Sean Barrett (Independent)
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I welcome our good friend, the Minister for Transport, Tourism and Sport. He and I discussed issues of aviation economics many times when he was my student in Trinity College Dublin. My concern in this instance is repeated announcements that the Government is edging closer to accepting the proposed takeover of Aer Lingus. I was pleased to note the Minister's statement during his visit to County Kerry at the weekend that he welcomed Mr. Donald Trump's contribution to the debate on the proposal. The takeover would be in the interests of British Airways and IAG and we know the Aer Lingus board wants it proceed. This does not mean it would be in the interest of wider society.

I am particularly concerned that British Airways has not developed any routes on the north Atlantic from Scotland, a country with a population of 5.3 million people, the north of England, a region with a population of approximately 15 million, and Birmingham, which is located in the UK midlands with a population of approximately 10 million between the east and west Midlands. British Airways could be called "Air Heathrow" given that it continuously channels traffic through Heathrow Airport. In contrast, Aer Lingus has developed nine north Atlantic routes. I am not convinced British Airways will pursue different policies in Ireland from those it pursues in Britain if it takes over Aer Lingus.

A major part of the disquiet in Scotland is that, to use the words of a Member of the Scottish Parliament, Angus McNeil of the Scottish Nationalist Party, "there has been a historic imbalance in UK aviation policy that has held back Scottish airports and the development of direct international links". This is a factor in the forthcoming election in the United Kingdom. CAPA Consulting, an Australian economic consultancy, examined aviation in Manchester and made the following conclusion under the heading, "Lack of a home-based carrier restricts route opportunities":

is clearly not going to help, at least under the present management. Over the course of the last two decades, what was a fit-for-purpose Regional operation at both Manchester and airports was whittled down...

If we give up a valued national airline headquartered in Dublin to become a subsidiary of British Airways, can we expect the company to treat us better than it has treated regions in the UK?

As the Minister is aware, in an open European market, airline companies are free to enter any route in Ireland. I would welcome a decision by British Airways to enter the Irish market but not if the price is the acquisition of Aer Lingus. The only destination to which British Airways operates from Dublin Airport, with its 175 routes, is London. The company does not operate any routes from Dublin, Cork, Shannon, Knock or Kerry airports, which operate 41, 30, 12 and six routes, respectively, and flies to only one of the 190 destinations served by airports in Northern Ireland. This track record does not reflect the undertakings the company has given us.

The Industrial Development Agency put the matter most succinctly in its evidence to the Joint Committee on Transport and Communications when it stated: "Ireland needs frequent, direct and competitively priced flights to multiple destinations in the UK, the United States and Europe". This is not what is on offer from IAG. We need access for the tourism, high-tech and financial services industries. Scotland, Manchester and Birmingham do not have such access and there is no reason IAG will provide it at an Irish airport.

On the issue of the Heathrow slots, the IAG website states that on 30 March 2012, the company divested 12 slots on taking over British Midland. Having knowingly given away 12 slots as part of the acquisition of British Midland in 2012, the company now states it will protect Aer Lingus's Heathrow slots for five or seven years. It knows it must give up slots because doing so is part of the standard EU procedure for dealing with anti-competitive mergers.

I welcome the finding of an opinion poll on the proposed takeover published in a newspaper yesterday. It showed that we have made the case against the proposed takeover in the face of overwhelming odds and public relations work by the airlines. I note that 54% of respondents did not want the proposal to proceed, while the first opinion poll on the issue found 58% of people opposed the proposal. Among supporters of the Minister's party, 33% were found to be in favour of the takeover, while 50% opposed it. The majority against is even larger among supporters of the Labour Party, Sinn Féin, Independents and the Fianna Fáil Party.This merger is not wanted and Mr. Walsh and company should be told to pack their bags and go. We want this independent airline.

Paschal Donohoe (Dublin Central, Fine Gael)
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I thank the Senator for raising this matter in the way he has today and in recent weeks. I am constrained in my ability to respond to a number of the points put to me by him. He is now used to this refrain, but because a takeover period has been declared, I am restrained in responding to some of the more detailed points made. I wish, however, to frame what is happening in the context of the development of aviation and aviation policy. These are matters in which the Senator is a genuine expert. As I have outlined from the very start of the process, connectivity and the future of Aer Lingus are important issues in which there is a great deal of public interest which has been heightened since the first proposed offer for Aer Lingus from IAG three months ago. I last addressed the Seanad on this matter on 28 February, but, as I have said, I am constrained in what I can say.

The Senator has spent a good part of his successful career as an economist championing the merits of market forces over Government intervention, particularly in the aviation sector. His work has highlighted the benefits of applying the so-called invisible hand of the market to previously State-dominated sectors such as aviation and his research has provided ample evidence during the years of the failures of State intervention in the market in Ireland and abroad. On the other hand, his work has also highlighted the benefits market liberalisation has brought as a whole. The aviation sector was a good case study for the Senator to have chosen. It is one of the best examples of the benefits that accrue when a monopolistic, State-dominated industry is gradually opened to competition. An important part of that process has been the reduction of State ownership in the sector. Most European states have now divested themselves of airline shareholdings and, in some cases, the state-owned airline no longer exists. However, there are still some significant state shareholdings such as our own in Aer Lingus.

The first significant deregulation of aviation took place in the United States. Since 1992 the European aviation market has been fully open for all EU airlines. It has been a genuine win-win for all concerned. Consumers, airlines and the wider economy have all reaped benefits in increased routes and connectivity and the significant lowering of prices for consumers. The Senator pointed to the issue of regional connectivity in the United Kingdom. The whole point of the open market is that any such gaps should be quickly filled by competitors. I suggest to the Senator that Aer Lingus's strategy of bringing traffic from UK regions through Ireland on transatlantic routes is a good example of this approach.

