon Group is rightly availing of the unprecedented Government supports put in place to help mitigate the effects of the crisis on our citizens and businesses.

Airports throughout the country, including Shannon, have been able to avail of some of those measures, particularly the Covid-19 wage subsidy scheme, the Covid-19 unemployment payment, the commercial rates waiver and the deferred tax liabilities. The measures were further enhanced by yesterday's budget announcements where, for the first time and in recognition of the devastating effects of Covid-19, Shannon and Cork airports will have access to capital funding under an Exchequer-funded programme. Some €10 million in capital support has been made available for safety and security projects at these airports. This funding will be provided through a one-year Covid-19 regional State airports programme in line with state aid rules.

For smaller regional airports which handle scheduled services and have fewer than 1 million passengers annually, €21.3 million will also be provided next year under the regional airports programme. The programme will provide €10 million in capital funding and €11.3 million in current funding in 2021, ensuring ongoing regional connectivity through our public service obligation, PSO, services between Dublin and the two regional airports of Donegal and Kerry and will also support critical operational activities in the areas of safety and security. Like Donegal and Kerry airports, Ireland West Airport will also be eligible to apply for capital and current supports under this programme.

Senators will be aware that towards the end of the summer, Shannon Heritage had indicated that it intended to close Bunratty and King John's castles from the beginning of September. I understood this was a difficult decision, particularly in light of the importance of these site to the people of the mid-west. Arising from this, I made a commitment to support the continued opening of these sites over the winter season. I did so to safeguard jobs and secure ongoing access to these sites by local people. Unfortunately, the situation with regard to Covid-19 has since deteriorated and, in line with level 3 requirements, King John's castle is now closed. In addition, all indoor spaces in Bunratty are closed with limited outdoor access. While I remain absolutely committed to supporting companies like Shannon Heritage, it is unclear whether these sites will be able to remain fully open during the winter season given the current trajectory of the virus. With that in mind, and working in conjunction with my colleagues in Government, I believe that Shannon Heritage needs a more robust level of support to ensure its ongoing viability. That is why the Government announced a €50 million recovery and resilience scheme yesterday for strategically important tourism enterprises. It is important to note that while Government recognises that tourism is depressed at the moment, it was in the past and can again be a driver of economic recovery. I am confident that this scheme will provide the right level of supports for the many companies like Shannon Heritage to sustain core capacity in the industry and position our tourism sites for recovery.

Senator Ó Donnghaile called on the Government to commit fully to the survival and development of the Shannon Group. I can confirm that the Government is fully committed to ensuring that Shannon Group is well positioned for the future, particularly, given the importance of Shannon Airport to the economy and the mid-west region and, indeed, nationally. In this regard, I have already committed to undertaking an examination of the future viability and sustainability of Shannon Group. In this context, in addition to those I have already outlined, I will consider any further supports Shannon Group may need and will bring a memo to Government on the matter shortly.

Senator Ó Donnghaile's motion mentions that regional balanced economic development must be central to Government planning. I can assure the House that the Government is committed to balanced regional development. Project Ireland 2040 is a clear manifestation of this commitment and the Government recognises the valuable role all our State and non-State regional airports play in this regard. Again, I will refer to yesterday's budget announcement of €21.3 million in funding for our regional airports which provides further evidence that regional connectivity and development remains a critical priority for this Government. Also, the programme for Government, Our Shared Future, recognises the value of our aviation sector in supporting economic development, international connectivity and tourism via our airports. Again, I can assure the House that the Government is committed to enhancing connectivity by ensuring safe, sustainable and competitive air access responsive to the needs of business, tourism and consumers.

Every one of us here knows that Ireland, as an island nation, is particularly dependent on air connectivity both socially and economically and aviation plays a critical role in our economy. It is essential for tourism, export business and foreign direct investment. Shannon Airport is an important player in delivering high-quality international connectivity, particularly, in the mid-west region.

The policies of successive Governments have recognised the importance of air connectivity and pointed, in particular, to Ireland's reliance on international connectivity to secure its competitive position internationally. There are no plans to change this policy. The Government has committed to maintaining Ireland's core strategic connectivity. I am also particularly aware of the need to restore connectivity for the two most important international markets for the mid-west region, that is, London Heathrow and the east coast of the US. In that context, it is encouraging to note that the airport slots associated with these key routes have been protected for future use by the airlines concerned as soon as normal market conditions resume. Moreover, Aer Lingus confirmed to my Department that the connectivity commitments concerning the Heathrow slots which were secured when the State sold its shareholding to International Airlines Group, IAG, in 2015 remain in place until September 2022. Aer Lingus has also confirmed to the Department its intention to resume the specified level of services to London Heathrow as soon as circumstances allow. Given the current trajectory of the virus, we are not yet at a point where it is possible to permit a large return to air travel. For this reason, it is intended that the national economic plan to be concluded later this year will provide for appropriate measures to safeguard strategic connectivity and the resilience of the aviation sector.

I thank Sinn Fein for tabling this motion and providing me with the opportunity to discuss these important issues. There is much in this motion that I and the Government agree with wholeheartedly. I agree with the motion's positive sentiments towards the importance of the Shannon Group to the mid-west region to maintain jobs and continue economic development of the region as well as to the national economy. I agree with the need to ensure the continued survival of international air travel from the mid-west region. I agree that regional balanced economic development must be central to Government planning and I confirm that this is so.

I can also confirm that the Government is fully committed to the survival and development of Shannon Group, creating conditions to encourage the development of new air routes, particularly, to new and emerging markets when conditions allow, to ensuring a high level of competition among airlines operating in the Irish market, to ensuring the regulatory framework for aviation reflects best international practice and to considering further targeted financial supports to help reinstate connectivity, support regional development and sustainability in the aviation sector.This will feed into the Government's plans to aid broader economic recovery at the appropriate time, cognisant of the prevailing public health advice. However, the Senators' motion asks the Government to commit to the reintegration of Shannon Group, under the remit of State control, with the DAA. I cannot agree to this. In saying this, I am taking it that the Senators are referring to reintegrating Shannon Airport, but not the entire Shannon Group, with the DAA. As outlined, Shannon Group's businesses are many and varied, and many of these were never part of the DAA group. Therefore, reintegration does not arise. Shannon Group is already a State body, and integration with DAA does not change its status.

Prior to 2019, when Shannon Airport was badly affected by the global grounding of the Boeing 737 MAX, passenger numbers had been growing and Shannon Group was projecting growth across each of its business for 2020. However, forecasts across the airline sector do not now anticipate global capacity returning to 2019 levels before the 2023–24 timeframe. The question of when aviation business might be able to resume in a meaningful way is clearly linked to the evolution of the virus, ongoing travel restrictions and advisories, in addition to the more general economic outlook. Our efforts must now be focused on ensuring that Shannon Airport and Shannon Group are well positioned for the future, particularly given the importance of the economy of the mid-west region. This was the Government's thinking when it made its budget announcement yesterday, with the establishment of the Covid-19 regional State airports programme of 2021, which will benefit Cork and Shannon airports.

DAA is also focused on tackling the unprecedented challenges that the global pandemic has brought to its business. It is not helpful or appropriate at this time to contemplate major structural reform of the airport sector. That is entirely apart from the fact that Shannon Group was established as an independent basis for very sound policy reasons. There is no compelling case that the policy rationale was flawed or that the practical implementation was not delivering positive results. I am confident that, with appropriate support, Shannon Group and the wider Irish aviation industry can and will rebound quickly when this crisis passes and help to drive the wider economic recovery. I reject the Sinn Féin motion and, on behalf of the Government, I have proposed a counter-motion. I call on the House to support it.