Breen demands Government action on Lynx Cargo Project.

February 18th, 2010 - Pat Breen

ADJOURNMENT DEBATE Wednesday, 18th February 2010.

I thank the Ceann Comhairle for affording me the opportunity to raise this issue. I am disappointed the Tánaiste is not available to clarify the comments made in this House last night. Perhaps she could also update me on her meeting with Michael O’Leary.

While I accept that Ryanair is not interested in building an aircraft maintenance facility at Shannon Airport, I am deeply concerned about the airline’s plan to axe 18 destinations from its schedule at the airport from next month. The recession is having a more severe impact on the tourism industry in the mid-west region than on any other region in the country. Passenger numbers slumped by 27% last year and access capacity through Shannon Airport has decreased significantly. Capacity has dropped by 50% in transatlantic traffic, 37% in European traffic and 11% in British traffic, and the outlook for 2010 is even bleaker. When I met Michael O’Leary tonight, I encouraged him to return to Shannon Airport and to provide flights to his previous destinations. He said the travel tax is still a major impediment to a new deal. I am interested to hear the Tánaiste’s view following her meeting with Michael O’Leary.

Earlier this evening, we debated a motion of confidence in the Minister for Defence, Deputy Willie O’Dea. I remind the House of what the Minister, Deputy O’Dea, said when the recommendations of the interim report on the mid-west task force were debated in this House last month regarding the Lynxs cargo facility: “A great deal of work is being done behind the scenes in this matter and an announcement is imminent.” Is that another case of mistaken recollection by the Minister? In response to questions I raised with the Tánaiste on the Lynxs project in the House last night, she said, “It is not fully mature yet, in order to move on to final decision making”. She continued: “The task force has afforded it a high priority and we will ensure, in the context of the former’s final report, it remains so.”

I am deeply concerned about those comments as I fear the region could lose the Lynxs facility if the Government does not fast-track the project. I would like to know what the Tánaiste meant by saying the project was not “fully mature”. I hope there is no suggestion of another report. We are blue in the face with reports. We need Government action. Even the chairman of the task force is frustrated by the Government’s inaction. He is on record as saying that he has no notion of wasting his time moving on to complete the final report until a number of the recommendations of the interim report are acted upon. If the Tánaiste is going to wait for the task force’s final report, we could be waiting for another two or three years. One could ask if we will ever see a final report.

When the Lynxs Group signed a memorandum of agreement with the Shannon Airport Authority in March 2009, it anticipated that the final stages of construction would be in place in 2011. The company will be lucky if the Government has made a decision on the project by then. The Lynxs Group is investing more than $15 million in the project. A total of €7 million is required in investment to upgrade the airport’s infrastructure. I refer to improvements to the runway, the building of a new taxiway and the provision of additional aircraft parking spaces. That is not a significant amount of money. It is peanuts compared to the €62 million the Government wasted on e-voting machines, for example.

The Lynxs Group has an international reputation for building and managing first class cargo facilities across the world. When the green shoots begin to emerge in the industry, which will happen sooner rather than later, the first business to show improvement will be air freight. We have to be ready to capitalise on the opportunities which are presented.

Our region is being paralysed and strangled by the Government’s lack of decision making. This country’s reputation abroad will be damaged if we are seen to be a country that is paralysed by bureaucracy, red tape and indecision. The development of Shannon Airport as a first class cargo facility in partnership with the Lynxs Group is a project which is strategically important to the future of the airport. The Government’s task force recognises its merits and its strategic importance for the mid-west region. One can ask what else is needed to convince the Government of the merits of the proposal.

I seek to clarify a number of issues such as the timescale and whether the Tánaiste will bring the project to fruition before the task force’s final report. It would be unforgivable if the jobs to be created by the project are lost to the region because of Government inaction. I urge the Minister of State to clarify the situation regarding the Lynxs project. What is needed is a serious approach to the project by the Government, for it to show leadership and that it is equal to the task. It might be necessary to make a leap of faith and give the project the green light to proceed.

