Seanad debates

Wednesday, 10 October 2007

3:00 pm

Photo of Noel DempseyNoel Dempsey (Minister, Department of Transport; Meath West, Fianna Fail)
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I welcome this opportunity to address the House on Shannon Airport and the development of the mid-west region. This is an important issue for the House, the Government and the people of the west and mid-west. Regarding the decision made by Aer Lingus to withdraw the service between Heathrow Airport and Shannon Airport and the issues surrounding the wider development of the mid-west region, the fact that the Government has initiated a debate on these matters in both Houses indicates the serious manner in which they are being considered.

I do not propose to go into background detail relating to this situation as it is well known and has been discussed in the other House. I will, rather, deal with issues and questions that have been raised as a result of the decision. Lest anyone is in doubt I will repeat again that the Government is disappointed with the decision taken by Aer Lingus to discontinue the service between Shannon Airport and Heathrow Airport and has consistently conveyed that disappointment to the management of the company publicly and privately. I reiterated this view on my behalf and on behalf of the Taoiseach and the Government on a number of occasions during the weeks following the decision and I emphasised it again at a formal meeting with the chairman and chief executive of Aer Lingus on 28 August. I sought to convey to them, once again, the extreme disappointment felt by the Government. I pointed out that the decision runs contrary to public policy in a number of respects, including the national spatial strategy and regional development and aviation policy. It was recognised that Aer Lingus is not an instrument of Government policy but there was an expectation that such wider policy issues would be considered when commercial decisions were being made. I also made the point that Aer Lingus should have engaged more with its customers, staff and wider stakeholders before announcing its decision. The chairman said the decision was taken to establish a new base at Belfast International Airport following extensive evaluation of growth opportunities throughout Europe. He said the decision was commercially robust and the company would not reconsider it. The company has since reiterated that position consistently.

It was evident from early on that Aer Lingus would not deviate from its decision and, given this fact, the Government began to look at the possibility of restoring connectivity on the route. A number of options were explored in this regard. I first investigated the possibility of the State acquiring Heathrow slots to replace the service. I was informed that this was not legally possible because it is not open to this state or any other to acquire slots as the applicable rules allow only for slots to be assigned to airlines. The option of providing funding to assist in acquiring such slots was also examined but this or any other form of direct subvention of a London Heathrow slot is constrained by state aid rules.

It became clear that the only option open to us was to assist the Shannon Airport Authority in any way we could to secure a replacement service for the Aer Lingus Shannon-Heathrow service. Arising from this it was clear that the focus of attention had to be on getting a replacement service for the Shannon-Heathrow route. We indicated clearly to the Shannon Airport Authority, which has direct responsibility for securing such services, that we would assist it in any way we possibly could. The authority has been actively pursuing all options in this regard since then and I have made it clear to it that I am available to assist in these efforts, if required.

Undoubtedly, the best chance of securing a London Heathrow service was through the efforts made by the Shannon Airport Authority with BMI. Unfortunately, we now know that BMI has decided not to provide the service on this route in the short term. I have no doubt that the Shannon Airport Authority will continue its efforts to try to attract another carrier to the route, but the current situation, as far as I am aware, is that no such carrier has been identified.

The question has been raised on a number of occasions and no doubt will be raised again today as to why the Government as a shareholder does not intervene directly to change the Aer Lingus decision. The answer is simple. The clear and unequivocal legal advice we have is that shareholders do not have the power to overrule management decisions on business matters. This is a simple legal fact which cannot be changed by any amount of political rhetoric. Even if the Government, on its own or in conjunction with other shareholders, called an EGM and voted for the restoration of the service, the management of Aer Lingus would not be obliged to follow any such direction of its shareholders.

The question has also been raised as to why the State retains a strategic shareholding of over 25% in the company. We had two key objectives in mind in doing this. First, this shareholding provides a major block to a hostile takeover by enabling the State to prevent a compulsory takeover of 100% of the company. If the company was taken over, the new owner would not be able to extract the Aer Lingus assets, including slots and cash. This provides significant protection against the selling of slots. The second strategic advantage of a 25% shareholding is that it enables the Government, as a shareholder, to block special resolutions which could lead to the sale of Heathrow slots. The report of the senior officials group, which was appointed to examine all aspects of the decision, states, "Disposal of slots relates specifically to the sale of slots and/or the transfer of slots between airlines and does not apply to the reallocation of slot pairs to new or existing bases". Our key strategic interests are protected in the memorandum and articles of association. While they do not protect against the transfer of slots such as occurred in this case, they nevertheless remain extremely important from a national point of view.

I conveyed to the chairman and chief executive of Aer Lingus the Government's strong disappointment with the decision on the Shannon-Heathrow service. In those discussions I set out, in particular, that the decision ran counter to public policy in a number of respects, including the national spatial strategy, regional development and aviation policy. I made it clear that while it was recognised that Aer Lingus was not an instrument of Government policy, there was an expectation that it would take these wider policy issues into account in making commercial decisions. However, it is clear it did not do so.

To ensure this point of view is consistently articulated at board level, I have decided to appoint two further directors to the board of Aer Lingus. I will ask the State appointees to seek to ensure that all future decisions of the company, that have implications for wider Government aviation or regional development policies, are considered and decided at board level. That will give the State appointees the opportunity to raise the public policy implications of each decision and to ensure the full commercial implications for the company are taken into account.

The State appointees to the board do not, nor will they, have a veto on board decisions. Under company law it is not possible for the State or any other shareholder to overturn a decision taken by the company on day-to-day business matters. The legal advice to the Government has been clear and unequivocal. Neither is it possible for the State, even as a shareholder, to seek to impose non-commercial obligations on the company. By appointing our full board complement it will be possible to ensure the full ramifications of all significant strategic decisions are fully discussed and decided by the board.

Would the appointment of these extra directors have changed the decision on the Shannon-Heathrow service? In these particular circumstances the answer is "No" because the board gave the management a mandate to pursue all commercial opportunities for the airline. On foot of this mandate, management decided to discontinue the service between Shannon and Heathrow. It did not have to get the further approval of the board. The appointment of two extra directors would not have made any difference to this decision. Even if board approval was a requirement, the emphasis that the company has put on the commercial advantages of Belfast over Shannon suggests that a better understanding of the wider implications for the Shannon region and wider commercial issues for the company would not have tipped the balance in this case.

On the point about connectivity, it is accepted by the Government that this decision by Aer Lingus will have an adverse effect on the region, especially business travellers to the Middle East, Asia and Australia. The senior officials group confirmed that. I am committed to ensuring the mid-west will continue to have the widest possible range of connectivity options available for the benefit of business and tourism throughout the region.

Photo of Fidelma Healy EamesFidelma Healy Eames (Fine Gael)
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Tell us how, Minister.

Photo of Noel DempseyNoel Dempsey (Minister, Department of Transport; Meath West, Fianna Fail)
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I look forward to hearing how the Opposition intends to do it. It will be very interesting.

Photo of Fidelma Healy EamesFidelma Healy Eames (Fine Gael)
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Give us a chance.

Photo of Noel DempseyNoel Dempsey (Minister, Department of Transport; Meath West, Fianna Fail)
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It is my view that little will be gained by continuing to look backwards regarding the Aer Lingus decision. Everyone must look for solutions and options that will address the adverse impact that may flow from this decision. That is the reason the Government commends the efforts of the Shannon Airport Authority for its positive response to a very difficult situation.

