Negotiators from the Department of Transport and their US counterparts are locked in discussions in the US over a new bi-lateral aviation agreement, while talks between the EU and US on a new "open skies" deal are to recommence in February.

Aer Lingus and tourism interests have been clamouring for change to the bi-lateral, which dictates that Shannon must have 50 per cent of flights to and from the US.

Objecting to any change to Shannon's status as a gateway to the US "is totally wrong, strategically wrong and would not be good for the country," according to the director of Shannon Airport, Mr Martin Moroney.

"We have no fear of open skies down the road. I would be happy to see a change which would give Aer Lingus more gateways into the US even though we know the predominant development of those gateways would be from Dublin," Mr Moroney said.

He would be in favour of a five-year transition period to open skies, where a two-for-one, in favour of Dublin Airport, could apply.

"My keenest interest is to have as many as possible year-round services to the US and we want to have the main carriers agreeing to serve Shannon year round as a basic condition of some way forward in a transitional period to open skies.

"If we were assured that we would have year-round services, Shannon management would not be averse to a change in the current bi-lateral in advance of open skies. Down the road, we don't have any fears of Cork or Knock getting transatlantic services, everyone should benefit."

Shannon's income per passenger from the US is five times the amount it earns from passengers on other routes and Mr Moroney warned that, if not handled properly, the introduction of open skies would be needlessly damaging to Shannon and the west of Ireland.

"We are open to a change but we need to be involved in negotiations on change," said Mr Moroney, who has worked at Shannon Airport since 1980.

He believes that, under open skies, the numbers flying on US-Ireland routes could double from 1.7 million to 3.4 million.

"I am confident that Shannon, which currently has a market share of 42 per cent, can hold onto 30 per cent."

Up until Ryanair announced last month that it was to establish a European base at Shannon next year resulting in nine new routes, 2004 had been a difficult year for the airport.

The only State airport to record a percentage drop in passenger volumes this year, its future has been bedevilled by uncertainty arising from the new airport structure, ongoing rumblings over impending job losses and doubt over the long-term commitment to the airport of its biggest customer, Aer Lingus.

However, Ryanair's announcement has transformed the airport's prospects and Mr Moroney said that terminal passenger growth of 50 per cent is expected next year, which would take passenger numbers using Shannon to more than three million.

However, an anticipated spend of €8 million per annum over the coming years on capital works at the airport, including a €3 million sewage treatment plant, means that profits may be some way off, with reports that the airport is losing €4 million per annum.

"We are not in the game for profits, but I believe that we can create sufficient cash flow to be able to afford to invest in our capital expansion. It is comparable to a not-for-profit organisation but this cannot rule out prudent business management.

"Our new approach is that the airport is a tool of regional development; the key is to grow the traffic at the airport, to sustain the airport as a business and be a catalyst for development in the region."

Underlining Shannon's growing cost base, Mr Moroney said that the airport pays Clare County Council just under €2 million per annum in rates.

Mr Moroney said that he will be asking the local authority to contribute to a route development fund that the airport is formulating. Airport director for the past two years, Mr Moroney argues that the airport's growth was not stymied under Aer Rianta.

"Between 1992 and 2001, terminal traffic doubled, which was a very strong performance."

Reports of the workforce of more than 550 at Shannon being halved "are totally inaccurate and no decision has been made pertaining to employee numbers", Mr Moroney said.

However, he added: "Any business cannot sustain itself unless it is self-financing and standing on its own two feet. Shannon airport has not been able to do that on a consistent basis and part of that reason is that the cost base is much higher than airports of similar size. The cost of operating Shannon has probably grown more than it should in terms of payroll costs."

Under the Shannon Airport Authority, the airport has been able to offer low-cost deals to airlines, resulting in the airport securing eight new scheduled services for the months ahead along with the Ryanair deal.

"We have to reduce costs per passenger. We are increasing the number of passengers and we are currently engaged in a detailed analysis which is looking at what future business will look like. No decision will be made on any jobs losses without detailed consultations with unions."

The business plan for the airport is being prepared by the airport authority and must be lodged with Government before the end of April.

"Everyone should support at least philosophically, until we are down to the detail, any change that will improve the costs base at Shannon in a way that will further grow the traffic and increase the business.

"A voluntary redundancy programme is usually a big cost and I don't know if we can afford that."

The Feakle native admitted that, if Shannon was privately owned, a severe approach would be taken to its costs base.

"The unions must see that, for the entire region, it is critical for their membership and their own role that they be open and willing to look at options and find ways to deliver."