Committee Reports > List of Committees > Joint > 1980 > Committee on Commercial State-Sponsored Bodies > Report No. 14 - Aer Lingus, Teoranta and Aerlínte Éireann, Teoranta

MIONTUAIRISC NA FIANAISE

(Minutes of Evidence)

Dé Céadaoin, 30 Aibrean, 1980

Wednesday, 30 April, 1980

AER LINGUS TEORANTA AND AERLÍNTE ÉIREANN TEORANTA

Mr. N. Sweeney, Group Manager, Marketing Services, and Mr. P. Gleeson, Manager Access Transport of Bord Fáilte Éireann called and examined.

217. Senator Cooney.—One of the problems that Aer Lingus has that other airlines might not have is that Aer Lingus are the main carrier of tourists into this country and obviously are of vital importance to the tourist trade in this country. A situation has arisen that Aer Lingus are constrained to operate services that might have a commercial question mark about them but in the national interest—and part of the national interest is tourism—they continue to operate them. Have Bord Fáilte done a study or attempted to quantify what would be the tourist position here if only commercial considerations were to affect Aer Lingus? How important are Aer Lingus for the tourist industry in Ireland?

Mr. Sweeney.—We have not undertaken a formal study as to what the economic implications would be for the tourism industry. You start from the base that Ireland is in a unique situation, firstly being an island destination; secondly, not being a primary tourist destination—in many cases we are a secondary one, particularly in terms of long-haul traffic which would mean trans-Atlantic traffic—and, thirdly, there is such a close inter-relationship between the development of tourism and the development of the airline. This has certain economic disadvantages for commercial operation of an airline. It means the traffic is very highly peaked with a high proportion of it in a very short period of time. Because they want to develop tourism and introduce a range of promotional fares, the yield probably is not as good as it could be, and in domestic demand for air services out of Ireland we are a relatively small market. The business content is quite small overall. The dependence of Aer Lingus upon tourism is enormous. One can see, if one looks particularly at the development of traffic let us say from the newer markets from continental Europe, that the two more or less stand side by side, with Aer Lingus developing new routes and new connections and tourism moves are growing in these particular countries around the same time. In the tourism industry we recognise clearly the need for a strong nationally-committed airline. We have had instances where other airlines have served Ireland but when it has come to the bottom line they have taken very commercial decisions which were unpalatable to the tourism industry and they have pulled off particular routes for particular services. It is imperative from our point of view that considerations other than the pure economic or commercial considerations should pertain.

218. Senator Cooney.—Does any conflict occur between Aer Lingus and Bord Fáilte in regard to their pricing policy and their level of fares, bearing in mind that there are commercial constraints in Bord Fáilte’s tourist demands? Have there been any areas of conflict there and what mechanism is there for resolving it? Generally what is the position?

Mr. Sweeney.—We have a good working relationship and a good working mechanism for solving these problems. Let us look back about ten years or so. One of the primary concerns for a national tourist board like Bord Fáilte is obviously to ensure that the capacity on a particular route is there to meet demand and also that it is provided at a price which the tourist can bear. The areas of difference of opinion in the past have been largely the North Atlantic and that goes back to probably the mid-seventies. The mode of charter as a form of transportation on the Atlantic offered certain advantages for the development of tourism traffic such as very low seat cost and provision of capacity at times when the bulk of tourists want to travel. At that stage the policy of Aer Lingus was to develop scheduled traffic and to keep charters to a minimum. However, that is an example where we differed in opinion in 1973 and 1974. We had a number of joint studies and we were able to prove that a particular mode of transport was instrumental in developing traffic and producing more traffic rather than just diluting it, as is always the fear of any commercial operator, and that was resolved. The difficulties in developing traffic are not necessarily or have not always been problems in relation to a particular airline because there are governmental regulations which also pertain to the operation of services in the charter schedule. In some instances these, rather than the policy of a particular carrier or airline, can be inhibiting factors. Relationships between Bord Fáilte and Aer Lingus have improved over the years and there is a working relationship and a mechanism for dealing with any differences that arise. With de-regulation and a change in philosophy basically in the airline world, the range of promotional fares that is available now is far broader than was the case five or ten years ago. The partial breakdown of IATA is obviously one of the factors contributing to that and there are a number of initiatives which Aer Lingus have taken which are aimed at developing traffic. For instance the weekend fare on the North Atlantic, which last year was available in both directions, the previous year was available for tourism coming into Ireland. This is one instance where they put on a very attractively priced fare that generated traffic at a time when they had light loads. There are things like public excursion fares available for most European cities and to Ireland and for weekend traffic in the shoulder and off-season. All of these are welcome and the constraints which prevented any airline from introducing these in the past are now being minimised so there is far more opportunity to experiment. One of the areas where we co-operate very closely is research and market intelligence, where we can measure the effect of these kinds of fares. Not all of them work, but where they are proven to do so we can work towards developing traffic.

219. Deputy B. Desmond.—On the Apex fare decision of Aer Lingus this week for Dublin, New York, Boston, Chicago, as a practical example, was there any prior consultation between Aer Lingus and Bord Fáilte? How recently did Bord Fáilte become aware of that decision and how would they mesh that into their promotional activities?

Mr. Sweeney.—We were in consultation with Aer Lingus on a number of possible fare offerings that they would introduce and we were aware of it before the fare was finalised and before it became public. In regard to promoting it, we already had meetings with tour operators in New York, for instance, constructing total inclusive or package holidays using that kind of fare and that fare is being used as a priced fare for advertising in the United States.

220. Deputy B. Desmond.—On another level, do the Department of Transport bring together Bord Fáilte and Aer lingus jointly to discuss, for example, tourist growth projection for 1980? Do they have that kind of joint discussion under the auspices of the Department of Transport and Power or do the companies meet separately? What is the degree of co-ordination, the extent to which the Department is involved on a joint basis with both?

Mr. Sweeney.—The situation has changed somewhat. Up to last year we were reporting to the same Department, basically; now we report to different Departments. The procedure up to now has been that we would make submissions on a number of issues, in respect of all our lines or one particular situation, to the Department and we would also make our submissions known to Aer Lingus simultaneously. Any discussions would be held at the invitation of the Department or Aer Lingus at that stage. Very few of the issues are resolved at almost Ministerial level. At the effective level any problems or difficulties are aired, and our opinions and views are made known at that stage.

221. Deputy Kenneally.—Is the fact that the two Departments have been split a problem?

Mr. Sweeney.—No.

222. Chairman.—To take a basic example, and perhaps an over simplified issue, Bord Fáilte say we need better communication with some countries, for instance Italy, which we know has very good tourist potential, but Aer Lingus do not have a very good service there. You are pressing for a better service and they say it does not really pay us to have a better service. There will now be two different Departments, one Department pressing for a better service and another Department saying Aer Lingus cannot afford to have a presence there. What is your reaction to that?