The authority has specifically identified airline services to the key European hub airports of London Heathrow, Paris, Amsterdam and Frankfurt as being of key strategic importance to its ongoing development. The airport recently published a European hub airport incentive scheme for services to come into operation in 2008, which provides for significant discounts in airport charges and for the possibility of marketing support to be provided by Shannon Airport for the new services.

This is the way forward. An airport such as Shannon cannot have all of its eggs in one basket. London Heathrow is undoubtedly an important link to the wider world but it is not the only option. A total focus on London Heathrow to the exclusion of other possibilities does the airport and the region a major disservice.

Those campaigning for the restoration of connectivity should throw their full weight behind the efforts of Shannon Airport and the Government to secure connectivity to the wider world. While the Heathrow link will continue to be a priority hub for us, other major European hubs can offer the same opportunities and potential. Equally, I respectfully suggest that statements to the effect that only Aer Lingus can provide connectivity to Heathrow are less than helpful to the efforts being made by the Shannon Airport Authority to maintain connectivity in the region.

Arising from the Government's acceptance of the report of the senior officials group, it is proposed that taking account of its findings and the other issues addressed in its report, relevant Ministers, following consultation with the four mid-west planning authorities together with the Mid-West Regional Authority, will report back to the Government as soon as possible on strategies for unlocking the further development potential of the Limerick-Shannon gateway and its wider region in light of the substantial investment planned under the national development plan and Transport 21 to create an integrated infrastructure underpinning the region's competitive position.

I am delighted to have and I thank Members for giving me the opportunity to outline the Government's position on Shannon Airport and the development of the mid-west region.

4:00 pm

Photo of Paschal DonohoePaschal Donohoe (Fine Gael)
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I welcome the Minister to the House to address this issue. I assure him that we as a party are as delighted as he is to address this issue in this House, express views about it and put questions to him.

In my contribution I will do my best to respond directly to the points made by the Minister in his contribution. I want to focus on two issues directly, the first of which is the statement the Minister has just made about the appointment of directors and the role they can play in this decision and in moving the issue forward in the future. The second is the role of the shareholding the Government has in Aer Lingus and what can be done to use it to bring this issue to a satisfactory conclusion.

I am approaching this issue from a different perspective. I am a north side Dubliner. I have lived and worked in Dublin all my life. I do not work or live in the west or in any of the areas that have been most vociferous in raising this issue but I am as committed as I possibly can be to resolving it. This is not an issue about whether connectivity to Heathrow is restored and so on but a broader issue about balanced regional development for the entire country. If we cannot deliver that, it will be a debacle from which everyone will suffer, not just people living in the west who will be affected by it but the entire country. This is not just an issue for the west and counties near that region. It is a national issue about the way we want to plan for the development of our country and ensure we have the infrastructure in place so that as an economy, the entire country can be competitive as we move forward.

These are not just my views on the issues involved. These views are expressed in the national development plan. They were the views of the Government as we moved into the general election and as expressed in its manifesto during that election. The national development plan leaves us under no illusion regarding the importance of balanced regional development. It points out three reasons, the first of which is the need for proper national infrastructure. The second is the need for that infrastructure to work in delivering prosperity to all regions, both rural and urban, and the third is the need to use that infrastructure to ensure economic activity is spread throughout the country.

This issue was recognised by the Government in the run-up to the general election in its manifesto and that of its constituent parties. The Fianna Fáil general election manifesto, The Next Steps, specifically highlighted the need for the development of Shannon Airport to ensure it had a range of options to allow for long-term development. The Green Party, in its document, called for that also. It quoted Teagasc and referred to the need to avoid regional imbalance and the need for infrastructure to make that happen. The Progressive Democrats Party, which has been very vocal on this issue, particularly in the letters pages of some of our national newspapers, talked about the need for national development and for infrastructure to ensure a sea change in regional development.

This commitment was made again before the general election. In April 2007, the then Minister for Transport, in response to a question from an Independent Deputy, emphasised the need to retain these slots, the importance of connectivity to the overall development of the region and made clear that it was in the national interest to ensure the best possible use was made of them. Now, despite these assurances, general election manifesto pledges, Dáil statements and commitments in the programme for Government, we find ourselves in this mess.

The consequences have been clearly spelled out by those living in the region and by national commentators. Almost 94% of business interests in the region say this will have a negative impact on economic activity, while 92% of chief executives in the region say this is a bad decision for the area that will affect the work they do and the income they can deliver.

Specific businesses are crying out about the difficulties this will cause. Element Six, which employs 630 people, uses 2,000 seats on the Shannon to Heathrow route every year. Are we really saying that the withdrawal of those 2,000 seats will ensure those 630 people will still have their jobs in a year's time and that this will not affect them? Of course it will affect them, as we can see from statements by the American Chamber of Commerce that it has €35 billion invested in the region across 129 companies and that the change in Government policy will have a negative impact on its ability to maintain that prosperity and investment.

I draw a comparison between the Minister's statement to the House and the decentralisation programme. In that programme, the Government claimed it wanted to decentralise public service bodies throughout the country to ensure the fair allocation of economic activity, the maintenance of quality of life and that infrastructure does not suffer from one centre hogging all investment. Although I have major difficulties with the practice, I support the theory and the Government was articulate in promoting it. To say, however, that we want to decentralise our public services while at the same time removing essential public infrastructure that ensures that not only public bodies can work but also private services is plainly contradictory. I do not say this to score political points. Such a contradiction will affect people's jobs and incomes.

The Minister spoke about the role directorscan or cannot play. It beggars belief that two vacancies on the board of Aer Lingus lay unfilled for so long since privatisation. It is inconceivable that the Government and other interests at the highest level were unaware these discussions were taking place. While they were taking place, the people and the Government were not represented at the board to make an input.

I am fortunate to have been a director of a private company and a public body. I have experience of the workings of boards of directors. It is all about setting a mandate and a framework within which commercial and individual decisions will be made. Surely if these people had been present, they would have had the opportunity to ask what mandate we are giving the organisation to deliver commercial success and to insist wider policy considerations be taken into account. If trade unions can legitimately make those points at board meetings, surely representatives of the Government, the people and regions that will be affected should be able to do the same. The fact that the Government is only trying to appoint those people now demonstrates its incompetence in managing this issue.

We move on to the role of the 25% stake. As I was preparing for this debate, I looked at a statement made by the Minister's predecessor, Deputy Séamus Brennan, about the role of Shannon Airport and Aer Lingus in the future. In 2004 in this House, he was discussing legislation relating to the airport and he said the people best able to determine the future of the airport were the people of the Shannon region themselves, who should be able to participate in the discussions taking place there and not just receive some memorandum from Dublin. In this case it appears the memorandum was not even written. The people in the region sought representation on the issue did not have board representatives to make their case and it is clear that Government direction that could have been given through use of the shareholding did not happen. The Minister made a number of statements about this.

What is the point in our having such a shareholding if we cannot use it to influence the commercial decisions of Aer Lingus in a way that will have a substantial impact on the development of the western region and the country as a whole? Is there any doubt that President Sarkozy or Chancellor Merkel would use such a shareholding to make that point and to ensure the economic success of the airline was compatible with the needs of the country?

