I am delighted to have the opportunity to address the Special Committee on the Covid-19 Response.
Let me cut to the chase. The Covid-19 pandemic has brought about the greatest crisis that the global aviation industry has ever experienced. This crisis is much more severe than those experienced at the time of 9/11 in 2001 and the global financial crisis in 2007 and 2008. To highlight this I will outline a few statistics from the International Air Transport Association, IATA. The losses in the global industry this year will be the biggest in aviation history, estimated at over $84 billion in 2020 and $16 billion in 2021. By comparison, airlines lost $31 billion with the global financial crisis and the oil price spike in 2008 and 2009. There is no comparison for the dimension of this crisis. IATA research indicates that fewer passengers are saying that they will travel again in the first months after the pandemic. In early April, 61% said that they would travel. By early June, that had fallen to 45%. Approximately two thirds of people surveyed are seeing less travel in their future, be it for vacations, visiting friends and relatives or business. Deloitte, in the context of consumer sentiment in Ireland, puts consumer confidence in air travel as low as 19% and industry commentators are predicting that capacity will not revert to 2019 levels until 2022 at the earliest.
There is not a clear understanding in Ireland about the scale of the crisis or, indeed, its significance for the economy and its prospects for future recovery. The task force for aviation recovery published its final report on 10 July and very succinctly captured the importance of the aviation sector in Ireland. It referenced some key numbers from Oxford Economics which are worth reiterating. The estimated GDP contribution of air transport to Ireland is €8.9 billion. A total of 140,000 jobs are supported by the aviation sector in Ireland. Some €8.7 billion is the estimated GDP contribution of foreign tourists and in the region of 8.8 million people visit Ireland every year by air.
The report of the task force highlights the critical importance of aviation to the economy and states that it was a strategic foundation for Ireland's open, small economy. International connectivity is a key driver of that economy and in recent years that connectivity to Europe, North America, the Middle East and Asia has significantly increased. The level of international connectivity that Ireland enjoyed prior to the crisis was looked upon with envy in many other countries and markets. That connectivity is not about serving local Irish demand to go on holiday overseas. This only represents part of it. The connectivity to which I refer connects Ireland with other markets and economies, allows business to be done internationally and allows foreign direct investment into Ireland, which is a critical driver of the economy. Connectivity is critical for regional development. Key businesses and services sectors such as technology, software, pharmaceutical, medical, finance, food and beverage depend on that connectivity, and small and medium enterprises across the country depend on the inbound tourists brought to the country by means of aviation.
There is a lack of understanding of Ireland's leadership position from a global aviation perspective. It is not just about the airlines and airports. The global leasing market for aircraft had its origins in Ireland and Ireland controls over 60% of that market. Ireland also punches above its weight in aircraft maintenance, repair and overhaul. The aviation sector is of systemic importance to the economy. It is, therefore, of strategic national importance that the sector be protected to survive this unprecedented crisis and be in a position to contribute to Ireland’s economic recovery.
I urge the committee to review the final report of the task force for aviation recovery. It contains a number of key recommendations on rebuilding regional and international connectivity. The report states that the Government should: provide a rebate directly to the airlines in respect of all Dublin Airport charges and navigation charges as paid by the airlines; a stimulus package should be put in place concurrently for each of Cork, Shannon, Ireland West, Kerry and Donegal airports; the current waiver for 80-20 slot use-it or lose-it should be extended to the winter of 2021 season; the Government should adopt the interim recommendations from the tourism task force; and we should ensure that the delivery of planned airport infrastructure programmes is carried out in full and on time.
The report also contains a number of key recommendations on saving jobs and supporting Irish business. It states that the Government should enable a liquidity initiative for the aviation sector to help companies that make a material contribution to the economy and that it should ensure that a sizeable amount of funding is drawn down for the Irish aviation sector from the Next Generation EU funding of €750 billion. Unfortunately, those recommendations have not yet been progressed or implemented.
The green list published on 21 July is more restrictive than is the case in any other European country. Ireland now stands alone in applying the policy. The rest of Europe has opened for travel. The criteria used is even more restrictive than that used for passengers from third countries entering the EU. Ireland has not acted upon the European Commission’s request to member states to lift border restrictions within the EU by 15 June. The green list published this week effectively means that Ireland is closed for business and that will have profoundly negative impacts on the Irish economy and on the aviation and tourism sectors jobs within them.
I started by stating that the Covid-19 pandemic has brought about the greatest crisis that the global aviation industry has ever experienced. The situation in the Irish sector is even worse than is being experienced by our international peers. We are in the unfortunate position of, first, having the most restrictive travel policies in Europe and, second, having so far done the least in Europe to support the aviation sector. These issues will need to be urgently addressed given the strategic importance of aviation to Ireland’s economic recovery. We are hopeful that the scale and depth of the crisis will soon be understood in Ireland and that the relevant actions required to address the crisis will be taken. Aer Lingus will continue to engage with the relevant stakeholders for this purpose.