Joint Committee on Tourism, Culture, Arts, Sport and Media díospóireacht -
Wednesday, 22 Sep 2021

Challenges Facing the Coach Tourism Transport Sector as a result of Covid-19: Discussion

Chairman

I have some housekeeping to get through, but I am sure everyone will bear with me. We convened this meeting with representatives of the Coach Tourism and Transport Council of Ireland, CTTC, to discuss the challenges faced by its members as a result of the Covid-19 pandemic. I live beside the premises of a well-known company called Sillan Tours. I am sure the witnesses are familiar with it and the impact the pandemic has had on that business. I am delighted the witnesses are here because Mr. Brian Rowe, one of the managers or owners of Sillan Tours, has contacted me concerning the situation businesses are in due to the impact of Covid-19. I welcome everyone. Witnesses are attending remotely and they are more than welcome to do so. I welcome Mr. Feargal Barton, Mr. Mike Buckley and Mr. James McGinley, members of the executive council of the CTTC. The format of the meeting is that I will invite the witnesses to make their opening statements and questions will then follow from members of the committee.

As our witnesses may be aware, the committee may publish the opening statements on its website following today's meeting. Before I invite our witnesses to deliver their opening statements, which I ask them to curtail to three minutes, I wish to advise them of the following in respect of parliamentary privilege. Witnesses are reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. If an opening statement is potentially defamatory in respect of any identifiable person or entity, the witness giving it will be directed to discontinue his or her remarks. My colleagues are aware of the situation regarding parliamentary privilege and I do not need to remind them of it.

I turn now to our guests and I call Mr. Barton to make the opening statement on behalf of the CTTC.

Mr. Feargal Barton

On behalf of the members of the CTTC, I thank the Chair and members of the committee for inviting us to present today and for providing us with an opportunity to discuss the serious issues affecting coach tour operators. I am a member of the executive council of the CTTC and managing director of Bartons Transport in Kildare. I am joined by my colleagues on the executive council, Mr. James McGinley of John McGinley Coach Travel in Donegal and Mr. Mike Buckley of Kerry Coaches in Killarney.

The CTTC is the largest representative body for private bus and coach operators, with some key industry names among our membership. We are a proactive organisation, focused on engaging collaboratively with stakeholders in the transport area and on delivering results for our members spread across every constituency in Ireland.

Covid-19 has brought severe disruption to the sector and to the membership of the CTTC. International tourism has been brought to an especially abrupt halt, while domestic business for members disappeared during the successive lockdowns introduced from mid-March 2020. With the country entering a new Covid-19 phase, passenger demand remains greatly dissipated. This is exacerbated by the imposition of maximum capacity rates and low consumer confidence.

When the 2019 tourism season ended, little did coach tourism operators think that they would still be wondering about the viability of the industry in the summer of 2021. In March 2020, the industry ground to a complete halt with the onset of the pandemic. In 2019, a record 11.2 million overseas visitors came to Ireland and coach tour operators made a significant contribution to the overall success of our tourism product. Responsible for directly attracting 2 million international visitors every year, coach tour operators invest substantial sums of money in marketing Ireland’s tourism product abroad at no cost to the State or its agencies. The industry carries coach passengers to every corner of Ireland, giving employment not just to coach tour operators and drivers, but also to the staff of hotels, retail and hospitality outlets, visitor centres and other small enterprises. In 2018, coach tourism helped to contribute €400 million to the Irish economy and therefore our strategic value to Ireland cannot be underestimated.

The Government last provided funding to the coach tourism sector in the July stimulus plan of 2020. While this funding was hugely appreciated by the industry at the time, many operators had exhausted their resources by the time those moneys were allocated in March 2021. No further support has been forthcoming in 2021 and this has created a major viability problem for a sector that is responsible, as I said, for bringing two million international tourists to Ireland annually. For this reason, the CTTC is calling on the Government to urgently provide funding to the sector via a supplementary budget allocation in the upcoming finance Bill. This is a necessary step to safeguard an industry with tangible and strategic value to the State and it would also ensure that the quality of the coach fleet remains at a standard that markets Ireland’s tourism product positively. Funding should be made available to cover losses incurred in 2021 and it should replicate the €10 million provided under the business continuity scheme for coach tourism. The implementation of such a measure should mirror the previous scheme. Such an initiative would greatly help the industry and assist in keeping many operators in business as they await a partial return to normality in the 2022 tourism season.

