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

I am pleased to update the House on aviation matters. This is clearly an exceptionally challenging time for the aviation sector, and particularly for those whose livelihoods depend on the travel, tourism and hospitality sectors. The global pandemic has had a devastating impact on international travel throughout the world. The Government is conscious of the need to continue to support the domestic aviation industry to restore vital air connectivity as soon as possible, and to assist the aviation sector to rebuild and recover when the Covid crisis eases, which we hope for, and expect, in coming months.

The sector is a major contributor to the economy. Government policies have recognised and supported this contribution. Aviation supports jobs within its own sector and across the economy. It is vital for foreign direct investment, the multinational corporate sector and international tourism. Aviation underpins Ireland's status as a great place to do business and it is essential to Ireland’s competitive position internationally. Our national aviation strategy over the years has sought to enhance Ireland's connectivity by ensuring safe, secure and competitive access that is responsive to the needs of business, tourism and consumers.

Prior to Covid-19, the air transport industry in Ireland, including airlines and its supply chain, was estimated to support €8.9 billion of GDP. Spending by foreign tourists supported a further €8.7 billion of GDP. In total, approximately 6.8% of GDP was supported by air transport and foreign tourists arriving by air.

Aviation is also vital for regions. Government policy has sought to optimise conditions for regional development and connectivity for both social and economic benefits. Aviation employers make a significant contribution to the regions, providing high-quality jobs within the sector as well as through the various ancillary services provided to airports, airlines and in local economies. Aviation is a particularly cyclical industry and, historically, it has always been susceptible to external shocks. In that context, the Covid pandemic is the most serious crisis the international aviation sector has ever faced and the industry is one of the most affected by the global pandemic. At the height of the crisis, traffic movements in Europe were more than 90% below 2019 levels and passenger numbers were estimated at just 1% of pre-Covid numbers. Recent analysis by the International Air Transport Association, IATA, shows that while domestic air travel demand has begun to recover globally, international passenger travel remains stalled in the face of ongoing travel restrictions. For Ireland, EUROCONTROL data show that traffic is still 84% below 2019 levels. A range of forecasts across the airline sector do not anticipate global capacity returning to pre-Covid levels before 2023 or 2024. The question of when aviation business might be able to resume in a meaningful way is clearly linked to the roll-out of vaccinations globally, the evolution of the virus and variants of concern and the ongoing need for testing related to travel, as well as the more general economic outlook. All of these factors have been carefully considered by the Government and the roadmap for reopening international travel announced on 28 May provides a framework for that recovery.

Faced with the challenge of Covid, all parts of the aviation sector, except those substantially or exclusively dedicated to air cargo, have had no option but to radically address their cost base and protect liquidity. Alongside rationalisation measures, companies are shoring up their finances through increased borrowings and raising new capital. Regrettably, Stobart Air’s plans to secure a new buyer failed and this resulted in it ceasing trading. This is a devastating development for the 480 Stobart Air workers who have been directly affected by this decision. Job cuts have also unfortunately been a feature for other European airlines as a direct consequence of the Covid-19 crisis. Ireland’s temporary wage subsidy scheme, TWSS, and employment wage subsidy scheme, EWSS, have been generally successful in maintaining the link between airlines and their employees during the Covid crisis in Ireland. For Stobart Air, however, the loss of its franchise contract for the operation of regional UK routes, along with other factors, made its position untenable. The restoration of regional connectivity is of critical importance for the Government and work is under way to secure a new operator for these vital regional routes as soon as possible.

The Government is fully aware of the ongoing impact of the pandemic on the aviation sector. From early in the crisis we put in place a range of supports for businesses, including the aviation sector. These included the TWSS and EWSS, the waiving of commercial rates, the deferral of tax liabilities, the Covid restrictions support scheme, CRSS, the credit guarantee scheme and the Strategic Banking Corporation of Ireland's working capital scheme. It is estimated that by the end of this year our airlines and airports will have received over €500 million in Covid supports from the various programmes available. This includes liquidity support already provided by the Ireland Strategic Investment Fund, ISIF, which is part of the National Treasury Management Agency, NTMA. It has invested €150 million in debt funding in Aer Lingus and €40 million in the Dublin Airport Authority, DAA, from the €2 billion pandemic stabilisation and recovery fund. This fund was established last year as a key support for Irish employers whose businesses had been affected by Covid-19.

