More money for Aer Lingus flies in the face of reason

John McManus (Business Opinion, Irish Times last Monday) is wrong in his assertions about Ryanair's opposition to State aid for…

John McManus (Business Opinion, Irish Times last Monday) is wrong in his assertions about Ryanair's opposition to State aid for Aer Lingus. We are indeed opposed to it. Not as asserted because it would get in the way of profit at Ryanair (it wouldn't), but because it will threaten some of the jobs of 1,700 - mainly Irish - people employed at this company.

How would John McManus feel if the Irish Independent or the Irish Examiner were to receive Government subsidies to compete with the Irish Times?

The low-cost arrangement we have entered into with Brussels South Charleroi Airport is not State aid. It is a low-cost arrangement (which in turn is passed on in the form of low fares) which is available to every airline - including Aer Lingus - that wishes to fly there. This is not, as asserted, State aid.

The governments around the world and in Europe provided war-risk indemnity for the world airlines in circumstances where the insurance industry refused to provide it. Again this is not State aid. It was made available to all airlines on an equal footing and was a prerequisite to allow all airlines to fly in circumstances where the insurance market wouldn't provide cover. Furthermore Ryanair volunteered to pay for it - although the Government has incurred no costs by putting it is place.

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"State aid" is the unlawful granting of funds or financial assistance by governments to their State-owned flag carrier airlines which gives those State airlines an unfair competitive advantage against their private-sector competitors.

This is unlawful, and is not allowed. Ryanair does not accept State aid, and nor do we support it (even if it were to be paid to all airlines equally, in which case as Ireland's largest airline we would be the biggest recipient).

State aid does not result in efficient airlines or lower fares - it props up inefficient airlines and high fares. I object to State aid for our principal competitor, when it is quite clear that this aid will be used to assist it to compete against Ryanair.

We carry almost 10 million passengers a year and we save those customers more than £500m over our competitors' higher air fares. We are investing over $2 billion in aircraft, and are opening up routes at the rate of six to 10 a year. We have planned to do so because we rely upon the assurances given by both the Irish government and the European Union that our State-owned competitors will not continue to receive State aid.

State aid and government intervention has resulted in the European airline industry being incredibly inefficient, overstaffed, with these excesses being masked by charging outrageously high air fares mainly to national consumers who are afforded little choice.

Over the last 10 years Irish consumers have been offered a choice, and are voting with their feet.

Ryanair carries far more passengers (at much lower fares) than Aer Lingus does to and from this island and we will continue to do so into the future. If, as John McManus says, there is "tremendous public affection" for Aer Lingus, this appears to come to an abrupt halt when people are asked to pay extra money to fly with them.

While the issue of State aid for Aer Lingus is clearly the most topical one at present, it is obscuring a far more pressing and deeper crisis facing Ireland next year, namely the collapse of our tourism industry.

American visitors will be down by at least 50 per cent next year (and Aer Lingus will cut back capacity by 25 per cent), and so another million passengers will not travel to and from Ireland.

Our hotels, visitor attractions, restaurants and bars are facing a crisis. Industry experts estimate that between 20,000 to 30,000 jobs could be lost in the tourism sector next year.

Ryanair has offered to make up this shortfall by delivering a million additional passengers on new low-fare routes from the south of France, Italy, Germany and Scandinavia.

All we are seeking is low costs and efficient facilities that are competitive with those we are being offered to Ryanair at many other European airports.

There is no point in expecting the Aer Rianta monopoly to agree to lower costs. Monopolies increase costs, not lower them. This needs Government intervention and a radical plan to reduce our reliance on Aer Lingus and North American tourists, and to transform the Irish-European tourism in the same way Ryanair transformed Irish-UK tourism in the 1990s.

Ryanair's record of delivering growth, traffic and tourists is unmatched by any airline in Europe. Although Aer Lingus may be in trouble, Ireland has the benefit of Europe's largest low-fares airline and the only airline in Europe that guarantees to sell the lowest air fares.

Why don't we work to our strengths, and offer Ryanair a competitive cost base here at the Irish airports? Ireland has nothing to lose and everything to gain.

What is this Government waiting for? The failure to take up Ryanair's proposal in the last two years has resulted in Ireland losing to Glasgow, London Stansted and Brussels airports.

Finally John can rest assured that Ryanair has already taken steps to "make up" with Mary O'Rourke. We have requested a meeting to explain in detail how - by working together - Ryanair and the Government can deliver two million new passengers and 500 new jobs for Irish airports and Irish tourism over the next two years.

I hope she will respond magnanimously in the national interest.

Michael O'Leary is chief executive of Ryanair