Mr. Sweeney.—If that situation arose we would make our views known to our own Department. The kind of relationship we have with Aer Lingus we also have with other carriers. On occasion one would approach another carrier to provide service where one can prove that there is a demand for a particular service.

223. Chairman.—If Aer Lingus said they had examined the potential of that country and were not convinced that they should have a service there, or that they should improve their service there, and Bord Fáilte think that there is a potential from the tourist point of view, would the Bord feel free to approach other airlines and encourage them to provide a better service?

Mr. Sweeney.—Yes. In the first instance, obviously we would try for the net benefit of the economy to use an Irish carrier. But if for some reason it was not feasible we would approach another carrier. On most routes, if not on all routes, it is uneconomic to provide capacity simply to meet peak demands. That was the case on the North Atlantic recently where it was uneconomic to one carrier to try to service Ireland’s peak demand, because it varies so much in the off season. Consequently, we have other carriers serving the route probably more frequently in the summer periods than in the winter periods, or else we would have charters which essentially took up that peak demand.

Mr. Gleeson.—In a situation where there was a market perhaps at certain times of the year, it would not necessarily justify a scheduled service, and that is where we would hope through a tour wholesaler to get a charter operator in. In some cases Aer Lingus might be the company which would operate the charters but in other cases they might not have an aircraft available and so we would go elsewhere.

224. Senator Cooney.—With regard to the services to the Continent generally, what are Bord Fáilte’s views on the present level of services, and are there any gaps that the Bord would like to see closed?

Mr. Sweeney.—Perhaps Mr. Gleeson could answer this as he has been closely associated with the development of traffic, particularly from Europe.

Mr. Gleeson.—I was very much involved in development of European traffic and worked closely with Aer Lingus also. The situations that I described already were in a number of markets. One might feel there is a big market, there may even be a substantial tourist market at certain times of the year, but it does not warrant a scheduled service. On practically all those occasions we started off by getting a tour wholesaler to start a series of charters. When these charters were successful, Aer Lingus and other carriers began to look at the route, and to begin market research. In certain cases they were able to lay on scheduled services.

Amsterdam is a classic example of that. Amsterdam-Dublin now has something like three services daily, whereas a few years ago it was the first European route to develop into a daily service. The development of that has been largely through charters. A lot of these charters came into Cork, some of them to Shannon and some to Dublin. We are now at the stage where in addition to having direct flights into Dublin we have flights from Amsterdam into Cork as well. This is a situation where a route was developed through the operation of charters and Aer Lingus operated probably 75 per cent of the charters on that route. They were involved through wholesalers in charters in developing the route. This is a pattern that will be used in other areas. We would watch closely other markets in Europe. Austria is one that we have been looking at for some time and we feel it is ripe for development on a scheduled basis. We had some charters from that area and we had various discussions with Aer Lingus about the possibility of extending a service from Zurich to Vienna or a service from Munich to Vienna. We have talked to Austrian Airlines and other people about the possibility of developing there. It is beginning to look as if that area is ready for a scheduled service and within the next 12 months, Aer Lingus will probably extend in there from some area. This is a market which has grown through the operation of certain types of charters and through the operation of programmes with other carriers through places like Zurich or Munich.

There are other markets, like Brussels, which have a high frequency of services. The Brussels service to Dublin has reached that stage also through the operation of charters. In some instances these charters were not operated by Aer Lingus and I suppose it forced a more competitive situation price-wise in the area. Charters have again led to bringing the national carrier from Belgium in on the Brussels route. These sort of developments take time. Very often the worst thing that can happen is to have too much capacity on a route, as happened a few years ago in the Italian market were there were services from Rome and Milan. Alitalia were operating and they pulled out because they found there was not enough for everybody in the market. One can have a premature development, which is not desirable. In order that it works out in a reasonably planned fashion, as we have said in our paper,* we like to see the access transport capacity available to meet the market growth. We can best do this by dialogue with carriers such as Aer Lingus and others.

225. Deputy B. Desmond.—What is the reaction from travel agents and different tour operators to the fact that Aer Lingus and yourselves are both doing promotional work and several other organisations are doing direct promotion work, particularly in America? Is there an element of confusion or duplication or not the best use of resources in that area? How does one overcome that?

Mr. Sweeney.—There is a great deal of co-ordination of activities of various bodies who promote in the market place. Clearly, the national promotion of Ireland as a destination is the role of Bord Fáilte. The carriers are obviously promoting their service and at the same time they have to promote the destination. Their primary objective is for market share of the traffic that is moving on a particular route. Then there are other bodies from Ireland who operate as tour operators overseas in particular markets. There is no confusion. There is obviously stimulation of the market by the mere fact that these people are working in the market place. One of the things the Tourist Board should be careful about is that the degree of co-ordination and of co-operation with various sectoral interests must not be such as to deter some other tour operators from working with it, or some other carriers. There could be a problem if they saw that we were closer to one particular operator, be it an airline or tour operator, than to anybody else.

In the market place, for instance, we have got Ireland House situated in a number of locations where we share office facilities with Aer Lingus. This has the advantage of curtailing overheads which are quite substantial in overseas markets for both organisations. We work very closely together in terms of bringing publicity to Ireland and we share the cost. We work very closely in advertising. This is clearly an area where the impact of the advertising can be greater in terms of the hard sell element. We as a tourist board can promote the destination, we can project the appeal, the motivation. If we are doing it conjointly with a tour operator or carrier, we can then put our particular price on it and also are getting them to spend money in the market place. The technique or the mechanism of joint advertising is one we use quite extensively.

226. Deputy B. Desmond.—What is the market projection at this stage for 1980? Perhaps this is an awkward question not directly related to our examination, but what are the prospects for 1980, bearing in mind the US recession, bearing in mind the increased price of drink here relative to the UK, and changes in exchange rates, and so on? How do you feel 1980 will work out vis-à-vis last year?

Mr. Sweeney.—Since we all set our projections and planned our strategy in the latter half of last year, a number of international events have changed the kind of marketing environment in which we operate, a number of which were mentioned. I think there is growth overall in the market place. One can refer back to what happened after the recession and the oil crisis of 1974-75. In fact, world tourism, international travel, bottomed out and declined in some areas for a period of 18 to 24 months before there was renewed growth in the market. I do not think it would be unreasonable to expect a similar kind of pattern to emerge in those countries which are now going into recession, particularly North America. Overall, I think we will have growth in traffic to Ireland over last year this year. The performance of various markets will obviously differ within that mix, but overall we will have growth.

227. Deputy Fitzsimons.—To what extent do you think Aer Lingus should get into more hotel involvement here at home rather than abroad? They have, of course, an interest in Jurys and in the International Airport hotel.

