Oireachtas Joint and Select Committees
Wednesday, 19 May 2021
Joint Oireachtas Committee on Transport, Tourism and Sport
Issues Affecting the Aviation Sector: Discussion (Resumed)
Today we are continuing our module on challenges facing the aviation sector and the purpose of the meeting today is to discuss updates on international aviation and, more particularly, the challenges facing the entire aviation sector and air travel.
On behalf of the committee I welcome to today's meeting Mr. Willie Walsh, director general of the International Air Transport Association, IATA. All 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. Therefore, if their statements are potentially defamatory with regard to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction.
Witnesses attending remotely from outside the Leinster House campus should note that there are some limitations to parliamentary privilege and, as such, they may not benefit from the same level of immunity from legal proceedings as a witness who is physically present. Witnesses participating in this committee session from a jurisdiction outside the State should also be mindful of their domestic law and how it may apply to the evidence they give.
Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable. I remind members of the constitutional requirement whereby they must be physically present within the confines of the place where Parliament has chosen to sit, namely, Leinster House or the Convention Centre Dublin or both, to participate in public meetings. Unfortunately, I will not be able to permit a member to participate where he or she is not adhering to the constitutional requirement. Therefore, any member who attempts to participate from outside the precincts will be asked to leave the meeting. In this regard I am asking members partaking via Teams that prior to making a contribution in the meeting, they confirm they are on the grounds of the Leinster House campus or the Convention Centre Dublin. Anyone watching the meeting online should note that Oireachtas Members and witnesses are accessing this meeting remotely. Only I, as Chairman, and the necessary staff for the running of the meeting are physically present in the committee room. Due to these unprecedented circumstances and the large number of people attending the committee meeting remotely, I appeal to everyone to bear with us should any technical difficulties arise.
Mr. Walsh may now make an opening statement. I thank him for taking time from his busy schedule to be with us. Aviation is critical to Ireland, as he is probably well aware, being one of our own. We are very keen, as a committee, to consider how we can achieve the reopening of the aviation sector as quickly as possible in a safe way.
Mr. Willie Walsh:
In the interests of time I will not read the statement we submitted to the committee and will instead take it that members have taken the opportunity to read it. If I may, I will make a couple of remarks.
Without question this is the most challenging crisis the airline industry has ever faced, and although we have confronted some in the past, nothing has been of this scale. It is important to point out the crisis is ongoing and it would be wrong to say it is a direct result of the global pandemic. What we face today is a crisis that arises from restrictive travel arrangements. To be honest, in the case of Ireland I would describe it as a repressive travel policy that is preventing people from travelling. We can say that with confidence because in markets where restrictions do not apply, we have seen demand recover generally in line with where demand was in 2019, particularly the US domestic market, where travel restrictions do not apply. Traffic there is now back to the levels seen in 2019. In some cases it is beginning to exceed those levels.
We know travel restrictions were introduced for the right reason at the right time but if these restrictions are relaxed or removed, we will see a recovery in demand that will enable airlines to work their way out of this crisis. What we believe is necessary, particularly in the case of Ireland, is that the EU must align policies. We would like to see the EU traffic light system reintroduced and applied consistently across the Union. As a proud Irishman and citizen of Europe, I am disappointed with the way the EU has managed through this crisis, with many different regimes being adopted by governments, which is causing great confusion in the minds of customers and major problems for airline operations. We would also like to see that where people have been vaccinated, travel restrictions would be fully removed.
In addition, the quarantine arrangements put in place in Ireland are particularly repressive and they should be removed and replaced, if necessary, by a risk-based testing system. I was particularly interested in listening to the contribution of Professor Mark Ferguson, who has appeared before this committee, and to read comments from one of the co-authors of the Ferguson report, Professor Paddy Mallon, on testing. There is a case to be made for the use of best-in-class rapid antigen testing in lieu of expensive and difficult PCR requirements.
We also would like to encourage the Irish Government to urgently consider the opening of a travel corridor with the United States. This is of particular importance to the Irish economy and tourism industry in Ireland. There is good reason to be optimistic that this could be possible.
Last but not least, in anticipation of a recovery in passenger numbers, it is critical that our border agencies are ready for such an increase. Airports will not be able to function properly if people arriving in the country or having to depart have to present bits of paper to officials to prove they meet requirements. There must be a digital solution in order that we can continue to process people who have the right qualifications and authorisations to enter the country without creating massive queues at the border. On that note, I will pause and allow the committee to challenge me or ask any questions.
I thank Mr. Walsh for being so concise. We want to probe or drill down into what must be put in place to deal with the matters he raised, particularly as they relate to the common travel area with the UK and antigen testing. The reopening of the transatlantic routes to the US is also critical to us.
I welcome Mr. Walsh to this important meeting. The Oireachtas transport committee has had many deliberations trying to get international air travel back up and running and has produced a report on it. Mr. Walsh referred to Professor Ferguson's report on antigen testing, something for which this committee strongly advocates.
Will Mr. Walsh give us an overview on the current air travel restrictions imposed around Europe? How does Ireland measure up in terms of other jurisdictions? Travel to America is currently prohibited. America will not let us in. Obviously, one needs a co-ordinated approach to this and the digital green certificate offers that potential. Work needs to be done on this, however. I agree with the need to open an air corridor between Europe and the US in tandem with the creation of the digital green certificate. Will Mr. Walsh give us an overview of what is happening with regard to air travel restrictions across Europe?
Mr. Walsh is aware of the recent announcement by Aer Lingus, a company with which he is familiar, that it will close its cabin crew base in Shannon. Given his background and his standing in aviation, it is clear Aer Lingus is in a difficult financial position. It has received funding from the State with an Ireland Strategic Investment Fund, ISIF, loan of €150 million but I understand it is losing approximately €1 million a day. There is a need for a more substantial cash injection to be made to the airline to keep it afloat.
I am advocating that any cash injection deal from the Government to Aer Lingus should come with a proviso that the strategic routes which operate out of Shannon, namely, Heathrow, New York and Boston, are protected. When Aer Lingus was sold to International Airlines Group, IAG, there was a commitment, signed into the articles of association, that the Shannon-Heathrow slots would be protected for seven years. That will expire in September 2022. Would it be justified to seek a further extension, say a ten-year period, of the slots in any deal that would be done with Aer Lingus?
Mr. Willie Walsh:
I agree with the Deputy on the digital green certificate. That would be a step forward. At IATA, we have argued that there should be a common standard in order that airlines and governments can fully satisfy themselves that people travelling meet the criteria and where somebody has been vaccinated that they can provide evidence of it. Regardless of what we might think as to whether vaccination should be a requirement for travel, some countries will make it a condition of entry. We have already heard a number of countries say that it will likely be the case. Having a robust and verifiable system that can be checked and satisfied is important.
On EU restrictions, I have described the arrangements in Ireland to be repressive. I have heard people almost cheer the fact that Ireland has the most restrictive arrangements as if it is something good. I do not see it that way. This is particularly dangerous for a country like Ireland where the message being sent out is that we do not want people travelling to the country. For a country that has always been open, as well as dependent on emigration and foreign investment, such a message sent out around the world is particularly worrying.
Other EU countries do not have similar restrictions. I am living in Switzerland - I accept it is not an EU country - but I have travelled into Spain without any restriction. One must provide an antigen test before one can travel into Spain. Coming back into Switzerland, one needs to have a PCR test. To travel to the UK, where more restrictive arrangements are in place, a PCR test is required or an antigen test and one can self-isolate. There is not a common standard. Some countries require PCR testing to be taken within 24 hours of travel, others, 48 hours, and others, 72 hours. One would think that the EU should be able to align on a simple issue like that. If it is okay for some countries to accept a test taken within 72 hours, why is it not acceptable for all? Some require it to be taken by everybody including newborn children. Others, like Ireland, require the test for children above the age of six. In some cases, it is for people above the age of 18. A common standard is not being applied across the EU. Some countries are more open than others. In the main, some element of restriction is in place.
