Marc MacSharry (Fianna Fail)
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I thank the Minister for taking the time to come into the House to deal with this issue. My Adjournment matter relates to Shannon Airport and the measures announced by the Government in the budget, as well as indications given throughout last year. My concern is that the State is unfairly promoting a policy to ensure the survival and growth of one airport potentially at the direct expense of another. I want to make it clear, as I have got some stick from a particular county yesterday and today, that I am for Shannon Airport, pro the south-west region and would not seek to scupper investment to help that region and Shannon Airport to perform to its potential. Ireland requires the airport to perform to its potential.

The Minister may or may not be aware that I have lodged a complaint with the European Commission Directorate General for Competition raising concerns about the measures announced some time ago indicating that they are anti-competitive on the basis that I understand Shannon Airport's business plan will specifically target 250,000 passengers at Ireland West Airport Knock and that, effectively, it now has the benefit of the apparatus of State agencies in seeking to do this following the announcement of what I estimate to be a ¤100 million debt write-off, the stripping of certain assets to be sold to IDA Ireland, the proceeds of which will go back to Shannon Airport, among other issues. I estimate that up to ¤300 million is the value of the investment to Ireland West Airport Knock and that region. This equips Shannon Airport unfairly and undermines the potential of Ireland West Airport Knock to continue to grow its business.

The Minister has said that in some ways he admires the performance of Ireland West Airport Knock in terms of what it has achieved in growing its business by 350% - to use his words - in the past ten years at a time when Shannon Airport had lost 63% of its business. In that period ¤160 million was provided for Shannon Airport, while just ¤15 million was provided for Ireland West Airport Knock. The Minister stated:

... if nothing was done for Shannon the airport stood in danger of being passed out by Knock airport in passenger numbers, despite a current gap of over 900,000 passengers.

I think if the trends continue as they are it will happen because Shannon?s numbers are already down 20 per cent this year and Knock is still growing. It is only a matter of time without a change in policy.

I am not against Shannon Airport, but the Booz report warned that supporting Shannon and Cork airports in isolation would jeopardise the viability of other airports. That is what will happen. We must take a strategic approach to our airports, acknowledge that they can all be economic drivers for their respective regions and maximise the potential of the regions in contributing to the national effort and, ultimately, national recovery.

I ask the Minister to acknowledge the strategic importance of Ireland West Airport Knock to the north-west region and its potential to contribute to the national effort and future national recovery. Second, I ask him to make available proportionate supports to Ireland West Airport Knock to help it to perform to its potential. I am not talking about "capex" and "opex" but rather take a strategic view. I am aware that members of the board and management have met the Minister and other Government representatives some 50 times since he took office to highlight the contribution that can be made in the context of some 900 jobs being created and in terms of the airport being an economic driver for that region.

Rather than Shannon being enhanced in its role to try to rob Peter to pay Paul, all of us can be equipped to focus on the international market to get more people into the respective regions and those regions to contribute to the national effort. The Minister knows where I am coming from. I am aware that people in Clare are extremely annoyed at this disruptive Sligo Senator from the north west potentially querying why Shannon should be supported.

Martin Conway (Fine Gael)
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So is Deputy Timmy Dooley.

Marc MacSharry (Fianna Fail)
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I am simply using the complaint to the European Commission to raise awareness and highlight the fact that we must have proportionate support for Ireland West Airport Knock in the interests of that region performing to its potential and making a positive contribution to the national effort.

Leo Varadkar (Dublin West, Fine Gael)
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As the Senator will be aware, the Government decided in November to proceed with the separation of Shannon Airport from the Dublin Airport Authority, DAA, and to merge the airport with a restructured Shannon Development to form a new integrated Shannon entity in public ownership, "NewCo". This will grant Shannon Airport the freedom to determine its own future in the best interests of the airport itself and of the Shannon region. It will free the board and management of Shannon Airport, together with the employees, to bring a fresh approach to the future development of the airport.

In line with this Government decision, the assets and business of Shannon Airport were transferred from the DAA to the Shannon Airport Authority, SAA, on 31 December 2012, following the approval of the relevant order by both Houses of the Oireachtas. Shannon Development and Shannon Airport Authority are both owned by the State and the State, on behalf of its citizens and taxpayers, has been faced with these two ailing companies that have not been realising their potential to make a contribution to the economy of the wider region. The State is, therefore, restructuring its assets to make better use of them as a catalyst for the development of sectoral opportunities, and the creation of jobs, particularly within the aviation sector. This restructuring involves no more than a re-ordering of assets which are already in State ownership. It is the DAA, not Shannon Airport, that borrowed money over the years and it is for the DAA to pay that money back. The State is neither writing down nor writing off any debt as these borrowings will be paid back in full by the DAA. It will be for Shannon now to chart its own future as a separated State-owned company.

There appears to be some confusion in recent debate about the difference between a State airport and a regional airport. Please allow me to clarify that issue. There are two types of airport in the State, the State airports and the regional airports. The State airports, Dublin, Cork and Shannon, are owned by the State and the Government appoints their chairman and boards. They receive no Government grants or Exchequer subsidies. They are expected to fund their own capital development from their profits or borrowings against their own assets which are not guaranteed by the State. They should turn a profit, pay corporation profit tax and a dividend to the State and have done so in the past.

The regional airports - Ireland West Airport Knock, Kerry, Waterford and Donegal - are not owned by the State and we do not appoint their boards. They exist for reasons of regional and social policy to provide essential air access to relatively remote regions that do not have a major airport or State airport nearby. As a result, they can receive Government subsidies, subject to certain EU rules. Generally, these subsides are provided to allow them to break even and remain operational. They are not expected to pay a dividend and the Government does not guarantee their debts or financial obligations.