We must respect the investors and management but we also must respect the people of the west and those who have an interest in balanced regional development. History will be quoted back to me in this debate about the role of Seán Lemass as Minister for Industry and Commerce in establishing Shannon Airport. If we looked back on our history, however, we would not make this mistake. Seán Lemass talked about the State playing an active role in delivering national development overall, something he also did as Taoiseach. Would he make these decisions? If we had studied our history, this would not be happening. The Government will go down in history as responsible for this but I am more concerned about the jobs and incomes of those who have been affected by this decision. They should not be consigned to history. The Government should play a role in ensuring that does not happen.

Photo of John EllisJohn Ellis (Fianna Fail)
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When we debate the withdrawal of services from Shannon to Heathrow, we must realise the Government is not responsible. We privatised Aer Lingus and everyone supported that when it took place.

Photo of Pearse DohertyPearse Doherty (Sinn Fein)
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Not everyone. Sinn Féin opposed privatisation, saying it would lead to a situation such as this.

Photo of John EllisJohn Ellis (Fianna Fail)
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The Senator can use his own time to criticise me any way he likes.

Aer Lingus is now a private company. It is no longer State-run. Why was this necessary? Aer Lingus needed substantial capital investment in the coming years if a national airline of any description was to be maintained. As Chairman of the Oireachtas Joint Committee on Transport, I held a number of meetings at which we discussed the privatisation of Aer Lingus with the current management and their predecessors. It was politely outlined to us that state aid to airlines was no longer allowed if difficulties arose. It was Hobson's choice, so we had to decide that it would be privatised. When it was privatised some people may have thought that because the State maintained 25% it would control the airline with that interest. The State is a 25% shareholder but it does not have control of the day-to-day management decisions. Aer Lingus management saw a business opportunity by swapping the Shannon-Heathrow slots to Belfast. The management was wrong. If it had spare capacity on the Shannon-Heathrow route, which is quite obvious, then rather than having four flights a day it should have left two return flights per day, morning and evening. That would have solved everything and kept everybody happy. That is the approach that should have been adopted, rather than getting out of Shannon altogether. By quitting Shannon, the company is leaving a part of the country without connectivity. Let us not be under any illusions about it. That is the situation in which we find ourselves, so we must now look ahead and see what we can do about it. I do not know whether Aer Lingus might still, at this late stage, consider leaving two slots for Shannon-Heathrow, but I do not think it will. Is there not an opportunity, however, for somebody else to take up the slack? Last week, the death occurred of Mr. Tony Ryan, a person who probably made the greatest contribution to the Irish aviation industry. He saw an opportunity for Ryanair and what could be done for the airline sector generally. There is a business opportunity in Shannon for some other airline to take up the slack. The Shannon Airport Authority has a major role to play in this regard, but it will have to get out there and sell that business opportunity.

Photo of Mary WhiteMary White (Fianna Fail)
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It is doing so.

Photo of John EllisJohn Ellis (Fianna Fail)
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I expect it will be successful in doing so, but we must be objective about this matter. We privatised Aer Lingus and we must accept what goes with it. We cannot have it À la carte because it does not work like that. It is easy for people to make rash statements about what the Government can do, but once it was agreed by everybody, with the exception of Senator Doherty's party——

Photo of Joe O'TooleJoe O'Toole (Independent)
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Government Senators are on the record as having disagreed with it.

Photo of Fidelma Healy EamesFidelma Healy Eames (Fine Gael)
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The Senator should get his facts right.

Photo of John EllisJohn Ellis (Fianna Fail)
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Whoever wanted to disagree did so and we will allow them that privilege. None of us will dispute that, but we must consider what we can do now to get connectivity between Shannon and Heathrow back in place. The House should support the initiatives taken by the Shannon Airport Authority to seek a new partner. We must be clear, however, that the biggest advantage of the Government's 25% stake in Aer Lingus is that the Heathrow slots cannot be sold. They are probably worth more to some airlines than Aer Lingus is worth in its entirety.

Photo of Fidelma Healy EamesFidelma Healy Eames (Fine Gael)
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We do not know that. We do not know if they would ever intervene if they had to. That is the problem.

Photo of John EllisJohn Ellis (Fianna Fail)
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We will leave that until the day the threat arises. The House must decide whether it wants to be constructive or destructive as far as Shannon is concerned. If we want to be constructive we should support the Shannon Airport Authority and any carrier that wants to run a Shannon-Heathrow service. The only way to support such a service is for those in the region to use it.

Photo of Fidelma Healy EamesFidelma Healy Eames (Fine Gael)
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Support it to go where? If it does not go where we need it, how can we support it?

Photo of Maurice CumminsMaurice Cummins (Fine Gael)
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Senator Ellis without interruption, please.

Photo of John EllisJohn Ellis (Fianna Fail)
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I always thought that there were not as many interruptions in this House as in the Lower House.

Photo of David NorrisDavid Norris (Independent)
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The Senator is deluding himself.

Photo of Joe O'TooleJoe O'Toole (Independent)
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He is reading the wrong newspaper.

Photo of John EllisJohn Ellis (Fianna Fail)
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When I was previously a Member of this House, it was a much more constructive place than it is now.

Photo of Joe O'TooleJoe O'Toole (Independent)
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The interruptions are of a better quality. That is the point.

Photo of John EllisJohn Ellis (Fianna Fail)
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As far as the Government and everybody in the Shannon catchment area are concerned, we need to get connectivity between Shannon and Heathrow, irrespective of how we do so. Some years ago, Aer Lingus committed another serious crime regarding a regional airport much closer to me, when it pulled out of Knock and left it for dead. We saw what happened there, however, because when Knock decided to sell itself it grew the air traffic volumes using its facilities. The Shannon Airport Authority said there could be considerable savings with regard to the costs incurred by Aer Lingus. I hope the authority will now decide to make those savings available to any other airline that is prepared to provide connectivity.

Photo of Joe O'TooleJoe O'Toole (Independent)
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It has said that.

Photo of John EllisJohn Ellis (Fianna Fail)
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Yes, but it needs to go out and push its case. BMI did not take it but quite a number of airlines with slots in Heathrow would be only too glad to take up this route which was profitable.

Photo of Ned O'SullivanNed O'Sullivan (Fianna Fail)
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I welcome the Minister of State to the House. I also welcome the statement of clarification that was provided for the House by the Minister, Deputy Noel Dempsey. It is not my intention to make the Minister's job more difficult. There are more than enough Opposition Members who will do so. The importance of this issue is illustrated by the fact that so many Members wish to contribute to the debate. I am thankful to my colleagues, including our party spokesman and particularly Senator Callanan, for allowing me to address the issue. As the crow flies, I am probably the closest of our group to Shannon. While many arguments have been proposed for retaining the Shannon-Heathrow service, I do not intend to go over old ground by reiterating them. A number of such valid and cogent arguments were made by various groups both within and outside the region.

I wish to comment, however, on the negative social and commercial impact this decision is having on our region. People have said those effects are exaggerated and that we are whingeing, but employers and workers in the mid-west are not whingers. They have delivered consistently over the years and have been both proactive and successful. In addition, we are fearless in taking on challenges and when we express concerns they are real ones. Regional equality is an important issue, which has been brought to the fore as a result of this matter. All regions should be cherished equally. This is a test case that must be won if we are to restore any form of balance between the over-concentration of economic activity in the greater Dublin area and the east coast generally and that of other regions. It will be won. I am confident our Ministers will deliver on the issue one way or the other. It is of paramount importance that they do so. Those who elected me to the Seanad are public representatives from the mid-west region. They are not fools and will not be easily fobbed off.

