US embassy cable - 05DUBLIN296

C O N F I D E N T I A L SECTION 01 OF 02 DUBLIN 000296 
 
SIPDIS 
 
E.O. 12958: DECL: 01/31/2015 
TAGS: EAIR, ECON 
SUBJECT: IRISH GIVE GREEN LIGHT FOR NEGOTIATING OPEN SKIES 
ARRANGEMENT 
 
REF: DUBLIN 177 
 
Classified By: Ambassador James C. Kenny; Reasons 1.4 (B) and (D). 
 
1.  (C) Summary: On March 8, Transport Minister Martin Cullen 
informed the Ambassador that Ireland was prepared to pursue a 
new bilateral aviation arrangement, along the lines of the 
Open Skies approach outlined in reftel discussions. 
Transport officials requested USG proposal texts as the first 
step in moving to follow-on discussions.  Minister Cullen 
noted that a new bilateral relationship would be central to a 
larger air transport strategy that involved the possible 
privatization of Aer Lingus, the separation of the Irish 
airports authorities, and the building of a new airport 
terminal in Dublin.  End summary. 
 
Getting to Yes 
-------------- 
 
2.  (C) In a March 8 meeting, Transport Minister Martin 
Cullen informed the Ambassador that the Irish Government 
Cabinet had, earlier in the day, authorized the Transport 
Department to pursue a new bilateral aviation arrangement 
with the United States.  (Per reftel, Transport officials 
expressed interest in an Open Skies arrangement during 
February 7 discussions with State Department Deputy Assistant 
Secretary for Transportation Affairs, John Byerly, and 
 
SIPDIS 
Department of Transportation Director for International 
Aviation, Paul Gretch.)  Cullen noted that the Transport 
Department had spent the preceding weeks marshaling political 
will among GOI agencies, including the Department of Foreign 
Affairs, to support the move to a new bilateral arrangement. 
On March 8, the Cabinet delivered the judgment that "Ireland 
needed to do this."  Cullen expressed his preference that the 
U.S. and Irish sides move as quickly as possible to next 
steps. 
 
3.  (C) The Ambassador welcomed the news and noted that an 
Open Skies arrangement would significantly benefit both 
sides.  Restrictions at Shannon, he pointed out, had led a 
number of U.S. carriers to avoid the Irish market, to the 
detriment of both sides' economies.  He added that Open Skies 
would be a boon to the Irish aviation sector, which was 
unique in Europe in boasting two profitable major airlines 
(Aer Lingus and Ryanair).  The Ambassador also observed that 
senior Administration officials had been instrumental in the 
USG's original formulation of Open Skies policy and would be 
happy to hear of the GOI's decision. 
 
4.  (C) Transport's Director General for Aviation, John 
Murphy, who attended the meeting with the Ambassador along 
with the Minister's Advisor, Colin Hunt, said that he would 
call DAS Byerly to activate the steps outlined in reftel 
paras 8 and 9 and to request USG proposal texts for GOI 
review.  (Murphy made the phone call later the same evening.) 
 Murphy noted that the first priority should be to identify 
the best arrangement for both sides.  Second, it was 
important that the arrangement pass legal muster, and he 
mentioned that Ireland's Attorney General's office was 
engaged on the issue. 
 
A Low-key Approach 
------------------ 
 
5.  (C) Minister Cullen said that the GOI did not plan to 
issue a press statement on the Cabinet decision, preferring 
to pursue follow-on talks with the USG in a low-key manner. 
He noted, however, that he would welcome a St. Patrick's Day 
discussion between Prime Minster Ahern and President Bush on 
the prospects for a new aviation relationship.  Cullen 
acknowledged that the U.S. side would need to consult with 
industry on proposal texts and that this necessity would put 
this issue into the open, possibly ahead of St. Patrick's 
Day.  He noted that the GOI had no plans at the moment to 
inform the Commission, though it was likely that word from 
industry would arrive in Brussels quickly.  Cullen quipped 
that Dublin had "heard enough" from Brussels this week 
(alluding to Commission-Ireland dudgeon associated with the 
GOI's March 2 decision to withdraw a euro 170 million grant 
to Intel under threat of a Commission investigation.) 
 
Open Skies as Part of a Larger Strategy 
--------------------------------------- 
 
6.  (C) Cullen said that a new U.S.-Irish aviation 
arrangement was central to a larger air transport strategy 
that involved the possible privatization of Aer Lingus, the 
separation of the Irish airports authorities, and the 
building of a new airport terminal in Dublin.  The Ambassador 
observed that a new terminal would embody Ireland's economic 
success and would create the kind of initial impression that 
would help Ireland to attract foreign visitors and 
investment.  He cited comments from U.S. visitors on transit 
problems at Heathrow and the advantages in making European 
connections in Dublin.  Cullen said that the Dublin terminal 
would be designed with an eye to capturing a portion of the 
Heathrow market.  A challenge in that effort, added Murphy, 
would be to build a terminal that was large enough for such 
purposes but sufficiently cost-effective to attract low-cost 
carriers. 
 
7.  (C) Comment: Post would greatly appreciate USEU and 
Embassies in other Member States not discussing this 
development with host government civair officials.  The U.S. 
and Irish sides will be working out the best way to play this 
issue publicly in the coming weeks, particularly in the 
context of the U.S.-EU aviation negotiations. 
KENNY