The CTTC also recommends continued funding for 2022 under the business continuity fund for coach tourism to reflect the damage done to the sector. The peculiarities of our industry mean there is a long lead-in time for international bookings. With huge uncertainty engulfing us regarding the variants of Covid-19, the continued effectiveness of vaccines and a potential crisis in confidence affecting our consumer markets, it is essential that a support net is provided on a contingency basis in 2022. This will be crucial to enabling us to be ready to scale up operations when the country’s tourism revival begins in earnest.

I thank the committee again for the invitation. We are happy to hear observations from members and to take any questions they may have.

Chairman

I thank Mr. Barton. He gave a strong and detailed overview of the situation and of the CTTC's wishes in the context of the upcoming budget. I hand over to my colleagues now to allow them the opportunity to tease out these ideas a little more. I call Deputy Munster.

Deputy Imelda Munster

I thank the Chair and I welcome our guests. I see some stark figures from June in the submission we received from the CTTC. It is stated that 40% of operators are planning to sell their coach fleets this year, for example. Do the witnesses have updated figures for the losses those companies have experienced? I refer to aspects such as average debts and the scope of the financial hardship being experienced. It was mentioned that the CTTC would like to see additional funding of €10 million. Would that amount be sufficient now?

Mr. Mike Buckley

I will come in here. I thank the Deputy for the question. Regarding the €10 million, and to provide some historical perspective, we commissioned Mr. Jim Power, one of the leading economists in the country, to draw up a report for us after March 2020. The impact of the pandemic hit us like a tornado and we needed to quickly see where our losses were accruing. That economic report examined our fixed costs. Our difficulty was that no revenue was coming into any of the operators dealing with international tourism or private coach hire because all events were cancelled. We were facing a situation where no revenue was coming in, while we were still operating and had to insure our vehicles even as they depreciated greatly in value.

Mr. Power collected and collated a great deal of information from the sector and arrived at an estimate for our fixed costs of 17%. Although no revenue was coming in, our costs were still running at 17%. The final figure was arrived at by taking the overall figure for the revenue garnered by private coach tours and private hire operations in 2019, some €250 million, and then taking 17% of that amount as representing fixed costs. The total came to €42.5 million. We assumed at the time, in our innocence, that the pandemic was going to last six to nine months. Until March 2021, therefore, we predicted that we would have losses of approximately €32 million. That is the amount that we requested in funding from the Government then.

We were allocated €10 million in the July stimulus of 2020 and we were very grateful for that funding. To put the situation into perspective, however, that amount would cover the repayment capacity for two or three months of a touring coach. These coaches in our depots and yards will not have moved for some 24 months by the time there is any smell of a recovery in the market. In summary then, we were very grateful for the €10 million in funding. It was a lifeline to support operators and get them into 2021. The difficulty that arose in the context of the new variants appearing and ongoing lockdowns is that the 2021 season has, effectively, seen business dissipate as well.

There was an opportunity towards the end of the year to generate international business, however, due to travel advisories in the US advising against coming to Ireland, a signal was sent out that the country was closed. The amount of international business in September-October is minimal and only scratches the surface. We were grateful for the €10 million funding, but the original request was based on our fixed costs, which were €42.5 million per annum.

Deputy Imelda Munster

Mr. Buckley stated that for many businesses the Government support only covered overheads for two or three months. How did they manage aside from Government supports? Did they take out loans or sell asserts? Were there job losses? Does Mr. Buckley know the percentage of businesses that closed?

