Deputy Gay Mitchell gave me notice of his intention to raise on the Adjournment the failure of Capital Airlines to transport Irish passengers and the whole situation of Capital Airlines. Deputy Mitchell understands the procedure. The matter is in order.
Adjournment Debate. - Suspension of Airlines Services.
Thank you, a Cheann Comhairle, for giving me the opportunity to raise this matter in the second half of extra time, so to speak. I am pleased to have this opportunity to put this matter on the record of the House.
It appears now that some hundreds of Irish air travellers have lost money through the failure of Capital Airlines. If the airline does not resume services the money spent on tickets purchased will be lost forever. Initial reports indicated that the problem was created by the parent company, Browne Group International. This now appears not to be the case. In fact, the reverse may well be the case. It now seems that losses on Irish services caused or heavily contributed to the group's problems. It appears that Capital Airlines have underestimated the competitiveness of the Dublin-London market of which they could only capture a 5 per cent share. I understand they increased their passenger numbers by about 2,000 in the previous year, despite increasing their capacity from 40,000 to 80,000 on that route since taking over the Virgin Atlantic service in 1988.
Capital Airlines made losses of approximately £7 million in 1989 and this was contributed to heavily by the Irish services.Was this airline undercutting other airlines simply to obtain a niche in the market? If so, is the public interest best served by this approach? Surely it cannot be if ticket purchasers are not aware that such policy puts their money in jeopardy. At £60, a return ticket Dublin, Luton Capital Airlines was aiming at the lower socio-economic group, the very people who cannot afford such losses. They would not have money in their pockets to purchase a replacement air ticket and many of them would be stranded at the last moment.
The Transport Tour Operators and Travel Agent Act, 1982 requires all tour operators and retail agents to be licensed by the Department of Tourism and Transport and to provide bonds sufficient to protect all members of the public booked with them in the event of closure. It is anomalous that this legislation does not extend to airlines and I am asking the Minister to amend it to cover airlines. The day may come when a major or not so major airline may default, and not all the airlines flying in and out of Dublin and in and out of this country are making a profit. It happens that some of those that are not making a profit have at their back persons who are in a position to put their hands on capital. If it should happen, however, that an airline in a lossmaking situation follows Capital Airlines' example it would not be hundreds of people who would be out of pocket but thousands. They probably believe they are covered by the 1982 Act but they are not covered by that Act. That measure should be extended to cover airlines so that they are required to be bonded in the same way as tour operators to ensure that the travelling public are properly and adequately covered.
There have been reports of travellers taken off airplanes, such was the suddenness of the discontinuance of service in the case of Capital Airlines. I call on the Minister to tell the House the precise number affected, how he intends to ensure that they are compensated and how he intends to protect future travellers on airlines from similar situations so that they are protected and compensated and not simply treated as a creditor like the person who supplies the fuel for the airlines. A person paying for a service is a purchasing customer and should be protected in the same way as people are protected under the legislation dealing with tour operators.
Many travellers believe themselves to be covered by legislation but this is simply not the case. This matter must be addressed by this House and by the Minister.I urge the Minister to ensure that the full extent of the effect on Irish travellers is fully disclosed. I have already had complaints from front bench spokesmen from my own party and from a number of Deputies around the country about this and how their constituents were left high and dry at the last minute. The Minister should disclose to this House precisely how many Irish travellers were affected, what it cost them, what steps are being taken to ensure that they are being compensated and what steps he is taking to ensure that, if there is a further problem with any other airlines, the travellers are adequately covered and are compensated for any losses they may incur.
Again, Sir, thank you for giving me the opportunity to raise this matter.
I note that the Deputy has a Dáil question tomorrow on this subject at which time I will also deal with the matter.
Capital Airlines is a UK airline which was designated by the UK authorities to operate scheduled air services on the Luton-Dublin, Belfast-Dublin and Leeds-Bradford-Dublin routes under the terms of the Ireland-UK transport agreement.As a UK-based airline its operating licence is issued by the UK Civil Aviation Authority who are obliged under UK law to satisfy themselves in relation to the financial fitness of airlines both when a licence is being issued and periodically thereafter, depending on the size of the airline and a whole range of other criteria. This is obviously done in the interests of keeping in touch with and ensuring that the operators in the air transport industry are financially sound. I should point out that this is also done in the interests of providing continuity of service to the public and a reasonable degree of protection, not complete protection, I accept.
Capital Airlines suspended operations between the UK and Ireland on 28 June last as a result of its parent company, the Browne International Group, being put into receivership. I understand from the UK authorities that the receiver to the company is not in a position to indicate at this stage whether the airline will be sold as a going concern or will resume trading in the near future.
Since the suspension of operations by Capital Airlines I have been in touch with Aer Lingus and Ryanair about passengers affected by the suspension of operations.I can inform the House tonight that tickets issued by Capital Airlines for travel on Aer Lingus services are being honoured by Aer Lingus while Ryanair, which also operates on the Luton-Dublin route, has also made special arrangements for the transport of affected passengers. Such passengers were offered a special one way fare of £40 by Ryanair to allow them to return home. Furthermore, Ryanair mounted a special Luton-Dublin flight on Saturday 30 June to accommodate passengers anxious to return home last weekend. About 80 passengers travelled on that flight. A similar number of passengers holding Capital Airlines tickets have availed of Ryanair's oneway fare from Ireland to the UK. I share the Deputy's concern and I have every sympathy for those affected by this development. I must emphasise that Capital Airlines are a UK airline and responsibility for their licensing rests solely with the UK authorities. I will examine carefully the suggestion the Deputy made in regard to amending the Act. There is, of course, a thin line between under-cutting and competitiveness.However, I will examine the suggestion the Deputy has made.
I am conscious, of course, of the difference between the travel charter-type business and the day-in day-out scheduled business. The Deputy is quite right in that there is a bonding system, by legislation, in the package holiday business. This is because people pay substantial deposits and book their holidays a long time in advance. There is generally much family involvement in that area and there is a much longer term and deeper investment for the travelling public than the week-in, week-out, day-in day-out scheduled traveller. I am not sure the system is easily transferable from the travel chartered side to the scheduled side but I will certainly consider the matter.
The Dáil adjourned at 10.45 p.m. until 10.30 a.m. on Wednesday, 4 July 1990.