Vol. 386 No. 1
asked the Minister for Tourism and Transport if the recent announcement by Aer Lingus and British Airways of their intention to apply for identical fare increases between Ireland and Britain is compatible with Article 85 of the Treaty of Rome; if he will treat such applications separately; if he will consult with the competition policy directorate of the EC in relation to such applications; and if he will make a statement on the matter.
86.
asked the Minister for Tourism and Transport if the disparity in air fares between routes with competition and routes with a cartel operation between Ireland and Britain indicates an abuse of the dominant position under Article 86 of the Treaty of Rome; if he will take steps to reduce this disparity; and if he will make a statement on the matter.
With the permission of the Ceann Comhairle, I propose to take Questions Nos. 85 and 86 together. Under the Ireland/UK Memorandum of Understanding on air services between the two countries, fares filed by airlines of either country are considered approved unless they are disapproved by the aeronautical authorities of both countries. Either side may, however, unilaterally disapprove fares of its own airlines which it considers to be either excessive or anti-competitive.
Under EC Council Directive (87/601/EC), fares for scheduled air services between member states may be filed individually by carriers or following consultations with other air carriers, provided that participation in such consultations is voluntary and that the results are not binding on carriers.
I would draw the Deputy's attention to the fact that promotional air fares on all routes between the two countries have been reduced substantially in recent years. For example, on the Dublin-London route, the lowest Apex (return) fare was £104 in summer 1985, while in summer 1988 the lowest Apex fare on the same route was £63. This represents a reduction of almost 40 per cent. Promotional fares to/from other UK points have been reduced by up to 22 per cent over the same period. I am satisfied that these very significant reductions have been achieved as a result of the increased competition which I have actively encouraged, as well as the pressure which I have consistently applied for lower promotional fares as part of the Government's programme to develop tourism. In all the circumstances, therefore, I am satisfied that fares currently being applied on Ireland/UK routes conform with the requirements of EC law and that no cartel exists on those routes.
Aer Lingus has recently filed proposals for revised air fares on Ireland/UK routes, the main feature of which is a proposed average increase of 3 per cent, with effect from 1 April 1989. To date British Airways has not filed with my Department proposals for increased fares although I understand from media reports that the company has indicated that if the Aer Lingus proposals are accepted they will file matching fares which they would be entitled to do under the EC Council Directive to which I have already referred. No decision has been made in relation to the filing.