Deputy Billy Kelleher: I thank Deputy Breen for raising this matter. The Deputy referred to this country’s reputation and the fear that we would be seen as bureaucratic and in a state of paralysis. The contrary is the case. All surveys on this area show that this country is nimble and flexible. It is very much seen as being pro-business in terms of setting up business here or establishing companies for investment purposes. We would not wish a negative view to be portrayed without correcting it.
The mid-west task force has already made its recommendations on the Lynxs cargo facility project and the project is currently being considered by the Minister for Transport. The Dublin Airport Authority has statutory responsibility for the operation, management and development of the three State airports. The Minister for Transport advised in February 2009 that the DAA had concluded a memorandum of understanding with the Lynxs Group, a global airport cargo facility company, to explore jointly the feasibility of developing a major cargo facility at Shannon Airport. I understand that the basic concept underlying the proposal was, among other things, to secure existing cargo at the airport, increase the potential for cargo growth and to provide flexibility and operational readiness for the potential requirements of US cargo pre-clearance in the event that the US authorities would agree to cargo pre-clearance at a future date.
The involvement of a global air cargo development company, such as the Lynxs Group, was seen by the DAA as important for the provision of investment and to raise the profile of the facility in the freight community and cargo industry generally. In the initial phase, it is proposed that there would be investment in a new cargo facility that would involve the transfer of existing cargo operators from current locations. In later stages, it is proposed that the facility might be expanded to attract increased traffic and to realise the airport’s potential as an airfreight hub, as well as further opportunities that might evolve from pre-clearance, which would underpin the development of a logistics, distribution and manufacturing cluster in the Shannon area.
It is recognised that Shannon has a number of strengths, such as a well developed economic hinterland and its proximity to major economic and distribution centres in the United Kingdom and Europe. It can also reap the benefits of current and pending road access improvements. The Minister for Transport also advises that, on the other hand, the DAA has to operate to a commercial mandate and it does not have access to unlimited funds to undertake capital investment. Any investment that the airport undertakes must be evaluated carefully to ensure that there is a commercial business case.
I understand the Department of Transport has recently received the DAA’s evaluation of the business case for the project. Consideration of the best way to support the project will take account of the extent of potential investment by the DAA on foot of its evaluation of the business case and any support that could be provided by the State, subject to compliance with EU state aid rules. The DAA has financed pre-clearance facilities at Shannon at a cost of some €22 million since it became operational for commercial aircraft on 5 August 2009. The service is working very well for all concerned. Given the significant investment involved in the construction of the pre-clearance facility, it is hoped that as many flights as possible would use the pre-clearance services there. The next phase of pre-clearance is to extend its use to private aircraft en route to the United States. Following close engagement with the US authorities in recent weeks, preparations for general aviation pre-clearance are well advanced and it is hoped that the service will become operational in the coming weeks.
This is a welcome development for Shannon and one that I know the authority there will market vigorously. There is great scope for growing this market given that already significant numbers of private aircraft land at Shannon for refuelling and other technical reasons prior to completing the journey to the US. The pre-clearance agreement with the United States does not provide for cargo pre-clearance currently. However, that is an issue the Minister for Transport has raised with the current and previous US Secretaries for Homeland Security. Both of them were receptive to giving further consideration to cargo pre-clearance from Ireland, once passenger pre-clearance is fully established.
The issues facing the mid-west region are the issues facing other regions and facing the country as a whole. The situation in the mid-west was exacerbated by the Dell decision. The work of the mid-west task force has helped to focus the response of Government and agencies. The Tánaiste is very grateful for the work Mr. Brosnan and the other members of the task force have undertaken to date. The task force has identified a number of issues for further study in its final report, which she looks forward to receiving in the coming weeks.
We have had such discussions in previous Dáil debates. The DAA is commercially mandated to operate Shannon Airport and any investment has to have a business plan and to make sound commercial sense if it is to receive clearance.