Written answers

Wednesday, 1 February 2006

9:00 pm

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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Question 274: To ask the Minister for Transport his plans for the development of air transport, both internationally and here; his anticipated role for Aer Lingus and the various airports in this context; and if he will make a statement on the matter. [3539/06]

Photo of Martin CullenMartin Cullen (Waterford, Fianna Fail)
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The objective of aviation policy is to facilitate and encourage as wide a range as possible of reliable, regular and competitive commercial air services for Irish tourism, trade and industry. This Government has made a number of key strategic decisions on the future of aviation policy and a number of initiatives have been taken to achieve our principal policy objectives. Last May I brought a comprehensive package of measures before the Government with the aim of helping the State airports to realise their full potential in delivering international air access and positioning Aer Lingus for growth.

The Government decision cleared the way for the planning and provision by the DAA of new terminal and pier capacity to cater for continued growth in passenger traffic at Dublin Airport. Subject to the safeguards of consultation, verification and regulation, the DAA will provide a second passenger terminal in 2009 while a new pier for aircraft, Pier D, will be provided in 2007. An extension to the existing terminal building will also be completed in 2008. The restructuring of the State airports, as provided for under the State Airports Act 2004, will facilitate each of the three airports in maximising its own potential by bringing a fresh approach to addressing the challenges of meeting the changing needs of airlines in a growing but very competitive market. The role of the State airports is complemented by the six regional airports which contribute to balanced regional development.

The Government also agreed that Aer Lingus had an immediate need for access to equity capital to enable it to compete effectively and to fund growth. It therefore agreed to the State disposing of a majority shareholding in Aer Lingus, while retaining a significant stake of at least 25% to protect key strategic interests, provided that myself and the Minister for Finance are satisfied that this level of disposal is warranted on foot of the analysis prepared by the Department's advisors for the investment transaction. The Government also authorised myself and the Minister for Finance to commence arrangements immediately to facilitate an investment transaction.

The advisers appointed jointly by myself and the Minister for Finance have completed the first phase of their work, that is, recommending the most appropriate transaction mechanism and advising on the size and timing of a transaction. The Minister for Finance and myself are currently considering the report prepared by our advisers. Our Departments have also engaged with the company with a view to finalising the terms on which a transaction can be initiated as soon as possible. The Aer Lingus ESOT and trade unions will continue to be fully consulted on the proposed approach.

A further significant development in 2005 was the negotiation of transitional arrangements for Shannon in the context of an EU-US open-skies agreement. The text of the EU-US agreement is finalised, and pending US clarification on new US rules on ownership and control issues, the agreement will come before the Transport Council in March or June 2006 for approval.

The key features of the transitional arrangements for Shannon, reached after intensive negotiations with the US authorities, are as follows: there will be no change in the Shannon stop arrangements, that is, 1:1 ratio for Dublin and Shannon flights, for a further 12 months to November 2006; the transitional period commencing winter season 2006 and finishing beginning of the summer season in April 2008, which gives two and a half years of Shannon stop arrangements from now; during the transition period, the ratio of Dublin and Shannon flights will move from 1:1 to 3:1 so that for every one flight to and from Shannon, a carrier can provide three flights to and from Dublin. This ratio can be averaged out over the period of the transition; Irish airlines will have access to three additional destinations in the US from November 2006, over and above the four destinations currently being served; and there will be full open skies between Ireland and the US from April 2008 in the context of an EU-US agreement.

When full open skies comes in after April 2008, Irish, EU and US airlines will have full unrestricted access from all airports in Ireland that can physically receive transatlantic flights to all points in the US. The aviation industry in Europe, particularly in Ireland, has benefited greatly from the liberalisation of the European aviation market in 1992 and it is expected that open skies will have a similar positive impact on Irish tourism and business. In consultation with the Ministers for Enterprise, Trade and Employment and Arts, Sport and Tourism, I am currently working on the development of a tourism and economic development plan for Shannon to ensure that the airport can maximise the benefits of open skies and sustain and grow transatlantic air services.

A further development which will grow air traffic to and from Ireland is the negotiation of three new bilateral air transport agreements during 2005. My Department negotiated new agreements with Australia, Bahrain and Qatar in 2005, bringing to 23 the number of agreements which have been negotiated with non-EU-EEA states. This has already resulted in 2005 in a new service by Gulf Air between Dublin and Bahrain, and other services may follow. In addition, Aer Lingus plans to start a new service between Dublin and Dubai from the summer of 2006. Following my recent meetings with the Minister for Transport of Singapore and Thailand, the development of direct flights between Ireland and Singapore and Bangkok is being pursued by my Department and the Dublin Airport Authority.

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