After three years of indecision and paralysis, Martin Cullen finally entered the conference room in the Department of Transport yesterday with something categorical to say on behalf of the Government about aviation.

Before he revealed the Cabinet's long-awaited aviation package, he seemed to offer some words of contrition about all the delays and false dawns.

"The aviation sector has seen many crises but little long-term planning," the Minister ruefully commented. He said this would no longer be the case. "We are determined to move firmly beyond the reactive traditions of the past," he told the large media scrum assembled before him.

The implications of the words were clear - here is the decision, now its time to move away from all the controversies.

Unfortunately, the Minister has probably failed to politically neutralise the twin issues of the Dublin airport terminal and Aer Lingus, at least in the short term.

Take the terminal first. While the Minister has effectively passed the issue over to the Dublin Airport Authority (DAA), the airports operator, has yet to select a site for the new facility. Consequently getting a fix on the price of the terminal is difficult at this point.

The only figures released so far vary widely. A statement yesterday from the DAA said it would cost between €130 million and €190 million to build the new facility, not including ancillary and site clearance costs. Either way there is a big difference between €130 million and €190 million.

The cost of the new terminal will have direct political consequences. Put simply, the higher the cost, the higher the airport charges.

The argument has been put in these blunt terms by DAA chief Gary McGann. He has made it clear the DAA wants a reasonable return on anything it builds and that means an increase in airport charges.

"No increase, no investment," McGann recently warned.

Politically it could be a hard sell for the Government to explain to the public why extra capacity at the airport means higher charges.

While the decision on charges is ultimately one for the aviation regulator Bill Prasifka (he is to make an announcement on May 31st), the political flak is likely to scatter in the direction of Government.

The nightmare scenario for Martin Cullen and his colleagues would arise if Mr Prasifka refused to sanction the kind of increase the DAA needed and some kind of stand-off developed.

The DAA's need for an increase in charges is based partly on its high debt profile.

The company is approaching a net debt level of €400 million. Throw another €190 million on top for building costs, not to mention about €100 million for ancillary works and suddenly you have a significant debt problem.

This does not take account of the debts due to transfer onto the DAA's balance sheet from Cork and Shannon airports.

Its also worth remembering that a major restructuring programme is likely at DAA in the years ahead. In order to service the debts the authority simply has to bolster its income.

The only two tenants that really matter in the next few years for DAA are Aer Lingus and Ryanair. Together they make up 66 per cent of all traffic at Dublin airport. In other words what they want they will simply have to get.

Each terminal will need at least one of these two airlines as an anchor tenant. So expect both airlines to be relatively demanding when it comes to negotiations. The most likely site for the new terminal facility is the north apron site, but another site to the south-west of the existing airport building has not been ruled out. The costs of each site are believed to be about the same.

With potential disruption on the cards and airport charges facing a serious rise, the short term political fallout of this week's decisions could be negative. Of course when the glistening new facility is opened, like Luas, it will probably gain the affection of passengers.

But even the most optimistic sources admit a new terminal will not be ready until 2009 at best.

Yes, there will be the interim solution of a new pier for aircraft parking stands available from 2007, but this will do nothing to sort out congestion for passengers in the existing terminal. You cannot process people any quicker through check-in desks or security barriers simply because there are more aircraft parked outside on stands.

As for Aer Lingus, things are a little clearer. The Minister will not be personally involved in deciding how much equity should be sold or when it should be sold. Consultants will perform that role.

The main challenge for the Government will be to retain some kind of control over the company's affairs in the future.

Despite all the hype of recent months, getting top value for the company is not necessarily a political imperative. The proceeds of the sale are not destined for the exchequer anyway, but for Aer Lingus itself.

The airline probably needs between €300 and €400 million for a new fleet of long haul aircraft. While the purchase price of the new fleet will come in at about €1 billion, the airline will fund this with a combination of debt, equity and cash.

The fresh funds from the Government are effectively going to be used to strengthen the company's balance sheet so it can handle a €1 billion deal.

So who is going to buy the shares? Well, according to analysts, there are likely to be several takers, among them big international institutions like Fidelity group, Capital group and Wellington Management.

The feeling in Government circles is that hedge funds are not wanted. Irish pension funds are also likely to be involved, although many of them are very sceptical about airline investments.