The manner in which Aer Lingus handled this matter from start to finish beggars belief. I cannot understand how the decision was taken exclusively by the chief executive and other executives, with virtually no consultation, input or involvement by the board of directors. For many years, I had the privilege of serving as a director on another important transport board in the region, namely, the Shannon-Foynes Port Company. Any action taken by that company was discussed and approved by the board and no executive would have got away with making a decision that had not been properly thrashed out at board level. I welcome the fact that the Minister is appointing two additional directors, but my concern is that it may be a bit late going to the fair. They are welcome nonetheless if only because they will be able to hold a watching brief for the other regional airports. I hope these directors will protect Cork and Dublin Airports.

As a businessman I understand that all companies are inspired and motivated by profit. Their raison d'être is to make money and nothing else. I oppose what Aer Lingus has done because it makes bad commercial sense to leave a market which it has dominated and which has supported it to go into new terrain. Experts have responded unfavourably to this move.

As people who aspire to a united Ireland we were thrilled to see a company in which the Government holds a 25% stake being greeted by and on such good terms with Ian Paisley. That has given us food for thought about what a united Ireland would mean but nobody, not even our friends in the North, would have wanted that progress to occur at the expense of another region.

This problem must be solved. The alternatives to a Heathrow slot are not credible. For people to say that we can do business in Luton or Stansted is like someone shouting from the sidelines at Colm "the Gooch" Cooper when he has the ball in front of an empty net and telling him to pass it back to the goalkeeper and let him score from there.

Photo of Fidelma Healy EamesFidelma Healy Eames (Fine Gael)
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Now the Senator has it.

Photo of Ned O'SullivanNed O'Sullivan (Fianna Fail)
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It is the same thing. I commend the Minister's statement and hope that he will act on it.

Photo of Joe O'TooleJoe O'Toole (Independent)
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I wish to share time with my three colleagues. We will speak for three minutes each.

I compliment my colleague and old friend Senator O'Sullivan for picking up the mores of Fianna Fáil so easily. It will come as a major surprise to the Senator that it was the Government that called the people of the mid-west whingers. He may talk to it about that.

We do not need to be objective about this matter. There is nothing objective about a decision which tears the heart out of a region and a community. This should never have happened because we forecast it last year. We said this would be the death knell of the regions. I mentioned Senator Boyle's airport the last time I spoke on the subject here and several times outside the House. We said that if Aer Lingus was privatised this would happen.

The Minister is right, this is a private company and there is a fiduciary duty on the management to make the best profit possible. It would be completely wrong and in breach of all governance principles for the board to try to undermine a decision that was not in the best interests of the stakeholders. We know that but we knew it last year too. The people of Shannon and the mid-west region have lost out because we did not take notice of what could have been anticipated.

It was not a Hobson's choice last year and I outlined the options then. It was all forecast but not by the people on the other side of the House who now say it is clear and obvious and is the way the sector works.

I welcome the Minister of State to the House. How will he appoint the two directors? The posts should be advertised in the public media. The applications should be scrutinised and the applicants interrogated by either a committee of this House or an Oireachtas joint committee. They could outline their expertise, experience, independence, commitment and knowledge of the area and the regions for which they would be responsible. Who will be put in there and how will they do their jobs?

Senator O'Sullivan is right to say that the idea that the board of directors apparently was not privy to this astonishingly strategic and fundamental decision beggars belief. If I was a 25% shareholder in a company whose directors, whom I had appointed, did not know of such an important decision being taken they would be out the door. Let us appoint directors who mean something and would have the trust and confidence of the mid-west area and understand it.

Could the Minister of State do something for Shannon Airport such as put in a rail head, to make it the only airport on this island that would have an advantage over every other airport? There are two or three stations within four or five miles of the airport. Why not put that in now and give Shannon that advantage?

Photo of Feargal QuinnFeargal Quinn (Independent)
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I wish to make four quick points. I remind those who are protesting about the behaviour of Aer Lingus that this was easily foreseeable. The Goldman Sachs report last year made it clear and that was one of the reasons I voted against it. Despite all its smokescreens the Government's 25% holding was never going to enable it to place national priorities ahead of a privatised company.

I urge everyone not to be bamboozled again by the Government. The Minister is appointing two new directors but let us not be taken in by that. If a majority of Aer Lingus shareholders cannot stop the management, a minority of the board certainly will not be able to do so.

In the future Aer Lingus will apply the simple laws of arithmetic to dealing with its Heathrow slots. A big aeroplane uses the same slots as a small aeroplane, a long-haul aeroplane uses the same slot as a short-haul aeroplane. If Aer Lingus wants to maximise the value of the Heathrow slots in the long term it will use the biggest possible aeroplanes on the longest possible routes. That means that Aer Lingus will make more money by flying directly from Heathrow to New York and other points in the United States. If the imperative to make more money drives the airline that is what it will do. I foresee a time when for us to get from Ireland to America we will all have to fly through London.

Let none of us underestimate the ruthlessness with which Aer Lingus will pursue what it sees as its commercial interests. It seems to believe that it can successfully pursue a strategy against the wishes of its shareholders, the Government, its staff and, even more so, its existing customers, whom most people would regard as its most valuable asset. The very haste with which it has announced this decision shows that it has a different mindset. Only time will tell whether the company can survive with such an approach.

We should be in no doubt as to what to expect from the company in the future. The warning for Shannon and the west is one for us all. We could and should have foreseen this. We argued about it last year but this was not recognised.

Photo of Shane RossShane Ross (Independent)
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We should not be having this debate because the Government should have sold its 25% stake in Aer Lingus at the time of privatisation. Had that happened there would be no good reason for it to be a political football now. The Government is reaping the whirlwind of its fudge this time last year when it decided in its wisdom and its desire to cosy up to the unions in Aer Lingus and others that it would hold on to 25%. The impression was given - it was not contradicted by the Government at the time - that as long as it held 25% and the unions 15%, everything would be all right and the privatisation would not really be a privatisation, but that the airline would remain under State control. The Government deliberately gave that impression to keep vested interests happy. Now when it is being called on to deliver on that unstated but deliberate impression it cannot do so.

I have little sympathy for the Government in this situation. I support fully the sale of State assets. The Government has no business being involved in airlines, airports or banking. If we fudge it this is exactly what will happen. Now it is hoist on its own petard, and does not know whether it has control or influence, which it does not have.

The appointment of directors does not give one control over the day-to-day management of Aer Lingus. While the Government has no business in respect of this decision, it appointed the directors. Members should not forget the other directors are also political appointees. Every one of them was appointed prior to the privatisation by the Government. No one should take great comfort from the forthcoming appointment of two more directors. The Government implies the directors to be appointed will be two of the greatest political patsies ever to have been appointed by it, which will be some record to beat.

Photo of Mary WhiteMary White (Fianna Fail)
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The Senator has a cheek.

