I raise a very important issue for the midwest and west of Ireland. It is anticipated that the recent judgment on aviation services of the European Court of Justice will have major implications for transatlantic business. Ireland's bilateral arrangements are not affected by this judgment but in the longer term if there is a re-adjustment of the business between Europe and the United States there will be huge changes. We in Shannon are very concerned because of the implications for the airport, business, tourism and the west of Ireland generally. Shannon is very important in the international aviation business, a position we want to maintain for the future. It is anticipated that the judgment will reduce the 12 national flag carriers. This will mean amalgamations and take-overs and will have long term implications for some of the carriers, especially Aer Lingus.

Passenger traffic through Ireland has risen from around five million ten years ago to 20 million today, a dramatic increase which we want it to continue. It is felt in the midwest region that the court's decision will affect the Shannon stopover in the long term, although it may not be apparent now, and further undermine the airport's ability to attract business. This will cause problems for employment and industry in the region.

For these reasons I raise the issue with the Minister of State and hope he will convey to the Minister for Transport our awareness of the changes taking place. We are aware also of the attitude of the Commission which favours bilateral arrangements between Europe and the United States rather than the bilateral arrangements which have facilitated successful negotiation of arrangements between Shannon and Dublin. The particular situation in Shannon should be taken fully into account in the development of the aviation business. Any rationalisation and reduction in fares can be done in a way which protects our vital national interests such as Shannon.

I hope that the Minster of State will convey our anxiety to the Minister for Transport and underline the importance of Shannon's transatlantic business to the region in terms of employment and revenue. It is vital for the protection and enhancement of the tourism industry. There are very strong feelings in the midwest region about Shannon's future transatlantic status.

This is a lengthy and complex judgment and it will take a considerable amount of time to analyse and interpret its long-term implications. The first step will be to ascertain the response of the eight member states directly affected. Although the judgment is not putting any pressure on our existing agreements, member states will obviously have to take it into account in any future bilateral agreements or in any substantial changes to existing agreements.

The judgment is most certainly not a clean-sweep victory for the European Commission. For example, the Court of Justice ruled against the Commission's claim that the countries were infringing existing community competence. The court has also ruled that it remains a matter for the Council of Ministers, in accordance with Article 84(2) of the Treaty, to decide "whether and to what extent and by what procedure appropriate provisions may be laid down for sea and air transport".

In coming to this conclusion the court has supported the view of the Council when, on a number of occasions in the past, it has decided not to give the Commission a mandate to negotiate an USA – EU open skies agreement. As the House will know, Ireland has consistently opposed giving such a mandate. On the other hand, it was probably not unexpected, especially in the light of the opinion issued by the Advocate General last January, that the court would find that countries had breached EU law in relation to provisions in their agreements with the USA dealing with fares, computerised reservation systems and nationality restrictions on airline ownership.

The tradition of bilateral air service agreements derives from the 1944 Chicago Convention that established the International Civil Aviation Organisation and provided the world-wide framework within which international aviation operates to this day. Under those traditional bilateral agreements it was a common, and probably universal, requirement for the airlines of the respective countries to be owned and controlled by nationals of one or other of the countries concerned. This arrangement reflected the normal approach to international air transport at that time which was almost entirely conducted by national flag carriers. By contrast, it is relatively recently – only from the beginning of 1993 – that the present liberalised air transport market was established in Europe under which the qualifying criterion for airlines is that a majority of their shares must be held by European nationals rather than nationals of any one state. This is the case with Ryanair which has become one of the most profitable airlines. However, under the existing Ireland-USA bilateral agreement, it would not be entitled to transatlantic traffic rights if it wished to obtain them.

Another reason behind this court case is the fact that the open skies agreements provide more generous access to EU markets for US airlines compared to the access offered to EU airlines in the USA. In particular, because Europe is treated as a series of separate countries, US airlines have the right to fly from, say, New York to London, pick up passengers in London and take them on to Frankfurt. However, a European carrier would not be permitted to pick up US passengers in New York for an onward flight to Chicago.

The essence of bilateral agreements is that they are agreeable to both countries concerned. It is by no means a foregone conclusion that non-European countries will wish to include access by all European airlines or allow European airlines free access to provide internal services in their country under a future agreement. Negotiations to reflect the requirements of the court are likely to be complex and time consuming.

The programme for Government includes a commitment that the Government will ensure Shannon and Cork Airports have greater autonomy and independence. As the House will be aware, the Minister has stimulated a debate, both within the Shannon and Cork regions and at national level, on the best ownership structure for these two airports going forward, in the context of continued State ownership. The Minister has visited both Shannon and Cork in recent weeks to hear peoples' views. There is a genuine sense of goodwill towards the airports in the two regions on the part of local tourism and business interests and the Minister has no doubt that Shannon Airport will grow successfully and continue to be a major support for the mid-west region.