State to underwrite air industry insurance

The Government is to underwrite insurance cover for airlines and airport operators in a Bill introduced in the Dβil yesterday.

The Minister for Public Enterprise, Mrs O'Rourke, said the Government's response was in line with the action taken by other EU governments and, indeed, governments worldwide, following the atrocities in the US last September.

"The terrible events in the United States have had huge repercussions for economies across the globe, and in particular the aviation industry. This Bill is the Government's response to one aspect of those repercussions: the withdrawal of war risks insurance cover by the insurance industry worldwide."

Mrs O'Rourke said she had no doubt the House shared the Government's strong belief that terrorists should not be permitted to curtail freedoms.

"The freedom to travel is an essential part of the modern economy. It is also an essential part of the freedoms we enjoy as citizens of the European Community, as part of our long-standing kinship with the United States and as part of the goodwill that Ireland and its people have earned throughout the world by our support for human rights."

She said that without the Government's intervention Irish aviation, including airlines, airports and other essential service providers, would have ceased to function, with the resultant knock-on effects for tourism, air travel and employment.

Mrs O'Rourke said that the Navigation and Transport (Indemnities) Bill authorised the issuing of indemnities to airlines, airports and other essential aviation support services to make up the gap between the insurance cover they have and what was available before its withdrawal.

Premiums would be changed, she said, adding that the limit to be paid by the Government, in the unlikely event of claims being made, was nine billion euros.

Mrs O'Rourke said that following extensive consultation with the Attorney General's office, the Department of Enterprise, Trade and Employment and the Department of Finance, it was concluded that the Government could not directly indemnify the airlines under existing legislation.

In the circumstances, she added, it was decided that the most that could be done in the short term was to issue letters of comfort in which the Government undertook to introduce the Bill. In the event of it being enacted, indemnities would be issued to the firms which had received the letters of comfort.