Photo of Shane RossShane Ross (Independent)
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They will be expected to deliver on a matter in respect of which they cannot. I feel sorry in advance for the unfortunate people who will be appointed to this board, because they will be expected to take orders directly from the Minister on non-commercial grounds. They will be unable to so do and the Government will be unable to deliver. While it wishes to surmount this problem by stating its intention to appoint two people who somehow will prevent it from happening in the future, it will not be averted.

Were the Government really to desire to so do — I do not suggest it should — while it could not interfere with this decision today or tomorrow, it could certainly remove the board. There is no reason to prevent it from getting together with the unions and others to remove the board at the next annual general meeting. However, the Government will not do this.

Allow me to contrast the extraordinary inaction and feeble excuses provided by the Government on this issue with its incredible activity when Ryanair decided it wanted to take over Aer Lingus. No one could have been faster on the road to Europe than the Fianna Fáil Ministers who stated this should never happen. It used its 25% shareholding ruthlessly when it was politically practical. In this case, however, when the Government finds it impossible to deliver, it states there is nothing it can do legally. This problem arises when one is unable to make up one's mind whether to privatise.

Senators:

The Senator has gone well over time.

Photo of Shane RossShane Ross (Independent)
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The Government deserves all the political flak it is getting for the decision it made last year.

Photo of David NorrisDavid Norris (Independent)
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I am grateful to my colleagues for allowing me some time to speak on this issue. This was a ruthless executive decision taken in a business context. From the parameters of one perspective, this was a correct decision because the guidelines were entirely economic and directors might have been found to have been neglectful of their responsibilities were they to fail to make the greatest possible profit. However, as the route was already profitable, this was not a necessary decision.

Senator Ellis was Chairman of the Oireachtas Joint Committee on Transport on which I served and this was one reason I spoke and voted against the privatisation of Aer Lingus. One hears much about privatisation and competition and I completely disagree with my distinguished colleague, Senator Ross, when he speaks about Ryanair and Aer Lingus. While this action was meant to produce competition, the first thing to happen was that Michael O'Leary tried to use Ryanair to gobble up Aer Lingus and establish a monopoly. We would have lost a State monopoly only to gain a monopoly whose only interests were greed and the wealth of a small number of individuals.

This was also a political decision and the Government undoubtedly knew about it.

Photo of Alan KellyAlan Kelly (Labour)
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Hear, hear.

Photo of David NorrisDavid Norris (Independent)
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This was a ready-up because it fitted in with the Government's North-South co-operation policy. Hence, this was a political decision.

One should contrast the attitude adopted by the Government on this issue, in which it shafted the people of Shannon and Aer Lingus, to its manoeuvrings when Members were in the process of establishing a committee to investigate the rendition flights that passed through Shannon Airport and the lies that were then told in this regard. The Government was prepared then to gallop in at the behest of a strong Shannon lobby for nakedly political reasons.

This issue has two elements. I refer to the business element whereby one can justify what was done in terms of harsh competitive realities. However, I do not, because there should be a social dimension. The only way to have one is by retaining Aer Lingus in public control, which is the reason I voted against the privatisation. All the matters Members raised then are now coming home to roost.

Photo of Mary WhiteMary White (Fianna Fail)
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I wish to share two minutes of my time with Senator Daly. I also wish to record formally that while all Fianna Fáil Members wished to speak on this issue, they were short of time.

Senators:

Is Senator White's sharing of time with Senator Daly agreed? Agreed.

Photo of Mary WhiteMary White (Fianna Fail)
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On 7 August, the Tuesday following a bank holiday, Aer Lingus stuck a knife in the back of its 320,000 customers——

Photo of David NorrisDavid Norris (Independent)
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Hear, hear.

Photo of Mary WhiteMary White (Fianna Fail)
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——the Government, business people and industrialists in the Shannon region, its loyal staff, councillors from Galway to Kerry, the tourism industry and the people of the mid-west. This was not the behaviour of a world-class company as normal companies look after their customers with respect. One need only consider how Senator Quinn treated his customers. The customer was king and he wrote a book, Crowning the Customer, on the subject. Similarly, one should consider how Tesco, as a successful world company, looks after its customers and provides them with their needs.

It was a savage act on the part of Aer Lingus to do this to its 320,000 customers. Lest any Opposition Member is in doubt, the Minister's speech makes it clear the Government did not know about this. The Minister, on his own behalf as well as that of the Taoiseach and the Government, has reiterated his deep disappointment to Dermot Mannion and the board regarding the withdrawal of the slots for four return flights per day to Heathrow Airport.

Everyone who flies to London prefers to fly into Heathrow Airport rather than Gatwick or Stansted airports. For example, those business people who wish to travel to South Africa, the Middle East or the Far East and who can only fly into Gatwick or Stansted cannot run their luggage straight through. What business people do not wish to be able to send their luggage straight through to their destination? Those who travel to Stansted or Gatwick will be obliged to collect their luggage and journey to Heathrow to get to Cape Town.

Senators:

The Senator's time has expired.

Photo of Mary WhiteMary White (Fianna Fail)
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The Government and the Shannon Airport Authority are doing their level best to induce another airline to take up this opportunity. As Senator Ellis noted previously, it was a profit-making route and all Members must support the Government's efforts to secure another airline. If no other airline takes up the offer, Aer Lingus should be forced to give back two slots. I refer to slots from Dublin or Cork that do not operate at full capacity. The region requires connectivity to Heathrow.

A lady with great knowledge of industrial development in the mid-west, Ms Maura Saddington, spoke out on this issue, which is highly unusual for someone from the semi-State sector. She is on record in The Irish Times as stating the region needs the return of the slots in question. I call for a re-energised Government plan that prioritises the national development plan for the area, the production by the Minister of the tourism plan for the region, as well as a focus on re-energising the west and mid-west. Senator Daly may speak now.

Senators:

Senator Daly has one minute.

Photo of Mary WhiteMary White (Fianna Fail)
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The Acting Chairman should allow him more time. He will be looking for sympathy some day when I will be sitting in the Chair.

Senators:

Can we have order, please? Senator Daly has one minute.

Photo of Alan KellyAlan Kelly (Labour)
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The Senator has 30 seconds.

Photo of Mark DalyMark Daly (Fianna Fail)
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I will speak when it is again the turn of the Government Members.

Senators:

Very well; that is fine.

Photo of Alan KellyAlan Kelly (Labour)
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While I welcome the Minister of State to the House, it is a pity the Minister for Transport and the Marine, Deputy Noel Dempsey, was unable to remain. I speak on behalf of the Labour Party and thank my colleague, Senator Brendan Ryan, who is our spokesperson on this subject, for allowing me to do so. I speak as a representative of the mid-west who is highly exercised about events in Shannon in the past few months. The mid-west has been let down by the Government's failure to intervene in this crisis which threatens the livelihood of thousands of people, as well as the region's very character. This is an important matter and the mid-west's morale has taken a hit arising from it.

Given the time allowed for this debate, I will not go into details regarding the decision's impact on the mid-west, except to state it obviously will be detrimental from the perspective of business, tourism and socially, which has been greatly underestimated. Members have already witnessed businesses losing jobs, as well as projects being put on hold. For example, I refer to Dromoland Castle, Doonbeg golf course or the proposed new hotel in Quin, County Clare. Moreover, as someone who has worked for Bord Fáilte and its successor, Fáilte Ireland, for nine years, I am fully aware of the impact this decision will have on the mid-west in respect of tourism. The region suffers from a lack of sustainable tourism agency policies aimed at persuading visitors to spend more time outside Dublin. Shannon Development has spoken out about this matter, but it is deplorable that the other State agencies have not had one word to say about one of the biggest decisions affecting Irish tourism in recent years.