It is regrettable that Aer Lingus has had to take the decisions it has. It must be remembered Aer Lingus is not vying on the transatlantic routes. The transatlantic operation from Shannon is particularly seasonal. It has always been heavily dependent on US inbound traffic, particularly so during the summer season. This summer season is wiped out, the second summer in a row in which Aer Lingus will not be able to bring people from the US into Ireland. While Irish citizens are restricted in terms of entry into the US under law, there is no restriction on US citizens travelling out of the US or back into the US.
It is deeply regrettable that Aer Lingus had to take this decision but I do not see any way of avoiding it. It is in a deep financial crisis. While the Deputy is correct that it had access to an ISIF loan, that has to be repaid. The damage done to airlines through this crisis is huge with the additional debt burden that has been taken on. Those debts have to be repaid and this will impose significant restrictions on how airlines operate. It will be particularly true in terms of the appetite they have for financial risk, which will seriously restrict the level of capacity that comes back into the market once travel restrictions are removed. I have no inside knowledge of how Aer Lingus is thinking but I do not see how it would be possible for Aer Lingus to recreate the transatlantic network that it operated in 2019 once things get going. It is going to take many years to see the transatlantic network built up again.
On the Shannon slots, I always said people did not have anything to fear. I do not have any inside knowledge as to how things are operating now but when I was at Aer Lingus and IAG, those routes were operated on a profitable basis. People should have nothing to fear. If the demand is there, I guarantee Aer Lingus will want to serve it. It always has and I believe it always will. People should not be concerned about the continuity of that service, provided the Government removes restrictions. If travel restrictions continue, then it is inevitable that these routes cannot be operated.
I welcome Mr. Walsh. His opening statement is quite comprehensive.
I will start with employment support, which is the big issue. We all accept that for an island like this connectivity is paramount. We are told throughout this period that it is all about maintaining capacity, particularly in aviation. When we get to the tail end of this, it is important we are able to maintain that connectivity and, within that, to provide protection for workers and their families.
In the Irish sense we can speak about a continuation of the existing supports and even beyond that. I would be grateful for any detail on that.
Much of this work is about what we can put in place in the current set-up for reopening travel. Mr. Walsh mentioned a resumption of the EU traffic light system and eventually removing all quarantine requirements. As he mentioned, the committee did some work with Professor Mark Ferguson, particularly around antigen testing. He spoke about some of the pilots operating in Britain, specifically, where people flying in would perform serial testing on themselves over ten days or a specific period. We have called for pilots to use such a process in this period so we would at least have that heavy lifting done. We have contacted the Government, and particularly the Minister for Transport, about this happening.
We heard from England's chief medical officer about the possibility of the Indian variant overtaking the Kent variant and we hope this will not affect vaccinations and the protection of people but it is a worry. We must take that into account. We should remember on some level that it is Covid-19 that has done this to us. Mr. Walsh might agree that we must consider the likes of the digital green certificate and rapid antigen tests in order to give us choice.
I am interested in the idea of the American corridor. I accept the importance of our relationship with America but has there been any communication about this on the other end? At present, they obviously have restrictions on us flying there now. I get that with the passing of weeks, a significant number of people will be vaccinated, allowing more freedom on what can be done.
Mr. Willie Walsh:
I thank the Deputy and agree with him. Employment support has been critical and I acknowledge that if not for the employment support provided by governments, not just in Ireland but in other countries, the scale of unemployment in the airline industry would be massive. We were hoping to keep people in employment and with critical skills in place to enable the industry to restart quickly. As this period of restriction has extended well beyond what anybody expected, and the damage done to the industry is significantly greater than anybody expected, the ability of the industry to recover to the 2019 levels of capacity quickly has reduced to the point where that is impossible. It will take several years.
We have seen many aircraft retired so they are not available. Unfortunately, many critical staff have been made redundant and many more would have been made redundant if not for the employment support schemes. We must very thankful and recognise the supports that governments have provided. That enables airlines to get moving again, although not at the same scale I would have hoped for if we had this conversation six months ago. I remain optimistic we will be able to see a recovery in the second half of this year, and this is principally based on the accelerated roll-out of the vaccine and the scientific evidence that the vaccine is having a significant impact on the levels of transmission. Those levels of transmission are definitely dampening as a result of vaccination.
On the question of serial antigen testing, I listened with great interest to Professor Mark Ferguson when he appeared before the committee. I am not sure I support the view that people need to be tested every day but a risk-based approach to testing is a very sensible suggestion. I read the recommendation of the committee on that and it would be great to see the Government act on that recommendation.
I do not have as much data about Ireland because they are not readily available but the UK is providing much data in this regard. My latest data relate to the period between 25 March and 5 May, when just over 150,000 people travelled to the UK and either had to go into hotel quarantine, similar to Ireland, or self-isolate. Of those 150,000 people, all of whom were required to do a PCR test on or before their second day from arrival in the UK, 3,749 demonstrated a positive indication. That is 2.5%. Interestingly, if we remove people who travelled from India and Pakistan, who accounted for 20% of the people travelling and over 50% of the people who tested positive, the positivity rate was 1.5%. To put this in a more positive way, 98.5% of people were perfectly fine, had no virus and were not contagious but suffered restrictions as a result of this process. The figures I have for Ireland comprise a much smaller sample and I am not sure they are up to date. The figures indicated approximately 3% of people who had gone into hotel quarantine subsequently tested positive, meaning 97% of people who were forced to pay over €1,800 for the pleasure of being locked in a hotel for two weeks were fine.
If we assess these measures, we must consider the risk. We cannot have a zero-risk approach because it is unachievable. If people accept a reasonable level of risk, it can be done without the measures that have been put in place. The quality of testing has significantly improved. I do not know how many PCR tests members have done but I have done ten in the past two months associated with the travel I have been doing. I have also done several antigen tests and, fortunately, I have tested negative every time. Nobody wants to have to go through that just for the privilege of exercising their freedom of movement, which is a fundamental principle of the EU. That is really what has upset me most.
I agree with the Deputy's assessment and the committee's recommendation on replacing forced quarantine with a sensible system of serial testing, including on a daily basis. I am sure people would not mind that as an alternative to hotel quarantine. It could happen every second day. It would be a very sensible risk-based approach to the problem we face.
Mr. Willie Walsh:
I have had some discussions with the US Department of Transportation and its concern is how it can be satisfied that where people have been vaccinated, authorities can be assured the information is accurate. This is where the digital green certificate comes into play as it provides the guarantee governments seek. There is a solution available.
I thank Mr. Walsh for attending today's meeting. At the outset I mention the devastating news received yesterday that Aer Lingus, an airline with a constant presence in Shannon since 1958, is to permanently close its base there. That is absolutely devastating for the 130 employees based in Shannon, the region and aviation in general. There is much work to be done and we will go down fighting. I know the Taoiseach is to meet airline representatives tomorrow and the airline is seeking support from the Government. That must be conditional and there is no blank cheque territory for funds, whether in the form of grants or repayable loans via ISIF. There must be some conditionality built in and this must involve commitments to routes from Shannon and the base there.
There are a number of things I want to say about yesterday's announcement. One must look at the chronology, because the Cabinet was due to meet yesterday to consider two things, one of which was the scaling back of mandatory hotel quarantine, which cannot happen soon enough. It had a purpose in early January when we had 8,000 or so cases of Covid-19 per day but it does not have a purpose now. The Cabinet was also to consider the digital green certificate and a pathway forward to a resumption of international air travel. These were the matters on the Cabinet agenda yesterday. That is the day that Aer Lingus chose to make this announcement. The company has availed of salary support in the form of the employment wage subsidy scheme, EWSS, for the past 14 months and practically all of the Aer Lingus wage bill has been paid for by the Government. While the Government may not own the airline and that day is gone, it has skin in the game and it needs to call that in as well.