Mr. Sweeney.—This is clearly a question for Aer Lingus. As I understand it, their diversification programme is primarily profit-orientated. It is to sustain the airline that they are doing that, so obviously they make commercial decisions as to whether it is better to invest in hotel capacity in Ireland or abroad. However, in fairness one should say that hotel capacity has not been expanding in Ireland. There has not been a demand for expansion of hotel capacity in Ireland over recent years. We are now undertaking a programme of expansion of hotel capacity which has been facilitated by the Government. This is the first such expansion programme which has been facilitated for quite a number of years now, since late sixties and early seventies.

228. Deputy Fitzsimons.—We had an Irish international rugby match coinciding with St. Patrick’s weekend. There was a great scarcity of beds in Dublin and there were a lot of traffic problems with aircraft. How could something like that occur in view of the fact that there is sophisticated marketing research between Aer Lingus and Bord Fáilte?

Mr. Sweeney.—It suffices to say that Bord Fáilte brought it to the attention of a number of bodies a number of years back when it became evident that the two events were going to take place the same weekend.

Senator Cooney.—It was not possible to reschedule the international date because not only Ireland but other countries were involved. It involved scheduling of the whole season of matches between all the Home countries.

229. Deputy B. Desmond.—Could I revert back to one other aspect? The last time the representatives of Aer Lingus were here they stated, in evidence to this Committee, that they were not very optimistic about the short-term future of the North Atlantic. They expressed very serious concern about it. On the other hand, one sees some other American scheduled carriers and charter carriers coming in and out of Shannon and so on, Transamerica Airlines in particular. They say they are optimistic. What is your projection on the North Atlantic? Have you done any recent work on market research in the area?

Mr. Sweeney.—The North Atlantic presents a problem to most carriers serving it between the United States and Europe at the moment and a number of factors have brought about this situation. It is essentially a market where costs for things like aviation fuel have a particularly strong bearing. Also, it depends on the type of equipment one is using. Essentially the viability of the route depends very largely on getting your mix of fares correct, that is, getting a balance of high yield fares, for instance, from the business traveller and sustaining the promotional fares with a mix of traffic and doing it with a wide-bodied aircraft because the per seat cost is considerably reduced if you can do it on a larger type aircraft. The service into Ireland is highly seasonal. Bord Fáilte would certainly be concerned about the future of maintaining a year round service on the North Atlantic. A lot of publicity is being gained by carriers who have entered the market, but one should bear in mind that two carriers exited from the market last year, that is, Trans World and Air Canada, who had been maintaining year round scheduled services into Ireland. They pulled out. The primary concern of Ireland is, first, to maintain communications between the two Continents and, secondly, to do so on a year round basis. I think that is quite important.

230. Deputy B. Desmond.—Finally, on the question of complaints. An American traveller coming to Ireland walking into a Bord Fáilte office may have a particular complaint to make about scheduled air services. In today’s Irish Times we see a passenger complaining that a B707 was put on instead of a B747, a substitute plane, and so on. How do you handle that type of complaint vis-à-vis Aer Lingus and Bord Fáilte? Do you process it from Aer Lingus back to you, then back to the passenger, or do you pass it all on to Aer Lingus?

Mr. Sweeney.—No. The process for handling complaints made in respect of Aer Lingus, or in respect of any element of the tourism product, is that we acknowledge the complaint, we tell the complainant that we are taking the matter up with the particular operator, and we go back to the complainant with the explanation as to why it happened.

231. Deputy B. Desmond.—Matters of redress?

Mr. Sweeney.—If there is a legitimate claim against the operator, we make that known to the operator and to the complaintant.

232. Deputy B. Desmond.—Would it be fair to ask you if you have received any volume of complaints about Aer Lingus and other carriers?

Mr. Sweeney.—That I quite honestly would not know.

Mr. Gleeson. I think I could answer that. The number of complaints we receive about any of the carriers operating here is absolutely minimal. We would rarely receive a complaint.

233. Deputy B. Desmond.—What about the North Atlantic?

Mr. Gleeson.—About the North Atlantic. If we do receive a complaint we answer the complainant. We send the complaint to Aer Lingus and ask them to look into it and let us know what they were doing and to reply to the person and to let us have a copy of the reply. Generally speaking, they handle such complaints satisfactorily to our way of looking at it. The type of thing that has happened—and I think it was complained about in the paper today—I imagine could have been caused by perhaps mechanical failure on a B747 and the necessity to substitute another aeroplane for it, that being possible because of a not very high load factor on the particular aircraft. It did read very badly, I must say. It is the sort of thing that if we are asked to we will look into with Aer Lingus. We will probably take it up anyway with them.

234. Senator Cooney.—Are you totally satisfied with the level of customer service from Aer Lingus in terms of cabin service and in terms of efficiency and politeness generally in regard to passengers at the airport?

Mr. Gleeson.—By and large I would say that Aer Lingus are as efficient as most operators and more efficient than many, particularly in Europe and overseas, that I have experienced. It is fair to say that any airline is as good as the worst hostess or steward who is in the line. Anybody can have a bad experience with cabin staff who for some reason or another are not putting their all into the job or could not care less. That can happen with any airline. The same thing can happen with staff at an airport. It is common in certain airports to find yourself queuing up to check in for a flight and just at the moment when you are next on the list the guy closes and says “I am having a tea-break”. You may or may not get your flight. I do not think that we ever find that sort of thing happening here.

I think Aer Lingus internationally offer a pretty good service, both in the cabin and on the ground. Probably proof of that is the number of airlines who use them to service their aircraft, not just in Dublin but in London and New York and places like that.

235. Chairman.—Could I get back to promotion again? Aer Lingus spend something in the region of £30 million on sales and publicity. Some of that would be purely selling the name and the cost of selling tickets and so on, but a great deal of it would be selling Ireland as a place to come to. Would you acknowledge that far more than half of that is of direct benefit to tourism? The figure they give for tourism promotion is something in the region of £13,500,000. Some of that would be administrative costs but the rest would be by way of persuading people to come to Ireland. Would you agree that a very large portion of that money is of direct benefit to Bord Fáilte? It is doing your job for you. Have you any qualification or reservation about it?

Mr. Sweeney.—I accept that Aer Lingus would spend that amount of money in promoting travel to Ireland. They are doing it against a backdrop of a national promotion. They are obviously aiming at optimising the benefits that their operations can derive from that. They are not different in that instance from any other commercial operator in the field. Generally the extent of their promotional activity, be it for generation of traffic or for market share, depends on the volume of traffic, on having the turnover. In other words, other carriers like B and I, Sealink, Swissair and so forth would be devoting a certain portion of their turnover in terms of volume to the promotion of that sort of traffic.