The decision of Aer Lingus, aided by the Government's inaction, to withdraw the Shannon-Heathrow route is nothing short of a disgrace. Nothing has ever mobilised the people of the mid-west in this way. I say this with some knowledge, as I am a representative from that area. As people from all sides have pointed out, we should not underestimate the passion that people feel on this subject. Nothing since the suspension of breast cancer services at Barrington's Hospital in Limerick has exercised people to such an extent — in fact, they are more exercised about the Shannon issue.

I have met members of the Atlantic Connectivity Alliance and Aer Lingus workers' groups many times. I welcome many of them to the House today, where they are present in the front row of the Visitors Gallery, including Theresa, John, Conor, Michael, Eugene, Tony and Michael. Geraldine Morrissey, who is the nemesis of the Minister for Defence, Deputy Willie O'Dea, is also present, as is my colleague from the mid-west, Deputy Jan O'Sullivan. It is great to see that someone with an interest in this issue is here for the debate. I welcome these people to observe the debate, and I admire their determination, the arguments they have put forward and the way in which they have done so, and their professionalism in pursuit of this very just cause. I also admire the dignity with which they are dealing with this issue — something which I cannot say I have always seen among the Government benches.

The motion put forward by the Government in Dáil Éireann some weeks ago on Shannon and Heathrow was one of the most cowardly ever seen in these Houses. The motion expressed disappointment at the decision of Aer Lingus. I will repeat that: disappointment. The Houses of the Oireachtas are not here to be disappointed. They are here to act. However, the Government says it is disappointed. In this, it has singularly failed to look after the people of the mid-west and show solidarity with them. The Government Deputies from the mid-west also showed their true colours as they walked like lambs through the lobbies. They had a choice. They could have put pressure on their own Minister and Government to use its 25% shareholding to intervene in this crisis and reverse the decision, whether by means of voting on the behaviour of management at board level, by a vote of no confidence in the board, or by whatever means was required. However, they have failed to do so.

I have some questions about the former Minister for Transport, Deputy Martin Cullen, who privatised Aer Lingus, and the way in which he did this. Did he really know what he was doing? He was either incompetent or inept. Either way, it does not fill me with confidence. He sold the current Minister a pup, and many people in the Minister's own party believe the same. He botched the privatisation, pure and simple. He stated in the Dáil that through the memorandum and articles of association, the 25% shareholding available to the Government would protect connectivity and the slots in Shannon, Cork and Dublin. The Minister for Transport and the Marine should be in a position to call an EGM to maintain Government policy. We realise the reality: he cannot or, more importantly, will not do this. I ask the Minister of State his opinion on the former Minister's declaration. Does he still agree with what he said in the Dáil? Whether he does or does not agree, I ask him to explain why.

At the start of this crisis the Minister for Transport and the Marine, Deputy Noel Dempsey, stated that we in the mid-west were exaggerating the situation. Does the Minister of State still believe this? The Government said initially that it could not intervene. It is amazing how this has changed so that it is now saying it will not intervene. It will not use its shareholding to call an EGM and reverse the decision. This was confirmed earlier this morning by the Taoiseach. The Government talks about a balanced regional policy, but will not act on it. It is not on the Government's agenda. All the spatial planning in the world will be no substitute in a region that has no connectivity to the central axis point of the world.

When I raised the issue of Shannon and the Government's failure to use its 25% shareholding on the Adjournment last week, the Minister of State, Deputy Máire Hoctor, was wheeled in to read a script, from which I quote: "The Government's legal advice is that, having regard to the duties of the board of directors pursuant to the Companies Acts and the memorandum and articles of association of Aer Lingus, shareholders do not have the power to overrule management decisions on business matters". This is very similar to what the Minister said today. Why did the Government keep the shares at all, if this is its interpretation? Why did it keep the shares if it cannot call an EGM, vote on management decisions or, if necessary, propose a vote of no confidence in the same management? This seems very strange legal logic to me and my party, and also to other observers, including the former Minister for Industry and Commerce, former Deputy Des O'Malley, who in a letter to The Irish Times stated:

The Minister for Transport, among others, is espousing a version of company law with which I am not familiar. He seems to think that management is supreme, to the exclusion of all others. The Companies Acts envisage the board of directors as responsible for the actions of a company. The board in turn is answerable to the shareholders. The shareholders have the ultimate sanction of dismissing the board if they disagree with the company's policy.

This is also our understanding, but it is not the Government's. Instead, the Government has found a convenient way of avoiding its responsibilities. I have never seen a board take a strategic decision of this magnitude without first consulting its shareholders. I share with Senator Davis Norris a belief that this must have been known by the Government prior to the decision.

When the crisis initially rose, Government Deputies in the mid-west assured us that things would be fine — either the decision would be reversed or connectivity would be established by a different carrier. Now that neither of these is possible due to the Government's own position, what will Government Deputies say? What are we going to do now? It is a simple question. They seem to be speaking out of both sides of their mouths on this issue, and they want to be both in government and in opposition. My Seanad colleague, Senator Mary White, asked in a letter to The Sunday Times: "If the Government's 25% stake in Aer Lingus was not intended to influence the strategic development of the company, what was it envisaged for?" I ask the same question. What was it envisaged for? Perhaps the Minister of State will explain what it was envisaged for, because I am still unclear. Senator White agrees with the Opposition that connectivity through Shannon is key, and many other speakers have said the same. She stated:

The key issue is the likely setback to the region's development. Heathrow is a gateway to the wider world, and in this era of globalisation international connectivity is more important than ever.

I could not have said this better myself if I tried. Perhaps the Minister of State's colleagues in the Dáil, when they were voting, might have thought of this and voted in accordance with what many of them actually believe. I make an honourable exception of the Deputy from Cork who went missing, and a few others who did not seem to have time to turn up for the vote.

My party, the Labour Party, opposed the privatisation of Aer Lingus. It was the only major party in the Oireachtas to do so. This was not on ideological grounds, but because we believe in a simple economic philosophy called externality, which implies that in certain circumstances the greater good must be protected. In this case, the greater good of the mid-west should have been protected. Unfortunately, the Government did not believe this.

Last week's announcement by BMI that it has no intention of instituting flights to Shannon Airport did not surprise me in the least. Those of us who have been following this crisis closely, as I have, knew that this was never on the agenda, especially as BMI had announced a week or two before the Aer Lingus announcement that it intended to establish 17 new routes. If this were the case, how could it be expected to create a new route to Shannon? It was never going to happen — it was a smokescreen, plain and simple.

The Minister for Transport and the Marine stated that the Government was in talks with BMI and that these were going up and down. I presume they were down quite often. When exactly did the Minister's officials last correspond with BMI prior to Thursday's announcement? As I said all along — many of my colleagues agree with me — Aer Lingus is the only sustainable option at this time for the Shannon-Heathrow route, despite the Taoiseach's assertions today. This is because it is the only company that has slots at Heathrow, apart from British Airways, which is not interested, and BMI, which has already stated that it will not participate. Thus, Aer Lingus is the only possibility, if its decision can be reversed.

