Denis O'Donovan (Fianna Fail)
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Before Senator Mulherin begins, I should say I have had complaints from different sides of the House that I have been too lax and flaithiúlach with the time allowed, so Senators will be constrained to their four minutes. The Minister or Minister of State will respond and it is at my discretion to allow a supplementary question. Somebody raised a pertinent point in the last term that we could try to get five matters rather than four into the time. I have looked at the logistics and it is not possible. I have timed people and some used one or two extra minutes, with the Minister taking longer to reply. That means it would be impossible to accommodate five matters as it would encroach on the Order of Business. I am not referring the Senator Mulherin but just saying that in general.

Michelle Mulherin (Fine Gael)
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I will not take that personally and I thank the Cathaoirleach for allowing the matter.

I welcome the Minister of State to the House. This issue has been ongoing for a long time and I ask, once and for all, that proper grant aid be provided to Ireland West Airport at Knock. Under current state aid rules, only 75% may be provided by the Government. The airport has been in negotiations with the Department of Transport, Tourism and Sport for the past number of years, and it undertook work in a study group established jointly between the board at Knock and the Department as part of an in-depth review to consider the strategic options for the development of the airport. Basically, the airport wants to become self-financing and must do so by 2023. This study group did its work over three years ago. This was prompted after May 2012 when a package was announced for Shannon Airport to make it independent. That wrote off €100 million in debt and provided other benefits for Shannon in order for it to go from strength to strength.

Knock has been a success story against the odds. It is an airport owned by the people that needs proper support. It has been waiting too long for that. Even at this stage, the airport is not looking at expansion next year but basic maintenance. It needs a pavement overlay of the runway, which is 30 years old, and this will cost €7 million. If we assume the State will give some money, under state aid rules the airport must still come up with €2 million that it does not have.

I thank the seven local authorities in the west that have invested in Knock and paid over €3.2 million in July this year as part of taking a share in the airport. They will contribute approximately another €4 million. This money may only be used for marketing and development of the airport and not basic maintenance. There must be some sort of serious commitment shown to Knock.

Statistics released in July indicate there has been 0% employment growth in the west if we take into account jobs that are still being lost which offset those being created.According to the last census, three counties in the west, namely, Mayo, Sligo and Donegal, are the only counties in the country that have lost population. We have no major interurban routes, motorways, high-speed trains or major deep water ports. Those more recent statistics will show that there is disadvantage here. Ireland West Airport Knock is key and strategic and something seriously needs to be done about supporting it once and for all. Time is ticking on the clock and, according to European rules, the airports have to become self-financing by 2025.

The regional airport programme was approved by the EU Commission for 2015-19. When the case was made by the Department to the Commission, why was a request to allow 90% funding not made to the Commission for Ireland West Airport Knock also? Why was a special case not made for that airport at the same time? Dialogue and discussions have been going on since Shannon Airport has been bailed out and funded handsomely. Conversations have been going on yet now we are going into the fourth year and still there is nothing substantial for Knock.

We sold the State's share in Aer Lingus for €335 million. Where is this money? Surely it is obvious to invest it in the likes of Ireland West Airport Knock, which is badly in need of the funding. I welcome the €1.3 million for safety and security measures in the airport, which was granted approximately two weeks ago by the Department. Obviously, however, this has nothing to do with expansion and merely concerns essential safety and security work. When will the Department and the Government be serious about funding Ireland West Airport Knock? It is critical for the west of Ireland. Serious effort needs to be shown right now.

Eoghan Murphy (Dublin Bay South, Fine Gael)
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I thank Senator Mulherin for raising this important issue and her serious commitment to it over a number of years. There are two distinct elements to her question: funding for regional airports; and the role of the connectivity fund. I will first deal with the regional airports programme which will set the context for an examination of the potential role for the connectivity fund.

