asked the Minister for Tourism and Transport if his Department have calculated what constitutes an economic air fare on all internal and cross-Channel routes; if he has satisfied himself that Aer Lingus are not applying uneconomic fares in an effort to undermine opposition from independent airlines; and if he has not so satisfied himself, the proposals he has to protect the principle of fair competition and the future of independent airlines.
Ceisteanna — Questions. Oral Answers. - Airline Fares.
14.
As the Deputy is no doubt aware one of the priorities outlined in the Programme for National Recovery is the development of the Irish tourist industry with a view to creating an extra 25,000 jobs and attracting an additional £500 million of foreign tourist revenue during the five year period of the programme. With this objective, I have encouraged Irish airlines to charge the lowest possible fares consistent with economic operation.
In examining applications for approval of air fares, I am obliged under EC law to take into consideration a wide range of criteria, including the costs of the applicant airline, the needs of consumers, the need for a satisfactory return on capital, the competitive market situation, including the fares of other airlines operating on the route, and the need to prevent predatory practices. However, and here I quote directly from the relevant EC Directive: "the fact that a proposed air fare is lower than that offered by another carrier on the same route shall not be sufficient reason for withholding approval".
The range of fares offered by any airline on any of its routes is primarily a matter for that airline to decide by reference to its own costs, the demands of the market and the general competitive environment, within the parameters laid down by the EC Directive to which I have already referred. It would be inappropriate for my Department arbitrarily to fix specific fare levels in respect of any particular route because the economics of individual airline operations vary considerably in accordance with the flexibility which carriers have in terms of pricing, frequency of operations and class of service offered. In any event, I do not consider that current market circumstances warrant any measures of an interventionist or protectionist nature. Indeed, as we have seen down the years, such measures stifle rather than encourage competition.
It need hardly be said that Aer Lingus fares applications are dealt with on exactly the same basis as those of other Irish carriers and on that basis I am entirely satisfied that the competitive situation is both equitable and healthy. Since coming into office as Minister for Tourism and Transport I have given every encouragement and support to the development of competition in the air transport field. In particular, I have encouraged independent Irish airlines to become more involved in servicing routes to and from Ireland by giving them access to a large number of international routes. The development of such competition has contributed to the development and expansion of the Irish air transport industry through the advent of lower air fares and I am particularly anxious to ensure that this situation should continue, since low air fares, particularly for tourists visiting Ireland, represent a critical element in the Government's strategy for the accelerated development of the tourism industry.
In relation to the principle of fair competition, rightly emphasised by Deputy Deasy in his question, I would refer him to my previous reply on this subject on 23 February 1988. As I said then, I regard competition as very important. I have already assured the Deputy that I would step in, within the powers I have, if there was any indication that competition was being eliminated.
As to the future of independent airlines, I intend to continue to encourage them in the interests of fostering more services, greater competition and lower fares. I see no reason independent airlines should not flourish in the new climate we are creating both here and in Europe.
Can I ask the Minister to assure the House that nothing he has said will imply, in any circumstances, that he will tie Aer Lingus's hands behind their backs in responding competitively to competition whether it be from Ryanair, Club Air or foreign airlines?
I can give the Deputy that assurance.