Jan O'Sullivan (Limerick East, Labour)
Link to this: Individually | In context

We raise this matter in the context of fears about the future of Shannon Airport, with particular reference to Ryanair threatening to pull out from April next year. In effect, this would mean that 1.4 million passengers would be lost to the airport - 75% of Ryanair traffic - as the airline is planning on leaving only one aircraft there. In 2007 Ryanair accounted for 46% of overall passenger numbers, while 59.6% of overall passenger numbers at the airport were Ryanair-generated in 2008. This would create an enormous difficulty for it.

While Shannon airport faces many difficulties, the tax issue is one that has been cited by Ryanair. I know that at times Ryanair tries to force unreasonable bargains but in this case it is absolutely right. The €10 tax is regressive and unfair, a barrier to travel and anti-competitive. In the context of Ireland being an island nation which needs to encourage tourism, facilitate travel and have balanced regional development, the tax is clearly a threat to the future of Shannon Airport.

It is also a problem in the context of tourism. A statement issued today by the Irish Hotels Federation calls for its abolition. It is worth noting that the federation gives statistics indicating that 200,000 people across the country are employed in the tourism industry and that its contribution to the economy in 2008 was €6.3 billion. All that the travel tax has brought in since it was introduced and became effective on 30 March is €57.9 million, which is far less than what was predicted. Some €57.9 million in the context of a tourism budget of €6.3 billion indicates that the tax needs to be totally reconsidered. If it discourages tourists from coming to this country - tourism is such an important industry - the detrimental effect it is having throughout the country can be imagined. We are particularly concerned about Shannon Airport. This tax, if it drives Ryanair out, will pose huge problems for the airport and the region.

Joe Carey (Clare, Fine Gael)
Link to this: Individually | In context

I reiterate my complete opposition to the €10 travel tax. The tax which was introduced in the rushed budget of October 2008 by the Minister for Finance, Deputy Brian Lenihan, has caused and is causing extreme harm to Shannon Airport and the economies of County Clare and the mid-west region. Absolutely no thought or consideration was given by the Government to the impact such a tax would have on tourist numbers.

As an island nation, Ireland's tourism product is dependent on quality, affordable air connectivity. There is huge pressure on airlines to stay in operation, with fuel price volatility and a dramatic slowdown in demand. Many airlines have gone to the wall as a result of these factors. We simply cannot afford to place ourselves at a competitive disadvantage in regard to other destinations but the Minister's travel tax does just this.

This year Shannon Airport has already paid a high price because of the tax, with the loss of two Ryanair aircraft from its Shannon Airport base, the loss of five Ryanair routes and a reduction in the number of Ryanair flights from 136 to 116 per week. Governments in other countries have acted quite differently in response to the global economic slowdown. They have removed travel taxes and airport charges. If this country is to bounce back from the economic doom it faces, it will have to do the same. Since 2008 the Dutch Government has removed its travel tax, the Belgian Government has decided not to introduce a similar travel tax, having listened to stakeholders in its tourism industry, while in Spain and Greece the respective governments removed charges on all regional airports. What did the Irish Government do? It imposed a ridiculous travel tax which has pulverised the tourism industry. Some hotels in County Clare are open only three days a week, bed and breakfast premises have closed down, as have restaurants and pubs, yet the Government response is to persist with a depressing travel tax.

In 2007 Ryanair accounted for 46% of business activity at Shannon Airport and in 2008, for 1.85 million passengers, delivering 60% of the airport's passengers. Last week Ryanair issued a very stark warning that the base which it established five years ago would be reduced by 75%. I appeal to the Minister of State who comes from the mid-west and represents north Tipperary-----

Martin Mansergh (Tipperary South, Fianna Fail)
Link to this: Individually | In context

Almost. It is south Tipperary.

Joe Carey (Clare, Fine Gael)
Link to this: Individually | In context

I appeal to him to give a commitment to abolish the travel tax in the next budget. If Ryanair strips 75% of its service at Shannon Airport, it will cause utter devastation in the region.

Martin Mansergh (Tipperary South, Fianna Fail)
Link to this: Individually | In context

I am pleased to take the opportunity to comment on the air travel tax and express my regret at the decision of certain airlines to withdraw flights and services from Shannon Airport.

The Minister accepts that the airline industry, with other industries within the transport sector and beyond, continues to go through a difficult trading period. However, he does not accept that the decline in passenger numbers experienced by the airports in the State is due to the introduction of the air travel tax. The difficult trading period in the airline industry arises primarily from weak world economic activity. The decline in air travel is an international phenomenon and as a result, aviation services are contracting on a global basis. As Deputies may be aware, Airports Council International, ACI, has reported that European passenger traffic from January to July was down 8.7% compared to the same period in 2008. The International Air Transport Association reports also reflect such declines.

In the case of Ireland, the decline in passenger numbers through our airports is broadly in line with that in our international counterparts, including those where there is no travel tax in place. This downward trend is evident for periods prior to the introduction of the air travel tax. Furthermore, passenger numbers for other modes of transport such as railways have also experienced broadly similar declines. While this is not desirable, it is clear that the air travel tax is not the substantive cause of the decline in passenger numbers.

