That is all right, but on the second question, I think the House is entitled to know the purpose of the two loans amounting to £14,500,000 which are being finalised. I mentioned a moment ago that an additional £26 million was provided in 1969 for the purpose of increasing the fleet, including the two Boeing 747s. There was a certain amount of criticism of Aer Lingus earlier this year, and Deputy Burke said Aer Lingus was being wrongly criticised in that they found it necessary, due to slackness at one stage to hire out their own Jumbo and subsequently, when things began to boom, if that is the correct expression for it, to hire a similar aircraft from Alitalia. It would be improper to criticise them in that regard in view of the fact that the company had net losses of £5 million in each of the last two years. That is alarming. I accept that we have a world situation but it is alarming that whenever we have a coalition government these world situations are generated. State-sponsored boards, like Aer Lingus, which were running smoothly suddenly experience a loss. That is a dear price to pay for coalition government and over the last three years we have all had experience of the price we must pay for coalition.
I find it most upsetting to think that in the booming sixties the UK and continental routes were not as remunerative for Aer Lingus as the North Atlantic route. The company made most profit on that route. It is unfortunate that it is that end of the company's business that is now showing a loss. I can recall an Aer Lingus official telling us in those years of how important that route was for the company. At that time the company was endeavouring to increase the number of landing points in North America. That has changed and we now have a situation where the Minister tells us that these losses threaten the very survival of our Atlantic service. He has told us that if the loss situation cannot be quickly remedied we would have little option but to terminate or very seriously curtail the service.
The only back bencher from the Government side who contributed to this debate, Deputy Taylor, re-echoed the Minister's sentiments. That is a dreadful threat to have hanging over the company. While in government Fianna Fáil succeeded in resisting the pressure put on the nation by the Americans to permit American airlines to fly into Dublin. Those people who criticised the Fianna Fáil Government for contemplating allowing the country to be forced into accepting this signed the document which allowed TWA fly into Dublin with a proviso that a stop be made at Shannon. We had battled for a long time to prevent this happening. I should like to know if any investigation has been carried out by Aer Lingus or the Department into the factors involved in the loss on the North Atlantic route. The Minister informed us that the loss was brought about because of the depressed state of the industry on the Atlantic which was due in the main to a fall in traffic over a number of years, intensive charter competition and uneconomic fares. I take it that the intense charter competition was not generated by TWA and the question of uneconomic fares is a matter for IATA.
I am aware that one of the reasons for the fall in traffic was the economic situation in the US but was any of it created by the fact that TWA were given permission to fly to Dublin? At the time of the signing of the agreement with TWA the American airline committed themselves to spending a sizeable amount of money on generating tourist traffic for this country. Has that promise been honoured by TWA? I find it difficult to criticise the Government on this agreement because I realise the pressure put on them over a period. I can understand the Government having to succumb to pressure but if commitments were entered into it is our responsibility to see that the American airline with the concession honours them. I should like to know whether the commitments have been honoured and if not what action is being taken to rectify the position.
I have dealt with the Minister's reference to the threat to the North Atlantic service. I wonder if that is the thin end of the wedge. The Minister has stated publicly that he would endeavour to ensure that Aer Lingus would not withdraw from the North Atlantic but there is a built-in threat in his speech. I dread the day the Minister for Transport and Power will announce that, due to continuing losses on the Atlantic routes, Aer Lingus have decided to withdraw that service. I hope the fears expressed in relation to this matter will not be realised.
I am surprised that the Minister found it necessary to talk in terms of a subsidy. Too many Government agencies have to be subsidised. The ESB have been endeavouring to avoid this type of situation. One of our older State companies, Bord na Móna, went through a difficult period but succeeded in pulling themselves up by their boot strings. I should hate to think that Aer Lingus would have to be subsidised and I agree with the Minister that a Government subsidy would not solve the problem.
I cannot understand the Minister saying "We could not afford to pay a subsidy of anything like the magnitude of present losses. A subsidised airline, with the deliberation that subsidy brings with it, would have far less chance of survival on the Atlantic in its present exacting and depressed state than an airline standing on its own feet fighting for survival." I have the queerest notion that that paragraph contained a message, not so much for Parliament or the people, but for the board of Aer Lingus. That statement does not stand on its own. I do not accept the argument that the airline, as a subsidised airline, would have less chance of survival than it has at present. I do not understand in what way a subsidy would constrain the airline. I cannot see how it would be more difficult for Aer Lingus to operate on the North Atlantic. Somewhere in the Aer Lingus files in the Department of Transport and Power there are a number of alternatives. It seems logical that one of the proposals submitted is that Aer Lingus could reduce their charges through subsidies. I can see justification for non-movement by the Government in this regard. The very minute a decision is taken to subsidise Aer Lingus the floodgates will be opened. That is an internal matter between the Minister and Aer Lingus. The Minister is responsible for Aer Lingus and he should tell them to solve their problems in whatever way they like but not to attempt to apply for a subsidy. To highlight the matter in public in order to get the message to the board of Aer Lingus is quite remarkable.
