Vol. 405 No. 1
7 Mr. Yates asked the Minister for Tourism, Transport and Communications if he has an overall policy in relation to the optimum number of carriers on routes between this country and the United Kingdom; if he has satisfied himself with current developments that a two Irish airline policy will be maintained; and the steps he is prepared to take to ensure this.
Under the Ireland-UK Bilateral Air Agreement there is no restriction on the number of carriers which either side may license to operate on the major routes between both countries. These major routes are Cork, Dublin and Shannon to Birmingham, London — Heathrow, Gatwick and Stansted — Luton and Manchester. On all other routes either side may designate up to two of its own carriers.
The designation of Irish carriers on any route is a matter to be decided by me, while the designation of UK carriers is a matter for the UK authorities.
In September 1989 I announced a two Irish airline policy for a three year period. The aim of the policy is to strengthen the Irish presence on services to-from Ireland rather than having two Irish carriers actively pursuing traffic on identical routes.
Under this policy, in so far as it applies to services between Ireland and the UK, Aer Lingus are the sole Irish carrier operating from Irish airports to Heathrow and Gatwick and from Dublin to Manchester, while Ryanair is the sole Irish carrier operating from Irish airports to Luton and Stansted and from Dublin to Liver-pool. Ryanair is also the sole Irish carrier providing direct services between Irish regional airports and airports in Britain, with Aer Lingus serving these routes via Dublin.
While both Irish airlines are encountering difficulties at the present time, arising from the Gulf crisis and the current recession in the British and United States markets, they are taking the necessary corrective measures now to deal with the situation in order to be in a position to take advantage of any upswing in international travel when the current adverse trends have passed.
I am satisfied that current policy is working effectively and that it should be maintained for the planned period.
Would the Minister agree that the current policy is disastrous as British Airways have pulled out of the Dublin-London route and three carriers have pulled out of the United Kingdom-Ireland route in recent years? Will the Minister confirm that it is now likely that Aer Lingus will lose £16 million on the Dublin-London route this year and that the combined losses of Ryanair have been in the order of £23 million and, in view of that chaotic situation, would he consider decontrolling fare prices where there is ample competition? Will he consider some reorganisation of routes because the competition on routes in some cases is known to be predatory and in some cases is unsustainable in the long term in view of the losses I have spoken about?
I am not prepared to consider decontrolling prices for airlines. I think that would be a very dangerous policy and I am surprised that the Deputy is pursuing that policy. Tourism is essential to Ireland's economic growth and, in a situation where we had fewer airlines, not more, and less competition, not of my choice but through market forces, it would be a very dangerous policy to allow the airlines to get together and effectively set their own prices. I am surprised at the direction the Deputy is taking in this area, which is worth studying and I will certainly take a look at it. British Airways pulled out of the routes for reasons best known to themselves.
They were losing their religion.
There were six airlines on the Dublin-London route two years ago and it is down to three now. This Government or this country did not invent the recession in the United Kingdom or in the United States or, indeed, the Gulf War. Ninety-nine per cent of airlines in the world today are in severe difficulties and I have no mechanism — although I would be interested in the Deputy's proposals — to protect Irish airlines against international market forces nor could I attempt to do so.
With regard to the Deputy's other point on reorganising the competition, let me say that I did that last year when I pulled the two airlines away from savage jungle-type, head-to-head competition and instead gave them complementary routes on which they could have some form of co-operation, which I hope will continue.
Perhaps a final question, Deputy Yates.
Would the Minister not agree that the present level of losses being incurred by all the operators on the Irish Sea are simply unsustainable and that the inevitable conclusion of that attrition is that Ryanair could go out of business and Aer Lingus would be left with a monopoly at the end of the day? Would the Minister not agree that his policy must be to preserve two Irish carriers and that the best way to do that would be to decontrol fares and to look at the existing areas where there is predatory combined flights flying out within a half-an-hour of each other from regional airports and that both airlines must be brought together to see how there can be an orderly development of routes across the Irish Sea——
Brevity, please, Deputy.
——so that both airlines may co-exist?
I disagree fundamentally with the Deputy. Decontrolling air fares is not the way to get more competition in the current marketplace. The proof of that, if the Deputy requires proof, is that I have not refused either airline any increase in prices which they have sought. We have given fare increases of up to 20 per cent in the past year and in one case I am told that a fare increase which I sanctioned was not used because they decided they would lose traffic if they had applied it. I think that is the wrong direction in which to go. The correct direction is not to raise fares.
To allow free market forces.
But that would mean raising fares in a situation where there are only one of two airlines.
Will the Minister subsidise the losses?
The direction is to cut costs.
I hope the Minister will take a bow if Ryanair go out of business.
There are two remaining questions and the time for Priority Questions is fast running out.
The direction is to cut costs. I have had both airlines in to discuss that subject, and both Aer Lingus and Ryanair are in the centre of very substantial cost-cutting measures and they have to get a work support for that.
I now call Question No. 8, Deputy Byrne's question and I want, if at all possible, to dispose of Question No. 9 also.