Ireland is not unique in applying a tax on air travel. Many countries worldwide and within the European Union apply similar taxes. For example, our nearest neighbour, the United Kingdom, has applied a similar tax for a number of years. It recently revised the air passenger duty to have four bands of 2,000 miles each and increased the rates just two days ago. The new rates are as follows: band A, 0 to 2,000 miles, £11-----

Joe Carey (Clare, Fine Gael)
Link to this: Individually | In context

What about Belgium and the Netherlands?

Martin Mansergh (Tipperary South, Fianna Fail)
Link to this: Individually | In context

-----band B, 2,001 to 4,000 miles, £45; band C, 4,001 to 6,000 miles, £50; and band D, over 6,000 miles, £55 in the case of economy class. These rates double in the case of tickets other than economy class. One might be tempted to argue why the airlines which use UK airports - some use them very heavily - do not bully the British Government.

Jan O'Sullivan (Limerick East, Labour)
Link to this: Individually | In context

I am sure they do.

Martin Mansergh (Tipperary South, Fianna Fail)
Link to this: Individually | In context

The base band A rate is being further increased to £12 from 1 November 2010, with increases of 30% to over 50% being applied to the other three bands, B, C and D, also from that date. In France, the civil aviation tax is charged at around €4 for EU destinations and €7 for other destinations. Moving further afield, Australia and New Zealand which, like Ireland, are extraordinarily dependent on air travel also apply departure taxes.

The rates for the Irish air travel tax are not unreasonable, both for shorter and longer journeys, when compared to rates in other countries. Taking the United Kingdom as an example, a person travelling within the United Kingdom will be liable to pay the UK air passenger duty of £11, or approximately €12, on each leg of the journey, that is, a passenger departing from Manchester to London will be subject to the £11 tax and on the return journey departing from London to Manchester will also be subject to the £11 tax, giving a total tax liability of £22, or approximately €24. In Ireland, a person travelling within the State will be liable to pay €2 in tax on each leg of the journey, giving a total tax liability of €4. Furthermore, the UK rates in respect of longer flights range from moe than four times higher to five times higher than the Irish rate. The Government acknowledges that low cost travel has been good for Ireland. The pioneers in this area deserve to be commended. However, in analysing the new tax, we must not overplay its impact.

At the moment, a fare from Shannon to London Stansted that is initially presented as €15 with a similar €15 return fare will actually cost a passenger over €100 when all charges are included, excluding the air travel tax. This assumes no luggage is checked in which would cost more. Included in the €100 is a €5 credit card handling fee per flight segment. This practice has been the subject of much criticism by consumer bodies. In addition, there is a recently introduced on-line check-in fee of €5 per flight segment. If a person cannot check in on-line, there is a €40 check-in fee per flight segment. Incidentally, the on-line check-in fee for a return flight to the UK equates to the amount of the air travel tax for that journey. It is also worth noting that in the case of a return journey within the State, the on-line check-in fee is two and a half times higher than the €4 air travel tax liability for those flights.

A person flying from London Stansted to Shannon, or indeed from any airport in the UK to Ireland, is already paying, through the airlines, £11 or around €12 in air passenger duty to the UK Exchequer. Airlines do not appear to have any difficulty in applying the UK air passenger duty. In the case of long-haul flights, a €10 tax as a proportion of the total price of a return fare is minimal. Visitors to Ireland are only subject to the tax on the return journey. The additional €10 or €2 in the context of a much larger purchasing decision involving travel, hotel expenditure and so on, should have only a limited effect on tourist numbers.

In addition to weak world economic activity, the spate of failures in the airline sector have been largely driven by a massive spike in oil prices in 2008. Price pressures have subsided and fuel costs - which had increased to as much as 50% of some airlines' cost base - have fallen considerably. Airlines benefit from an international tax exemption on jet fuel. The extent of this benefit is illustrated by the example that tax as a percentage of the price of a litre of petrol is currently in excess of 60%.

We have to bring a sense of balance to this debate. In the past few years we saw exceptional growth in air travel both to and from Ireland. Strong disposable incomes and consumer confidence at home led people to take, in some cases, several air trips per year. However, it should come as no surprise that given uncertainties in the economy generally, consumers have shown some reluctance to take or plan trips abroad. An air trip abroad generally involves expenditure of several hundred euro, so to blame singularly the introduction of a modest air travel tax of €10 or €2 for the reduction in passenger numbers is stretching credibility. It is difficult to understand how an airline that has complained vigorously about the €10 air tax, on the basis of price sensitivity of customers, can then introduce a non-discretionary on-line check-in fee of €5 per flight, or €10 per return flight.

The introduction of a relatively modest air travel tax is an important revenue raising measure in the context of the significant financial challenges we now face. The Minister for Finance has no plans to review the tax as proposed by the Deputies.

Joe Carey (Clare, Fine Gael)
Link to this: Individually | In context

For shame.