Marketing Fund must be ring-fenced to promote Shannon Facility – BREEN.

June 24th, 2009 - Pat Breen

Fine Gael’s Deputy Spokesperson on Foreign Affairs and Clare T.D. Pat Breen T.D. said today that he is very disappointed that in spite of all the rhetoric from the Transport Minister that a major marketing campaign is required to promote the US Pre Clearance facility at Shannon Airport that no extra funding is to be made available from the Government coffers. Deputy Breen will be raising this matter with Minister Dempsey when the legislation to give affect to the facility comes before the Dail next week.

“Shannon Airport has been hit with a series of body blows in recent weeks with the Delta withdrawal and the curtailment of Aer Lingus services. While full connectivity to Heathrow is to be restored the downturn in the global aviation business is hitting this Region very hard.”

“I welcome the fact that Minister Dempsey recognises the importance of connectivity from this Region to the US, with 65 US Companies based in this Region a direct daily link is hugely important in sustaining those businesses and maintaining jobs here.”

“News that British Airways have signed up to avail of the US Pre Clearance facility at Shannon is a welcome development, however, if the opportunities which this facility presents here at our Airport are to be fully exploited then it is essential that a marketing fund is ring-fenced to promote the facility. Time has already been lost here in this Region as originally it was hoped that Shannon Airport would have at least a two year lead in period before a similar facility was operational at Dublin Airport.”

“In this context, I am disappointed that the Government is not making extra funding available to this Region for this purpose and I will be raising this matter with the Minister when I speak in the Dail next week when the Aviation Pre Clearance Bill 2009 comes before the House.”

Dáil Question
No: 265

*To ask the Minister for Transport his views on the recent announcement by Aer Lingus of the curtailment of their winter schedule to the US; the implications of these cutbacks for Shannon Airport; if he will outline his concerns to Aer Lingus; and if he will make a statement on the matter.
– Pat Breen.

* For WRITTEN answer on Tuesday, 23rd June, 2009.

Ref No: 24586/09

Answered by the Minister for Transport
(Noel Dempsey)

REPLY

I am deeply disappointed at the suspension of some of Aer Lingus’ transatlantic services for the Winter season, as recently announced by the Company. I am particularly concerned at the impact on connectivity of the Mid-West region to the wider US market from both a business and tourism perspective. I made these concerns known on behalf of the Government to the Aer Lingus Chairman when he informed me of the proposals on 11 June.

Aer Lingus is a private Company and has to take its own commercial decisions. It would be inappropriate for me to directly intervene to seek a reversal of this decision and to do so would ultimately be damaging to the airline and its customers. In law, the Directors are responsible for managing the company’s business and the shareholders are not entitled to overrule management’s decisions on business issues.

The State’s three nominated directors on the Board were issued with a mandate on the date of their respective appointments requesting them to seek to ensure that all future decisions of the company that have significant implications for wider Government, aviation or regional development policies are considered at board level. In any such decisions they are directed to seek to reconcile commercial and public policy objectives.

The Chairman of Aer Lingus informed me of the proposals on 11 June. I immediately wrote to the State’s three directors to remind them of their mandate and requested that they take account of Government policy on connectivity, regional development and industrial development in the Board’s consideration of this matter. It is acknowledged that the duties of the State nominated directors on the Board of Aer Lingus derive from the Companies Acts and that they are obliged to pursue the best interests of the Company.

The suspension of a number of transatlantic services from both Shannon and Dublin for the winter season is reflective of the extremely difficult trading conditions in the air transport sector in general and in the long haul market in particular in recent months.

I recognise the harsh realities of the marketplace at present and the impact that reduced demand has had on long-haul operations globally in the past few months. The International Air Transport Association, which represents 230 airlines, comprising 93% of international air traffic, has projected industry wide losses of €9 billion this year. Revenues are expected to fall by 15%, which is more than double the rate of decline experienced following the September 11 terrorist attacks.

From Shannon, Aer Lingus’ winter schedule will see the suspension of the Chicago service and a reduction in frequency on the Boston route. Aer Lingus is also suspending its services from Dublin to Washington and San Francisco for the winter season.

I understand that the proposed changes to transatlantic services were necessitated by the continuing losses on these services. In the case of the Shannon – Chicago route, for example, I understand that Aer Lingus carried less than 11,000 passengers on the route during the previous winter season and industry projections indicate that passenger volumes may fall by a further 10-20% for winter 2009/10.

Notwithstanding the commercial realities of the decision, my immediate concern is to ensure that the widest range of alternative connectivity options are available during the winter months. I have urged Aer Lingus and the relevant airport authorities to explore ways of minimising the impact these decisions will have on tourism and business.

I understand that daily one-stop services will continue to be offered to San Francisco and Washington in cooperation with Aer Lingus US partners – Jetblue and United Airlines. Continental Airlines also operates a regular service from Shannon to its New York hub at Newark Airport, which facilitates easy onward connectivity to over 50 U.S. cities, including Chicago and Boston. Proposals by Aer Lingus to increase the frequency of the strategically important Shannon-Heathrow route and to improve timings to facilitate better connectivity to and from Heathrow are a welcome development.

The Government has allocated €47.25m, for the overseas marketing of Ireland as a tourist destination this year. Included in this amount is over €4.5m for regional marketing activity including the “Discover Ireland’s Wonderful West” Campaign. The campaign is overseen by Tourism Ireland who will continue to work closely with Fáilte Ireland, Shannon Airport, Shannon Development, and the local tourism industry in the mid-west to vigorously promote the Shannon region through cooperative marketing campaigns. I understand that their campaign has generally been very well received to date.

Looking to the future, the challenge will be to ensure that Irish aviation is well positioned to take advantage of the economic recovery when it comes. I firmly believe that when trading conditions improve there is considerable potential for additional services by Aer Lingus and other carriers availing of new opportunities under the EU-US Open Skies agreement. It is precisely in this context that the full potential of the new US preclearance facilities at Dublin and Shannon will be realised. I am currently bringing legislation through the Oireachtas to give legal effect to our preclearance agreement with the U.S.