Mr. Kevin Toland:

I thank the special committee for inviting me to appear on behalf of the Dublin Airport Authority, DAA. I have circulated a brief presentation, the key points of which I will synopsise for four or five minutes before answering questions Senators may have.

Brexit is a key issue for Ireland because we have a very open economy and air connectivity is critical to its functioning. Not only is the United Kingdom withdrawing to some extent from the world stage and the European Union but the United States is also pulling back and taking a different role. For this reason, it is all the more important that we remain connected and active and have air connectivity.

Aviation matters to the economy and country, with 91% of access to the island by air. It is critical for Irish businesses operating internationally and trading outwards and in supporting foreign direct investment and tourism, one of our key industries which employs one in nine workers. The DAA, the company of which I am the chief executive, has been driving growth in the level of air access. We have conducted an economic impact study which shows that Dublin Airport accounts for 117,000 jobs across the economy, with Cork Airport accounting for approximately 11,000 jobs. Approximately 3.5% of gross domestic product is directly associated with air connectivity.

Like all industries, aviation is very much a scale business. People ask me what is Dublin Airport's competition. Our competitors are airports such as those in Brussels and Manchester because we compete with them for aeroplanes and routes. Our competition in the case of Cork Airport is airports such as those in Bristol and Lyons, with which we also compete for aeroplanes.

Ireland has been left very exposed by Brexit. From an air access perspective, approximately 11.5% of air traffic from the European Union is into the United Kingdom, while approximately 53% of UK air traffic is to EU countries. Ireland is by far the most exposed of EU member states, with approximately 39% of our air traffic to and from the United Kingdom. To take the cases of France and Germany, two of the key negotiators of an overall agreement, just 6% and 7%, respectively, of air traffic from these countries is to the United Kingdom. Air access is fundamentally much more important for Ireland which is far more exposed than other EU member states as a result of Brexit.

I will briefly address a couple of key impacts before taking questions from Senators. The common travel area is not only about the Border because Ireland and the United Kingdom also share visa programmes for 18 countries. This is very important for Irish business and the economy in terms of trade and tourism. The chief executive of Dublin Port pointed out that if the common travel area were to fall away as a result of a hard Brexit, the traffic jam from Dublin Port would nearly reach Senator Gerald Nash's home town of Drogheda. While that could be fine in some ways, we would have the same disruption at Dublin Airport and it would be very costly and disruptive to trade. Ultimately, it would act as a disincentive to trade and travel.

Tourism is still one of our critical industries. Approximately 42% of tourists to Ireland arrive from the United Kingdom. This is an iceberg. Dublin Airport passenger numbers are growing strongly this year, with growth of 7% recorded already this year. However, this figure masks the fact that tourist numbers from the United Kingdom are in freefall. Figures published by the Central Statistics Office last week showed that tourist numbers from the United Kingdom had fallen by 10.7% in the first quarter of 2017 and by 6.5% on the figures for the previous month.

The numbers are falling like stones and should not be masked by good performance elsewhere.

While it is an important market for bringing tourists in, often we do not realise that our most important competitor for tourists is the UK. Once people have gone to Paris, Rome, Madrid and London, they tend to look at Wales, Scotland, Devon, Cornwall and the Lake District. These are the areas we are competing with. We are now competing with an economy where sterling is weaker. In that way, those in tourism there are more competitive and we are more expensive in terms of brining in tourists and competing with them. We saw this impact immediately after the vote last June when sterling depreciated. We saw it in the shops in particular. We run a large duty free business. We saw it in our shops in Cyprus and Dublin, where a large number of UK travellers shop.

Another key item is the open skies deal. Many people do not realise what freedom of travel in the European Union means. What it really means is that any EU airline can go from any point to another point with no restraints whatsoever. Since the open skies deal was introduced in the mid 1990s the number of routes has increased fivefold. Committee members will see from our submission that the competition where more than two airlines are competing on a country-to-country route has gone up tenfold. Ireland is a prime example. We see the development of air travel in our country through that lens.

The critical point for the DAA is that we need to deepen our connectivity, especially our long-haul connectivity. We have gone from four routes in 1996 to a total of 24 cities and 34 services on long-haul this summer. We need to defend our share and defend our business in the UK. In particular, we are bringing on our new northern runway in Dublin. We need to bring that on as quickly as possible such that we are not in a position whereby we are unable to keep growing. We need to be able to grow and ensure usable conditions on the runways. This will help to ensure that our economy is safe and secure from the threats that come.

There are positive and negative impacts on everything and it does not end up being all negative. However, we believe Brexit is negative on the whole. A change to the common travel area would be negative, unless the arrangement is preserved. The tourism impact and the open skies impact are crucial. There is an interlocking system of regulation in security and safety as well as in air travel throughout Europe. It has an underlying impact on both economies. Whether we like it, we are dependent on the UK economy for much of our trade and services.

On the other side there are positive impacts. The reintroduction of duty free to the UK could be positive. We believe there will be opportunities for people relocating from the UK to Ireland since it will be the only English-speaking common law part of the European Union. We believe there will be opportunities for transfer business. However, in a net sense we believe it is negative.

Key actions in tourism are vital. We need to act now and spend more money. We need to defend our UK market. We also need to defend against the UK, which is far more active and spends more money regionally. The UK is increasing the number of flights to long haul destinations and has taken a decision after 40 years on Heathrow Airport. We need to ensure the visa regime stays flexible. We need to underpin our connectivity by bringing on more capacity as fast as possible such that in no way will we be held back from the economy growing and developing. We need to do whatever it takes to protect the common travel area and the Border. We need to push hard in order that, whatever else arises, the open skies arrangement in place is kept in future. We need to continue our push within Europe for continued liberalisation. We will miss the UK being at that table. The UK is one of the key advocates for open skies and an open market. As a small peripheral economy, we are absolutely exposed to the market and therefore we want a truly functional open marketplace.

I thank the committee for giving me the opportunity to make my presentation. I hope committee members have seen the document we sent in. It has a clear synopsis.