I move amendment No. 1:
In page 4, line 38, after "£175,000,000." to insert "The Minister shall satisfy himself that all competition rules both domestic and of the European Union are observed by the Holding Company and all its subsidiaries.".
This topic was referred to on Committee Stage and I thought it was appropriate to put down this amendment on Report Stage. It is evident to anybody looking at the matter even half objectively that there has not been observance of the competition rules, either domestic or of the European Union, in respect of some activities of what is called in this Bill the holding company, or Aer Lingus, as it has been known up to now. I gave some examples in this respect on Committee Stage.
I find it very difficult to accept that there is such an extraordinary disparity in air fares between Ireland and Britain. It is possible to get a £59 return fare with any of the companies flying the Dublin-London routes. That fare was originally set by a privately-owned airline and it was immediately followed by Aer Lingus. A significant proportion of the people who travel on that route are happily able to avail of that fare, which has been of enormous benefit to consumers. As I demonstrated yesterday, it has led to a considerable increase in the number of passengers using the route and a substantial increase in the number of people visiting this country who would not otherwise do so. To that extent it is very welcome.
If we contrast the Dublin-London fare with the Dublin-Bristol fare — I need hardly point out that Bristol is more than 100 miles nearer to Dublin than is London — incredibly the lowest fare that can be obtained on the Dublin-Bristol route is £175 and in some cases it is substantially greater. Similarly, the fare on the Dublin-Glasgow route is many times that on the Dublin-London route, even though the distance from Dublin to Glasgow is approximately the same as that from Dublin to London. Because there is competition on the Dublin-Liverpool route the fare in that case is low. However, on other routes such as Bristol and Glasgow where there is no competition, the fares are very high. In fact, at one stage when Ryanair was flying to Glasgow but not to Edinburgh, the Aer Lingus fare to Edinburgh was on average more than double the fare to Glasgow even though the two cities are only a very short distance apart. It was perfectly evident why this was so — Aer Lingus responds to competition on the routes between Britain and Ireland. Even though its cost structure is very much higher than that of either of its present main competitors and it must inevitably lose money, it persists in doing this.
On Committee Stage the Minister gave the impression that that sort of non-commercial activity would not happen in the future. I asked him — I think quite relevantly — why if he disapproves of this activity for the future, does he approve of it at present? If this kind of activity will be wrong in the future it must be wrong now. The Bill will give the Minister greater controls in this respect. He told us today that semi-State companies would do his bidding and that was it. I again invite the Minister to consider whether something which hopefully he will forbid in the future should be allowed to happen now.
Of course, the purpose of the very low fares charged by Aer Lingus, which has a very high cost structure and which will inevitably suffer losses, is to get rid of its competitors on these routes. Aer Lingus has succeeded in getting rid of some of its competitors in the past and others left by agreement when the cartel broke down. However, it is not acceptable to the European Union or Commission that companies would operate in that way. In particular, it is not acceptable for a semi-State company to deliberately incur losses in order to try to force a private unsubsidised competitor out of the marketplace. This practice is illegal. In some countries this kind of anti-competitive activity is not just against the civil law but is a criminal offence and people can end up in jail for engaging in it. That is not the case in this country. But if some countries feel so strongly about it that they take steps to deal with it under their criminal law, then obviously there must be something very seriously wrong with it. Therefore, it seems to be entirely wrong that, after an investment of £175 million of taxpayers money, there should be any question of Aer Lingus being allowed to continue some of the dubious commercial practices in which it has engaged in the past. I have proposed the inclusion of this amendment in the Bill to make it abundantly clear that those kind of practices cannot be allowed to happen in the future.
I have referred to the Irish-British routes, and the same principle applies to flights to and from provincial airports within Ireland. The House will recall that for a number of years Aer Lingus was not prepared to provide flights from certain provincial airports, but once Ryanair started to provide flights from Knock and a number of other provincial airports suddenly Aer Lingus, which had said it was not economic to provide such flights, started to provide flights from Knock airport in direct competition with Ryanair. When Ryanair reduced its fares, which it felt it could do, Aer Lingus also reduced its fares. While Ryanair provided direct flights from provincial airports to airports in Britain, Aer Lingus, through Aer Lingus Commuter, provided flights for £10 from provincial airports to Dublin, provided the passenger was taking an Aer Lingus flight to Britain after that. The economic cost of a flight from any provincial airport in Ireland to Dublin is clearly very much more than £10 and obviously Aer Lingus's competitor could not survive on that basis — Aer Lingus could survive because the taxpayer was picking up the tab. As a result Aer Lingus's competitor had to pull out of that market. Of course, once it pulled out the Aer Lingus fares shot up.
It is worth contrasting the £10 fare charged on this add-on basis by Aer Lingus from places like Galway and Knock with its return fare of £55 from Dublin to Shannon, a route on which it says it does not make much money. Shannon is approximately the same distance from Dublin as the other provincial airports — if anything, Shannon may be marginally further from Dublin. If Aer Lingus cannot make any significant money on a £55 fare how can it claim it is doing anything other than deliberately losing large sums of money on a £10 fare for the same distance?
These practices are well known, but they have been condoned and tolerated for a long time. Like many other people who want to see a situation in air services other than one of total monopoly, I am anxious that those kind of practices should not be allowed to continue. The taxpayer should not in the future have to come to the aid of an airline which deliberately runs up losses because it is paranoid about trying to get rid of its competitors.
It is sad that this is the position. I made a similar argument in 1984-85 when we had experience of another Irish private airline, Avair, being put out of business. Happily, this airline has been very successful since outside Ireland, where, unfortunately, it was unable to survive. At that time I was very anxious to ensure that if another private Irish airline appeared on the scene it would not go the way of Avair. Ryanair has managed to survive through very difficult times because somebody associated with the main shareholders was able to carry the losses. However, I do not think that man will be available to do that should losses be incurred again in the future. Therefore, it is vital that that airline does not incur substantial losses again, which or course it is not anxious to do.
The examples I have given — I could give many other examples — make it clear that it is vital for the Minister to satisfy himself that competition rules are observed. The Minister may well reply that competition rules are part of the law, either of the land or of the European Union, and therefore we do not need to include such a rule in an Act to make it law again. The purpose of including such a rule in legislation is to draw attention to the fact that it exists and, in particular, to put an obligation on the Minister to ensure that the laws are observed. Those laws are not dreamed up just for the sake of regulation, they are for a good public policy purpose and for the benefit of the consumer. Where any predatory company, whether an airline or other business, succeeds by using its strength and its State subsidy to put competitors out of business, the inevitable outcome is that as soon as the competitors disappear, fares rocket upwards. That has happened several times; it happened every time a competitor went out of business on a particular route and the consumer was then held up to ransom. That is unacceptable and it should not have been tolerated. Over the past number of years in particular I expressed strong objection to it on a number of occasions. I have been heavily criticised by Aer Lingus for doing so and I am held up by the senior management and its staff as someone who was trying to harm the company instead of doing it good. We are told that anything Aer Lingus does, is, by definition, right and that virtually it can do no wrong.
I hope we do not return to the bad old days prior to 1986 when aviation policy in this country was largely dominated by Aer Lingus. I hope we have entered a better era than that of the 80s and I hope, by the acceptance of this amendment, the Minister will show that he is determined to ensure that fair play, both for competitors and, most importantly, for consumers, is maintained here and that the status of the State and access to taxpayers money of any one company will not be allowed to act to the detriment of the consumer.
