Further letter to Leo Varadkar about Aer Lingus

Minister,

the recent controversy about Ryanair proposing to sell off Aer Lingus' slots at Heathrow should underline the importance of these slots for Ireland. Michael Vaughan of the Hotels Federation made a strong case for their retention on Morning Ireland before Christmas.

I have written to you about this before, but to reitirate:

• we acquired these slots (and all our international slots) easily, at a time when airport slots were freely available and under a far sighted government policy of improving our flight connections. Because we acquired them so easily, we do not appreciate their value and the difficulty there would be in replacing these slots at any reasonable price once they are surrendered. If you recall my previous letter, I suggested that an oil rich state with lots of cash and poor connections would probably make a bid for AL to gain control of the slots. This appears to already be underway.
• a sell off of Aer Lingus will not be able to provide necessary surety that the slots would be protected. Safeguard clauses in the sale could lose their effect if the carrier was subsequently reflagged, bankrupted etc.. Allowing Aer Lingus to be sold with its slots is not an acceptable safeguard of our needs as an island to maintain connections.
• the slots should be returned to State ownership and held in a holding company which would ensure that they would be used for flights into Ireland. There are 3 steps necessary to achieve this:

1. A sale-and-leaseback agreement must be agreed with AL in regard to the slots. This agreement should take place as part of the overall deal on selling the State's share and settling the question over the pension scheme. The slots should be sold to the state and leased back on a long term lease to the airline.
2. The slots should then be transferred to a holding company within state control
3. Once (in the far distance) the leases have expired, the slots should be rented out to any airline (foreign or domestic) to service flights into ireland. This should be spelled out at the beginning as a long term commitment of the slots to AL would probably fall foul of State-aid rules. A mere sale and leaseback arrangement that brought assets within state control should be OK though -and indeed, the protection of transport links for islands is specifically provided for in EU state aid rules.

So Minister, I urge you, as part of the overall negotiations on pensions and the sale of the shareholding -please ensure that AL's overseas slots are held in the title of the State. Clever clauses in any sale agreement are no substitute for ownership and we should not lightly give away an incredibly valuable legacy of previous state policy -one of the few things we got right in the last century.