As the Senator will be aware, the Minister for Transport, Tourism and Sport, Deputy Shane Ross, oversees the regional airports programme. The current five-year programme, covering the period 2015-19, provides targeted supports to our four regional airports, namely, Kerry Airport, Donegal Airport, Waterford Airport and Ireland West Airport Knock. The programme acknowledges the key role played by regional airports in supporting the tourism and business sectors in their respective regions. The programme was approved, as the Senator is aware, by the EU Commission in August 2015 under the 2014 EU guidelines on state aid to airports and airlines, and it includes provision for Exchequer support towards safety and security projects at the four regional airports.

Under the 2014 EU guidelines, state aid for capital projects at airports is limited to a maximum of 75% of the eligible cost of the project. However, I understand that the guidelines also acknowledge that investment projects at airports with average traffic flow below 1 million passengers per annum located in peripheral regions may experience a funding gap. In light of this, and subject to a case-by-case assessment, state aid exceeding 75% may be justified in exceptional circumstances. In such a scenario, the EU Commission has indicated that a business case justifying a higher aid rate would have to be approved by it. It should be noted that this state aid is for the eligible cost of the project, namely, the funding gap after the airport has used its own revenue or other funding. It is not for the gross cost of the project. I am informed that the Department of Transport, Tourism and Sport has indicated to Ireland West Airport Knock that it will support the airport's case to the EU Commission to permit grant aid of up to 90%. I understand that Ireland West Airport Knock has also sought assistance from the Department in preparing an application and that Department officials are engaging with the airport on it.

Funding provided under the regional airports programme must have regard to the total funding available each year to support all four of our regional airports. I understand that this year the Department has approved €2 million in grant aid for safety and security investment at Knock. This represents half of all the capital funding that has been allocated to all four regional airports this year.

In that context, we can examine the potential role of the connectivity fund in supporting regional airports such as that in Knock. The connectivity fund was formed to invest the €335 million proceeds from the sale of the State's shareholding in Aer Lingus, with the aim of enabling and enhancing Ireland's physical, virtual and energy connectivity. The connectivity fund is a sub-portfolio of the Ireland Strategic Investment Fund, ISIF. The fund adheres to the broader ISIF mandate, which is known as the double bottom line, whereby each investment must be made on a commercial basis to support economic activity and employment in Ireland.

The Senator's question refers specifically to a potential role for ISIF and the connectivity fund at Ireland West Airport Knock. As outlined, in the context of the fund's mandate, any investment at Ireland West Airport Knock would need to meet the ISIF's double bottom line requirements. Grant aid does not constitute a commercial investment and the provision of grant aid from ISIF or the connectivity fund would not be consistent with the mandate.The ISIF team has advised me that it is available to consult with the Knock airport authorities to explore potential investments. Any such investment would be on commercial terms and may be structured such that it can work alongside any grant assistance from other sources.

Michelle Mulherin (Fine Gael)
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My second question has been partially answered. Why is the Department only now having an agreement with Knock airport that it is going to make a special case to the European Commission that would entitle the State to give 90% grant aid funding? This has been going on for three years, including after the study group undertaking and its report. Why has nothing been done? Knock airport requires seven local authorities to bail it out. This did not happen with Shannon, Dublin or Cork airports, or anywhere else. Knock airport is not the same as the other regional airports. The other regional airports lie close to other major airports, considering the major motorways that exist.

Why was it not done when the regional airports plan was being submitted to the European Commission? Why is it taking so long for Knock airport to be helped now that the Government seems to concede that it will work with the airport? Last July, the Government agreed with airport management on five documents that would need to be prepared, and it is being done only now. How is Knock airport being helped in a timely fashion to grow and to become self-financing? That is all we want, not to continue to receive handouts.

Eoghan Murphy (Dublin Bay South, Fine Gael)
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It is not the case that nothing has been done. In 2016 alone the Department has approved €2 million in grant aid for safety and security investment at Knock airport, which is half of all the capital spending that has gone to the four regional airports this year. Regarding state aid, a case-by-case assessment and approval from the European Commission is needed, and the Department of Transport, Tourism and Sport has indicated that it is more than willing to work with Knock airport to try to reach the 90% permission from the Commission. That is the appropriate way to go about this.