The digital green certificate will be before Cabinet again next week, as we are getting to the final ratification stage. It has to be stated repeatedly that this has to be ratified by 27 member states. This is an EU-wide protocol and set of regulations and it is not the case of Ireland being a laggard in this regard. There is a political run-in period here of six weeks or so, from the time of ratification across the EU to its implementation. Can Mr. Walsh inform us if that six-week political lead-in aligns itself with the lead-in period that IATA and all of the airlines it represents need in having hours for pilots, cabin crews back and certified and marketing plans up in place? It seems to me that on Tuesday, when the Cabinet meets and the ratification process starts in Ireland, the logical thing for the Minister, Deputy Eamon Ryan to say is that the sector is in the starting blocks and that this is its six-week lead-in period. He should state it is also the lead-in period politically and that we should now get it all aligned. Can Mr. Walsh tell us if that aligns itself perfectly for his industry?
Mr. Willie Walsh:
That is a good comment, provided that there is certainty after the six-week lead-in period that things will start again. What will kill the industry completely is if we have this reopening and closing of borders again. The damage that is being done is very significant. The real challenge that airlines face, and this is particularly true of Aer Lingus, is that the significant cash burn it faces will actually increase as the airline starts to get back up and running again. One has a combination of costs that it is not currently incurring such as fuel, airport and en routecharges that will now become payable at the same time as the airline is waiting for the revenue stream from bookings to come into place. For many airlines, the most challenging period is not what we have come through but it is what we are facing. Part of that will be the risk associated with getting going too fast.
I am aware that the Deputy did not ask me a question about the financial support for Aer Lingus but please allow me to comment on that. Any company taking out a loan will have to assess the conditions associated with that loan, not just the financial conditions but all of the other red tape, and then satisfy itself that it makes sense. One can put all of the conditions that one likes but that does not mean that the loan will be accepted nor does it mean that one has a strong card to play. What one has to do, and I am sure this is what the management team at Aer Lingus is looking at, is to provide certainty that if Aer Lingus starts operating on the transatlantic routes again, it will be able to continue to do so because the costs associated with ramping up a transatlantic operation are massive. It is in that period that the greatest risk is being taken. If I was looking at additional debt being taken on by the airline I would be very careful about the conditions associated with that because the balance sheet has been significantly stressed and the debt that has been taken on has to be repaid. For that debt to be repaid, the airline will have to be profitable. One cannot impose non-commercial restrictive covenants on an airline and hope that it will be in a position to repay the debt.
One needs to be very careful. I do not see how Aer Lingus can sensibly guarantee the operation of a Shannon transatlantic base, given that the summer season has, yet again, been effectively lost, with the very significant seasonality associated with the transatlantic operation into Shannon. I agree with the Deputy that it is very sad to see it and it is terrible for everybody involved. These decisions are not taken lightly by airline management. Many of these decisions have been forced upon them because of the financial crisis that they face at the moment.
I thank Mr. Walsh for his comments. If the Chairman will allow me to extend my comment, the 130 employees based out of Shannon have had their salaries largely paid by the Government, which is the point I wish to make. The taxpayer has more or less paid the wage bill for the Shannon employees. On that basis, the Government should have some say if it is paying the wage bill. There should be some conditionality built into it in order that those employees would at least be strategically located in the Shannon base.
I absolutely get the point here but there is no deflecting blame here because mandatory hotel quarantine had a purpose during the time of peak Covid-19 infection rates of 8,000 cases a day. This has now been tapered back to 300 or so cases a day and it does not now have a purpose. Mandatory hotel quarantine, however, has been a catalyst to where we are at today but Aer Lingus senior management also seized an opportunity presented to it by a crisis to withdraw from Shannon. I just think that the timing of it was chronic. It was the day on which this issue was to come before Cabinet. It is on the eve of things reopening. It will be five or six weeks before planes are back in the sky, so that is also something of a factor. There are certain actions the Government will take, which are already happening. The Taoiseach is to meet the relevant parties tomorrow but there needs to be a certain amount of playing hardball with Aer Lingus here as well, because it has done well out of the Government and its wage bill has been fully paid by it.
It also has shown little loyalty to its staff based in Shannon because the carrot hanging over the staff there since yesterday is that they may be transferred, possibly, to Dublin. That will not happen because when the company looked at temporary lay-offs within its workforce, the company held on to some staff members who had only come in the door ten or 11 weeks before the onset of Covid-19 pandemic but laid off staff members who had been in Shannon for 30 or 35 years. They showed loyalty on each occasion to Dublin and Cork over Shannon and this needs to be stated. We are supportive of Aer Lingus and I will do everything as a Deputy in County Clare and in my position as my party’s aviation spokesperson. We will work on this night and day but we also need to call out some of these truths.
We will be putting those points to Aer Lingus when its representatives appear before us also. I will move on with Mr. Walsh in my own slot, in which I wish to ask a number of questions. First, has he met the Government to give his overview on aviation, which is a sector that is such a pinnacle of importance for our economy and if so, at what level has this happened?
It would be very important that he meets the Government and it is something on which we would work with him.
Second, Mr. Walsh spoke about Ireland having the most oppressive travel policy anywhere in the world. Can he elaborate on that point? In that context, the Government is about to announce a reopening time for aviation. What are the benchmarks that he would like to see? He spoke about certainty. I am a Deputy representing Limerick City and Shannon Airport is of great importance to us but there is also a question here if the aviation sector can reopen. I would like to see goodwill to Shannon to resume both the Heathrow and transatlantic services with the cabin crew in Shannon but until such time as aviation is up and running, it is more difficult to have those discussions.
Taking into account the resumption of the common travel area with ourselves and the UK, Mr. Walsh also spoke about the US, about the digital green certificate and vaccination. When does he anticipate that Joe Biden as President of America, his Administration and officials, will allow people to fly to the US from Europe without the restrictions? We are at a point now where the digital green certificate is coming in at the end of June and we are looking at a six-week lead-in period. Can Mr. Walsh then map out what is the latest time that aviation needs to get the green light in order that it can actually survive?
I know I am drilling down but I think we need to get into detail. Could Mr. Walsh map out why he regards Ireland as an outlier? What does he want to see in the Government's reopening plan that is realistic because at the end of the day, there are public health issues here? How does he see it operating with the members of IATA in terms of public health, flying in and out of the UK and transatlantic destinations, the timeframe involved, linking in with the digital green certificate and other measures like PCR and rapid antigen testing?
Mr. Willie Walsh:
When I said the Irish Government has the most repressive regime, I meant that it had mandatory hotel quarantine for over 70 countries and still have it for a number of countries. Regarding the US, if I look at the data the UK has provided, in that six-week period about which I spoke, the positivity rate and the number of people travelling to the UK from the US was 0.7%. A total of 34 people tested positive for coronavirus. A total of 99% plus did not have the virus, yet you are locking them up in hotels here. That is repressive. A total of 32 people travelling from France to the UK tested positive, yet they are being locked up in hotels in Ireland. Nobody travelling to the UK from Belgium tested positive, yet people travelling from Belgium to Ireland are being locked up. Nobody tested positive from Luxembourg. They are just four countries in respect of which I can give the committee an example of hard data. For some reason, the Irish Government has decided that these people represent a significant risk to Ireland. I disagree strongly. I am not being paid by Aer Lingus. I have not been paid by it or indeed IAG for some time but I reject the statements made about Aer Lingus. It would be able to defend itself but-----
Mr. Willie Walsh:
It lost over €360 million last year and over €100 million in the first quarter of this year. It is not being opportunistic. It is desperate in respect of the measures it is taking, as are airlines across the world, which are faced with very tough decisions. I have been in tough positions before. These are not easy decisions to take. People do not take them lightly. They are looking at the future survival of the airline and must make decisions that can at best guarantee that they can do that.
The Chairman raised a very important issue in respect of the US. The most critical issue for Ireland is getting people from the US travelling to Ireland. I know it would be great to see Irish people travelling to the US. The US has made clear that it will allow its citizens to travel internationally and return to the US without restriction if they have been vaccinated. We could approve that tomorrow but Ireland is saying that if someone is vaccinated and travels to Ireland from the US, he or she will have to pay over €1,800 and we will lock him or her up in a hotel for 12 days, escort him or her there courtesy of the Irish Government and make sure he or she does not leave. That is repressive.
