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

I am grateful to be invited to the Seanad this afternoon. I am pleased to speak to the House on the impacts of Covid-19 on aviation. As the Minister, Deputy Eamon Ryan, has spoken about plans to introduce mandatory quarantine for international travellers, I will not address that matter but I am happy to speak further on it in my closing remarks if that is required.

The aviation sector has been massively impacted by the pandemic, with an almost total collapse in international air passenger traffic. In our airports, traffic in 2020 was down 90% for the period from March to December. Given this, and the continuing challenges and restrictions of Covid-19, it may take a number of years for the sector to return to 2019 levels. We will only see the beginning of recovery when there is the possibility of a sustainable return to international travel.

I would like to talk in more detail about the financial impact on aviation. As I mentioned earlier, passenger traffic is significantly reduced. Dublin Airport traffic levels are down 95%, and traffic levels in Shannon Airport and Cork Airport are down around 99%. Both Dublin Airport Authority, DAA, and Shannon Group have implemented significant cost-saving measures, including the introduction of temporary pay cuts, reduced working weeks and voluntary severance schemes.

Ryanair closed its aircraft base at Shannon Airport in October and announced in early November that it would cease all flights to Shannon Airport, given the collapse in forward bookings. Ryanair resumed a limited and disrupted schedule, due to Covid-19 restrictions, to three UK and European destinations on 17 December for the Christmas holiday period and these services ended on 10 January.

The 2020 annual results for Aer Lingus's parent company, International Airlines Group, IAG, were released this morning and they show a full-year operating loss for Aer Lingus of €563 million, compared with a profit of approximately €300 million in 2019. These results reflect the serious impact that Covid-19 has had on Aer Lingus and on the airline industry in general, and the outlook for 2021 is not positive. Aer Lingus is operating at just 15% capacity across its network and has also cancelled its services from Shannon Airport. There are no scheduled services operating at Shannon Airport until April at the earliest, when Ryanair has indicated it will reopen its base and commence a summer schedule of flights.

Our smaller airports have also been severely impacted. In the case of Ireland West Airport Knock, all flight operations were suspended from the end of March to the start of July 2020.The airport took the decision to close during that period and had to temporarily lay off most of its staff. With no scheduled flights, it was forced to close for a second time in 2020, from mid-November to mid-December. Currently, Ireland West has no scheduled services but is open for general aviation. The majority of the airport's staff are still on extended lay off. Other regional airports, such as Kerry and Donegal, were able to remain open with skeleton staff due to the operation of a Government funded public service obligation, PSO, service.

In response to the enormous impact of Covid-19, a number of financial supports have been put in place. The aviation sector has been able to avail of a range of Government supports for businesses. This includes the wage subsidy scheme, waiver of commercial rates, tax clawback, the Covid restriction support scheme, the credit guarantee scheme, and the Strategic Bank Corporation of Ireland, SBCI, working capital scheme. We estimate that over €200 million in operational supports have already been made available to Irish airports and airlines under these schemes. However, we recognise the need for targeted support for the aviation sector and, therefore, the Government has also agreed a revised €80 million funding package specifically for Irish aviation in 2021.

I will elaborate on how this package has been allocated. Some €21.3 million is allocated to the regional airports programme. A new programme for the period 2021-25 was published on 4 February. This funding will provide capital and operational supports to the airports of Donegal, Kerry and Ireland West Airport Knock, and will meet contracted costs of PSO air services from Donegal and Kerry to Dublin. Some €32.1 million is allocated to the Covid-19 regional State airports programme. My Department has developed this programme to provide capital and operational supports to Cork and Shannon airports in 2021. Airports have already submitted a range of capital proposals, including a significant runway overlay project at Cork. These proposals are currently being assessed by my Department.

Some €26 million is allocated to the Covid-19 supplementary support schemes. These schemes required state aid approval from the European Commission and I am pleased to confirm that the Commission announced its approval of the supplementary schemes on 24 February. Under these schemes, €20 million will be provided for compensation for State airports in light of Covid-19 impacts in 2020. This funding will provide the airports with flexibility to roll out route incentives-charge rebates, in consultation with airlines, with a view to supporting recovery and growth of connectivity. Up to €6 million will also be made available to regional airports - Knock, Kerry and Donegal - that provide connectivity under the EU temporary framework in recognition of the impact of Covid-19 on their business.

Taken together, the level of committed Government supports for Irish aviation to date is in the region of €280 million, which is a significant level of support by any measure. My Department will continue to consider proposals for additional targeted support in light of the deepening crisis in the sector, in particular, in the event of the extension of restrictions on international travel throughout the year. It stands to reason, however, that supports specifically designed to facilitate growth of air traffic can only be progressed at the appropriate time, taking account of the outlook for the easing of travel restrictions and improving wider epidemiological conditions.

In June 2020, the then Minister for Transport, Tourism and Sport announced the formation of a task force for aviation recovery. The task force was asked to set out recommendations for consideration to assist the Irish aviation sector to recover from the Covid-19 crisis. The task force delivered its final report in July and recommendations broadly ranged from measures to improve the safety of air travel, to rebuilding regional and international connectivity, and to making financial support measures available to the sector. The majority of the recommendations have been implemented. Certain recommendations relating to the growth and incentivisation of air traffic can only be progressed when restrictions on international air travel are lifted.

The scale of the challenges created by Covid-19 are better understood now than when the task force was appointed and submitted its final report last year. I will be engaging with the National Civil Aviation Development Forum to continue our work in addressing the current challenges. The NCADF, which brings together senior aviation stakeholders, serves as the established high-level forum for consultation and engagement on key challenges facing the sector.In that context, I look forward to the opportunity in the near future to consult with this group and to consider how best the industry might emerge from the current crisis, following improvement in the epidemiological situation.

Given how difficult the past year has been for this sector, I wish to acknowledge how the aviation industry has responded to the challenges of Covid-19. Throughout the pandemic the industry has continued to implement the suite of measures set out in the air travel protocol to address the public health safety of passengers and staff. Air carriers continue to play their part in implementing Government Covid-19 measures and to promote Ireland’s public health information on websites which are available to passengers at booking and check-in. Under the polymerase chain reaction, PCR, test regulation, carriers will deny boarding to passengers without a negative PCR test result and will inform passengers of their obligations not to travel without proof of essential travel.

My Department will continue to engage with airports and airlines over the coming months. The pandemic has had an unprecedented impact on the aviation sector. We are an island nation and are heavily reliant on international connectivity. I am fully committed to protect and support the industry and will continue to work with my Department and the Minister, Deputy Eamon Ryan, to ensure that the sector is at the forefront of our recovery plans. I thank the Leas-Chathaoirleach.