I have consistently said that all Irish airports should operate to a commercial mandate and have stressed on numerous occasions that regional airports, including Ireland West Airport Knock, must work towards achieving operational viability over the near term, particularly given the downward trajectory of Exchequer funding. In this regard, apart from the consideration of restructuring the State-owned airports, I have also endeavoured to rationalise the system of State support for the regional airports not owned or controlled by the State, including those in the ownership of private companies and private trusts, and the Government now has a settled policy in relation to those airports.

In line with the recommendations of the value for money review on the regional airports programme published in 2011, the Government has decided that funding under that programme for the period 2012-2014 is being consolidated on the four regional airports of Ireland West Airport Knock, Donegal, Kerry and Waterford since the start of 2012. Funding for Galway and Sligo airports ceased in 2012. Subject to funding availability, the other four airports, including Knock, will continue to be eligible for funding up to the end of 2014 when the current EU-approved scheme expires.

While it might be possible to put a scheme in place to fund the regional airports beyond 2014, any such scheme would, due to new EU guidelines, be subject to more stringent eligibility criteria and to prior approval by the European Commission. Of course this would also require the allocation of scarce Exchequer resources rather than to other competing demands such as public transport, road maintenance, hospitals and schools.

Since 1993, Ireland West Airport Knock has had the benefit of around ¤40 million in support under the regional airports programme. This includes funding for PSO air services, which although paid directly to the airlines, also benefits the airport through revenue paid by those airlines to the relevant airport. Approximately ¤1.3 million was provided in 2012 to the airport, ¤700,000 in capital expenditure funding for capital projects and ¤600,000 in operational subvention under the "opex" programme. In addition, in 2012 alone the tourism agencies, Tourism Ireland and Fáilte Ireland, provided a total of over ¤1 million for overseas marketing related to Ireland West Airport Knock and the surrounding region. Shannon, Cork and Dublin have not received such Exchequer support. While some may argue that Shannon and Cork have been cross-subsidised by Dublin, it could equally be argued that had these two airports, Cork and Shannon, the same status as Ireland West Airport Knock, a regional airport, they would have been eligible for the same Government grants for the past few decades.

I believe that the measures the Government has initiated in relation to Shannon will give rise to some degree of increased competition not only between the State airports but also between them and the regional airports, including Ireland West Airport Knock and Kerry, which is a good thing. These measures are focused on increasing the overall number of passengers to and from Ireland through increased efficiencies and attracting new aviation business that would otherwise not be based in Ireland which will have a beneficial national impact.

I am confident that there is a role for all remaining airports in providing scheduled air access for Ireland including Knock, Donegal, Kerry and Waterford. It is also obvious that visitors arriving at Shannon Airport are more likely to visit western regions than tourists arriving at Dublin Airport. I know the Senator will be aware of the importance of transatlantic connections and access to Heathrow through Shannon and that he will want to see the airport's decline halted.

I regret that some have attempted to suggest that the development of Shannon Airport must come at the expense of Knock. I believe that both airports can have a bright future, particularly as the economy recovers and tourism initiatives such as The Gathering help to bring more people into the country. It will be for the airport boards and managements to bring this about.

In the context of overall aviation policy, the Senator may wish to be aware that I launched a consultancy process on the development of an aviation policy for Ireland at a major conference in December and that this will be pursued through 2013, leading to the adoption of a new policy in 2014. In that context Ireland West Airport Knock has been invited to participate actively and this is an opportunity for them to set out its vision for the future of Knock and the regional airport sector.

I reiterate for the benefit of the House that the Department and its agencies stand ready to work with Ireland West Airport Knock but it must be within the existing budget envelopes, within state aid rules and must have regard to the fact that there are other regional airports at Kerry, Donegal and Waterford that also need to be taken into account.

In regard to the measures announced by the Minister for Finance, Deputy Michael Noonan, in the budget, these will appear in the Finance Bill which has yet to be published. Any measures will apply equally to all airports.

Marc MacSharry (Fianna Fail)
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I thank the Minister for taking the time out of his busy schedule to respond. The mistake being made in the context of the north-west region is that Ireland West Airport Knock is seen as a regional airport. If we could grasp the opportunity it presents in that region it could pay dividends for the State. I am not seeking a huge amount.

Marie Moloney (Labour)
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Does the Senator have a supplementary question for the Minister?

Marc MacSharry (Fianna Fail)
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I ask the Minister to take a strategic approach and make proportionate supports available to Ireland West Airport Knock and to view it as the international airport that it is, rather than a regional airport. This can be a contributor. I do not see it as an either-or issue. I am simply saying we must do something to acknowledge the strategic importance of Ireland West Airport Knock and what it can achieve for the region and Ireland Inc. as a whole in the same way as we in the north west acknowledge and support the fact that we need a strong Shannon and a strong south west.

Leo Varadkar (Dublin West, Fine Gael)
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All I can add is that Ireland West Airport Knock is a regional airport and is extremely important to Connacht and the north west but from a national point of view it accounts for only about 2% of air traffic to Ireland. If it was not a regional airport it would not be eligible for "opex" or "capex" funding or State aid. If it was a strategic airport, such as Dublin Airport which accounts for 80% of traffic into the country, it would not be possible to State aid it. It is not possible to give Ireland West Airport Knock or any other airport some special status whereby it can receive State aid that other airports do not receive. The airports in State ownership that operate on a commercial basis receive no Government grants and no State aid. State aid is only provided to regional airports, precisely because they are regional airports and are important in providing access to regions that do not have motorway access, such as Donegal. Whatever is done for Ireland West Airport Knock must comply with state aid rules and similar treatment must be given to Donegal, Kerry and Waterford airports. It is not possible to give Ireland West Airport Knock some form of special treatment or priority treatment. That is not what has been done in Shannon.