Michelle Mulherin (Fine Gael)
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It has been going on for three years.

Denis O'Donovan (Fianna Fail)
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I call Senator Mac Lochlainn to raise his matter.

Pádraig Mac Lochlainn (Sinn Fein)
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The Minister will be aware that the City of Derry Airport serves not just Derry but the entire region of 500,000 people. It is the only region on the island that has no rail link, no motorway link and, now, no air link to our capital city, Dublin. In the City of Derry Airport, 40% of the passengers, approximately 140,000 to 150,000 per year, are from Donegal. Since 2010, the Irish Government has withdrawn funding for the Dublin to Derry link and I appeal to the Minister of State to reconsider the decision. Whether through a public service obligation or other means of funding, I ask the Minister of State to meet his responsibility, particularly to the 140,000 to 150,000 passengers from Donegal who use this vital regional airport.

If we are serious about the Wild Atlantic Way and tourism, for which the Minister of State is also responsible, if we are talking about getting tourists from North America and Europe into the north-west region, including Donegal, Derry and Tyrone, connectivity to Dublin is vital. Tourists are flying into Dublin. If they can get a connecting flight onwards to Derry, it is a major boost to the region. I ask the Minister of State and his senior colleague, the Minister for Transport, Tourism and Sport, Deputy Shane Ross, to step up to the plate and put financial support on the table for this vital regional airport. I will share time with my colleague, Senator Niall Ó Donnghaile.

Denis O'Donovan (Fianna Fail)
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I will allow the Senator to speak, however normally if Senators wish to share time they must state it at the beginning.

Pádraig Mac Lochlainn (Sinn Fein)
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Apologies, it was my fault.

Patrick O'Donovan (Limerick County, Fine Gael)
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Ba mhaith liom buíochas a ghabháil leis na Seanadóirí as ucht an t-ábhar seo a ardú inniu. I am taking this matter on behalf of my colleague, the Minister for Minister for Transport, Tourism and Sport, Deputy Ross.

There are no plans to provide Exchequer funding to the City of Derry Airport. As the Senators will be aware, the Department of Transport, Tourism and Sport has a five-year regional airports programme, covering the period 2015 to 2019, to provide targeted supports to our four regional airports, namely in Kerry, Donegal, Waterford and Ireland West Airport Knock. This programme was approved by the European Commission in August 2015 under the 2014 EU guidelines on state aid to airports and airlines.

Our programme provides for Exchequer support towards safety and security-related projects and activities at the four regional airports. It also supports the two public service obligation, PSO, air routes from Donegal and Kerry airports to Dublin. The national aviation policy published by the Department last August acknowledges the role played by the regional airports in Kerry, Donegal, Waterford and Knock as being important in promoting a level of international connectivity to support the tourism and business sectors in their regions. The policy also confirms that these four airports are being given the opportunity to grow to viable, self-sustaining positions. In this regard, our policy is to continue to support safety and security projects and activities at these airports, where appropriate. During the summer holidays, I had reason to be at Donegal Airport in Carrickfinn. I was very much taken by the level of service provided and the facilities available there.

I am aware of the recent plans by Ryanair to reduce services from the City of Derry Airport next year and I appreciate the challenge this poses for the authorities there. The Irish Government provided the City of Derry Airport with funding support in the past. There was a PSO on the Derry-Dublin route for ten years, from 2001 to 2011. The subsidies needed to support that PSO were fully funded by the Irish Exchequer. It ended following a value for money review of Exchequer expenditure on our regional airports programme, published by the Department in 2011. The Derry-Dublin route was not the only PSO service to be ended at that time. The PSO routes linking Knock, Galway and Sligo were also discontinued. The only PSO routes we have today are those linking Donegal and Kerry airports with Dublin. In addition, the Irish and UK Governments jointly funded substantial safety works at City of Derry Airport between 2005 and 2012. The two Governments contributed 75% of the cost of those works on a 50-50 basis, while the balance of 25% was provided by the airport owner, Derry City and Strabane District Council.

