asked the Minister for Tourism and Transport the implications resulting from the completion of the internal market of the EC in 1992 for Aer Lingus and other Irish carriers on air services to and from Ireland particularly on major routes such as Dublin-London and Cork-London; and if he will make a statement on the matter.
Ceisteanna—Questions. Oral Answers. - Internal Market in Air Transport.
22.
The completion of the internal market in air transport, which is to become effective from 1 January 1993, will provide major opportunities, as well as challenges, for Irish airlines. The process is being accomplished in three phases, the first of which was the package of air transport liberalisation measures adopted in December 1987 and which became effective on 1 January 1988. The second phase is to be introduced by 30 June 1990 with the third and final phase being implemented on 1 January 1993.
At this stage there are no proposals before the Council from the Commission for the next phase in liberalisation. There are, however, a number of aspects of the current regime which I would like to see further liberalised in the next phase. Specifically, I shall be pressing for a less restrictive fares regime, a more open capacity regime, and increased opportunities for market access, including an increase in the 30 per cent limit on the number of seats available for fifth freedom traffic. Progressive liberalisation of air transport within the Community will provide opportunities for Irish airlines to compete within a Community-wide market. Irish carriers have been to the forefront in taking up the new opportunities presented in the first phase package. This has already been illustrated by the inauguration by Aer Lingus of new third-fourth and fifth freedom services and new third-fourth freedom services by Ryanair.
In relation to the increased competition which will be faced by Irish airlines, as the completion of the internal market progresses I am confident that based on results to date our airlines have the will and the ability to meet competition from foreign airlines and to expand successfully into the wider European market.
Irish Government policy has consistently supported the liberalisation of air transport within the Community. Recent experience has shown the benefits of healthy competition in the domestic and Ireland-UK markets. In pursuing such a policy, the major objective of the Government is to secure a wider market base in order to provide scope for the further successful growth in the Irish air transport industry in line with Government targets for growth in tourism numbers.
I should mention that the revised Ireland-UK bilteral air services agreement signed in Dublin on 11 March 1988, went a good deal further in terms of liberalisation than the December 1987 EC package — to which I referred earlier — in that it provides for an open route schedule, with multiple designation on the major routes, a double disapproval fares regime and an open capacity regime. In so far as the Dublin-London and Cork-London routes are concerned, a substantial degree of liberalisation in a bilteral context has effectively taken place. This is reflected in the increase of 73 per cent in traffic on the Dublin-London routes over the past two years and of 61 per cent on the Cork-London route during the same period.
I thank the Minister for his full reply. Can the Minister confirm the concern voiced in a report to this House on the half-yearly activities of the Community, that in view of the greater liberalisation that will be effective after 1992, apparently other carriers will be allowed to operate on the Dublin-London and Cork-London routes? Because traditionally these routes have been confined to British and Irish carriers, would he agree that if other carriers are allowed to operate on them it will present Aer Lingus with a difficulty in that these have always been strong money-making routes for them?
I agree with the Deputy that they are the strong economic routes as far as Aer Lingus are concerned. It is also true — as he has said — that other airlines will have freedom of the air as far as the establishment of routes are concerned. The growth of British Airways who are already on the route since they purchased Caledonia means that a giant is operating on the route. However, I have no reason to be pessimistic because Aer Lingus, Ryanair and Club Air will be able to cope with the competition.