Mr. J.J. Kavanagh:

I thank the Chair and committee members for inviting the Coach Tourism and Transport Council of Ireland, CTTC, to appear before them today to address the crucial issue of the spiralling fuel costs currently crippling the industry. We are delighted with this opportunity, which will allow us to outline the detrimental impact of the crisis on the bus and coach industry and the integral role the sector can play in alleviating the cost of living crisis for many. I am joined by Mr. William Martin and Mr. Brendan Crowley, who are fellow executive council members of the CTTC. I acknowledge the desire of the CTTC to work in tandem with the Government in addressing this crisis. We are Ireland's largest representative body for the private bus and coach sector, with a comprehensive membership spanning mostly indigenous family-run operators, working across scheduled services, international tours, private hire and school transport.

The private bus and coach sector is an integral part of Ireland's national transport network, and collectively the sector is responsible for carrying more than 75 million passengers per year, helping to sustain 11,000 direct jobs and contributing in excess of €600 million to our national economy. Private operators are responsible for attracting one fifth of all tourists who visit Ireland annually. This has an enormously positive impact on regional retailers, hospitality outlets, visitor attractions and other relevant businesses throughout the country.

The sector is also largely responsible for the provision of school transport, with more than 90% of the 41 million school journeys being carried out by private operators. On an annual basis, more than 120,000 children are transported to their place of education on 7,000 different bus routes to 3,000 separate schools. As such, commercial operators are an essential foundation stone of the Irish transport network, and the smooth carriage of thousands of passengers and school commuters remains dependent on the viability of the sector.

The recent invasion of Ukraine has resulted in soaring fuel costs that continue to rise at a level which, simply put, is unsustainable for the sector. Having spent the past two years grappling with the unprecedented reduction in passenger levels as a result of the Covid-19 pandemic, we are now in the midst of another crisis, which is pushing the sector to the brink of collapse. For the most part, commercial operators have been left with little choice but to absorb the financial repercussions of crippling fuel costs. While scheduled service operators with direct award contracts have the benefit of fuel variation clauses contained therein, which help to insulate operators to an extent, this status quoends in June. Correspondingly, the situation is somewhat bleak for coach tour operators and school transport providers. This is owing to the fact that many of these operators have signed up to contracts, either with Bus Éireann or private tourism companies, for previously agreed rates. In some cases these last for up to five years. They are now unviable, unworkable and, worse still, they threaten the livelihood of these businesses.

In particular, the lack of alignment in State contracts and Government procurement is troubling and we need to see legally enforceable fuel variation clauses introduced in school transport contract in order that operators have protection against extreme variations in fuel costs. They currently do not have this. Fuel variation clauses are a progressive means of protecting all parties to a contract and essentially, act as a safeguard against the risk and uncertainty associated with the sudden change in the price of essential materials needed to give effect to the contractual obligations. These clauses are designed to support sectors and industries that are susceptible to external events and beyond the control of the parties. They allow for prices to rise or fall as the relevant circumstances prevail, which gives a large degree of certainty and comfort to all.

Many of our members are at the forefront of school transport and a recent research survey bleakly highlighted the impact of external events on the sector. Two thirds of operators have seen fuel costs increase by up to 60% over the course of the past 12 months, 90% of operators need up to a 35% increase in contract rates to continue to operate their services and 95% of school transport providers are unable to guarantee service provision up until the end of the academic year in June.

Furthermore, the coach tourism sector in Ireland is facing a competitiveness issue as the country is at the higher price range for visitors and given recent events, it will be increasingly challenging to continue to position Ireland as an attractive tourist destination. This in turn risks jeopardising our once-thriving international and domestic tourism markets, responsible for independently attracting 2 million tourists, and threatens the viability of thousands of businesses and jobs across the country.

The fact of the matter is that every facet of public transport has been impacted by pre-existing contracted rates which if not resolved, will have a detrimental impact on congestion, our decarbonisation ambitions and strategic transport provision across the country. Commercial bus companies cannot continue to provide the same level of service and maintain current schedules while grappling with an average 50% to 60% increase in the price of fuel. Given the majority of our members operate routes outside of Dublin any adverse impacts on general service provision will have a disproportionate impact on the regions.

In order to alleviate the worst impacts on general route delivery and service provision, the Government needs to implement a number of crucial policies without delay. It should reduce VAT on fuel to 9%. This worked very well for the hospitality sector when it was in crisis and a similar policy must be adopted to safeguard the mass transportation sector during a time of extraordinary financial hardship. Just last week, the CTTC wrote to the Government recommending a temporary reduction in VAT, the details of which can be worked out in consultation with industry stakeholders. The Government should align all State transport contracts to ensure the inclusion of fuel variation clauses, which will insulate school transport operators against further diesel hikes, which are expected. The Government should introduce a special fund for embattled coach tourism operators that have pre-existing contractual arrangements in place with international tour companies in order that they can continue to attract millions of international visitors this year. The Government should encourage members of the public to take public transport as a means of offsetting the cost of living crisis. Buses serve as a feasible solution while offering crucial regional connectivity. This would alleviates city congestion and would help to reduce the country’s carbon emissions. In ordinary times, buses are a cost-effective transport option for commuters and collectively, our sector has a vital role to play in helping Ireland to realise its sustainability objectives. It is imperative we safeguard this.

One full coach takes 40 cars off the road. As a country, we should be deploying every available incentive and strategy, to encourage a modal shift away from private vehicles towards public transport and I acknowledge the crucial steps taken by the Government so far in this regard. However, asking operators to shoulder the financial burden of crippling fuel costs is the antithesis of this and as absorbing these price shocks will ultimately undermine efforts by operators to electrify their fleets, we also need to look at ways and means to facilitate this transition in a meaningful way by enabling commercial operators unfettered access to purchase EVs. Without essential support at this time, the industry will be in jeopardy, which will render the 2050 zero emissions target impossible.

At the outset, I was keen to emphasise the CTTC’s desire to engage proactively with the Government, in seeking to address this crisis. It is in that same spirit that I thank the committee for this opportunity to contribute. We look forward to answering any questions that members may have.