In terms of the structure of the airline industry, the opening up of the market has led to two trends. First, new operators such as Ryanair have expanded to become truly European airlines. Second, among legacy carriers, a process of cross-border consolidation has led to the emergence of three main multi-airline groups in Europe - IAG, Lufthansa and Air France-KLM. When Aer Lingus was State-owned, as the Senator is aware, it had to be heavily supported by the taxpayer on a number of occasions. That option is no longer available, which is partly why the State chose to sell its majority shareholding in 2006 in order that it could have access to capital to fund its growth. The company has had many ups and downs, but in recent years it has returned to profitability. That is the reason I wish to reiterate to the Senator that the Government's underlying position on its shareholding is that it will not be sold unless the terms of the sale are satisfactory to the Government and an acceptable price is secured.

Legitimate concerns have been voiced by many people, including the Senator, about lAG's proposed offer and the Government has outlined the details and clarification it needs from IAG in that regard. The interdepartmental group has continued discussions with IAG. I have made it clear that I wish to see this matter brought to a conclusion within a number of weeks. The ongoing engagement with IAG is taking place in that context and my representatives and I are fully focused on that objective. The outcome of this work will be examined very carefully by the Government against a set of public interest criteria before making any decision. Connectivity, including connectivity to the regions, and employment are exceptionally high among these criteria, as I have outlined on many occasions. I welcome the opportunity to respond to the Senator on this point and look forward to continuing to do so.

Sean Barrett (Independent)
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I thank the Minister, as always, for engaging in dialogue. The Seanad has a huge role to play in this matter. Part of my disquiet is that the media leaks seem to be bypassing Parliament as if it did not matter. Some of the utterances have been dismissive of the Deputies and Senators from north Dublin, Cork and, of course, County Clare. It should be remembered that there was deregulation because there was a parliamentary revolt in 1984 by seven Deputies, four from Fine Gael and three from Fianna Fáil - one of whom was half out of Fianna Fáil.

In the preface to a book I wrote on this matter Alfred Khan said I was the expert on the Ryanair model and the revolutionary impact on aviation in Europe. He also documented in this volume the almost equally dramatic successful adaptation of Aer Lingus from a traditional European national carrier to operating in the new deregulated market, in contrast with other former national airlines in Europe which had either left the market or been absorbed by larger carriers. Being absorbed by larger carriers has not been in the interests of services to UK regions, including Wales, Scotland, the north of England and the midlands. I do not want that fate to befall us. The former Taoiseach, Mr. John Bruton, asked me to go on the tourist board, a place where I kept praying for airline deregulation. The Aer Lingus product was so good and still is that for many North Americans their holiday began when they boarded the aircraft. Someone once said that it began even before this in the Aer Lingus lounge. It is an iconic product. British Airways does not have this status and we would be wrong to sell the company to it. It is not worth doing so for the €300 million suggested to the Department of Finance, half of which would go to the troika.

I think of the vision of Seán Lemass who had aeroplanes ready to go in 1948, but the then Government cancelled them. That happened during the month of April and I hope we will not sell the airline this April, as it has such a role to play. Let us have a vision for the country. Aer Lingus is part of that vision; British Airways-IAG is not. In another jurisdiction services have been closed down at Barcelona to be transferred to Madrid. The hub and spoke model will not suit us. I want Dublin Airport competing with Heathrow Airport and Aer Lingus competing with British Airways. I do not want it to be part of it and do not want it to be subsumed by it. If the Aer Lingus board does not want to be independent, it should go. We need people with vision to develop the airline, not to sell it to British Airways.

Paschal Donohoe (Dublin Central, Fine Gael)
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I again thank the Senator for his points. He articulates the need for a vision for the development of aviation. There is a vision and the fruits of its delivery are clear in the extraordinary access the country has managed to deliver in recent years. This did not happen by chance. It happened because the Government, in particular, prioritised access. This prioritisation has underpinned decisions such as on the reduction of the airport travel tax to zero.

The Senator used the language of giving up on Aer Lingus. I have to emphasise a point to the House. We are aware of it, but sometimes it is not given the prominence it deserves. We no longer own all of Aer Lingus. We own just over one quarter of the company. It is not a State-owned national airline. We have a minority stake in it. On the arguments the Senator made about the merits of national ownership, we need to take on board the point that just under 75% of the company was sold. On the further points the Senator made about leaks and indications as to where the Government is going, I assure him that we are weighing up very carefully how we intend to handle this matter. No decision has been made on that and I am not in the business of briefing other people about my thinking on it in advance of briefing the Cabinet, let alone the Houses of the Oireachtas. When we make the decision on that matter I will have to take it to my Cabinet colleagues, and there will be debate on it in the Dáil and the Seanad.

I will conclude on a particular matter. The Senator made a very important point about the maintenance of our regional airports and regional access. I am the Minister who made the decision to retain public service obligation, PSO, funding for Donegal and Kerry airports. I did that for policy-based reasons. This is the Government that has found ways to develop access into Shannon Airport and continues to invest a huge amount of time and energy in how we support Cork Airport, and Shannon Airport also. I recognise those airports have particular needs. I realise also that the access they have built up is an incredibly important contributor to the development not only of tourism across our island but also in creating an environment in which we can attract international investment to our country and where Irish companies can sell their goods and services abroad. That need has been evident in decisions I made with regard to other airports since I came into office, and it will continue to be paramount in the way I review this proposed bid.