While the Derry-Dublin PSO instituted in 2001 satisfied the regulatory criteria at the time for PSOs, the political dimension also played a role in the initiative in our co-operation with the UK Government in funding the runway safety works at City of Derry Airport. The Good Friday Agreement had been signed in 1998 and endorsed by means of referenda, North and South. While there is much work still to be done, what has been achieved in the peace process in facilitating reconciliation over the past two decades is exceptional.

The financial landscape also changed compared to 15 years ago. We must ensure we make the best use of limited Exchequer resources. The funding available to the Department in the coming years will be fully required to support our two PSO routes to Donegal and Kerry, while continuing to provide support to our four regional airports in the areas of safety and security.

I was pleased to note earlier in the week that the Northern Ireland Executive announced a £7 million package to assist development and growth in and around the City of Derry Airport, including £2.5 million to support routes from the airport.I understand that the airport and the city council are in discussion with the Department for Transport in the UK to endeavour to secure PSO from the UK authorities for an air service that would link Derry with a London hub. City of Derry Airport considers that such a PSO route would be hugely beneficial for business and tourism users given that the Ryanair service to Stansted Airport is due to cease next March. I echo the sentiments of the First Minister and the Deputy First Minister that their package of support will enable City of Derry Airport to invest in route development and capital projects and, ultimately, allow the airport to plan for the future.

I will bring the specific issues raised by the Senators relating to tourism and the possibility of a meeting to the Minister's attention. I could meet Senator Mac Lochlainn to explore the issue further.

Pádraig Mac Lochlainn (Sinn Fein)
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It would be helpful if the Minister of State could do that. I would appreciate it if the Minister could meet Senator Ó Donnghaile and I to discuss this issue. I ask the Minister and Minister of State to meet the board and management of City of Derry Airport. The Minister of State mentioned Donegal Airport in Carrickfinn, which is a fine airport that should be supported. However, if one looks at people in Inishowen, one can see that Belfast is closer to them than Carrickfinn so the geography is obvious. This is why 150,000 people in Donegal use City of Derry Airport every year - 40% of all its passengers.

The Government is not being asked to fully fund a PSO. It is being asked to co-fund it with the British Government. The airport's proposition to the Irish Government is a really good deal. It does not just involve investing in the transport infrastructure but investing in the tourism infrastructure. If we talk about the Causeway Coastal Route and the Wild Atlantic Way, a big vision for people in Donegal, Derry, Tyrone and the north west involves connecting those two very successful tourist links and having a vision for the region. Investment by the Irish Government in City of Derry Airport would be very positive and productive financially.

I welcome the Minister of State's commitment to meet Senator Ó Donnghaile and I but I ask him to also meet the board and management of the airport. I believe that when he hears what they have to say, the Government will invest in that airport. It is our responsibility and the right thing to do.

Patrick O'Donovan (Limerick County, Fine Gael)
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I think everyone in the House will accept that the Government has very limited resources in terms of the development of our regional airports. We have two PSO routes - Kerry and Donegal. A number of PSO routes have already been, for want of a better word, withdrawn. They include Waterford, Galway, Sligo and Derry. Based on the limited resources we have, given the limitations that are there and the fact that the policy has already been subject to scrutiny by the European Commission, we must work within the parameters that have been set out in the Department's policies.

While I do not have a direct role in aviation or transport policy, I do have a role in tourism development. Certainly, I do not have any difficulty with meeting stakeholders along the Wild Atlantic Way. I holidayed on it in Donegal this year and the previous year and I have to say that it has an awful lot to offer. I would have no difficulty in engaging with public representatives from Donegal, Sligo and Leitrim regarding the development of the north west.

I will relay the Senator's sentiments to the Minister and will ask his office to arrange at the earliest opportunity for him to engage with all Members of the Oireachtas from County Donegal regarding this issue.