236. Chairman.—I think Aer Lingus would say that no other airline has the same emphasis, the same effect, or at least anything in the same proportion to directing people to Ireland as they have. Is that so?

Mr. Sweeney.—That is probably true in terms of air transportation into Ireland. Obviously, because they are the national carriers they have a very high identity and affinity with the destination.

237. Chairman.—I will put it to you in another way. Perhaps it is hard to answer precisely. If Aer Lingus reached the stage where for one reason or another they had to go out of business, would you accept that Bord Fáilte, if they were to maintain the present level of tourism, would probably have to spend £6 million or £7 million in promotion to maintain their present tourism, if Aer Lingus were no longer doing a promotion of the order of what they are doing at the present time?

Mr. Sweeney.—Yes, I think we would have to accept that. In fact, it would probably be fair to say that we would have to spend more in substituting the amount which they spent because we would be losing a very strong identity with the destination. Not having a national carrier we would have to work through other carriers who would not be as committed to the development of traffic or to the destination. The outlay would have to be in excess of substitution in the value of what they are currently spending.

238. Deputy Fitzsimons.—As regards tourist fares in general, there would seem to be a conflict between Bord Fáilte trying to maximise the number of tourists coming to Ireland and Aer Lingus trying to maximise the fares paid by tourists coming to Ireland. What are your comments there? Would there seem to be any kind of conflict?

Mr. Sweeney.—I think what one has to ensure is that in the short-term or in terms of the net national gain, that whatever initiative is taken in the area of fares should be to the ultimate benefit of Ireland. It would be unreasonable to demand or to expect to be carried on some fare which in the short term would be to the gain of increased numbers but would not necessarily be to the net national gain at the end of the day.

Mr. Gleeson.—We have had instances in certain areas, of low fares being introduced but they were not in fact generative. The amount of the fare, while it is important, is not everything. There have to be other motivations for bringing people to Ireland. If the fare is within reasonable limits, that is basically what one can expect, provided that we are not too far out of competition with our competitors for tourists.

239. Senator Cooney.—Do I take it that the last word is with Aer Lingus in that regard?

Mr. Gleeson.—Yes.

240. Chairman.—We did dwell for a moment on the prospects for 1980, but I think we were comparing it with 1979 which was admittedly a very bad year. Would you be able to give an estimate of how you think tourism will do this year as compared with 1978 which would be fairer comparison?

Mr. Sweeney.—It is probably true to say that the outcome for 1979 was not as bad as had been anticipated despite the problems of 1979. The circumstances are quite different now. They are largely economic and they are worldwide. The expectation globally is that tourism certainly will not be a growth factor in the latter half of 1980 and into 1981.

Mr. Gleeson.—One of the things that is emerging this year particularly in Ireland-England traffic is that while advanced bookings do not seem to be shaping up, the actual carryings to date are 20 per cent in excess of last year. The carriers themselves feel that it could very well be a better year than last year but that it is a late booking year. This is for a variety of reasons, economics and so on. People do not know where they are going to be in a month’s time, or whether they will have a job. Therefore, it is a late booking pattern, but the encouraging thing is that to date business is well ahead of last year. We have to take into consideration the fact that up to May, the percentage of tourists visiting Ireland is not great in relation to our total year.

241. Senator Cooney.—The pattern of bookings down but passengers up? Is that unique or is there a precedent for it?

Mr. Sweeney.—We have had late booking seasons in the past, again for economic reasons.

242. Deputy B. Desmond.—How do Bord Fáilte view the situation of the large number of bookings by Irish people going on holidays to Miami or the relatively cheaper US holiday resorts, availing of scheduled air services and so on? Do you view that with any concern, even relative to the impact of those scheduled services on the Irish domestic holiday market? From your own experience, are people getting that kind of suggested value for money, or better value for money?

Mr. Sweeney.—Research has shown consistently over the years that the outward bound market from Ireland is relatively stable, not having grown all that significantly. Expectations are that it will not grow significantly this year either, but there will be a shift in destinations—people are changing to different destinations for one reason or another. The primary motivation of Bord Fáilte’s Discover Ireland home holidays campaign is that you will always have a sector of the market which has a tendency to holiday outside Ireland. The strategy for the peak season in respect of the domestic market has been to go after a fairly small margin of the population who are susceptible to promotion one way or the other but, more importantly, to go after people for second holidays or short holiday breaks in the spring and the autumn periods. This is where the Discover Ireland campaign has been successful over the past number of years.

243. Deputy B. Desmond.—It has been said that one can eat much cheaper, sleep cheaper and drink cheaper in the US than in an Irish hotel, even taking the air fare into account. There seems to be a very strong public mood about this. Is it a matter of concern to you?

Mr. Sweeney.—The matter of pricing is obviously a matter of concern if you encounter price resistance for the particular product you are selling. It is fair to say that in a number of countries overseas there is an emergence of price resistance to the Irish product. On the other hand, I do not think Ireland will ever be a cheap destination in the bad sense, or an inexpensive destination in terms of the actual price you pay for the product. What we are concerned about is that the price you pay should be matched with value for money. It is more the value for money concept than the actual price level that one should be aware of.

In terms of overseas visitors policy, currency fluctuations plays a part in this. If you go back to the mid-seventies, when we had fairly high domestic inflation in Ireland, that was countered in many instances particularly in the German market, by the strength of their currency. When you might have had a price increase of 15 to 20 per cent in the Irish product it was not passed on to the German client because his currency was much stronger and eliminated the difference. Where you have reasonably stable, if not fixed, exchange rates, particularly in the EMS system, that advantage is not there any longer. On the other hand, one cannot say that if one cuts price, that is the answer to one’s problems. It is not a sound economic basis. Our particular strategy would be to ensure that the price charged represents good value for the product, and if it is perceived as good value people will buy it.

244. Chairman.—Is there a formal or semi-formal procedure between Aer Lingus and yourselves? Before Aer Lingus finally issue their schedules for the next year, do they consult you or say that this is what they are thinking of doing? Do they ask if you have any comments? Is there a joint consultation before they finally issue their schedules?

Mr. Sweeney.—Yes. We have joint consultation at two levels, in the market place between the local representatives, the tourist board and the airline, which is the first place where things begin to crystallise in terms of schedules or fares, and we have consultations, at head office level. There are three areas where we have formal communication and dialogue—in terms of capacity and the volume of planes made available on particular routes; in the area of schedules, frequency of service and so forth; and in the area of fares.

245. Chairman.—Is there very close consultation between you?

Mr. Sweeney.—Yes.

The witnesses withdrew.

Mr. Christopher Kirwan and Mr. Eamonn Griffin of the Irish Transport and General Workers Union; Mr. Paul Boushell, Mr. Frank O’Malley and Ms. Josephine Walsh of the Federated Workers Union of Ireland called and examined.