In the following paragraph of his speech the Minister said:
I am glad to say that our airline is fighting back. It is pursuing a strategy based on the retention of the present fleet, increased marketing and charter activity, rigid control of costs and the maximum development of profits from related and ancillary activities.
As a result of the improvements, things are going so well that, in fact, the company set a target for an operational profit of £1.5 million for the present year which represents an improvement of £3.5 million at operational level in 1975-76. I am getting bogged down in this. The Minister finishes up by saying "Latest indications are that this target will be realised and possibly exceeded." I do not know if I am reading this correctly or not but he had talked about a net loss of £5 million. He talks here about an operational profit of £1.5 million. My ordinary national school education led me to believe, until I got down to the next line, that that meant that Aer Lingus had killed the net loss of £5 million last year and they were going to achieve their target of £1.5 million operating profit, which means that they were going to be £6.5 million better off operationally from last year to this year. Then he said that that represented an improvement of about £3.5 million at operating level. That set me back a little. The sum of £3 million was after disappearing out the window all of a sudden in one line.
I cannot understand why the Minister in his speech, or his staff in the preparation of it, would not be more objective and let us get the situation where we can compare like with like. If we are going to do any sort of comparison, that is the way it should be. The House should not have a foggy presentation of the position. Here was I thinking that Aer Lingus were doing better to the extent of £6.5 million to find when the Minister did his sums that it was £3.5 million. I ask the Minister, if we are going to show £3.5 million of an improvement at operational level over last year and we had a £5 million loss last year, does that mean that Aer Lingus, to put it this way, are going to lose only £1.5 million this year or is it that they are going to make a profit of £1.5 million?
The Minister has said that the latest indications were that the target would be realised and possibly exceeded. Assuming that the target is just about realised, I would like the Minister to tell me when replying whether that means that Aer Lingus are going to be £1.5 million in the red at the end of this trading year or £1.5 million in the black. This is no small gap. Whatever way we look at it, the sum as he presents it says that operationally anyway, whatever that means, Aer Lingus are going to operate more efficiently or more successfully than they did last year to the extent of £3.5 million. To anybody's way of thinking £3.5 million is no small matter.
There has been a slight improvement. The Minister says further:
Traffic on the North Atlantic is unlikely to resume the strong sustained growth rates of former years.
Therefore, I take it that traffic in the Atlantic has not improved to any great extent and this was the thing that was blamed for the £5 million loss last year. When the Minister replies, I would like him, on behalf of Aer Lingus, to give some idea as to how this £3.5 million improvement was brought about in the present year. The Minister says we were pursuing a strategy based on the retention of the present fleet. That is not the reason for the improvement. We have the same number of planes. Regarding increased marketing and charter activity, I would like to know from the Minister whether this additional £3.5 million operating profit this year has been brought about by greater efficiency in marketing. That is what I look upon as increased marketing. It has not been brought about by reason of lower or cheaper aviation fuel. It has not been brought about by any reduction to any extent in inflation; in the rate of inflation maybe, but not inflation.
The Minister and Aer Lingus may be on the horns of a dilemma in trying to reply to what I am trying to get at, but things are still going badly. There is no pot of gold at the end of the rainbow in this regard. Nothing marvellous has happened, as I see it, in this year as against last year. We are told that it will be some years before the North Atlantic situation builds up. There probably has been some little improvement. I hope that there has been a step-up in the amount of traffic this way across the North Atlantic but to have an improvement of £3.5 million at operational level arising from increased marketing and charter activity in the light of constraints that there are on charter activity is remarkable.
The Minister's speech introducing this was rather short and as I have already indicated, not too self-explanatory. This is why I feel that probably the Minister in replying did visualise that he would be going into some more detail and would be more informative to the House. Certainly he gave basic information—I was going to say as to why he wanted an extra £25 million. He did not do that. It may be to enable Aer Lingus to start negotiating for loans before things become more prohibitive. As against that, from the nod of the head that I have got from the incoming Minister a few moments ago, there is nothing big planned in Aer Lingus at present and this is only proper. They should not be planning too serious a capital expenditure.
