Vol. 260 No. 1
asked the Minister for Transport and Power if he will comment on the recent increase in the cost of Aer Lingus flights from Dublin to London and return; if this increase was authorised by the National Prices Commission; and if he is satisfied that this increase was justified and warranted.
49.
asked the Minister for Transport and Power if he is satisfied that the proposed 10 per cent increase in the flight cost between Dublin and London is in keeping with the intention of the Government to promote low-cost holidays in Ireland; and if he will give a comparison between the cost of a two week all-inclusive holiday in Spain with that in Ireland.
50.
asked the Minister for Transport and Power if the proposed 10 per cent increase in the Dublin-London flight cost will militate against the tourist industry during the coming summer; and if he will give the projected number of visitors that are expected to use this route for the period 1st May to 30th September.
51.
asked the Minister for Transport and Power why he sanctioned the recent increase in cross-Channel air fares.
With your permission, a Cheann Comhairle, I propose to take Questions Nos. 48, 49, 50 and 51 together.
As I have said in reply to previous questions, international air fares are agreed by the airline at meetings of the International Air Transport Association. The level of these fares is dictated by commercial considerations related to the economics of operation. Low fares which did not cover costs would result in losses which would have to be paid by somebody. The Government have no intention of calling on the taxpayer to subsidise air travel.
By virtue of the powers vested in me by section 10 of the Air Navigation and Transport Act, 1965, I have approved the recent increases in air fares, viz. 7½ per cent on the London/ Dublin route and 10 per cent on other cross-Channel routes. The air fare increases which have been allowed do not include any increase in respect of the air fare portion of an inclusive tour. The National Prices Commission decided that the case was not appropriate for reference to the commission.
Air fares have not increased disproportionately with general increases in salaries and wages and, consequently, I do not anticipate any undue cut-back in the growth of air traffic as a result of the increase in fares. On the contrary, and apart from the exclusion of inclusive tour fares from the general increases, new tourist and other promotional fares which have been introduced by Aer Lingus, will it is expected stimulate the traffic growth. These include a special youth fare, the fly-drive facility which combines an air fare with car hire; and "gateway" holidays which include air transport, connecting transport to and from the hotel and accommodation at the hotel for a price equal to the lowest air fare in the off peak season and slightly in excess of it in the peak season.
Bord Fáilte are giving priority to selling these special fares to the British market and anticipate a traffic increase. I am not in a position to give a projection of the number of visitors expected to use the Dublin-London route between 1st May and 30th September, 1972.
As regards the comparison between the cost of a holiday in Spain with that in Ireland, various elements, as for example, cost of living differences, make comparison difficult. However, the Irish "gateway" holiday at about £40 per person, from London, compares favourably with inclusive tours to Spain.
Does the Minister agree that the announcement of the recent increase, coming as it did just at a time when our position in the British tourist market was showing slight signs of recovery, came at the worst possible time? Did the Minister have discussions with Aer Lingus or did he take any steps to have this increase deferred until the end of this year or did he just give sanction without going into the implications of it? Is the Minister aware that the increase came as an absolute shock to everybody involved in tourism promotion in Britain?
I assure the House and the Deputy that scheduled air fares within Europe were negotiated within the IATA umbrella as far back as last December and this was merely the implementation of a decision taken then and to which I referred in my Estimate speech in the House.
Is the Minister aware that at the same time as we were announcing increases in our cross-Channel air fares announcements were being made in London of decreases in fares to Paris and other continental destinations from London and also to Australia and New Zealand? How is it that you can have lower fares to the Continent and continually increasing fares from Ireland?
That is too global a statement. I can give the Deputy a full schedule of the fare increases and decreases that were agreed at the December conference. The important thing is that Aer Lingus are taking the initiative in the area they themselves can control, that is, in the nonscheduled area of charter flights. In that area they have introduced, as I have said in the reply, a number of package holidays involving free car hire to destination in Ireland, free petrol within certain limits and, in another package, free hotel accommodation for bed and breakfast for two days after landing along with car hire to destination. They are taking every initiative in the area open to them, the non-scheduled charter area, but the schedule flights are entirely a matter for international agreement between scheduled airlines.
Is the Minister saying that he could not resist this increase because of an international agreement?
Over which he has a right of veto.
Again, you could bring disruption into the air situation between ourselves and BEA. Between BEA and Aer Lingus there is a pooling arrangement as regards flights between Ireland and Britain and this arrangement would be totally disrupted if we took unilateral action. We want to see Aer Lingus in a breakeven financial situation: we do not want to see them going into a loss situation in which the Irish taxpayer would have to subsidise Aer Lingus in order to maintain reduced schedule rates.
Would the Minister not agree that the planes on this route are always full and that it is quite ridiculous to say they could not breakeven without increasing the fares by £2?
It is a very profitable arrangement.
For business people going to London, it is a ridiculous fare, £30 to go to London and back.
The Deputy has given a very good commercial reason why the schedule rate should not be reduced.
Would the Minister not agree that it was most unwise for him to put forward the thesis that on routes between Ireland and Britain we must have whatever fare BEA decide, that they must make the decision and we must go along with them?
I did not suggest that.
This is clearly what the Minister said. Would he not further agree that the suggestion that air fares must rise by the same proportion as costs is based on an economic fallacy? Would he not agree that the principles which apply to the CIE reductions could also be applied in this area where elasticity of demand in relation to price can be quite high?
The Deputy must appreciate that, as I said in my first supplementary reply, internal arrangements are entirely different from external arrangements and CIE price-cutting arrangements were properly effected by reason of decisions taken within our own ambit of control. Aer Lingus have taken similar steps in the non-scheduled area, the charter area, where they are their own masters. The Deputy is well aware that in regard to rates in respect of scheduled flights it it a matter that is worked out by international agreement and co-operation with all the airlines.
Is the Minister not aware that that international agreement is one in respect of which Aer Lingus have the first right of veto and in respect of which he has the second right of veto if he had the courage to use that right on occasions like this when this increase is, in fact, endangering our tourist industry?
The Deputy is only using words of nonsense and nobody is better aware of that than himself.
