THE GOVERNMENT would consider the McCarthy report’s recommendation to dispose of its Aer Lingus shareholding in the context of the ongoing budgetary challenge, Minister for Transport Leo Varadkar told the Dáil.

He said the Government had retained a minority stake of 25.1 per cent in Aer Lingus in the initial public offering (IPO) of shares in 2006 to protect the State’s aviation interests, especially access to London Heathrow services.

“Therefore, in considering any disposal of the State’s shareholding, it would be necessary to evaluate whether the protections considered necessary for London Heathrow services at the time of the IPO in 2006 are still relevant in the light of market developments since then and, if they are still relevant, whether there would be any means of protecting them in a disposal.”

Mr Varadkar said the effect of any disposal on competition in the State’s air travel market would also have to be considered.

Another key consideration would be the realisation of maximum value.

Fianna Fáil spokesman Timmy Dooley said he was somewhat disappointed Mr McCarthy had included Aer Lingus considering it was of strategic interest to retain the 25 per cent shareholding.

In the past, he said, Aer Lingus had an effective monopoly, and without the emergence of Ryanair there would be a lesser level of service than currently exists, and at higher fares.

The concern about the disposal of the Aer Lingus shareholding would relate to the direct connectivity to London Heathrow and the onward services provided and, especially, the lack of effective competition from the perspective of business and tourism.

Mr Dooley urged the Minister to consider those issues when making a decision.

Mr Varadkar said Mr Dooley could be assured of that.

The European Commission had ruled Ryanair could not take over Aer Lingus, he added, and he was determined there would be two significant airlines operating out of Ireland.