To be frank, I would like a more elaborate explanation from the Minister of this £3.5 million operational improvement which is all credit to Aer Lingus. Peculiarly enough, I have the idea that, with whatever streamlining has been done which brings about this £3.5 million improvement in operational profit, when maybe the outgoing Minister for Industry and Commerce rapped them on the knuckles at some stage about wasteful operation, they tightened things up and were in a position to transfer at operational level anyway from a £2 million loss to a £1.5 million profit in the 12-month period. It is something which they must be congratulated on, but one must congratulate them with tongue in cheek. If that sort of target can be achieved this year, the question naturally arises as to why things were so bad last year. I hope the Minister would check that out.
The next question I would like to ask is in relation to what I have said regarding the operational profit of £1.5 million. Again, forecasting must be very difficult for any State body or for any body. It was difficult to budget last January on the basis of costs at that time in the light of Government promises that things were improving and were on the upturn. Succeeding Ministers and the Taoiseach came into this House and said: "We have caught up. The situation will be such and such, and the gross national product will be so and so." As the Minister for Industry and Commerce would say "We are over the hump". He has been over the hump each year for the past three years.
In referring to the Aer Lingus report as recently as the 11th November, the Minister said that the air companies set a target of an operating cost of £1.5 million and, in fact, as on that date, that target would be realised and possibly exceeded. If Aer Lingus are ahead of target, that means they have tightened things up and improved marketing and general overall operations to a considerable extent, and they must be complimented on that. What percentage of the target of £1.5 million is represented by inflation?
Because of the change of Minister I have had to change my script for my contribution to this debate. The Air Companies (Amendment) Bill and tourism go hand in hand. Deputy Burke spoke on this measure previously and said that one of the militating facts against the successful promotion of tours and business by Aer Lingus was high hotel charges. Since then we have had the extraordinary statement by the then Minister for Transport and Power, the present Minister for Education, that hotel prices were dirt cheap, they were too low. That was a remarkable contribution.
We now have a new Minister with a fresh approach to this Department. We will have to wait some time to see what stamp he will put on it. I will be very interested in his approach to the question of opening the North Atlantic air service to unlimited charters. For quite some time a battle has been raging between Aer Lingus and the hotel industry. The latter are anxious that as many charters as possible come to Ireland. They do not mind who gets the tourists here. All they are interested in is that the tourists arrive and fill the bed spaces in their hotels. Aer Lingus have been accused, possibly wrongly, of interfering with the unlimited movement of charters.
I am aware that the former Minister and Aer Lingus were at the receiving end of a good deal of criticism from certain elements of the hotel federation, particularly the Munster branch, who were quite vociferous in their condemnation of the Government because they did not open the gates to unlimited charters. I wonder if the former Minister was very much in opposition to this. I would be interested in getting the present Minister's views on that point. I do not suppose a newly-appointed Minister ever had the opportunity this Minister has this afternoon to give the people on all sides in industry, in Aer Lingus and tourism, a blueprint of his plans.
Although this is a limited debate, the Minister can link tourism with air companies. I would be interested to hear what he has to say about chartering. This measure enables us to review the operations of Aer Lingus as a whole. I would like the Minister to detail his views and tell us if he will fall in line with Aer Lingus's opposition to cheap charters. As I said, the tourist industry is interested in getting the tourists here, irrespective of how they arrive.
I join with Deputy Barrett's remarks when he queried the devaluation and decreasing costs so far as Aer Lingus are concerned. As he said, Aer Lingus are unique and apart from other State-sponsored bodies, because they had the practical opportunity of selling their services for the German mark or the American dollar, and therefore should not have been so affected by inflation. I hope this Minister will cover these points in his reply.
I would now like to touch on a point also raised by Deputy Barrett which no speaker who travels by Aer Lingus can afford to ignore and that is "Aer Lingus, the friendly airline". My impression is that we are fast losing that name of which we were proud. Everything possible will be done by the Opposition to nurture, encourage and promote Aer Lingus and Aerlínte. When Aer Lingus first began operations they were our own "back yard" airline and certainly everybody was proud of them. The hostesses went out of their way to be pleasant and established a reputation for friendliness. Nowadays we do not hear references to the friendly airline or even see them in Aer Lingus advertisements. It would appear from the Minister's statement that Aer Lingus have made such a success this year of their marketing and charter activities that they have turned a bad operating loss into an operating profit. It remains for our airline to work hard at getting back the friendly airline image.
