The Government has announced plans to separate Shannon Airport from the Dublin Airport Authority, and bring it together with Shannon Development into a single entity.
The new body will have a commercial mandate in public ownership.
The move has been broadly welcomed by businesses and industrial interests in the mid-west, who believe that independence from the DAA is in the best interests of the future viability of Shannon Airport.
Minister for Transport Leo Varadkar said it is a significant step in developing the aviation sector in Ireland and securing the future of Shannon Airport.
''It heralds a new era for the Shannon region. I firmly believe that this is the best way forward for both Shannon Airport, Shannon Development and the mid-west region.
''We want to recapture the pioneering spirit of the people who gave us the airport and the Shannon Free Zone concept, so that we can provide exciting and innovative opportunities which benefit business, tourism, and job creation in the region, and across the country.''
Mr Varadkar told business leaders in Limerick and Shannon last January that substantial change was needed if the disastrous loss of passengers and revenue in recent years was to be halted.
Passengers through Shannon have halved to 1.6m in the five years from 2007, mainly through the loss of Ryanair services and the loss of Aer Lingus winter transatlantic services.
A recent report by the international consultants Booz said Shannon faced a significant threat to its future viability under its current ownership arrangements with the DAA, and separation from it offered the best opportunities for growth.
Shannon Airport has annual losses of €8m, and a long-standing debt of €100m.
Minister Varadkar said Shannon Airport will not have to carry the €100m debt into the new entity.
The debt will remain with the Dublin Airport Authority because the debt would not affect the DAA's credit rating and because the DAA would benefit from no longer carrying the cost of subsidising Shannon.
Minister for Jobs, Enterprise & Innovation Richard Bruton said the announcement represents a new start for jobs and enterprise in the Shannon region.
President of Shannon Chamber of Commerce Damien Gleeson said the Government had taken the decision "for all the right reasons and with all the right information".
Mr Gleeson said Shannon was delighted to have autonomous decision-making powers and would be able to compete for passengers.
A spokesperson for Shannon Development welcomed the announcement, saying it would provide "certainty" for the future of the airport.
"There is still a lot of detail to be worked out around the new structure and operation of the new entity, but today's announcement is undoubtedly a major step towards creating a new entity which will act as a catalyst for growth for the wider region in the years to come," the spokesperson said.
Fianna Fáil's Timmy Dooley said he welcomes a decision at last, but he said it seems that the cart is being put before the horse as a steering group is being put together after the decision is made.
However, Ryanair Chief Executive Michael O'Leary said transferring Shannon from one failed semi-State bureaucracy to another means that there will be no real change or reform.
Speaking on RTÉ's Drivetime, Mr O'Leary said airports should be sold, because the private sector is better at running those assets.
He said the key to Shannon's future was as a gateway for tourists from Europe to the west of Ireland and vice versa.
Mr O'Leary rubbished suggestions that it could become a cargo hub, or be used for pre-clearance for flights to the US.