246. Chairman.—Do the trade unions believe there are any shortcomings in industrial relations in Aer Lingus at the moment?

Mr. Kirwan.—Perhaps I could make a broad general statement and then I will leave it to the people who are directly concerned with the industrial relations field. I got in touch with this Committee because I noticed in the media that a great deal of publicity was being given to some evidence produced by the chief executive of Aer Lingus, particularly in respect of the North Atlantic operations. Tying this in and setting it against the backdrop of the fact that there is an application for a licence by Sir Freddie Laker on the cross-channel route, it became a matter of some concern to me, bearing in mind that this is the national flag carrier, wholly-owned by the State. When the chief executive asserts that something may happen which will have a tremendous effect on the labour content of the national flag carrier that begins to worry us. He was talking about possible redundancies in the event of a withdrawal from that service.

247. Chairman.—He was only talking about the North Atlantic route. The evidence was that the European network was still viable and profitable but the North Atlantic one was very unprofitable. Comment?

Mr. Kirwan.—We felt it was viable in so far as we can maintain the level of participation in the general business available. For example, there are private entrepreneurs—they are few and far between at this time—who would like to cut into it. Laker is one. We would be concerned that the national airline would get the type of recognition from the Committee which it is due. Even for social and economic reasons it is important to maintain as many people in employment as the industry can justifiably take. It was because of this that we asked to meet the Committee and express our concern about any development that may take place which would reduce the efficacy of Aer Lingus as our national airline, and, as a consequence, reduce the level of employment in it and the level of skill and expertise which has been built up over the years in the industry. That would be a matter of acute concern to us. We are anxious, therefore, that the Committee would be aware of our appeal. A specific question on the industrial relations scene has been put and as my colleagues live in this area on a day to day basis they have something to say about that.

Mr. O’Malley.—That question is a very wide and far reaching one and there are a number of points I wish to make. One point is in relation to the emphasis placed by Aer Lingus management on certain aspects of industrial relations. Since the dispute in 1978 of our clerical members an emphasis has been placed by Aer Lingus management on the industrial relations side. The staff development aspect of the personnel department has been bereft of some of the expertise that should be poured into that area. While they have revamped their industrial relations department, that aspect has been neglected to some extent. At present we are concerned at the high level of overtime that is worked within the airline. It is of grave concern to us who represent a cross-section of workers, clerical, operatives, trades and also cabin crews. It is more of a problem in certain areas than others. While we have endeavoured to improve the industrial relations climate we have encountered certain drawbacks and difficulties, mainly due to the fact that there does not appear to be an overall approach by Aer Lingus management, who tend to deal with problems as they arise rather than have an overall plan of strategy. In certain sections, particularly in relation to our clerical people—this is reflected to some extent in the last year’s annual report—we have evolved a system which at least gives us an opportunity, particularly in clerical grouping, to get information related to future plans. Aer Lingus at present are going through a phase whereby they have got to take on a considerable amount of new technology in order to equip themselves more effectively for the 1980s. We would not regard that system as being perfect to any great degree, but at least we have a system that if worked in a meaningful way by Aer Lingus management can bring about the resolution of a considerable number of the problems that will be followed by new technology. To that extent there have been some improvements from the 1978 position. We would like to see a greater involvement of our members at all levels in the decision-making process. We may in some areas get an indication that that is happening but in the general overall situation that is not transmitted to all levels. It is difficult to get down to specific issues and all I can do is give a broad statement of the position.

248. Deputy B. Desmond.—It is two years since the end of that dispute and the chairman in his report for 1978-79 said that the strike damaged the airline to the tune of £5 million; after that the joint working party was set up and after two years I should like to know the result.

Mr. O’Malley.—The result is that a considerable number of improvements that were required by Aer Lingus management have, in fact, been acted upon and worked. In that sense there has been a considerable amount of movement. However, I should like to point out that the strike in 1978 was an unfortunate event as far as we were concerned. It could have been avoided had Aer Lingus management been in a freer position to negotiate. The Department of the Public Service and the Labour Court did not serve in the resolution of our problem. We had to use the services of Dr. Charles McCarthy to try to reach a settlement. I would also point out that that dispute arose also from a claim that went back as far as 1976 and our union went through exhaustive procedures prior to the strike notice being activated. We have, as far as we are concerned, done everything in our power to improve the industrial relations climate and to some extent it has improved, but not as far as we would want it.

249. Deputy B. Desmond.—The other general unions, the Transport Union and the craft unions, were not included in that working party. They were excluded from the terms of settlement. To what extent have they been involved in the discussions of either improved industrial relations structures or new productivity measures which were allegedly within the ambit of that settlement?

Mr. Boushell.—I would not presume to answer for other unions but I should like to add a little to what Mr. O’Malley has said. Part of the reason for that strike was a failure by Aer Lingus management to have any meaningful consultation on changes in work practices, changes in recruitment policy and a whole range of things. Basically, Aer Lingus management’s position at that time was that consultation meant calling in the union, or unions, when they had their mind made up as to what they were going to do and saying: “We are now telling you”. That was a considerable ingredient in that strike. From the clerks’ point of view that has now greatly improved. There is now more meaningful consultation. As all groups have to be treated more or less equally other groups would have benefited from that consultation process but not in a formal way because the clerks are the only workers that have a formal agreement along that road.

Mr. Kirwan.—I range over most of the transport modes so I can be a little objective about this. As a general observation, industrial relations in Aer Lingus will stand up favourably—for example, in comparison with CIE, of which the Committee will have some knowledge. One of the safety valves we have, when we weigh our activities in the operations end against the situation described in the clerical end, is that we have a relativity clause which serves as a sort of automatic adjustment in respect of wages. For example, if craftsmen determine their wage rates at a certain level the “in house” agreement which operates within Aer Lingus ensures that the operative grades will keep pace pro rata. That has helped to stabilise the situation. I cannot remember, off the top of my head, any very serious stoppage of work in the operations end. That may be taken as an example that the industrial relations mechanism which operates in Aer Lingus and Aerlinte is good. We have some difficulty in persuading, certainly management on the shop floor, that they should be capable of making decisions to resolve matters of a local incidence and the general criticism that comes up within the operations sector is that far too often there is a tendency for middle-management to refer problems which the staff think should be resolved there and then to a higher level. It has even got to the stage, I was told on one occasion, where almost every matter raised was considered to be a function of the industrial relations department. So if we were to level criticism in industrial relation terms we would level it at this inability of management to delegate authority at shop floor level to resolve issues. All of that has meant that we have had to use all of the various difficult mechanisms open to us, such as the Joint Industrial Council, the Labour Court and so on before we could resolve issues which most of our members felt could have been resolved at source with a little commonsense application on both sides.

250. Chairman.—As far as you are concerned it uses up a lot of time that could have been better used?

Mr. Kirwan.—Yes, and it produces a great deal of aggravation.

