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News : Irish Last Updated: Jun 15, 2009 - 8:58:56 AM


Aer Lingus cuts US routes; IBEC says Irish Air Travel Tax should be re-examined; An ignorant or rational position?
By Finfacts Team
Jun 12, 2009 - 3:17:13 PM

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Image of Dublin Airport's Planned T2 -- second - - terminal

Aer Lingus said today it will cut seat capacity on its winter long-haul services by about 25 per cent compared with 2008 in a bid to cut costs. Also today, IBEC, the Irish business lobby group, today said that the Government's air travel tax should be immediately re-examined in light of the negative effect it is having on the airline and tourism industries.

Aer Lingus said today it will cut seat capacity on its winter long-haul services by about 25 per cent compared with 2008 in a bid to cut costs.

The former state airline said services from Dublin to Washington and San Francisco will be suspended from October 25th, while flights from Shannon to Chicago will be suspended from September 1st. Aer Lingus said average long fares were down 19 per cent in the first quarter due to the deterioration in economic conditions and weak consumer confidence on both sides of the Atlantic. It said the four weekly direct flights between Shannon and New York remains under close review.

US carrier Delta Airlines on Thursday said it was ending its scheduled transatlantic services from Shannon from October. However, the Continental Airlines route to Newark, outside New York, will continue.

Ryanair has also cut its short-haul services at Shannon in response to a decline in consumer demand.

IBEC Transport Executive Paul Sweetman said:

"This year aviation industry losses are expected to exceed $9 billion globally. Faced with reduced passenger numbers and rising fuel prices, airlines across the world are continuing to decrease capacity to match falling demand. Irish carriers are not insulated from these major problems and this is leading to a review of the services they offer.

"The Irish Government must act to ease the cost burden on Irish airlines and promote essential connectivity to global destinations. The recently introduced Air Travel Tax should be immediately re-examined.

"With passenger numbers falling and the tourism sector being hit hard, it is questionable whether the Air Travel Tax is bringing any net benefit to the exchequer. The Department of Finance should undertake a detailed cost-benefit analysis of the tax, in light of the dramatic changes in domestic and global economies."

The Irish Government should act...indeed!

Any suggestions on what tax or spending cut should replace the tax?

So a €10 foreign travel tax is the cause of the drop in air travel?

If IBEC wants to be taken seriously, it needs to do more homework on this issue than aping Ryanair's statement on Thursday.

Economics 101 --  air travel is down because of the severe recession and the fall-off in demand for migrant workers in Ireland.

Ryanair on Thursday called on the Irish Government to scrap its €10 tourist tax to prevent a further collapse in Irish tourism and related jobs next winter. The low fares airline said in the first five months of 2009 over 1 million fewer passengers travelled through Irish airports, resulting in the loss of at least 1,000 jobs at Ireland airports and over €600 million in tourism revenues.

Ryanair says statistics from the Airport Council International (ACI) confirm that every 1 million passengers at an airport create and sustain 1,000 jobs. Similarly Fáilte Ireland statistics estimate that oversees visitors spend an average of €600 visiting Ireland. If the traffic collapse of the first five months continues for the full year the Irish economy will lose over 2.5 million passengers, over 2,500 airport jobs and over €1.5 billion in tourism spend in 2009 alone.

The Belgian, Dutch, Greek and Spanish Governments have recently scrapped similar tourist taxes and/or airport charges in order to reverse falling passenger numbers and prevent further tourism and job losses. Ryanair says the Irish Government must now follow their lead and scrap the €10 travel tax.

On Wednesday, the CSO reported overseas trips by Irish resident had only fallen by 10.5% in the first four month of 2009 despite the recession.

There are many changes underway such as the fall-off in migration and this is one of those arguments where intuition matters more than statistics.

Ryanair flights are cheap and the  €10 travel tax is small beer when the total cost of most overseas trips are computed.

So IBEC, don't make fools of yourselves by making demands without presenting a credible case.

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