The debt funding for Aer Lingus is a three-year debt facility that will strengthen the airline’s liquidity position. ISIF and Aer Lingus have agreed commercial terms on the structure, pricing and repayment of the loan that are consistent with ISIF’s statutory double bottom line mandate to invest for a commercial return in business and projects that support economic activity and employment in Ireland. ISIF’s investment is designed to complement ongoing investment into Aer Lingus by its parent company, International Airlines Group, IAG. The investment is an excellent example of the effectiveness of ISIF’s pandemic stabilisation and recovery fund, which the Government established in May last year. It matches ISIF’s investment capacity with a strong business that can use ISIF capital as a platform for rebuilding post Covid-19, supporting jobs in Ireland and contributing to the resumption of normalised economic activity.The Government has allocated funding for an €80 million aviation-specific support package in 2021. In addition to €21 million in funding for regional airports under the regional airports programme, a further allocation to them of up to €6 million under a state aid compliant scheme is available in 2021. This is in recognition of the impact of Covid-19 on our smallest airports. Donegal, Kerry and Knock airports are eligible for funding under this scheme. Applications for funding are being assessed and I hope to be in a position to allocate funding in the coming weeks.

Approximately €32 million is being provided in support to Cork and Shannon airports this year. Additionally, my Department is assessing applications for funding to State airports under the €20 million Covid-19 supplementary support scheme. I expect to be able to provide funding to Cork and Shannon airports under it soon. This support will allow the airports flexibility to provide route incentives and airport charge rebates to stimulate recovery of lost connectivity this year.

The Government is allocating additional tourism supports to incentivise our international connectivity. The regional co-operative market access scheme promotes direct air and sea access to Ireland's regional experience brands and is administered by Tourism Ireland with matching funding from airlines, sea carriers, airports, ports and regional tourism stakeholders, including local authorities. The Department of Tourism, Culture, Arts, Gaeltacht, Sport and Media has increased the funding available for the scheme from €1.25 million in 2019 to €3 million this year. With international travel into Ireland due to recommence in earnest on 19 July, Tourism Ireland is engaging with a number of air carriers to support the promotion of routes into our regional airports, which will help to stimulate inbound tourism directly into our regions.

On 28 May, the Government announced a roadmap for the gradual reopening of international travel. This plan brings together the EU digital Covid certificate, pre-departure PCR testing and, where necessary, quarantine so that international travel can operate safely. An "emergency brake" mechanism will allow us to respond to the potential emergence of variants of concern. The current advice to avoid non-essential travel and related penalties will remain in place until 18 July. From 19 July, citizens will be advised to travel safely and in accordance with public health guidance and restrictions and to avoid non-essential travel to countries to which an emergency brake has been applied.

The Minister, Deputy Eamon Ryan, and I will continue to engage at every level across the Government to ensure that all testing-related options that strike the right balance between protecting public health and protecting our economy are considered. We will continue to be guided by the Department of Health and NPHET on Covid-19 testing and how it might be used in settings, including international travel.

In December 2020, officials in my Department engaged with the Department of Health and the HSE and noted that our airports had seen an opportunity over the Christmas break to run an in situassessment of antigen testing with the assistance of established testing providers. It was also highlighted that our stakeholders offered to assist in an on-site trial as regards the validation of antigen testing. Airlines have a number of outlined times their willingness to assist in any pilot programme, and my Department noted the potential for collaboration with other jurisdictions and airports on the issue.

On 11 May, I wrote to all Ministers to bring to their attention the report of the National Civil Aviation Development Forum on plans for the restarting of aviation. In that context, it was identified that one of the issues requiring urgent consideration was the role that antigen testing might play in the Government's framework for reopening. Earlier today, I wrote to my colleague, the Minister for Health, proposing that we consider piloting the use of antigen testing. The improvement in the epidemiological conditions in Ireland and in the European Union generally provides an opportunity to reconsider the potential role of antigen testing in facilitating international transport without an undue negative impact on public health. However, we will ultimately be guided by public health advice, as we have been through the pandemic.

While it may take some time for our aviation sector to regain the strong economic position that it had at the start of the pandemic, the Government has committed to ensuring that there will be no cliff edge for the Covid-19-related business supports that are currently available. On 1 June last, the Government launched its Economic Recovery Plan 2021, which is aimed at rapid job creation and kick-starting economic growth after the pandemic. The plan sets out new measures for businesses and affected sectors as the economy reopens and provides details of the various pandemic financial supports, including the CRSS, the EWSS and the pandemic unemployment payment, PUP. This gives certainty to employers, workers and those who need it.With our vaccination programme progressing, a plan in place for the resumption of non-essential international travel and significant levels of business support available, the aviation sector is now positioned to begin to recover. I will remain closely engaged with all stakeholders over the coming months in the implementation of these plans. There are reasons for optimism and better days ahead. The Government will continue to work to enable the aviation sector to resume its central role in a vibrant and connected Ireland.