Dáil Éireann debate -
Thursday, 2 Apr 1992

Vol. 418 No. 2

Ceisteanna — Questions. Oral Answers. - Airlines Fares.

Mervyn Taylor

Question:

6 Mr. Taylor asked the Minister for Tourism, Transport and Communications if her attention has been drawn to the fact that airlines operating from Ireland appear to be operating a cartel by reason of the fact that their fare structures and conditions of various types appear to be identical; if she will outline her views on such activity from the point of view of the Competition Act and as a matter of policy generally; whether she proposes to take any action in this regard; and if she will make a statement on the matter.

Mrs. Geoghegan-Quinn

All the international routes to/from Ireland on which Irish carriers compete with foreign carriers are intra-Community routes and services operated on such routes must conform with Community law. Under the provisions of EC Council Regulation No. 2342/90, member states are required to permit Community air carriers of other member states to match air fares already approved for scheduled air services on routes between Ireland and other EC member states.

Air fares are also subject to the competition rules of the EC Treaty. EC Council Regulation No. 3976/87, as amended, exempts from the application of the competition rules of the Treaty, consultations between airlines on fares and the conditions applying to such fares. Such consultations must not, however, exceed the lawful purpose of facilitating interlining, which is generally recognised as being of benefit both to the consumer and the industry. The conditions under which such fares consultations take place are set down in Commission Regulation 84/91 and officials from the Commission regularly attend such consultations. Participation by air carriers in such consultations is voluntary.

I am satisfied that fares filed with me by carriers serving Ireland conform to the provision of Community rules and are not inconsistent with the terms of the Competition Act.

My Department do not control fares on non-scheduled air services.

Mr. Taylor

Would the Minister not agree that, whatever may be the Community rules, the position on the ground facing the consumer is that a cartel operates, that identical rules and regulations apply in the case of all airlines, whether it be Aer Lingus, British Midlands, Ryanair or whoever? One must remain outside the country for a Saturday night and return for the £72 or £78, all of these fares are absolutely identical. They are operating a cartel and there is no competition between them. Is the Minister satisfied with that position or does she intend to do anything about it?

Mrs. Geoghegan-Quinn

I do not accept that there is a cartel in place between airlines operating to and from this country. It has to be recognised that it is a legitimate, competitive response by an airline to match a fare or other fares of another competitor. Perhaps to a greater extent now than ever before there is considerable competition, particularly on the Dublin/London route. I hope the Deputy would support interlining between airlines as something which affects the customer and is of tremendous benefit to travellers between both countries.

Mr. Taylor

I would have to say that I disagree with the Minister's view that there is no cartel. Is the Minister not aware that there are very complex rules and regulations, so complex they are comparable to the social welfare legislation or the income tax code, with a great variety of fares applicable on the same route? All the airlines that operate them do so under the exact same provisions? I agree with interlining, but that is a separate matter. One may be matching the fares of another, but clearly they are operating in concert, not only with identical fares but under absolutely identical regulations in all respects. Surely that is not something the Government can accept, because it is anti-consumer and costing the consumer considerably more than is appropriate, particularly on the Dublin/London route.

Mrs. Geoghegan-Quinn

I can only repeat what I said earlier, that I do not believe there is a cartel in operation. If the Deputy wishes to provide me with detailed information he seems to have, I shall be delighted to investigate it on his behalf.

Mr. Yates

Perhaps the Minister would agree with me that Deputy Taylor is talking rubbish in so far as all European airlines are losing a fortune, that within the current three-year period Aer Lingus are losing £100 million in transport.

In relation to the question of air fares and structures raised, the Minister will be aware that her predecessor received a submission in relation to Dublin/London fare structures to change the approval procedures on what is the most competitive route in the whole of the European Community? Is she prepared to allow quicker procedures in relation to fare changes and structures on the Dublin/London route as has been requested?

Mrs. Geoghegan-Quinn

That is a separate matter I will have to examine, but I do commit myself to coming back to Deputy Yates on that matter.

Mr. Byrne

The Minister will be aware that on the North Atlantic route, whether it be as a result of a cartel or not, there is no competition since only Delta and Aer Lingus fly on that route. Would the Minister agree with me that a Competition Act without competition is not worth anything? Furthermore, would she agree that she needs to open up the skies to Aer Lingus, allowing them to fly directly, in competition with Ryanair, into Luton and Stansted Airports? In addition, would she agree that to encourage competition Aer Lingus and other American airlines should be allowed to fly directly in and out of Dublin, thereby allowing greater competition which does not obtain? Would she agree that the reason there are artificial cartels operating is because of the restrictive legislative framework in which airlines fly between England and Ireland and over the North Atlantic?

Mrs. Geoghegan-Quinn

On the North Atlantic, there is a further question later on that matter when I might deal with the Deputy's supplementary.

On the Dublin/London route, in reply to an earlier question in relation to the Government's policy, or the two-airline policy the Government have been operating and which will be operational up to the end of 1992, I said I was in favour of that policy continuing until the end of 1992, that I was now in the process of reviewing that policy and hoped to be in a position to let both Aer Lingus and Ryanair know my decision in relation to that well in advance of their preparing their schedules for next year.