251. Senator Cooney.—What are the reasons? Is it because of a fear of resorting on the shop floor to a precedent that might be followed somewhere else and that might not have been foreseen at the spot of the incident? Would that be the case?

Mr. Griffin.—That is a possibility. Yes. One of the problems that has emerged over a period of years is that industrial relations made a take-over bid some years ago from management; management failed to take decisions at their level and let it go to industrial relations. They have never to date accepted back the responsibility to manage in the various areas nor have the industrial relations people been too anxious to give it back to them. The result is that we find ourselves now meeting management who really turn out to be messenger boys—they are running back and forth to industrial relations— which is bringing about frustration after frustration on the part of membership. I know the trade union movement have been criticised on a number of occasions about their lack of a responsible attitude to people. I would say that if there was a thorough examination carried out of what is going on in Aer Lingus it would vindicate the trade union movement in their responsible action to the whole of their membership. We now ask ourselves: “how long can this situation be allowed continue?” Agreements have been effected quite recently within the operative sections to bring about an improvement in the situation, to eliminate some of the problems emerging affecting members being recruited on a seasonal basis. Because they were recruited every year they felt they had an entitlement, which is understandable, but the company were not prepared to go along with that on a seniority basis. We made a change in that in order to help both sides of the house—the worker to realise that he was only seasonal and management to avoid this business of people believing that after seven or eight years coming back they had an entitlement. Unfortunately, the company are not honouring that even today. The situation now is that I could say tomorrow: “look, an agreement has recently been broken.” We do not have an industrial relations situation really. What we have are members of industrial relations at all levels. The last man promoted had experience in industrial relations. He has been promoted into a managerial situation. He now reports back to industrial relations before he makes any decision whatsoever.

252. Senator Cooney.—Are industrial relations not a part of management?

Mr. Griffin.—Unfortunately, they seem to be adopting more of the management role than acting as mediator between two groups, endeavouring to iron out problems. That is as I see industrial relations. To clarify that, one finds when one goes to talk about a point that industrial relations come down clearly on the side of management irrespective of the rights and wrongs.

Mr. Kirwan.—The question, Senator Cooney, is a logical one in an industry the size of Aerlinte and Aer Lingus—thousands of people, with a plethora of unions representing all of the various occupations. There will always be this difficulty about conceding one issue which might cause a ripple effect throughout the structure. That is not unusual. That happens in CIE, the Sugar Company, the B & I and so on. It is part of the ritual of industrial relations within a large number of trading companies employing a host of classifications. In common with most semi-State companies there appears to be this predilection towards passing the buck. In other words, people at the level of a particular operation—people who in our view are perfectly capable of taking decisions which have not got these far-reaching rippling effects—are not doing so. Instead they are saying “This is a matter which you must refer to the people charged with the specific responsibility of industrial relations”. That is a time-consuming exercise. That is the point we have been trying to make. Very often, by the time it gets to industrial relations—and perhaps it may not be resolved there—one then has to go through the practice of the conciliation conference and Labour Court hearing, which is even more time-consuming and is certainly not conducive to good morale. In a nutshell what we are saying is that within the industrial relations set-up in Aer Lingus there should be the capacity to produce people who can take quick decisions on minor industrial relations matters as they occur on the floor.

253. Deputy B. Desmond.—Would this be because they may have been feeling that the hierarchial structure of the company is too rigid? Aer Lingus would argue very strenuously to us that, despite the 1978 strike and other difficulties internally, in the seventies, overall industrial relations were reasonably good. They would argue that vis-à-vis other State-sponsored bodies and so on. Would it be your feeling that perhaps the line management at top level is too rigid or that everything is being sent up to them directly?

Mr. O’Malley.—The difficulty as we would see it is that, as has already been outlined in relation to passing problems up the line, even at the stage at which they are being dealt with by industrial relations there is a great preponderance of feeling within the department that they would rather somebody else took the decision. We get into third party situations very quickly in regard to problems which could be resolved within the company. We do use internal conciliation quite a lot even though it is difficult at present to get people because of the difficulty we have agreeing chairmen. We have had that difficulty for some time now. The situation is that matters are referred to the Labour Court. On that, I would say the Labour Court and the machinery of the Labour Court is being abused, because a number of the problems are being sent there from a delaying point of view. There is the fact also that the Court will issue a recommendation which, to a certain extent, may not suit either the company or our side at any given time. We have encountered that difficulty. From our point of view we have also used the Irish Productivity Centre in our negotiations but it is very difficult for an outside body to come in and understand the complexities of the airline. It did not aid in any great way, from our point of view, the resolution of the problems we had with the Aer Lingus management which could have been resolved, in our view at the outset, by direct negotiations in the time honoured fashion that has been there for years. I would say there is a very rigid approach to dealing with problems. The tendency is to pass the problems along the line, which eventually brings about a situation where one is using a third party. I am very much against the use of third parties except in situations where it is absolutely necessary. Also there is an abuse of the Labour Court machinery whereby it is used as a delaying mechanism which gives the impression that something is being done with the problem but in fact it is going on and on. As most of you are aware, the machinery takes quite some time to resolve quite a simple issue if it is used.

254. Deputy B. Desmond.—Is it not unknown for that to happen in other companies as well?

Mr. O’Malley.—But when a considerable number of one’s problems are directed in that way one ends up with a very long process in resolving even the simplest of claims. It may indeed go that way in other companies, but the point is that in Aer Lingus it is an ever increasing mechanism—more and more matters are being referred to more and more third parties. Yet the industrial relations department gets bigger and bigger because they apparently need more and more of them to prepare more and more submissions for more and more third parties.

255. Senator Cooney.—Is there any discussion going on to try to resolve what must be a patent problem in Aer Lingus?

Ms. Walsh.—I am an employee of Aer Lingus and a member of the Federated Workers Union of Ireland. That is why I am here today. We have been talking to management over the years and we have expressed our frustrations very strongly to them about what would be a minor problem being exposed and built up very much out of proportion, because it is something that could be handled locally, but in time it gets the notoriety of industrial relations or indeed goes on to a third party. We have spoken to them quite a lot about this and they recognise it as a problem. But, quite frankly, there is not enough trust on either side as far as we are concerned. We really do not trust Aer Lingus management so well and they do not trust us. This is why we fail to come to first base.

256. Senator Cooney.—Have the union side ever thought of saying to the management that here are problems in the labour field because of the reasons you have just given us and this is how they think it should be solved?

Mr. O’Malley.—Yes, we have. In fact the joint working party and our own union suggested that, particularly our General Secretary, Paddy Cardiff. I would like to give you an illustration. In the last fortnight I had a very simple problem which one would imagine could have been resolved internally. It related to a particular individual who was on a monthly pay roll and wanted to be paid weekly and had a good argument for the change from monthly to weekly. That matter had to be referred to a rights commissioner before we got a recommendation on a simple problem that should have been, because of the level of sophistication within industrial relations management in Aer Lingus, resolved there rather than having recourse to a third party.