Mr. Mike Buckley

There were job losses, obviously. To put it into perspective, we normally employ 112 to 114 people at this time of the year. At present, we have a skeleton staff working. There certainly were job losses across the country. We were grateful for the Government support. The fact it was introduced helped in the negotiating with banks. Most of our business are now in forbearance. Nevertheless, they are accruing interest charges, which means when the loans have to be paid back and the repayments kick in, there will be additional costs. Much of the money procured under the stimulus in July 2020 will go to defray some of those interest charges. It really is a bandage on a major bleed or haemorrhage. It has helped us because the majority of people in this sector have significant debts. In the coach sector, the capital outlay on coaches is quite high. For example, in 2019 more than €80 million was spent by our members on new vehicles. One can imagine the payment capacity that is required to maintain a fleet of that value.

Deputy Imelda Munster

Mr. Buckley referred to the job losses. Obviously, there were losses but does he have a figure or a percentage of the number of job losses? Can he give us a sense of what 2022 will look like for his industry?

Mr. Mike Buckley

There is still a significant amount of uncertainty about 2022. The international marketplace is starting to reopen slowly. The big issue in Ireland, as the Deputy knows, is the lack of connectivity. We have 80% less connectively into the county from all the major tourism markets worldwide at present. That in itself is a worrying factor. Even when consumer sentiment is high, if people cannot travel here, they will go to a different destination in the world. There is a huge sense of uncertainty. Certain outdoor niche markets, such as hiking, walking and golfing, may bounce back quicker. Due to the nature of the virus, people who traditionally came to Ireland in large groups to travel together may become reticent. Many of the incoming tour operators are telling us that people are simply not buying from their brochure tours. As an anecdote, I know of one tour company operating a large coach that is travelling around Ireland at present with two American visitors in it. There is a driver and a guide on that coach. The tour company wanted to operate the tour in order to send out the message that Ireland was open for business. They are the harsh realities of where we are at present. There is still a large amount of uncertainty and we do not know what 2022 will bring.

Chairman

I thank Mr. Buckley for that reply. I will now move on, if that is okay. The next speaker is Senator Malcolm Byrne.

Senator Malcolm Byrne

I thank the witnesses for their presentation. Apart from the necessary financial supports requested by the CTTC, what actions are needed to be taken by State agencies, in particular, Tourism Ireland, and, to a certain extent, Fáilte Ireland, to promote your members' businesses and to get agencies to respond to the point raised by Mr. Buckley about engendering confidence in people to use coach travel again? What marketing and other initiatives are needed?

Many CTTC operators are contracted to work in the school transport area. Will the CTTC outline the perceived impact on coach travel in the school transport area as a result of Covid? Perhaps the following question is too broad. Given a review of the school transport system is ongoing at present - I do not know if an answer can be given within three minutes - how would the CTTC solve the school transport challenge?

Mr. Feargal Barton

I will take the question on marketing. We worked closely with Fáilte Ireland during this pandemic. We had meetings every two weeks and then every month. We worked closely with Fáilte Ireland as it put its guidelines back in place. We also discussed, as we come through this pandemic and move into the next phase of recovery for 2022 and 2023, training and the investment needed for the training of new entrants in the market, such as new drivers and staff. We have lost a number of drivers who have retired or left the industry for other industries. We have a good working relationship with Fáilte Ireland. During this period of time, Fáilte Ireland and many others involved in tourism will have understood the positive contribution coach tour operators make to regional economies. The sector is responsible for the transportation of visitors to retail and hospitality outlets and visitor attractions, the length and breadth of the country. They include restaurants, evening function venues, visitor locations, such as Trinity College Dublin and St. Patrick's Cathedral, Dublin, and various different places similar to that. They now know the importance of coach tourism. This has been a collaborative process over the last 12 months or so, whereby we have tried to get our message across about how important this industry is, with it being responsible for 2 million visitors.