There has been talk of airlines' establishing flights to Shannon from other hubs. Of course they would be welcome, but they cannot provide the connectivity that the business and tourism interests of the mid-west need. We need sustainable connectivity for the business people of the mid-west. If airlines do come into Shannon from other hubs in the future, whether from Amsterdam or anywhere else, we do not know how sustainable this will be, particularly with regard to subsidies. We need a sustainable option for the mid-west that will allow strategic and spatial planning towards various objectives.

I appeal to the Minister of State from another point of view. If he will not intervene based on the arguments outlined by me and my colleagues today, which are based on the good of the mid-west, he might consider it from a more commercial angle. I will provide the facts in this respect for the Minister. Aer Lingus is leaving a very profitable route on which it has no competition. People do not like the word "monopoly", but that is, in reality, what the company has on this route from Shannon. It is going onto a route on which it will have serious competition, where one sees from the statistics that there are low bookings from Aldergrove to London. In 2001, British Airways ran this route for a couple of years. It was not viable and BA gave it up. It did not give it up without a reason. It gave the route up because it was not worthwhile. If it is not worthwhile, why is Aer Lingus going in there?

Aer Lingus is also giving up all the goodwill and the subsidies the Shannon Airport Authority has been willing to give it in the recent period and has improved in recent times. The following is an important statistic. According to the industry average, it is eight times more difficult to get new customers for an airline than to hold onto one's current customers.

There are other reasons the Government should intervene in the running of this airline. Last year this airline launched the Dublin to Dubai route with great fanfare and now it is giving it up. I raise a question mark over that. One must also look at the dispute with the pilots. There is a view across the House which was expressed earlier today, that the dispute is not exactly being handled with great authority.

We all know the reality is that Mr. Dermot Mannion wants to move this airline into a zone where it is principally a long-haul airline which will work out of Heathrow, principally serving the US. If this means cancelling Cork and some other services in Dublin, so be it. The representatives from Cork should recognise this. He wants to create an airline that can be put up for sale without any social responsibilities or baggage.

The State airline is no more. The Government and the Minister, Deputy Noel Dempsey, know this and that is why he is making two new appointments to the Aer Lingus board. Wait until we see what comes out of the next two world slot conferences.

Photo of Pat MoylanPat Moylan (Fianna Fail)
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Senator Kelly's time is up.

Photo of Alan KellyAlan Kelly (Labour)
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I am concluding. These slot conferences are important because they will decide the future of where Aer Lingus can work from. Wait until we see the decisions that come out of those conferences.

We in the mid-west will continue to fight this decision. The people of the mid-west are not whingers or exaggerators, and it is to their great credit that they have fought this decision. I will finish with a quote from the famed former Deputy Des O'Malley, who I mentioned earlier, in his excellent letter to The Irish Times:

The termination of services from Shannon to Heathrow will have its greatest effect in making it much more difficult to attract that kind of investment in the future. Apart from the loss of existing jobs, thousands of jobs that might have been created will not materialise.

Photo of Pat MoylanPat Moylan (Fianna Fail)
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Senator Kelly's time is up. I must move on to the next speaker.

Photo of Alan KellyAlan Kelly (Labour)
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I ask the Minister of State, Deputy Tony Killeen, to work with the Government to reverse this decision. It is the only sustainable option for the mid-west.

Photo of Dan BoyleDan Boyle (Green Party)
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Yesterday I had a conversation with a former director of Aer Lingus who informed me that on becoming a director, he was issued with a manual outlining the responsibilities that a director of Aer Lingus should have. Within that manual there were 34 pages on the area of corporate social responsibility. It could be that that manual needs to be rewritten given the new circumstances in which Aer Lingus finds itself. It is no longer a national carrier; it is a privatised company that operates to a base commercial agenda. I presume the same manual is in use, nonetheless, even for the two new directors being appointed today by the Minister for Transport and the Marine. Not having a copy of that manual or read its contents, I suspect it speaks of corporate social responsibility in its widest sense — responsibility to the workforce of the company, responsibility to its customers, and responsibility to the wider community, especially where the company has its base of operation. On every one of those criteria, it is clear that the new Aer Lingus has failed.

We can argue to our heart's content about the effects of the privatisation of Aer Lingus. That debate was held. My party had a particular viewpoint on it, but it was not necessarily the strict viewpoint of the previous Government. There were other parties — parties in opposition — which agreed exactly with that practice. The fact is that a privatised Aer Lingus now makes its commercial decisions regardless of the consequences for others.

The trend in this decision making even preceded privatisation. I recall having arguments about decisions Aer Lingus made on Cork Airport. The company took on a private competitor in the form of Jetmagic and undermined three routes so that there was no choice out of Cork Airport any more. Aer Lingus made a decision no longer to provide an air route between Cork and Dublin, and that was before privatisation.

We need to face a new reality. We do not have a national carrier and need to refocus the national aviation strategy to take that into account. Having listened earlier to the contribution of Senator Ross, we are very much in the realm of Hobson's choice as regards the future of aviation in this country and the roles companies in the area are prepared to play. It is not a case of Aer Lingus making these particular choices. It is just as much a case that one of the largest shareholders in the privatised Aer Lingus is not a company that has the best interests of the airline at heart. It is not concerned with the maximisation of profit in that company but more with how it can stymie a competitor in the commercial field. It is even possibly considering how it can transfer assets in the event of taking control of the company. On those grounds, Shannon has been very much the victim of a set of circumstances, only part of which relates to the decision to privatise.

Some contributions had regard to how this situation can be solved. It seems unlikely it will be the retention of the routes by Aer Lingus, but it must be the provision of some route by some carrier from Shannon to important hubs. We all must strive to get to that point.

I was particularly taken by the contribution of Senator O'Toole when he referred to the fact that Shannon, of all the international airports in this country, is the easiest to link up to a public transport network. An early decision needs to be made on that. It is technically feasible. In terms of cost implications it is one of the easiest to achieve. The Government is soon to make announcements on the metro north programme and Dublin Airport, but the need for a rail link for Shannon to open up the potential of that region is something my party will be highlighting in the coming years.

The decision to appoint two new directors might seem like an exercise in locking the stable door after the horse has bolted, but retaining the existing slots to ensure they are not sold to competitors will be an important facet of regional policy in the next few years. I am convinced that the Minister outlined during the debate in this House at least a strategy as to how Shannon can be rescued. My party, as a partner in the Government, is prepared to play its part in that regard.

Photo of Paul CoghlanPaul Coghlan (Fine Gael)
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I wish to share time with Senator Nicky McFadden.

We should be rightly critical of Aer Lingus for pulling the plug on Shannon. Despite all the assurances given in the past regarding the retention of the Heathrow slots in the national interest, it is, as has been stated in this debate, tearing the heart out of the region. In fact, it is worse than that. It affects the entire western seaboard. It has undermined the stakeholders. It has shafted customers and its staff. The directors, as Senator O'Toole stated, should be out the door.

The board is hiding behind the management in this matter and I do not understand how it has managed to get away with it. It must have known the Government would not act or lift a finger against it. It seems as though there was some collusion in what has happened because corporate governance would require — Senator Kelly quoted the correct position — that directors direct and lead; they cannot abdicate.