257. Chairman.—Can you think of any reason why this could not be done?

Mr. O’Malley.—No. It was their policy.

258. Chairman.—Perhaps it was some terrible complications from the point of view of the computer or something like that?

Mr. Boushell.—No. The point is it was their policy not to do that. That is the reason given to us and given to the rights commissioner.

259. Deputy B. Desmond.—Are you suggesting that if the industrial relations manager had executive powers and executive authority that he would be in the position to take this decision?

Mr. O’Malley.—I think he is in that position.

260. Deputy B. Desmond.—Then why does he not take that decision?

Mr. O’Malley.—Because, possibly, it is a perception of his that it might start a tide of people changing from monthly to weekly or whatever. That is the only reason that I can imagine why he should adopt such an attitude.

261. Chairman.—It is difficult to understand why if a proposal or suggestion is made for some change it should be referred to industrial relations unless there is a difference of opinion between management and the unions. Are you saying that something is put up to management at a relatively low level that certain things should be done and that, without even discussing it, they refer it to industrial relations, or do they say no, they do not think they can do that, but that they could do this; you say you are not satisfied with that and then it is referred?

Mr. Kirwan.—They do not make any suggestion at all. It is usually a case of saying no.

Mr. Griffin.—May I come in? I may not have the right answer to this and this is a very difficult one to suggest because I do not know whether I am doing favours for people or not on this one. But I believe that certain people in the organisation may have ceased to work because of not getting the promotions that possibly were due to them. That may very well be happening within this situation. Some years back we did have a situation where one went to IR and met the gentleman concerned; he produced a formula for settlement and that may have worked. Currently you find that you go to people in IR and they go to a backroom to see the same gentleman—you probably know the man concerned but I do not want to name him—and either get his sanction on the thing or not. Obviously he is a man who should be possibly in a much more visible position to make decisions but I think he was passed over—that is a personal opinion—and it has this effect.

262. Deputy B. Desmond.—When we are in public session such matters are under very understandable and necessary constraints and sensitivity, but we can certainly inquire from the company and from all the parties concerned as to their views on such matters. Is there a strong view still that the obvious reluctance on the part of the executive authority of Aer Lingus to resolve issues there and then has declined? It has been suggested down through the years that, perhaps American ‘management’ was inherited into Aer Lingus in the old days under Dr. Dempsey and so on when there was allegedly a different climate. There are many stories and arguments about that but one still gets the overall impression that, despite the difficulties that have occurred, despite the complexity of the negotiations with a large number of craft unions and quite a number of general unions, and despite the tremendous tensions that have occurred in the company, there is a tremendously high degree of trade union organisation right down from the airline pilots to the catering staff, but that nevertheless, industrial relations are not perhaps as bad as they appear to be from the descriptions at today’s meeting.

Mr. Boushell.—I think you have a certain insight into the historical background.

Mr. Kirwan.—There is a certain logic to that type of statement which I am not going to try to challenge now. It occurs to me that the Roman Empire lasted for 1,000 years——

263.—Mr. B. Desmond.—Is it not a complex situation?

Mr. Kirwan.—It is a fact that, for example, if one measures Aer Lingus and its track record in industrial relations, through disputes, with some other semi-State company, it would come out favourably; but that does not lessen the criticism that is being made here.

264. Chairman.—When we were examining the management, their view was not that there were very bad relations. They said the only serious strike in their history was the one referred to. I want to make it clear that it is not suggested that industrial relations are very bad.

Mr. Kirwan.—I do not think that we would think industrial relations are very bad in comparison with somebody else who is an awful lot worse. We know that. We are saying, however, that there is still plenty of room for improvement.

Mr. Boushell.—I do not agree that they are very bad in comparison with some others, but we are saying that there is plenty of room for improvement. We doubt that an improvement is taking place. The fact that the first strike was in 1978 and that there was not one for 40 years before that does not necessarily mean that there will not be another strike for another 40 years. A lot of people would wonder if the graph is going down. The almost historical analysis of what has happened would coincide with the view of a large number of the work force. My view would be that we have moved from a situation of the staff in general having a fierce loyalty to Aer Lingus, including the management thereof. They still have that loyalty to a thing called Aer Lingus, but it does not include management, who are roughing up their beautiful airline. That shift has taken place. But you will notice in speaking to people who work for Aer Lingus that if you criticise Aer Lingus they very rapidly spring to its defence. They will do so under any circumstances, which I think is not common to all industry.

265. Chairman.—That is a very valuable thing to have and I hope it will be preserved. Would you not agree?

Mr. Kirwan.—You generated this discussion, Chairman. I should like to deal with Senator Cooney’s question when he asked whether it was possible for the trade unions to devise some master plan and present it to the management as the panacea for all evils. I am not saying that we are not capable of doing that. We have been described as “know-alls” before, but it occurs to me that it is one step towards taking over the whole place, if you are able to demonstrate to them that you can manage it better than they can.

I want to make it quite clear—I am speaking for my union—that if we have industrial relations problems we will find a way of fixing them. We will not fix them here at the level of this Committee but we will find our own way of solving our industrial relations problems. In the overall general terms we are anxious to see this Committee adopt a perspective where Aer Lingus will be regarded as our national flag carrier, that the employment content of that company will be preserved, that any difficulties that arise in respect of any of its operations which will tend to cut back on its revenue and as a consequence cut back on its labour force will be regarded by this Committee as being a serious impairment to the national integrity and certainly in social and economic terms a disaster. With few exceptions no private entrepreneurial system can manage an airline. You will be able to talk about Freddie Laker, but in the main most of the airlines that operate in the western communities are State operated and wholly owned or partly owned by the State. Sabena, Lufthansa, Alitalia and Air France are all owned by the State. We are concerned that during the course of evidence to this Committee, the Chief Executive pointed to the possibility of a situation developing in certain of the company’s operations which could, if not checked by some means such as financial assistance or subvention from the State, result in substantial redundancies. It would be a matter of acute concern to us.

266. Senator Cooney.—To put his statement in context, I put the question to him as to what the effect would be if the North Atlantic route reached a bad state and had to collapse. It was in that context that he spoke, not envisaging it as happening but rather about what could happen if that unthinkable calamity occurred. The North Atlantic route is the biggest loss maker in the whole Aer Lingus-Aerlinte operation. They are losing a substantial amount of money. Have the trade unions put forward any suggestions or have they any idea how they might help to minimise these losses?