Mr. Willie Walsh:
If these people are vaccinated and we believe in the science and the story we have been told that the key to getting out of all of these restrictions rests with having a vaccination policy, then these restrictions should be removed as we see widespread vaccination. The level of vaccination in the US is very high. Why do you want to lock up people who have been fully vaccinated when the scientific evidence shows that vaccination does suppress the transmission of the virus?
If the Irish authorities lifted quarantine, and this committee believes it should and that they need to look at rapid antigen testing, and replaced it initially with rapid PCR testing for anyone coming into Ireland regardless of whether he or she was vaccinated or not with the requirement for a negative PCR test within 72 hours of arriving from the US, would that work?
Mr. Willie Walsh:
To come back to the comments from Deputy Cathal Crowe, people are taking advantage of this crisis to profit on the back of mandated PCR testing. If PCR testing is required, the price should be significantly lower. If a test within 72 hours of arrival is a requirement of entry, I do not think that will inhibit people from travelling.
Could Mr. Walsh follow on regarding what he wants to see in a reopening plan for the next two or months, be it on a phased basis, regarding the common travel area, how testing would work and how it would link into transatlantic travel? What are the dates on which it must happen in order that the airline business can recover and we see the likes of Aer Lingus re-engaging in Shannon Airport in terms of flights and cabin crew being based there?
Mr. Willie Walsh:
I believe it is too late when it comes to Shannon because it is nearly the end of May. It is too late to try to sell in the US market, change the attitude and assure that people in the US that Ireland welcomes them because the story over there is "if you travel to Ireland, you're being locked up." This country and its tourism industry have a job to do to repair that damage.
What would Mr. Walsh like to see in the reopening plan to be announced by Government tomorrow in terms of timeframe and procedures, flying within the common travel area between us and the UK, transatlantic travel and travel to Europe?
I thank Mr. Walsh for joining us today. Growing up, I would have seen his rise. I think he was in Futura before he came back to Aer Lingus and on to British Airways and IAG and here he is in IATA. It is great to see another Irish person doing so well in the international aviation industry despite its challenges.
A lot of people will be talking about Shannon for very obvious reasons. The decision that had to be taken is very regrettable and I understand the angst in the region. Shannon is so important to that region.
Mr. Walsh has given us his opening statement. Were he the Minister for Transport of the Head of Government, what are the three or four things he would do in the next week or ten days to get the aviation industry back up and running? We sometimes forget that people in Europe can jump on trains and get from country to country without going to an airport but we cannot. We have a population of less than five million people and in normal times, 33 million people go through Dublin Airport, which is more than six times the State's population. I do not think we would find too many other countries with those ratios.
Mr. Walsh has outlined some of what needs to be done in his statement but will he indicate the three, four or five things he would say, as an aviation expert, Ireland needs to do to ensure we have connectivity in the long run? I am talking about what is needed from a foreign direct investment perspective, a tourism inwards perspective and, equally, a population perspective. Irish people like to travel and visit other countries and there is a huge Irish diaspora across the world. Those people want to visit here and people in Ireland want them to come here. What does Mr. Walsh want us to do, week by week for the next three to four weeks, to get aviation back up to somewhere approaching what it was before? How long does he think it will take to get back to the 2019 figures? Will it be in the next five to ten years or does he not see us ever getting back there?
Mr. Willie Walsh:
That is a great question. We are likely to get back to the 2019 figures by 2024 at the earliest. More likely, it will take five years from now, which would be 2026, given where we are.
I have already outlined some of the things I would like to see happening. There has to be a signal that mandatory hotel quarantining is finished. It should only be required, if it is required at all, in extreme circumstances. It cannot be that it becomes the norm, which it has, in effect, become. Ireland must align with the rest of Europe in terms of having a sensible traffic light system. Ireland should use its position of influence within Europe to try to get a common position adopted across the EU. Particularly in a post-Brexit environment, it is disappointing to see the EU fragmented in the way it is.
Ireland needs to look at a testing regime that is risk-based. It should take on board the recommendation this committee has made in regard to antigen testing as opposed to expensive PCR testing. The Government has got to make sure, in anticipation of getting things moving again, that people will have a smooth passage into and out of the airports. That will require technology and the adoption of some form of digital system to allow people to move through airports in an efficient manner.
We have got to change the attitude in Ireland where travel is seen as an evil. I do not understand that, given how critical travel has been to the growth of the Irish economy. It has enabled people both on the island and outside it to do business in a way that would not otherwise have been possible. We have been massively successful in attracting business into Ireland but that requires access to the island. I really worry about whether the businesses that have relocated here are going to look at other parts of the world. I am doing that at IATA because there are some countries in which we have offices where the authorities are making it very difficult for us to work. We are already looking at whether we can relocate those offices to a more business-friendly environment. Ireland needs to move fast on this. I can understand the political risk associated with making decisions like these. I come from an airline background where we have to manage risk on a daily basis. It is in our DNA and we do it well. We understand how to manage risk. It is going to be important for Ireland to make change and make it quickly. The damage that is being done is significant and it is increasing every day.
Tourism and transport are the responsibility of two different Ministers in this Government but that has not always been the case. From both their perspectives and the perspective of the Dublin Airport Authority in terms of connectivity and inbound tourism, it is very important that we have tourists bringing their dollars, euro or whatever into the country. As Mr. Walsh mentioned, it is sad to see those graveyards in Spain and France and in the desert, with thousands of large aircraft parked that will probably not fly again. Does Mr. Walsh agree that it is likely airlines will be smaller than they were for a long time to come and will have to choose where they fly to and why, based on their available resources? What do we need to do as a country to ensure we get back the fabulous connectivity we previously enjoyed sooner rather than later?
Mr. Willie Walsh:
The Senator has hit the nail on the head. Airlines will be smaller and, therefore, they will have to look at where they assign the assets they have, which are fewer than they used to be. Ireland today would be very low on the list given everything I have said in terms of the restrictions. These decisions are being taken now. There are airlines that are looking at countries and markets that are beginning to open. We have seen what has happened in the UK with Portugal going on the green list and the emerging capacity that has gone into that country. UK airlines are not going to take that capacity out of Portugal and put it into Ireland. It is going to stay in Portugal and the next country that opens up is going to get some capacity. That is what is going to happen.
If Ireland is at the end of the queue, there will be very little capacity for it. That means inbound tourism is going to be significantly choked and outbound connectivity is going to be significantly inhibited. That is why I say it is urgent that the Government moves on this and does so quickly. I can guarantee that if the UK adds another three countries to its green list tomorrow, airlines that have capacity will put their aircraft into those markets. They are aircraft that could potentially have gone into Ireland. The sooner we do it the better. We are lagging significantly behind the UK and we are lagging behind several other countries in Europe that have already come out and stated that they will allow people with a vaccination to travel in and out without restriction, or they will remove quarantine for people who can show evidence of a negative test. We have to get back in line with other countries.
I have one final question. Mr. Walsh is representing IATA, which includes as members his former employers IAG and Aer Lingus and also Ryanair, the great enemy of Aer Lingus over the years. Ryanair has relocated aircraft out of Ireland and Aer Lingus is relocating aircraft to Manchester.
We are facing a serious challenge if even Irish-registered and Irish-based aircraft are moving out of Ireland. Will Mr. Walsh comment on how devastating it will be for us in the long term if we do not take action soon on this?
Mr. Willie Walsh:
The Senator has made his point very well. These are aircraft that were operating in the Irish market but will now operate in the UK market. Every day that passes, more aircraft are likely to be assigned to the UK or elsewhere, particularly in the case of Ryanair, which has incredible flexibility to relocate its aircraft right across Europe. That is the risk.
