Committee Reports > List of Committees > Dáil > 1985 > Committee on Public Expenditure > Report - Review of Exchequer Costs of Travel and Subsistence

APPENDIX V

Observations of Department of Finance and Department of the Public Service on the proposal from Lep Travel Ltd

1 There was difficulty at the meeting of the Public Expenditure Committee on 10 July 1984 in establishing how the arrangements proposed by Lep Travel Ltd would operate in practice in a Department. This written proposal as it stands, still lacks sufficient information to enable us judge how the arrangements would benefit us; for instance, Lep Travel Ltd. do not say what levels of bulk rebate would apply to specific volumes of annual travel. They do not outline the restrictions or conditions that would apply to our individual travel transactions in order to achieve the reductions e.g. type of advance notice needed, type of carrier/class of travel that would be used, the connection points on long distance travel.

2. As the Committee is aware, current Government policy regarding the use of air transport for official journeys is to urge insofar as it is practicable that officers use Aer Lingus for their travel arrangements. The basis for this policy, as will be appreciated, is to encourage the viability of the national carrier - a wholly State owned body - which has had occasion in the past to seek equity injection from Government to sustain its year round services. Business and official travel is one of the most lucrative sectors of Aer Lingus markets and any dilution in earnings from this source would have considerable repercussions for the Company. The estimated total value of tickets issued by Aer Lingus for Government Departments’ travel (including travel with other airlines) in 1983 was £2.3 million. Of that figure £1.25 million was in respect of direct carriage with Aer Lingus services. As Aer Lingus apply a 10% discount on all Aer Lingus flights booked by Government Departments the discount represented a saving to the Exchequer of about £125,000 in 1983.

3. Turning to the submission made by Lep Travel Ltd., the basis for the proposed “savings” in air travel over and above the present discount offered by Aer Lingus appears to be in the use of cheaper class travel and/or Apex type fares. The Apex fare is limited as to its suitability for business travel because of its restrictions in relation to flexibility and service. In any event, both economy class and Apex type fares available to us through Aer Lingus. A point which might also be made about fare packages is that Government Departments have to be careful as to their compliance with regulatory controls.

4. In relation to the Lep Travel proposal of a 4% bulk purchase rebate to the Exchequer alongside a possible 10-15% saving by using their agency it should be remembered that Aer Lingus already guarantee a 10% discount. In addition Irish mission rates are avaliable in certain hotels in Brussels. The Department of Foreign Affairs also avails of the services of its missions abroad to secure such economies as are practicable and negotiate special hotel rates. It is accordingly difficult to see how additional saving of the magnitiude suggested by Lep Travel could be achieved. Indeed, Lep are vague on how an incentive payment system as mentioned in Section 5 of Schedule 3 to the submission of 24th August would operate.

5. The contention in the Lep Travel submission that the benefits attached to using Aer Lingus are negated by the existence of pooling arrangements between airlines is no longer true. The situation described is one which existed in the 50s and 60s and has been superseded by arrangements which concentrate mainly on the allocation of schedules and which include strict limits on transfer of revenues.

6. In relation to the range of services on offer by travel agents vis-a-vis Aer Lingus there would appear to be little or no difference other than a Travel Tips newsletter on offer by the travel agents concerned. The assertion that Aer Lingus cannot adequately service the needs of the public service travel requirements because they do not themselves operate a worldwide network is untrue as Aer Lingus operate a computer reservation system which is one of the best in the world and facilitates the fast and efficient reservation of flights to anywhere in the world.

7. The Department of Communications have indicated that Aer Lingus would welcome an opportunity to make a presentation to the Public Expenditure Committee to illustrate the services which they can provide and which, in the Airline’s view, are as good as and perhaps better than the services that can be offered by travel agents.