Tommy Broughan (Dublin North East, Labour)

I am delighted to have an opportunity to speak on the critical topic of Irish aviation and tourism. I commend Deputy Mitchell and her Fine Gael colleagues on proposing this motion and highlighting the crisis in the global and Irish travel and tourism industries. As the motion emphasises, there has been a staggering decline in passenger numbers and tourism revenue in the past year. Air travel with the UK, which is our closest neighbour and most important tourism market, haemorrhaged more than 700,000 passengers between February 2009 and February 2010. This 14% decrease followed a 17% decrease in passenger numbers in January. There have been worrying slumps in air traffic between the UK and Kerry, Shannon, Cork and Dublin airports. The Kerry-Stansted route, for example, has had its service levels slashed over the winter period. It saw an incredible 54% decrease in passenger numbers, to just under 4,500 passengers, in the period between February 2009 and February 2010. It is estimated that if these trends continue throughout 2010, passenger traffic between Ireland and the UK will reach its lowest level since 1999, with a decrease of 1.75 million in passenger numbers to 9.15 million.

Aer Lingus recently posted operating losses of €81 million for 2009. The extraordinary job losses in the tourism and hotel sectors have been accompanied by major job losses in the aviation sectors. Some 1,100 jobs were lost at SR Technics and a further 400 were lost at the Dublin Airport Authority. I spoke this afternoon about the 500 job losses at Ryanair. Discussions on significant job losses at Aer Lingus are ongoing, but it seems that up to 600 jobs may be lost. The Government's apathy about protecting the high-skilled and high-quality aviation, engineering and maintenance jobs at SR Technics has been one of the most shocking features of its period in office. It has been compounded by the Government's attitude to aviation and travel taxation. As an island nation, our air and marine connectivity is critical to getting tourists and visitors in and out of the country. Rather than making it easier and more attractive for people to visit this country, the Government's big idea for supporting the ailing travel and tourism sector has been to slap an extra €10 air travel departure tax on everyone travelling through an Irish airport to airports 300 km from Dublin Airport. This was introduced as Governments across the EU - including those in the Netherlands, Belgium and Spain - moved to abolish similar departure taxes. It is even more galling that none of the revenue from the travel tax is being used to support aviation facilities, security and safety services or infrastructural development.

I congratulate the Minister of State, Deputy Cuffe, on his promotion. Since the introduction of the air travel tax, I have consistently asked the Ministers for Finance and Transport to publish the cost-benefit analysis that was carried out by the Department of Finance before its introduction. So far, however, neither Minister has given me any information in this regard. The suspicion remains that the tax was worked out on the back of a beer mat as a means of generating some easy cash for the Government rather than as a means of dealing with the issues affecting Irish aviation. The paltry economic analysis that was provided by Ministers in budget 2009 estimated that the new tax would yield €95 million in 2009 and €150 million in a full year. However, no estimate of the potentially negative knock-on effects and costs of the tax was provided. I refer to its effects on passenger numbers, aviation jobs and employment in the tourism and hotel sectors. It is incumbent on the Ministers, Deputies Brian Lenihan and Dempsey, to place a full cost-benefit analysis of this tax before the Oireachtas. If they cannot do so, they should abolish it.

The manner in which this tax has united opinion across the aviation industry is striking. Aer Lingus, Ryanair and CityJet, which account for 83% of the total number of passengers who depart this island each year, jointly commissioned an independent analysis from Amsterdam Aviation Economics, which is part of the SEO economic research group. The critical conclusions of the report were that the introduction of the air travel tax will cause estimated revenue losses of up to €482 million; that it will lead to up to 3,000 direct job losses; and that, in a full year of operation, it will bring about a reduction of up to 1.2 million the Irish aviation industry's number of departing passengers. That is balanced against an Exchequer tax take of just €116 million. The report states:

If airline capacity in 2009 had been maintained at 2008 levels and the ATT was to be passed on in full to passengers in the form of higher fares, it is estimated that the total resulting demand reduction would be between 0.5 and 1.2 million departing passengers over the first full year based on a price elasticity range of between –0.5 and –1.5. On this basis .... ATT revenue would be between €117 million and €124 million but total revenue losses for airlines, airports and the tourist sector would range from a minimum of €210 million up to €465 million, dependent on the elasticities assumed.

I drew up a rough estimate when the travel tax was introduced in the budget by the Minister of State's colleague. It was clear, at a glance, that the cost of this tax would be definitely far higher than its yield.

This stupid tax should never have been introduced. I note that the Minister of State, Deputy Cuffe, has been given responsibility for looking after sustainable transport. I accept that certain issues associated with aviation transport will have to be addressed, in time. This air travel tax is not the right way to address such issues. It is a stupid device that has resulted in serious job losses. No matter how one looks at it, the tax will result in further job losses in the future. The Government will not give the House a cost-benefit analysis because it does not have one. The Minister of State's colleagues in the Department of Finance did not draw up such an analysis. It does not exist. On any basis, the travel tax should be withdrawn. I support the motion and urge the Government to forget about this tax. I asked the Taoiseach a few weeks ago to ensure the Minister for Finance uses the Finance Bill 2010 to withdraw it. That should be done at the earliest opportunity. It is very damaging for our country.

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