I thank Mr. Walsh for addressing the committee today. He has a unique perspective on the aviation industry given his history with our flag carrier, with IAG and in his current role. I totally agree with his points on believing the science. We have a vaccination roll-out that is working and in which people have confidence. We have PCR testing that has been the gold standard for more than a year, since the start of the pandemic. We had the report by Professor Ferguson, the findings of which in terms of antigen testing and what needs to be done in that regard were discussed and endorsed by this committee. We have more than a year of global learning on personal behaviour and how to live with this virus. That needs to be taken on board. What Ireland went through last December, January and February was unique to Europe at the time and decisions were made during that period that were quite restrictive. Given where we are with the science, we now need a roadmap out of those restrictions. On mandatory hotel quarantine, for example, we need a roadmap to wind it down to be a measure of last resort. We have the science, vaccinations and testing capacity in place to make that happen and it needs to be done.
I have a couple of questions for Mr. Walsh. In regard to testing, this committee - as well as the Covid committee, of which I was also a member - has done a huge amount of work on trying to promote a testing regime within our airports and the aviation industry. We were always met with a rebuff from the Government on that.
Can Mr. Walsh comment on his view of the calls for airport and aviation testing and those kinds of options that he sought over the past year and the impact of that?
Second, could the Government here have done more to protect jobs in Aer Lingus in terms of the supports that were given? Conditionality in respect of job protection was specified in, for example, Germany, Spain and France, in return for state supports. I am asking that question in the context of how Aer Lingus operates within the IAG family of airlines. I am not saying that it is a simple thing but could more have been done to protect the jobs that have been lost in the context of supports that were given, such as a loan of €150 million given from ISIF, to Aer Lingus?
Finally, on the digital green certificate which is something we all want to see work well, does Mr. Walsh have any concerns as to the European capacity for an effective ICT regime to ensure this works well from the outset? This is all about having confidence in this certificate from early on because we all want to support it and get it off the ground. I would appreciate Mr. Walsh’s comments and answers on those issues and I thank him.
Mr. Willie Walsh:
Testing has progressed significantly. I go back 12 months when we started doing the PCR tests and antigen tests had not been developed to a standard which was considered acceptable. The advances that have been made both in the quality and speed of the testing and the assurance that people can get from testing has been really significant. One has to admire the science associated both with the vaccine and the testing. A standard that we believed was acceptable or necessary 12 months ago should not be necessary today because there have been so many developments both in the vaccination and the quality of treatment that we can give in our hospitals.
The fears that we had 12 months ago that the health systems would be overrun, and I am aware that it came close at times, have significantly abated. I also note that the most vulnerable in most countries have been vaccinated at this stage. The quality or quantity of risk, whichever way one wants to talk about it, has changed. The mitigation action therefore that one should put in place to address that has changed because one wants to end up with the same residual level of risk and we can do that with a cheaper, more efficient and more comfortable type of test than the PCR one.
I am aware that the scientists disagree on this and it is great to see that they cannot all agree. I have seen some thinking to the effect that a rapid antigen test should not be used at all and others who say it is clearly an effective way of testing people, particularly testing someone who is positive, where it does not necessarily guarantee if one has a negative result that one is negative. It pretty much does guarantee, however, if one has a positive result that one is positive. Testing has progressed.
The Deputy has asked a great question as to whether more could have been done to protect jobs. It is always easy to look back and say that we could have done more or done better. I cannot be too critical and I have to say that I am a great admirer of the Minister for Finance, Deputy Donohoe, who has done a fantastic job. He has responded as best he could in the circumstances and has a very challenging position going forward. The loan from ISIF is a commercial loan made on commercial terms. It is great to have ISIF there and as members may be aware, I was for a number of years chairman of the National Treasury Management Agency, NTMA, which included responsibility for ISIF. I understand how it operates and the steps that Aer Lingus would have had to have taken to satisfy ISIF that this was a loan that was worth making and would be repaid. To be honest, the thing that would have protected jobs more than anything would have been to get international travel going again. I know that that is a simple answer for me to give but it really is. Jobs can best be protected by the operation of the airlines. The sooner that we get the airlines operating, particularly during what is traditionally the peak summer period, the better. If we miss this summer period then the situation becomes much more grave because then we are going into what is traditionally a low-demand winter period, which will be particularly dangerous for a number of airlines.
I welcome the supports that governments across the world have given. Most of that support has been in the form of debt. That is why if one looks at the industry, we in IATA estimate the debt burden on it to be $650 billion, which is $220 billion of additional debt through this period. That is increasing by the day. It is also worth pointing out that most of the financing that airlines have accessed has come from the debt and equity markets. Shareholders have put in their fair stake and the commercial debt market has been accessed. What governments have been providing is a small fraction of what the industry has had to access but it is very welcome and if it had not been made available, a number of airlines would have been in severe trouble.
Mr. Willie Walsh:
That is a great question. We do not. We are developing in IATA what we call the IATA travel pass. We are doing this basically for the industry but much of the work that we are doing can be done on behalf of governments as well. It requires a central database and it does not have to be a digital green pass. In Ireland there is a database available for people who have been vaccinated and there is one in the UK. It would be great to have one across the EU. In most cases, we can access data that are reliable. We have an app developed that can be used. So far we have got approximately 110 airlines signed up to use it. We are in discussions with a number of governments already, eight or nine of which have said that they will be using it. We are in discussions with 30 other governments that are interested in using it as a system to enable people to demonstrate that they have met the requirements. It is possible, if not by relying on governments, but through the public and private sector working together, for an ICT solution to be provided.
I will now move to the Regional Group, who I inadvertently mixed up with the Independent Group, which I am now moving to correct. Deputy McNamara who has seven minutes, is substituting for Senator Craughwell.
I thank Mr. Walsh very much for his presentation. Mr. Walsh is a person with much experience in running an airline. Can he tell me what practical import there is from the closure of a base? Obviously, it does not mean that Aer Lingus will no longer fly in and out of Shannon Airport but it has implications, in particular, for early morning and late evening flights. Can Mr Walsh provide a little explanation on that point to the committee, please?
Mr. Willie Walsh:
The Deputy is completely correct. One has to crew the base from outside, which would typically mean that the aircraft and crew are starting from another base, which means the first departure depends on the first arrival. Typically, that means that the first departure will be later than if one had people based in the airport. It has implications in the timing of the schedule that is operated. I do not have any inside knowledge as to what Aer Lingus is thinking about but I imagine and expect that it will continue to operate out of Shannon. The shape of the schedule, however, and the level of activity will be very different to what has been known at Shannon.
Mr. Willie Walsh:
It is more expensive to some degree. One can provide them but normally it means that one is overnighting crews in hotels rather than having them based there. In many cases, that is what airlines do when there is insufficient activity at the base to justify having people based there. Aer Lingus has early morning departures, or they certainly did have such departures from a number of European cities but the crew members are not based there. They operate a late flight in from Ireland and an early departure but they stay in a hotel. It is not impossible to do it. I would not say that business people will lose out but it does impact on the schedule because it makes it more complex than if one has people and aircraft based there.
-----from the point of view of airline management.
The guaranteed slots at Heathrow to which my colleague, Deputy Carey, alluded earlier are of considerable value. Mr. Walsh seemed to indicate he did not think there was any particular threat to them immediately, but are those slots at a particular time? Are they not early-morning and late-evening slots into and out of Heathrow, which would be particularly valuable, given the demand for business passenger flights in and out of Heathrow because, obviously, it is in London?
Mr. Willie Walsh:
I think the measure is that Michael O'Leary sold the shares as well and normally he is regarded, and I certainly regard him, as one of the best business people in the world. He did not do any better. In fact, the Minister, Deputy Donohoe, got more guarantees than Mr. O'Leary did, but Deputy McNamara is right. In fact, he might remember that the slots Aer Lingus had when IAG required them did not include an early-morning departure out of Shannon. This was changed because clearly IAG has access to a lot of slots at Heathrow and was able to shuffle its slot portfolio to give a better departure time from Shannon into London, an early-morning departure which, from memory, proved to be particularly attractive and made a big difference to the profitability of the route. That remains the case with Aer Lingus as part of AIG. It has access to the slot pool that AIG holds through British Airways, Iberia, Vueling and Aer Lingus at Heathrow and it can play around with them to make the most efficient use of the slots. Therefore, I do not think there is a particular risk. If business recovers - and I think it will - I am pretty sure there will be a Heathrow slot out of Shannon because, certainly from my experience, that was a very successful way of operating out of Shannon.
