ON A DREARY Thursday morning in Dublin, Minister for Transport, Tourism and Sport Leo Varadkar firmly grips a mug of coffee for warmth before breezily moving through some aviation issues affecting his portfolio.
He is lending his support to efforts by Tourism Ireland and the Dublin Airport Authority to secure new international flights to Ireland, particularly long haul.
He was in the US last week to hold discussions with United about the planned launch of a summer route from Chicago to Shannon and to offer an attractive incentive package to operate flights to the west coast of America.
“From an Ireland Inc point of view, there’s a huge desire to have it, particularly from the multi-nationals,” he said.
“From a tourism point of view it actually isn’t top of our list. We’d have things like all year round to Toronto higher on our list.”
Varadkar said the deal involves “by and large no airport charges for five years plus a marketing package funded by Tourism Ireland”.
Is United biting? “There is interest in it,” he said. “The Dublin Chamber is very keen to have it and have been working hard on this. The big American multinationals based in San Francisco have offered to block-book a certain number of flights.”
Varadkar said Aer Lingus was also looking at the west coast but that its transatlantic focus was probably elsewhere.
“They say they will increase capacity to the US next summer, which is very positive but they’re looking more at existing routes .”
Varadkar will have a role of sorts to play in Aer Lingus’s future, given the Government’s intention to sell its 25 per cent stake in the airline.
What’s his view on Ryanair’s latest bid for its Irish rival? Reports suggest that Ryanair is willing to give up certain Aer Lingus and Ryanair routes from Dublin to rivals to assuage European Commission concerns on competition.
“I understand they are putting together a remedy package, but I haven’t seen that. I only know what I hear from the press.
“It seems that their remedy package involves giving some Aer Lingus routes to foreign airlines and some Ryanair routes to foreign airlines, which to me isn’t very appealing because it would certainly mean Irish job losses.
“And while foreign airlines are of course extremely welcome, they are likely to come off those routes more quickly if they are not profitable. If that’s the way it’s going I fail to see the upside for Ireland.”
Varadkar thinks it would be “tough but not impossible” for Ryanair to acquire Aer Lingus without the Government’s support.
“One thing that I am very sure of is that Aer Lingus is very vulnerable to takeover. Sooner or later somebody will take over Aer Lingus and the Government needs to be mindful that our stake is only 25 per cent and it is not going to prevent a takeover.”
For him, the key is to make sure that it doesn’t fall into the “wrong hands”, where a buyer “might either asset-strip it or use it for their own purposes”.
“I’m very mindful that if we sell the stake we want to sell it to someone who is interested in flying planes in and out of Ireland.”
How about Abu Dhabi airline Etihad, which flies daily to Dublin and owns just under 3 per cent of Aer Lingus?
“I don’t really want to get into that,” he said.
But he was disappointed that Willie Walsh had ruled out International Airlines Group.
“IAG would have been a good fit. I’m sorry they’re not interested but they’re pursuing a different strategy.
“I thought it was a good fit because Aer Lingus could have helped to feed Heathrow. It would have suited them and suited us.
“Instead, they’ve decided to take on Aer Lingus and they’re going to double their capacity on Heathrow.
“I’m not too upset because they’re going to drive down fares on the Heathrow route,” he said.
Varadkar said the separation of Shannon Airport from the DAA and its merger with the landbank of Shannon Development is well in hand.
“It’s getting there. We’re down to nuts and bolts issues as to how the different staff among the different agencies are assigned and how we divide up the different assets and finance.
“I don’t think it will happen in one go. I would certainly like to appoint the board of the new entity and start recruiting a chief executive by the end of the year.”