Mr. Kirwan.—This is a question of management techniques and expertise. A statutory instrument was prepared recently to provide for representation at board level in Aer Lingus. Hopefully with training we will have the people who will produce the type of suggestions that may meet the problem that you have described. To be quite frank, if I had the cure-all for the problems of Aer Lingus I would not be wasting my time talking to this Committee today.

Senator Cooney.—I do not mean the cure-all—just a contribution.

Ms. Walsh.—The consumer protection notion is very popular now. The media highlight the low cost of trans-Atlantic fares offered by such carriers as Freddie Laker. That sort of thing is very popular with politicians and in the media. This is something that works against Aer Lingus and the other bigger airlines in Europe and America coming together and establishing an economic fare on the Atlantic. The trade union movement, if they have been thinking about this and considering it, are very well aware that these are the restrictions on Aer Lingus. We know that the striking of a rate on trans-Atlantic fares can to an extent be modified somewhat by how many seats are put across the aisle of a 747 and whether the aeroplane is partitioned off in various sections making it crammed in one section and less crammed in other sections; but that is only marginal. The high cost of aviation fuel is alarming. I talk to people not working in Aer Lingus. I can appreciate their talking about getting over the Atlantic and back for £200 and less and I can see that with the overheads that are necessary it would be impossible for Aer Lingus to compete with that type of fare. On the Atlantic we use a lot of our aircraft on charter traffic and this is something that the airlines have developed over the years. I am not sure how they work the finances of that. It certainly appears to give a better return than scheduled flights. If we pulled out of the scheduled flights to a greater extent I would see a big difficulty from the Americans about maintaining the services and keeping the airports open to us. The unions are very conscious of what the airlines are up against. We are keeping an eye on what happens in America with de-regulation on the routes being operated by the other carriers and we are concerned about what might happen here and in Europe and what might happen on the Atlantic.

Mr. Boushell.—We consider ourselves to have common cause with management on those matters. We are as one with them on this issue. We recognise the problems. We think, however, that the Department of Transport have a big role to play in this area and should be examining more carefully the licensing of what could be called “fly-by-night” operators. They can come in, make a fast buck and get out or, if they are a big enough carrier, they can afford to carry a loss-making situation until they have done irreparable damage to Aer Lingus. However, Aer Lingus are the national carrier and they are expected, quite correctly, by the business community to provide a scheduled all-year-round service, even if they are operating with planes three-quarters empty. Aer Lingus could, of course, go into that market, but at an enormous cost and leave us at the mercy of foreign carriers and private enterprise-type carriers who can switch their money from one industry to another and leave us high and dry when it suits them. It appears to us that the Department could examine these applications a little bit more than they appear to us to do.

267. Chairman.—I should like to comment on what Mr. Kirwan said about what the Chief Executive said. He did not envisage this happening this year or next year. What he said was that the North Atlantic is showing a very substantial loss and that a time could come within the next two or three years when Aer Lingus would have to report to the Government from the purely commercial point of view as an airline, that they cannot justify continuing the North Atlantic services. It would be over to the Government to decide whether they want to carry it on for national reasons and so on. I think the losses on the Atlantic are running at something like £7 or £8 million. What is your view on that?

Mr. Boushell.—Yes, the figures are there and cannot be argued with. But it would not be simply cutting off the North Atlantic. There is an additional ingredient in that some of the passengers we carry on the North Atlantic travel with us into the UK and Europe and vice versa. Therefore you would be doing more than just getting rid of the North Atlantic; you would be getting rid of some of these other businesses as well.

Mr. Kirwan.—Could I make the point that the Chief Executive of Aer Lingus was perhaps trying the wrong ball. This has to be set in context. It is common knowledge that, though some people might tend to regard it lightly, that the world’s oil supplies are dwindling. The producers who are now in control of the sources of supply are setting the market prices for it. The last time I flew to London a ticket was £71 and now it is £99. Obviously if he is a good business man he is taking into account, so far as he possibly can within the restraints imposed on him by OPEC and other oil producing nations, what is going to happen. That is precisely why I got in touch with this Committee—because that first salvo was fired and because that first warning shot was let out. If we value history at all, it will teach us not to make the same mistake twice. For example, in our railway system we had people talking about the fall back in passenger miles and then we had a situation developing where half of our railway system was cut off. We are now running into a situation of acute shortage of energy. It may well be that in the future we will be talking about replacing the tracks that Tod Andrews pulled up. We do not want the same thing to happen in Aer Lingus. If the warnings have been sounded it makes us aware of the possibility and it is because we are aware of the possibility that we came here. We know that in every transport undertaking losses are engendered. Most people regard transport as a personal commodity and for that reason do not like paying for it. My wife does not like paying for the bus into town. Every time Liam St. J. Devlin raises the price from stage to stage she blames me. If you go to the B & I, despite the fact that there is a jetfoil in operation, in competition with Aer Lingus, skimming across the Irish Sea, the B & I lose substantially too. Their losses last year were in excess of £ 1 million. In any area of transport you find these losses. We were concerned that the Committee would have in mind when they are preparing their final report all the factors which contribute to this situation, the fact that this is our national flag carrier, our national airline and a very substantial employer and that any action taken to reduce the value of that is a matter of serious concern to us.

268. Senator Cooney.—Going back to the question of industrial relations, you mentioned that one of the areas where problems were referred was the Irish Productivity Centre. Would it be possible for us to see their report to give us an indication of what went to them and how they, as an outside objective body, looked at it?

Mr. Kirwan.—The IPC were involved on two levels. The Labour Court had them produce a report. They may make that available to you.

Mr. O’Malley.—The other report was at the behest of Aer Lingus management and ourselves. We asked them to do it on the basis that it would provide for negotiations Basically that was the objective of the exercise.

Mr. Boushell.—That report has not yet been published. In regard to the other one Mr. Kirwan has mentioned, we requested a copy of that and we understand that Aer Lingus management also requested a copy of it and were denied it, both by the Court and by the IPC, so perhaps you will have more luck. Perhaps if you have any luck, you might let us have a look at it too.

Mr. Griffin.—As regards what my colleague Mr. Boushell was saying, the type of services that we produce for passengers is a big cost factor. Other airlines coming in do not indulge in that type of cost factor but cut expenses. I have flown with some of these people and I know the type of meals that they give. They are nothing like the type that we expect and get ourselves and would be very critical if we did not.

Ms. Walsh.—The cost of landing charges that Aer Lingus pay at Dublin and Shannon airports is very heavy. They provide a substantial part of the expenditure on the trans-Atlantic route. There is no amelioration of those charges because they happen to be Aer Lingus. Aer Rianta, a Government body, collect the charges from them the same as from any other carrier. This is one way we have said to Aer Lingus management—and they of course agree with us—that they could in fact reduce the trans-Atlantic costs.

Chairman.—That came up before. Thank you all very much.

The witnesses withdrew.

*See Appendix 9.