Then additional connectivity was agreed to Barcelona and Paris. One expects it will not be business as usual straight away and that airports will consolidate around key hubs. For Aer Lingus that is Dublin and, perhaps, increasingly Manchester rather than Shannon and Cork. Obviously, Ireland is not a Schengen state. Schengen states will pretty soon allow in American passengers who are vaccinated and can show they are vaccinated. However, am I right in saying there is nothing to stop Ireland doing that tomorrow morning for persons who are vaccinated? A number of EU member states are allowing in passengers who are either vaccinated or can demonstrate they have immunity through having contracted and recovered from Covid. Greece, for example, and I think most other southern EU states are essentially allowing flights as of now. There is nothing to stop us. It is merely that we are hostage to the zero Covid fanatics in Ireland.
Mr. Willie Walsh:
I agree with the Deputy: there is nothing to stop the Irish Government. In fact, the common travel area would not inhibit it either because I suspect the UK and the US will reach agreement on arrangements there that will allow vaccinated people to travel as well, given the level of vaccination in both countries. No, I do not see anything that would stop the Irish Government moving immediately on this issue.
Lastly, Mr. Walsh is a businessman, and businessmen take risks. Most of the risks he has taken have paid off, but one cannot live in a zero-risk world. It is simply impossible. Mr. Walsh is also an Irishman so he understands Ireland and Irish politics. That is clear from the multiple references he has made and the fact that he was chairman of a State board. How does he account for the way in which Ireland became captured by the zero Covid crew in a way that no other European country did and that we became so understandably frightened of Covid but completely risk-averse such that we were frightened of Covid to the exclusion of almost anything else? It seemed almost impossible to have any other consideration in Ireland for a number of months.
Mr. Willie Walsh:
I am totally amazed. I cannot figure it out. It has been one of the things that has surprised me most about this. I thought Ireland would be quite the opposite, given that as a country we have always been so open to travel and given the number of Irish people who have had to move abroad for work, me included. I have not been able to go back to Ireland. I have not been in Ireland since February of last year. I used to travel into and out of Ireland regularly. I do not understand it. It is something we have to address. I think everybody understands that we had to take measures to protect people early on - I do not think anybody would disagree with that - but, given that we have seen things change, we have to move forward and recognise that as advances are made we should start removing the restrictions that are in place. I do not see what the fear is about allowing people who are vaccinated enter the country. There is very little risk associated with that, and the data show that. The number of people who have tested positive, having entered the country and gone into quarantine, is very low: 3% is not a figure I consider to be high in any way; 97% of people were fine. As I said, the data are consistent. There is a slightly different but a much bigger database in the UK, where the figure is 2.5%. The risk associated with that is perfectly manageable for a country like Ireland and a country like the UK without shutting down the economy and putting so many jobs at risk as a result.
Mr. Walsh spoke about the Heathrow routes out of Shannon. Am I correct in saying that if one does not have a cabin crew based in Shannon itself, it is more difficult to run the early-morning flights? Is that a reasonable statement?
Mr. Willie Walsh:
That is not necessarily the case because if one is operating between Shannon and London, given that there is no London cabin crew base, although there used to be many years ago, or a Shannon cabin crew base, one will have to have cabin crew and indeed pilots staying in a hotel somewhere. That is not unusual. In fact, in the case of the Dublin-Heathrow service, there are often pilots and cabin crew in hotels in London to enable the early-morning departures out of Heathrow into Dublin, so it is not impossible to do it. The question is-----
It is a pleasure to have Mr. Walsh before the committee. He is one of the country's most eminent experts in aviation from his role as CEO of IAG, Aer Lingus and British Airways. I am very interested in having a dialogue with him today on some of the issues at hand.
Regarding the 138 cabin crew and 60 ground staff affected by the Aer Lingus decision in Cork, it is deeply regrettable that this has happened. My personal view is that this was avoidable. I am delighted to hear Mr. Walsh refer to the attitude to flying that has developed in the Republic of Ireland. I find it incredibly hard to digest the damage this is doing to our economy, to inward investment in the country and to the outbound tourism aspect, which was very important to many of the tour operators, which this committee has regularly hosted. Many of them are now going bust, which is shocking. I think more than 140,000 people work in aviation.
I wish to put a couple of select questions to Mr. Walsh as somebody who has been working very hard behind the scenes to try to advance the reopening of aviation in Ireland. The first question concerns the digital green certificate, DGC. According to Mr. Walsh's read of the DGC, how does he think it will work in a situation in which a family of five are flying from somewhere like Cork Airport to, for example, Paris if they are taking a trip to Disneyland?
What will happen if the two parents are vaccinated but the children are not? How will it work out when the digital green certificate is implemented by the European Union?
Mr. Willie Walsh:
It is a great question. I am pleased to say IATA has a solution for it. We have a system called Timatic, an Irish colleague of mine is heavily involved with running it. Timatic is a central database that includes all requirements for travel - these are typically passport and visa requirements - but it has been extended to include health requirements as well. They can be accessed by airlines. Governments can put in those requirements. In many cases, children will not need to show evidence of vaccination to be able to travel with parents, as has already been stated by several countries. We are developing an app that airlines can integrate into their own apps. People will not have to go to several different sources. An Aer Lingus or even a Ryanair customer using a travel app to check in and fly will have this information. It can all be done through the airline's app. It will demonstrate on departure that a passenger meets all the requirements for entry to the country to which he or she is travelling.
We are engaging with governments around the world and passengers should be able to demonstrate the information indicating they meet requirements on arrival, as well as when they go through immigration. That can be done through one person for the entire family or several people could do it. We have digital solutions either in development or available to us today that will enable people to travel. We are very conscious at IATA that we must facilitate families when they are travelling.
On the question of engagement, Mr. Walsh indicates he has not been able to speak with the Government yet in his role. I have made the point about stakeholder engagement repeatedly to the Minister for Transport and the Minister of State with responsibility for aviation. As a Government Deputy, I make it categorically clear that this must happen and people like Mr. Walsh must be listened to when it comes to the decision-making process around reopening. Is the Republic of Ireland, as an island nation on the western periphery of Europe, on a similar trajectory to our European neighbours with the reopening of aviation?
Mr. Willie Walsh:
No. I regret to say Ireland will lag and the evidence demonstrates that Ireland is lagging behind other European countries that have already taken steps or announced they intend to take steps. Ireland is still debating some of these matters and it risks being left behind as the rest of Europe starts moving forward. It is not just when compared with EU countries, and it also risks lagging behind other countries around Europe and the world.
I should say I am not being critical of the Minister for Transport as I have not sought to meet him. The Minister for Finance, Deputy Donohoe, reached out to me early in my appointment at IATA to say he is available. I am six weeks in and I have a long list of things to do. I took the opportunity to appear before the committee.
We deem it a great honour that Mr. Walsh has come before us today. We have been doing much work on the aviation sector and we want to work to get it reopened as safely as possible. Mr. Walsh is a key component in that. We are delighted he took up the offer of appearing before us today. We hope this meeting will feed into Government policy and we will get common-sense, practical and safe solutions for the reopening of the sector.
I support the Chairman's comments, which are spot on. Mr. Walsh may be able to give a read from a European level or international basis on something to which I have been trying to get established answers but have found incredibly difficult. I refer to Ireland's connection with the United States of America and the reopening of the air bridge across the Atlantic to North America, including Canada and the United States. Where does he believe that is going at present? Is there any evidence to suggest the Commission is close to brokering a deal to lift the presidential ban in order that European passengers may fly to the United States? I raised the question of the Schengen area in the Dáil and Deputy McNamara joined in that evening as well. What is Mr. Walsh's knowledge around diplomatic efforts by the Commission to allow transatlantic passage for Irish passengers to the United States? Will Ireland be excluded as a non-Schengen country and should we, as the transport committee, be watching this?
