asked the Minister for Transport and Power what will be the likely consequences, if any, of devaluation for (a) the export industries at Shannon Airport and (b) Aer Lingus in regard to the purchase of the Jumbo jets and fares on Continental and transatlantic routes.
Ceisteanna—Questions (Resumed). - Devaluation Effects.
2.
It will be some time before the full effects of devaluation, beneficial or otherwise, can be assessed either for the country as a whole or for the export industries at Shannon Airport. Export industries at Shannon Airport and elsewhere should tend to benefit from devaluation though there may be temporary difficulties in some cases.
It is not possible to assess the effects of devaluation for Aer Lingus in regard to fares on the continental and transatlantic routes until the results become known of an International Meeting of Airlines at present in session.
The capital cost of the Jumbo jets which is payable in dollars will involve increased sterling payments because of devaluation. On the other hand, the company's dollar earnings will have a higher sterling value and devaluation in so far as it encourages more Americans to travel to Ireland should increase the company's dollar earnings.
Is there any danger that industries at Shannon—Airport which use American raw materials or American component parts to which other things are done at Shannon will find themselves in difficulties because of devaluation?
I am not prepared to give any further answers to the question because this requires assessment by the industries concerned and it would be quite impossible for me to speculate on what the ultimate detailed effects will be on individual industries at Shannon. Some of them can buy components in the sterling area for export outside the sterling area; others are bound to buy components in the area which has not devalued. It would be quite impossible for me to say more than I have said.
Question No. 3.
Would the Minister not agree that this is a somewhat important point? Would he not further agree that it is a matter that the Government should have given active consideration to in the light of the fact that it did seem to be obvious that devaluation was on the way? Can he not clarify the position further for the House?
The fact remains that it is not any use considering what one is going to do about devaluation until one knows what the extent of devaluation will be, which countries are going to devalue and which ones are not.
Does the Minister not agree than any company which buys component parts to re-sell back to the parent company in America surely will find themselves in trouble because of devaluation unless they are selling back entirely to America?
I have already made it clear that companies will be affected in different ways according to where they buy their raw materials and where they dispose of the finished products.
In other words the Minister contradicts the Minister for Finance.
No; I have said the position of the Shannon estate is likely to be as a whole reasonably satisfactory.
The Minister for Finance said it made no difference.
Would the Minister clarify this statement that the company may anticipate an addition in the payment of fares and freight rates on the planes flying between here and the US in view of the fact that it is the option of the traveller to pay his freight rate or fare in the currency of the domicile of the air traveller?
Of course this depends on the passenger income growth of Aer Lingus on the routes which they operate. The fare charged will relate to some extent to the extent of the expenditure in the sterling and non-sterling areas. Those payments go towards the operation of the Jumbo jets. The Americans will be able to travel to Ireland at a cheaper rate comparatively if they pay in sterling. On the other hand Aer Lingus will have to pay more for the Jumbo jets and therefore will have to pay back their commercial loans at a higher rate. It would be quite impossible within five days for Aer Lingus to give a specific answer to those questions and it is absurd for Deputies to expect a matter like this to be decided particularly since the fares have not yet been decided. They are being considered at the meeting.
(Interruptions.)
If the Minister says that it is not possible to give an answer at this stage because the effects have not been assessed by the companies, on what basis does he say that the situation is likely to be optimistic?
I have already replied to that. I have said that there are two matters involved here: the possibility that Aer Lingus can increase total sterling revenue because of the fact that it will be cheaper if we do not indulge in inflation in this country for Americans to travel in Aer Lingus planes. On the other hand there is a negative to that in the sense that Jumbo jets could cost more. How on earth could any air company be expected to know the reply in sufficient time?
Did the Minister consult Diddelum-Dandy, otherwise Deputy MacEntee?
The Deputies opposite are being absolutely irresponsible.
Diddelum-Dandy.
Ladies' curling pins.
Now nannygoat!