asked the Minister for Tourism and Transport in view of the refusal of the Italian authorities to allow Aer Lingus operate their service from Milan to Manchester on Monday, 20 June 1988 in accordance with the terms of this year's EC Air Transport Liberalisation Agreement, if he will outline the action he is taking to resolve this problem; and if he will make a statement on the matter.

5.

asked the Minister for Tourism and Transport the action he is taking to see that Aer Lingus are allowed fly to and from Milan, in view of the recent events.

8.

asked the Minister for Tourism and Transport the measures which are being taken in response to the refusal of the Italian authorities to allow Aer Lingus to operate a service to Milan via Manchester; if any direct representations have been made to the Italian Government on their refusal; and if he will make a statement on the matter.

I propose to take Questions Nos. 4, 5 and 8 together.

In accordance with the provisions of EC Council Decision 87/602/EC on capacity sharing and market access, adopted by the Council of Ministers in December 1987, I granted approval to Aer Lingus earlier this year for the operation of scheduled air services on the route Dublin-Manchester-Milan, with fifth freedom rights on the Manchester-Milan service. The Italian authorities, while permitting Aer Lingus to operate the Dublin-Manchester-Milan service on a combination of points basis, have refused to allow them to carry any fifth freedom traffic between Manchester and Milan.

The Italian authorities hold that since Milan Airport is exempt, on the grounds that it has insufficient facilities, from the application of Article 6.1 of the Council decision, which permits the introduction of third/fourth freedom scheduled services between hub and regional airports in member states, it is also exempt from the provisions of Article 8 which permits, subject to certain conditions, the operation of fifth freedom services where third/fourth freedom traffic rights exist. I do not accept the Italian interpretation of the Council decision. I have made strong representations to my Italian counterpart in this matter and it has been the subject of discussions between officials of my Department and officials of the Italian Ministry of Transport. In addition, it has been taken up with the EC Commission both by my Department and Aer Lingus. I have also personally discussed the matter with Mr. Stanley Clinton Davis, EC Commissioner for Transport.

The EC Commission, I am glad to say, regards the Italian argument as invalid and has decided to open infraction proceedings against Italy for its refusal to grant fifth freedom rights to Aer Lingus.

Had the Minister the agreement of the Italian authorities when he licensed Aer Lingus for this route?

I licensed Aer Lingus for the route on the basis of the air package of 14 December 1987, and was fully within my rights in so doing.

Included in the proceedings against Italy will there be proceedings for compensation for revenue lost while this matter is being decided?

With regard to compensation for revenue lost, I could not answer straight away. What we are concentrating on is clearing the way for the exercise of fifth freedom rights at Manchester. A rather sinister aspect of the matter is that Alitalia, the Italian airline, have started a Manchester-Milan service in the meantime. This adds a particular edge to our efforts with the Italians at ministerial and official levels and to our representations to the Commission, which is fully behind us.

Would the Minister confirm what appears to be obvious that the service is not operating at present and that there are no flights along this route? Has the Minister contemplated seeking the aid of the Manchester authority and the British Government to reciprocate on the issue so that Alitalia are not allowed to steal a march on Aer Lingus?

It is not true that there is no service. As I indicated in my answer, there is a service from Dublin through Manchester to Milan on a combination of points basis, but not with fifth freedom rights at Manchester.

What about the second part of my question?

The House can take it for granted that of the 12 signatories to the 14 December agreement, 11 of them will be fully in support of the Irish Government and Aer Lingus in this matter.

What exactly is happening to the five scheduled flights every week from Dublin to Milan through Manchester and back? Are these flights actually operating with the difference only that they may not carry passengers between Manchester and Milan?

I cannot be specific on the number of flights but the service Dublin-Manchester-Milan is continuing on the combination of points basis.

But with the difference that Aer Lingus are not allowed to pick up passengers in Milan and take them to Manchester?

Yes, and they cannot pick them up in Manchester and take them to Milan.

Is that the only difference?

No, there are other differences. We can travel from Dublin to Manchester and drop passengers there but not take them up. We then go on to Milan and drop passengers there. We can take up passengers from Milan for Dublin but not for Manchester.

Would the Minister not agree that we should seek compensation for revenue lost? If we do not, the Italians will have gained the time we are waiting for a decision from the court? Would he not make it clear to the Italian authorities that we will be seeking compensation in the European Court?

We know what the Commission's view is and we know there are three steps to be followed by the Commission. Consequent on that the question of compensation for loss would arise.

I would like to put it to the Minister, very much in support of what Deputy Mitchell said, that it is important in a general way to let your adversary know from the word go what you will ultimately be seeking so that he will know he will be facing a claim for revenue the Irish line has been losing, and will continue to lose, until this matter is settled.

I want to make it clear that from the beginning of the impasse negotiations were going on and at official level we were convinced the problem would be resolved. Finally, we got word from the Minister that it was not being resolved. At that time, there was not much point in going at it like a bull at a gate but now the chips are down, the full strength of the Commission is being brought to bear on the Italian authorities, and the House can be assured that we will not be remiss in pursuing the Italian Government.

Would the Minister rule out the possibility of banning Alitalia from coming to Ireland until this matter is resolved, or would he consider that a regressive step?

I have not considered it as of now.