Mr. Willie Walsh:
That is a great question. It is section 212(f) of the US Immigration and Nationality Act that allows the imposition of this restriction. It was put in place for the Schengen area before it was put in place for Ireland and the UK, and it was approximately a week or two after the US Government imposed the restriction on Schengen countries that it imposed the restriction on Ireland and the UK. I do not believe Ireland is at risk of being left behind. I know the US is considering it but I am not sure the appetite is very strong.
There is a move for this to be done on a reciprocal basis but that would be regrettable. We must recognise there is major value to Ireland in having inbound US tourism. These people tend to be the most valuable tourists we get into the country. There is a very short summer season we can take advantage of if we get things moving. Equally, I understand that as an Irish citizen, I would love to be able to travel to the US because I have business there. It is not nice being restricted but we must be pragmatic. The interests of the country are best served by allowing access to Ireland to US citizens with freedom to travel into and outside the US without restriction because they are vaccinated. Other European countries are certainly going to do that.
In response to Mr. Walsh's comments, it seems we have now reached a tipping point with the economic damage being done by current policies relating to aviation, whether it is mandatory hotel quarantines or the response to antigen testing versus the public health question. We have waited long enough to take action. This committee, comprising cross-party Deputies from both the Opposition and the Government, has been very vocal in its support for the aviation sector. It is now time for those at the Cabinet and those within the National Public Health Emergency Team, NPHET, to recognise that the economic damage being done to Ireland by current policies must be seriously considered, particularly now that we are reaching such an advanced stage in the vaccination process. I thank Mr. Walsh for the responses.
Mr. Willie Walsh:
I could not have put it better. It goes to the balance that we have argued for. We must balance the protection of lives with that of livelihoods. The problem is that livelihoods are being damaged significantly and are likely to suffer permanent damage unless we start moving quickly.
I thank Mr. Walsh for attending the meeting today. I will speak to the horizon for the aviation sector in general. When do we expect to be back at 2019 levels? We might be at 43% of those levels this year. Within that, how does Ireland compare internationally?
Mr. Willie Walsh:
It is difficult to say. The general view is that domestic markets will recover first and we are seeing that. There is no domestic market in Ireland or the UKper sebut if we look at big domestic markets around the world, China is back above where it was in 2019, as is Russia. The US is pretty much in line with 2019 and having spoken with chief executives in the US industry, they are confident they will have more capacity in the market this summer than they did in 2019. One could argue that domestic markets have fully recovered.
The view has been that short-haul leisure flights would recover first, built principally on the belief that the EU would open and there would be a common regime across the EU. It has disappointed many people that we have not seen that. The area of business that will lag in recovery is long-haul international. Ireland is principally looking at the US in this regard and we should get moving and put much effort into this.
We are going to have to work hard from a tourism point of view to convince US tourists to come back to Ireland and to demonstrate to them that they are going to receive the traditional warm welcome. There is work to be done there. It is domestic markets first, so that is no help to Ireland. On short-haul leisure, if we can get the EU working together, there should be some benefit to Ireland but the real benefit is long-haul, and that is transatlantic.
To be honest, I do not see the Aer Lingus network recovering to where it was in 2019 until 2024 or 2025. I do not see the US airlines that served Ireland coming back quickly into the market either.
That leads on to my next question. In terms of the level of supports that have been offered so far internationally, we heard from representative groups in Ireland which said very clearly to us that the Irish Government has not provided the scale of support that has been provided by other states. Mr. Walsh mentioned earlier that this may not be the case, and I would be interested in his perspective on that. We have the employment wage subsidy scheme in place and there are similar schemes internationally. How does Mr. Walsh see the transition? Will there be further cuts across the board? What types of subsidies and supports will be needed into the future to sustain the sector in its recovery? What does the future look like in terms of the ask from the industry on state and other supports?
Mr. Willie Walsh:
To take the markets I am most familiar with from my time at IAG, we have had employee support schemes in the UK, Spain and Ireland, and they were generally similar. I would say Ireland's was the least attractive of the three but there was not a huge difference between them all. If I then look at how airlines accessed financial support, the Spanish Government put in place a loan guarantee scheme with Spanish commercial banks, which IAG accessed through Iberia Airlines and Vueling Airlines to the tune of €1 billion. We saw Aer Lingus get €150 million through the Ireland Strategic Investment Fund, ISIF, whereas for Iberia and Vueling it was €1 billion. From memory, it was €750 million for Iberia and €250 million for Vueling; these are commercial loans but guaranteed by the Spanish state in the event of a default on the part of the company. British Airways accessed financing through two different schemes in the UK to the tune of about $2.8 billion. In terms of scale, obviously, Aer Lingus is smaller than British Airways or Iberia, but in terms of scale and importance, I would argue that Aer Lingus is probably of greater economic importance. Therefore, while Aer Lingus has accessed funding through ISIF, it is not on a similar scale to what is being made available in Spain or the UK.
In regard to strategic connectivity and its importance for Ireland, and given a possible future with a reduced aviation sector, does Mr. Walsh see an increased role for public service obligation, PSO, or state-supported or state-sponsored routes in co-operation with airlines?
On a separate issue, in terms of restoring confidence that international travel can happen safely, and the role of digital technology and antigen testing in that, does Mr. Walsh see models that are being used internationally that have done that well? There is a concern, and it is a reality we experienced last summer, that international travel might contribute to the spread of the virus. We saw it in the west of Ireland, with busloads of American tourists, and that gave rise to fear and concern among communities. We need to get to a place where we can give people confidence and assurance that international travel can happen safely. Are there tools or examples of where that is done well, in Mr. Walsh's experience?
Mr. Willie Walsh:
Exactly, and this is where the data are important. It depends on how people want to present the data. We can present the data as showing 3% who were infected as opposed to 97% who were not infected, but the evidence is that the vast majority of people were not and the infection rates were very low. When there is widespread infection in a country, the WHO recommendation is that we should not stop international travel, and that once the virus is in place, banning international travel has little or no impact.
One can argue about the variants of concern, and that is another issue. Again, there is the technology with regard to the vaccines, and the evidence that is available today shows that most of the vaccines are effective against the variants. We all know that viruses mutate and that is how viruses stay alive.
The other thing we have to remember is that the deaths which have taken place are tragic and it is a terrible tragedy for all of the families who have suffered as a result of this, but it is not just that people die from coronavirus. This is something we live with. People die from flu but we do not stop the economy every winter because of the outbreak of the flu pandemic and because hundreds of thousands of people die across the world.
Mr. Willie Walsh:
It is a great question. I am not a big fan of PSOs. They have a role to play on certain routes where destinations are not going to be served on a commercial basis. I cannot see anywhere that would apply in Ireland because I think critical connectivity will be provided on a commercial basis. It is something that governments will look at and a number of governments have introduced PSOs through this. There is a role for PSOs but I think it is a small, marginal role.
I welcome Mr. Walsh. I am sure everything he said will be counterbalanced by NPHET, the Department of Health and the HSE, which will say that public health lies at the core of everything we do. I concur with Mr. Walsh in his remarks - I am paraphrasing - that we have a repressive regime and that if we are to have access to and involvement in the digital green certificate and if people are fully vaccinated, then there should be no mandatory hotel quarantine and people should be able to come and go freely. In the context of Mr. Walsh's last remarks on critical connectivity on a commercial basis, does he see a difficulty for us, as an island nation, in terms of connectivity in a post-Covid world?
Mr. Willie Walsh:
Yes, I see some challenges. Certainly, we are not going to have the same network or breadth of network that served Ireland in 2019 for a number of years to come. For a number of the new destinations that Aer Lingus announced on the transatlantic routes, I cannot see how Aer Lingus will take the risk of reintroducing those for some considerable time. There was talk about direct air links to China, and I do not think that is going to happen in this post-Covid environment for many years. There is a risk that some of the connectivity that existed, or that we hoped for, is not going to be there or will not materialise in the same way. Without question, connectivity will be set back significantly and will take time to recover. I do not see any way around that, to be honest.