On the other elements of private transport, every aspect of private coach operation has been affected by the shutdown. Operators who had previously operated school transport contracts have had the opportunity to retender for those. Some of them operated extra 50% capacity vehicles. In general, school transport not only encompasses going in and out of the school, it also encompasses travel to matches, swimming events and day trips to various locations. In addition, school tours in 2020 and 2021, for which thousands of coaches had previously travelled the length and breadth of Ireland for, were cancelled. It has been a massive blow to every aspect of the industry, especially to tourism.

Deputy Malcolm Byrne

I raise the question of the school transport challenge. We are considering the learnings from this period. How would Mr. Barton change the school transport system, having operated in this area? It is not specifically related to this debate but can he offer us any advice on that?

Mr. Feargal Barton

I am unable to offer advice in the short term on school transport. Bus Éireann operate the main school transport scheme. There are different aspects to school transport. There is the private element of school transport within which operators engage with schools and parents with regard to operating private services. They have faced a difficult challenge during this period as a result of the 50% capacity rule and some operating on a larger capacity. In general, the return of school transport has been positive for school operators. Deputy Munster raised the issue of the loss of jobs. While we have likely seen 100% job losses in tourism, some of our drivers were diverted into different areas, such as school transport, to try to keep them within our companies while we get through this period, in order to bring them back to tourism next year.

Deputy Peter Fitzpatrick

I welcome Mr. Barton, Mr. McGinley and Mr. Buckley. They come from three very good counties - Kildare, Kerry and Donegal. They are three very strong counties. I know John Halpenny who comes from the Dundalk-Blackrock area and does a fantastic job in the locality. I thank him for the work he does in the area.

Mr. Barton stated in his presentation that the last time the Government provided funding was in the July stimulus package in 2020. It frightened me when he said that many of the operators have exhausted their funds.

That means the Government has given no funding so far in 2021. At the moment, my main concern relates to operators I know from County Louth and the surrounding areas that have invested massive amounts of money in upgrading their fleets. I am talking about hundreds of thousands of euro. What happens if the Government does not give funding for 2021? As far as I can see, the operators need the money.

Another issue of concern is the big shortage of drivers in this country. I believe the UK and other countries are offering massive amounts of money to drivers to go and work there. Can the witnesses hang on to their staff that they let go in the past couple of years? Have any of them moved on? It is frightening to hear that up to 40% of the fleets could be sold off. Mr. Barton says in his statement that the sector contributed €400 million to the economy in 2018. That should not be overlooked. The witnesses are doing a fantastic job. Could they please answer those questions?

Mr. Feargal Barton

I will take one or two of those questions and Mr. Buckley might come in then. Mr. James McGinley is in the waiting room. He is trying to get in, but for some reason he is not able to get in. Perhaps someone could help him.

Regarding funding for 2020, it was drawn down in March 2021. It was done on a very specific basis with regard to the coaches we had in our fleet. It was very specific on the year of the coaches because it was very much focused on tourism. It was not for private hire or any other element of the coach transport sector. Mr. Buckley gave an example regarding the funding for that. We have been out of business since March 2020, but many of our operators have not operated vehicles in the tourism sector since November 2019. The winter period is normally our quiet period and our busier period is from March to October. During the pandemic, the revenue that would have been generated in the 2020 period was just not there, so a lot of operators went to their banks and put a stay on their payments. When we received the funding, the operators went to the banks to say they received it and they were able to pay perhaps a lump sum off against a certain amount of payments. As Mr. Buckley mentioned, the grant was per vehicle and probably covered about three months of repayments on one brand new coach, which we were very grateful for, but members can see already there is a huge gap in trying to fund those vehicles because they are parked up and not operating.

A question was asked about what will happen as we move into 2021. No doubt there will be casualties because some of the operators are nearly in a holding process and when they get back into operation again, they will have to start paying for their vehicles. Part of the funding we are looking for will help those operators get to next year. It is as if we are halfway across the ocean. The Government has helped us to get to this point, but we need to get the rest of the way across, to get us to the next period when we can start to operate again on our own two feet. That is the situation on the funding side.

