Sale of Aer Lingus would not be in national interest

 

Ireland would be cut off from the rest of Europe if Ryanair was allowed to take over its rival, writes Garret Fitzgerald

HAPPILY, THE Government has turned down Ryanair’s bid to acquire Aer Lingus. It has done so on two grounds: because that bid undervalued its rival Irish airline and also on competition grounds.

It is notable, however, that the Minister for Finance did not exclude the acquisition of Aer Lingus by a foreign airline. Given the State’s financial situation, there remains a danger that the Government might later be tempted to secure a few hundred extra million euro in that way. It is therefore important that the arguments against such a course of action be presented.

In promoting this merger scheme, Ryanair argued that as many smaller European airlines are collapsing and even very large ones are merging, Aer Lingus cannot survive on its own. On the face of it this may seem reasonable, but in fact Aer Lingus has several unique features that have until now been universally ignored, and which raise serious doubts about this proposition.

First of all, Irish people are committed to foreign travel. In 2007, Irish people made 7.7 million trips abroad. If, as I believe is the case, about one-third do not travel outside Ireland, those who did travel made an average of two-and-half external trips each year.

The fact is that we have the highest rate of foreign travel in Europe. In relation to our population, we holiday abroad at twice the average European rate, and on average take 50 per cent more trips abroad even than our holiday-mad British neighbours.

Moreover, although tourist travel to Ireland does not play anything like as large a role in our economy as used to be the case, we still attract over 4.5 million holidaymakers each year. When almost 1 million business visits to the State and 1.75 million journeys are made home annually by Irish emigrants, the total number of visitors to our State adds up to more than 7 million a year.

That makes an overall figure of close to 15 million round trips, or a total of almost 30 million international journeys to and from Ireland each year. For a small country with a population of just four and quarter million inhabitants, that is a quite phenomenal figure.

And that is not all. For Ireland is today unique in being Europe’s only real island state. Both Britain and Scandinavia – with the exception of Finland – are linked to the rest of Europe respectively by a tunnel and a bridge.

And as only 10 per cent of travellers to and from Ireland travel by sea, air transport has to cater for almost 30 million journeys a year to and from Ireland.

I do not think there is any general understanding – even perhaps at government level – of how exceptional Ireland is in this respect. I have been looking at European international air transport figures for the year 2007, which show that our number of intra-European international air journeys per head of population is five times greater than the average for continental western Europe – and is six or seven times higher than in the case of France and Germany. France, with 15 times our population, generates only twice as many such journeys as Ireland.

In other words, in aviation terms, Ireland is not a small country, being outmatched in this respect only by Europe’s five largest states – Britain, Spain, Germany, Italy and France in that order – as well as marginally by the Netherlands, which has four times our population.

(This is because of KLM’s 70-year-old efforts to make Amsterdam a hub for international air transport. I still have a KLM timetable that I acquired in 1938, advertising the fact that their land-plane service from London to Australia took only eight days to get there!)

Against this background it can be seen that just as Ryanair was not too small to form the nucleus of a major European airline, so also Aer Lingus is not too small to survive on its own. And there are several important reasons for keeping our national airline in existence.

Ryanair is a point-to-point low-cost airline which does not offer interline facilities with other international airlines. Aer Lingus, however, has many interline agreements with other airlines that greatly facilitate travel, especially between Ireland and destinations outside Europe.

Each year, a total of 1.5 million passengers make such long-distance trips between Ireland and destinations outside Europe. Aer Lingus’s facilities are hugely important both for Irish travellers abroad and for the 700,000 visitors who, in addition to those who travel on direct flights to and from North America, travel each year from abroad by connecting services.

Moreover, it is important to make the point that countries like Ireland and Finland, which are somewhat isolated, need the assurance of direct services to the rest of the continent, which only a national airline can provide.

It should not be forgotten that although for some years after 1957, British Airways operated services to and from Ireland, eventually these were dropped because that airline found more profitable ways to employ its aircraft and to use its slots at UK airports.

Without Aer Lingus, that could have led to Ireland being very badly served on cross-channel air routes.

Ryanair is now in the process of becoming a major European airline rather than an Irish one – and good luck to it in that endeavour. If, as was the case with British Airways, that conflicted with profit maximisation, there could be no guarantee that as a major European airline it would be committed to ensuring the provision of an adequate network of routes to and from our island.

For all these reasons I believe that in the national interest there is a powerful case in favour of Aer Lingus being retained as a national airline, rather than being merged with any larger foreign air company.

It would be particularly unfortunate if the Government were at some stage to agree to the sale of Aer Lingus to a foreign airline simply to secure some hundreds of millions of euro to fill part of the hole in the public finances.

We have suffered too much from various forms of political short-termism to resort now to selling the family silver in an attempt to undo a small part of the financial damage inflicted on the economy in recent years.