Mr. Willie Walsh:
It is a great question. I know from my experience of working with Aer Lingus, the establishment of services to new destinations such as Seattle, San Francisco, which were building up, led to significant volumes of people travelling to Ireland on business. Those destinations take time to mature to a point where they are financially viable. Given that the Aer Lingus transatlantic fleet will be a smaller fleet, it means that some of those destinations will not be served for some time to come. That clearly must have an impact on foreign direct investment because having connectivity is very important. While the technology we are using this afternoon is great and enables us to do things, it is nowhere near as good as having face-to-face communication. I do not buy into the idea that all business will now be done over Zoom, Teams or something else because the quality of interaction is nowhere near as good as when people are sitting in the same room.
The committee should take up the issue of reduced connectivity following Mr. Walsh's presentation today.
I concur with Mr. Walsh on the vaccination bonus. It is meant to be that; a passport to travel safely. I should have put on the record at the beginning of the meeting that I received a briefing from Mr. Peter O'Broin and Mr. Simon McNamara of IATA. I compliment Mr. Walsh on the IATA travel pass video. I have put it into the chat group and it is something the committee should also explore. I should have said that at the beginning. I apologise for that.
I am concerned over the air bridge for both Europe and transatlantic services in the context of Aer Lingus particularly. Mr. Walsh smiled at the deal he got with the sale of Aer Lingus. I believe Senator Craughwell was one of the only ones who opposed the sale of Aer Lingus along with the former Senator, Seán Barrett. Many of us were concerned about the Heathrow slots. Does Mr. Walsh think that Aer Lingus will hold firm to its connectivity for Ireland and the importance of Aer Lingus to Ireland? Where does that stand now?
Mr. Willie Walsh:
I do not think it has changed. Obviously, I cannot speak for Aer Lingus or for IAG. The Senator will have heard some of the comments I made when I was CEO of IAG that I regarded Aer Lingus as the star performer in the group. We were delighted with the progress we made. We delivered on all commitments we gave and in fact exceeded them. We expanded the transatlantic network faster and far beyond what was originally anticipated. That was under the leadership of Stephen Kavanagh when he was the CEO and then Seán Doyle who took over from Mr. Kavanagh, who is now CEO of British Airways. Aer Lingus still has significant influence in IAG. However, the reputation of Aer Lingus has been damaged as a result of what Ireland has done and that will take some time to repair. From my knowledge, I can assure the committee that there is still a great commitment to Ireland on the part of Aer Lingus.
Mr. Willie Walsh:
I am not aware of anybody engaging. I am very happy to debate and I think we need to challenge NPHET. It should be open to challenge and we should not be afraid to push back on the decisions it has taken. I deal with risk or at least I did in my career as an operating pilot and as a CEO. The attitude to risk of many of these people is very different. We know we are required to operate in an environment where we are managing risk. I find it impossible to accept we can have a zero-risk environment. The impact of that attitude on some of the decisions taken in Ireland has been deeply regrettable.
Of course, some Oireachtas Members and members of this committee were all for mandatory hotel quarantining and sought a zero approach to Covid. Look where that got us.
I am concerned that Ireland, as a country, will not be ready for the digital green certificate, the Covid passport. I ask Mr. Walsh to comment on our preparedness and our supposed conservative approach to the digital green certificate.
Mr. Willie Walsh:
Ireland does well when it comes to digital industry. We are world leaders. I do not see why we should be concerned about that. I know there is a particular crisis with the cyberattack at the moment. I am sure everybody is hopeful that we can overcome that very quickly. I am confident that we can address these issues.
We previously engaged the Chief Medical Officer, Dr. Holohan, on testing and the whole area of aviation. We have invited him to appear before the committee again and hope he accepts that invitation.
How has the approach by the authorities here damaged Aer Lingus from a practical perspective? Mr. Walsh said he thought it was highly unlikely that US airlines would come back into Ireland for some time. When does he expect them back? He said the supports Spain is giving to Iberia are much larger than the supports being provided here. I ask him to define that. What airlines does he expect to see flying into and out of Ireland over the next year or two? Will we be very dependent on our indigenous airlines? Ryanair is still based here. The Irish public still regard Aer Lingus as a national carrier that provides a very good service. How critical is it that Aer Lingus and Ryanair come through this and are supported in a large way?
Mr. Walsh spoke about a reduction in service. Is that a reduction in the number of planes that airlines will fly or a reduction in the number of routes? What do we need to do initially with the reopening? Obviously, we want a safe reopening and we want it done in a practical way. As Mr. Walsh said, there may be occasions when quarantining is needed. However, with vaccinations and empirical evidence on reductions in incidence, quarantining is not needed as a general policy. Antigen testing is due to come on board. I know I am asking for considerable detail, but it is very important for Ireland. We understand how significant the implications are for Ireland, as an island nation. We have large airlines based here, Ryanair and Aer Lingus. I know I am asking a lot, but I think it is the key.
Mr. Willie Walsh:
The Chairman asked what has damaged Aer Lingus. As I said, the recovery is likely to be in domestic markets, short haul and then long haul. Aer Lingus has significant dependence on its transatlantic market, which has been very successful. Consequently, the recovery will take longer for Aer Lingus. My real concern is that the message coming from Ireland has been very negative, much more so than the message coming from other countries. The attitude has been that anybody travelling into Ireland must be infected and therefore we should not allow anybody in. I have not witnessed that to the same degree in any other country I have been dealing with. It has been particularly damaging to the reputation of Ireland as a destination country, which it is. We depend heavily on inbound traffic.
My point about US carriers is that there was considerable transatlantic competition with many services being provided by US carriers.
I do not see them providing the same level. They will serve Ireland but not to the same degree or with the same frequency of service. It will probably be more on a seasonal than a year-round basis, which is a risk. There will be a delay in some cases. It will probably mean that some of the airlines that we are serving would not serve Ireland as a destination or may only serve it seasonally. Regarding support, if I look at Iberia, it is probably twice the size of Aer Lingus but received five times the level of financial support from the Spanish Government.
Which airlines will be flying in and out of Ireland in the next year if it is reopened, besides Aer Lingus and Ryanair? Will it be predominantly those? What will be the percentage reduction of the size of airlines and the number of routes they will fly over the next year?
Mr. Willie Walsh:
I suspect it will be about 30% smaller and that will impact on destinations being served, frequency of services, seasonal compared with year-round services, and services three or five days a week instead of daily. It will take a number of forms. Based on what I see at the moment, it will be about a 30% reduction.
Mr. Willie Walsh:
I think there will be fewer than at present. The good news for the committee is that Aer Lingus and Ryanair together represented approximately 80% of the year-round capacity. A critical 20% was provided by a number of other airlines. A number of those will not serve Ireland because the market is too small and the recovery will probably take longer.
I thank Mr. Walsh for appearing before us today. I did not engage in questions with him because colleagues here live in towns very close to airports and such. Mr. Walsh's contribution was fantastic. It has given us much to work with and to think of. I thank Mr. Walsh for taking the time to be with us and the Chairman for allowing me in.
We thank Mr. Walsh for taking time out of his busy schedule. This was a mutually beneficial meeting. I see it as the start of a number of engagements. I assume that there will be follow-up with the Government, which is important. Let us hope that over the next week that we see a reopening plan that happens in a safe way, where our aviation sector can get off the ground and we can get back to what we do well, which is being a small, open economy. There are 140,000 people employed in aviation. We, as a cross-party committee, will really put to the Government that we need to look at reopening. By all means have a quarantine, but it has to be in limited cases. We should look at expanding testing to antigen tests, having PCR tests instead of quarantine, and ensuring that we have a viable and secure airline and connectivity in the future. I thank Mr. Walsh.