The Government, despite its 25% shareholding, has left Aer Lingus to freewheel. It was supposedly a golden share to prevent any alien takeover. If it was not that, the Government might as well have sold its shareholding, as has been pointed out. Connectivity is vital and it will not happen without the retention of those slots.

The other matter we cannot ignore here is that the former Minister for Transport, Deputy Cullen, misled the Dáil, because he confirmed the importance of the Shannon to Heathrow route in the Dáil debate that led to privatisation. He confirmed it was for reason of strategic national importance that the State was retaining its interest in the company, yet the Government has refused to utilise that stake in order to retain the use of the Heathrow to Shannon slots, despite it appointing a few extra directors. Why did the State need to retain any share in Aer Lingus if it is not prepared to use it? I contend the Government clearly did intend to use it in the national interest, so to speak, as outlined by the then Minister for Transport, Deputy Cullen. Because management got away with a con, in a manner of speaking, and because the board refused to act, we are now left in the lurch.

Photo of Nicky McFaddenNicky McFadden (Fine Gael)
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I thank the Minister of State, Deputy Killeen, for attending this debate. The Minister for Transport and the Marine needs to intervene and reinstate the Shannon to Heathrow services. I do not believe it is a fait accompli, nor do I accept the links are gone. The Minister still has a chance to intervene. Aer Lingus has proposed an extraordinary general meeting on expanding its fleet. The Minister has an opportunity to ensure the Shannon issue is firmly placed on the agenda.

We all know the extent to which connectivity is critical to an island nation that is wholly dependent on trade and tourism. As Senator Mary White stated, Heathrow is the closest gateway to the global economy, serving 200 destinations. As she also stated, closure of the Shannon to Heathrow services would sever access to 46 cities that are not served by the other London airports. Investors and visitors who use these connections are the key to continued wealth for the west and midlands. The Government claims to be committed to the national development plan, the national spatial strategy and investment in the Atlantic corridor. However, to ignore the customer, namely, the investor and visitor to the west, is nothing short of a disaster for the development of these regions.

We in the midlands do not have an airport. Athlone, Mullingar and Tullamore are part of the midlands gateway and it is the intention by 2020 to grow the population of these towns by 20,000. To attract trade and investment to the region we need the global connectivity that can be provided through Heathrow, not a reduction in our options. If I were the Minister my first concern on my appointment would have been to appoint the two Government nominees to the board of Aer Lingus. Perhaps then we would have had a chance of putting forward a view.

Photo of Mark DalyMark Daly (Fianna Fail)
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I welcome the Minister and the assistance he has given to Shannon and the mid-western region to bring back connectivity between that area and the wider world. I also welcome his future appointments to the board of Aer Lingus.

I support Senator O'Toole in his call that the two appointees would come from the mid-western region in order that the interests of that area would be served and their points of view put across. I also support Senator Norris's call to question the commercial rationale behind management's decision to move from this route.

Some interesting facts emerge. Senator Kelly stated it takes a significant effort to get a person to change from one airline to another. The statistic he used was one in eight. Aer Lingus management should explain its actions, given that between 2000 and 2006 there was a reduction of 43% in traffic between Belfast and London while traffic on the Shannon to London route has grown in the same period.

I would also like to hear how Aer Lingus proposes to capture half of the traffic between Belfast and Heathrow while providing only one third of the flights on that route. This appears to be an attempt to get a square peg into a round hole. It is questionable how Aer Lingus will achieve this and realise more attractive fares than in Shannon, given that it is competing against an airline that controls two thirds of the flights on the Belfast to Heathrow route and 12% of the slots in Heathrow itself. The competing airline on the Belfast to Heathrow route will be able to up the ante and will literally put Aer Lingus out of business, as British Airways went out of business when it tried to take on that company on the Belfast to Heathrow route.

The impact on Aer Lingus of its revenues on the Dublin to Heathrow route must also be examined. These are questions the new board appointees must put to management. The fact that there is an overlap in the catchment area of Belfast and Dublin means that in many respects people will fly from Belfast to Heathrow rather than from Dublin to Heathrow with no net gain for the airline.

I would like to see the State appointees questioning the commercial rationale behind the company's decision to move from Shannon to Belfast. Any company should stay with a monopoly. If I were in business and I had a monopoly I would not move for love nor money. It beggars belief how Aer Lingus thinks it will succeed where British Airways, the world's largest airline, failed. The real question is whether the management of Aer Lingus is serving the company and its shareholders well by leaving a monopoly and going onto a competitive route. A reduction of 43% in traffic in the past five years shows demand is falling on that route. Allied to this, the fact that Aer Lingus's market share in Dublin will be affected by its proximity to Belfast also calls into question management's decision making.

I agree with the Minister that we must look forward and that the restoration of connectivity between Shannon and the rest of the world must remain a Government priority.

Photo of Phil PrendergastPhil Prendergast (Labour)
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I wish to share time with Senator Healy-Eames.

Photo of Pat MoylanPat Moylan (Fianna Fail)
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Is that agreed? Agreed.

Photo of Phil PrendergastPhil Prendergast (Labour)
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It is not good enough for the Minister for Transport and the Marine to wash his hands of this Aer Lingus decision. What use is it for the Government to have a 25% stake in Aer Lingus when the Minister expressed no interest or concern when critical decisions that seriously eroded the region's competitiveness were taken that affected its potential attractiveness for foreign direct investments? The Government continues to spin the need for greater regional development. At the launch of the national spatial strategy for 2007 to 2013 Shannon and Limerick were awarded gateway status but Limerick and the greater mid-west region continue to fall behind other parts of the country. This is a serious body blow to that area.

The people of the mid-west want their representatives in the Government parties to show leadership and courage in the face of Cabinet silence following this disastrous decision to scrap the flight services between Shannon and Heathrow. Crying crocodile tears will not help anybody. Senior Ministers cannot continue to bury their heads in the sand and hope this issue will go away. That will not happen. There is an immediate and real threat to jobs and investment as a result of the Aer Lingus plan. I am aware hotels and other businesses in the Galway area are deeply concerned about the potential damage of taking away this key route to London Heathrow. The latest decision makes a mockery of proposals for development of the west and the principles of regional development and planning.

5:00 pm

Photo of Fidelma Healy EamesFidelma Healy Eames (Fine Gael)
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I thank the Minister of State, Deputy Killeen, for attending the debate. I am a Senator from Galway West and I represent the west's perspective in the national context. My speech is much longer than the time available to me.

The Minister for Transport and the Marine, Deputy Dempsey, addressed the House at the start of the debate. Despite what he said about what has been done by the Government to try to reverse this decision, to save the important Heathrow slots and to preserve connectivity to the rest of the world, I have seen no real passion or will on the part of Fianna Fáil towards Shannon, the west or balanced regional development. I have little time to speak on this matter. I realise Shannon is a political soft target for the Fianna Fáil-led Government. We have heard of Fianna Fáil's intention to develop the party in Northern Ireland. Is this why it has moved the slots from Shannon to Belfast? As many speakers have noted, the fairest way would have been, at the very least, to share out the slots between the four regions of Ireland, including the Belfast region. It is pathetic how Fianna Fáil has abandoned its voters in the west by selling them out.

Photo of John EllisJohn Ellis (Fianna Fail)
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We never did that.