Regarding the staffing side, we mentioned that there have been casualties in the business. We lost a lot of good quality tour drivers. Some left the business because of their age profile or because they decided it was time to step away after a long career. Others have gone into other businesses and enterprises and they might feel that is more appropriate for them moving forward. There is no question but there will be a staff shortage when we come back into operation. That is already being seen in some areas, such as the school transport division, where there is a shortage of drivers. Staffing will be an element, but part of the process will be to work with Fáilte Ireland to try to put training courses in place in order that we can upskill new staff. If I have not addressed something, Mr. Buckley might address those issues as well.

Mr. Mike Buckley

No, I think Mr. Barton has answered the Deputy's question. The seasonality of the coach tourism business is very important in the overall scheme of things. When the pandemic hit in March 2020, everybody had had a good, decent season in 2019. To put figures on it, 11 million visitors came to Ireland in 2019 and 2 million of those were transported by coach tours around the country. It would be remiss of me not to say that we get into every region in the country. Coach tours take people to Gweedore in Donegal, the Dingle Peninsula here in Kerry and the wilds of Mayo and Wexford, so it is important to highlight the add-on that coach tourism gives to local economies, in particular in the more peripheral areas of the country, in shops, cafés, small hotels and the attractions that are set up along the Wild Atlantic Way and on the south-eastern coastline. These areas are hugely dependent on coach tourism going there. What happened in March 2020 was that people had a decent season, their funds were exhausted and they were looking forward to a decent year in 2020 and, all of a sudden, no revenue was forthcoming. That was the reason the panic buttons were pressed in March 2020 and why we commissioned Jim Power to do an economic report, which gives a very stark picture of where we are at.

I concur with what Mr. Barton says about next year. There is still a huge amount of uncertainty about 2022. Please God, when we do come back in March and April we will see coach tours operating around the country again. However, we will have huge difficulties with staff shortages. We also need support to get us to March 2022 because we do not have a season this year that would allow us to put a pot of money away to meet payments and continue existing in the sector.

Chairman

Is Deputy Fitzpatrick happy with the responses?

Deputy Peter Fitzpatrick

Could I ask one more question?

Chairman

Yes.

Deputy Peter Fitzpatrick

I know the sector got no money in 2021. What happens if it gets no money in 2022? Mr. Buckley skimmed over it. What are the sector's requirements for 2022 to get it back up and running?

Mr. Mike Buckley

What we are looking for is a supplementary budget in October to look after what funds we should have got in 2021. We are also looking for the coach tourism business continuity scheme to be extended on a contingency basis for 2022, in the event that coach tourism does not recover fully in 2022. As such, we are looking for retrospective funding for 2021, because we did not realise at the time that it was the only opportunity we would have to draw down funding. As there was no stimulus this year as there was in 2020, we need supplementary funding for 2021 to be ingrained in the October budget.

Deputy Peter Fitzpatrick

That is great. I thank Mr. Buckley very much.

Chairman

I thank the witnesses. I am sorry Mr. McGinley did not get in. The witnesses gave a very comprehensive account of the impact of Covid-19 on their business.

Deputy Danny Healy-Rae was here. He was waiting patiently to ask some questions. He may have spoken with Mr. Buckley during the week. Unfortunately, he has had to go to the Dáil Chamber as he is speaking in a debate, but he was here to support the endeavours of the witnesses today to make their case.

I thank the witnesses for attending. I am aware that it has been a hugely difficult time for various reasons and the pandemic has had an adverse effect on the sector. I know that from speaking with Mr. Brian Rowan of Sillan Tours. He has numerous coaches travelling from Shercock to Dublin. He has been impacted by Covid-19, remote working, and students not being in college. Even with restrictions being lifted, it is very hard to see how business would come back to its previous level. I deeply sympathise with the predicament and situation of the witnesses. They have delivered their message clearly to the Government today. I thank them for doing that. That brings our meeting today to a conclusion. I thank the members who have contributed.

The joint committee adjourned at 1.39 p.m. until 12.30 p.m. on Wednesday, 29 September 2021.