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

APPENDIX VI

Letter to Clerk to the Committee from Aer Lingus

Thank you for your letter of 13 February and for the enclosed documents.

I attach the written submission from Aer Lingus as agreed. Should the Committee deem it necessary we would of course be willing to attend and elaborate on any of the issues raised in that submission, or on any other points of interest to the Committee.

Yours sincerely,

Oisin O’Siochru

PLANNING AND INDUSTRY AFFAIRS MANAGER.

21 February, 1985.

PUBLIC SERVICE TRAVEL ON AER LINGUS

1.Aer Lingus provides a very comprehensive travel service to all Government departments. The service is operated through the Business Travel Desk in Reservations Dublin. In addition a Senior Sales Superintendent, responsible for sales and service to Government departments, is fully familiar with all Public Service travel needs and calls on the various departments at regular intervals in order to keep in touch with their requirements.

2.The Business Travel Desk provides a complete travel reservations service, including car hire, hotels and surface tickets if required. Service available 364 days a year. Ticketing and reservations can be arranged on the services of most of the worlds major airlines (not just Aer Lingus). Payment is made through Aer Lingus for all services and the airline arranges for transfer of that payment to other parties as required. It is quite common for the Aer Lingus BTD to arrange for Government Dept. travel on other airlines (see 5 below), but requests for car hire, hotels or surface travel arrangements are comparatively rare in spite of the convenience of the service.

3.A ticket delivery service is available, but not frequently used. Most tickets are issued in our Grafton Street Public Booking Office and collected by messenger from the Government Department concerned or sent by post. They can, of course, also be made available at short notice at any airport or airline office, not only in Ireland, but worldwide.

4.Payment is normally by Credit Travel Order (CTO). This means that the Government Department concerned is invoiced in the month following the month of travel and given 30 days credit from the date of the invoice. These are essentially the same terms as those given by credit card companies.

5.Through this service Aer Lingus offers Government Departments not only the facility to book on a wide range of carriers to almost any destination worldwide, but also a choice of all the applicable fares offered by those carriers. The Aer Lingus reservations system is linked directly to the reservations system of nearly every carrier of consequence, worldwide, and our reservations staff are highly trained and experienced in making arrangements for the most complex and lengthy journeys. An essential part of the service provided by the Aer Lingus BTD is advice on the best routing and lowest fare consistent with the travellers requirements.

6.Understandably, the Aer Lingus BTD will try to route as much as possible on Aer Lingus services, but this consideration takes second place to offering the Public Service traveller the timing, routing and service he requires, at the lowest price available. This means that the entire journey can be on carriers other than Aer Lingus, an occurrence that is not infrequent where inter-Continental journeys are concerned.

7.Where the Government Department traveller is willing and able to comply with the conditions attached to the lower promotional fares (e.g. advance booking, length of stay etc) these fares will be offered. It is our experience however that the great majority of trips by Government Department staff do not qualify because they take place at short notice or are of short duration or require the flexibility to change date/time of travel or routing to fit in with changes in the timing or duration of the meeting or other activity which is the purpose of the journey. That much being said, it should be clearly understood that the Aer Lingus BTD desk can be relied on to offer the full range of legally available fares to any prospective Public Service traveller.

8.One important factor is that, as the National Airline, we offer reliability and a comprehensive support service. When tickets are issued at the through fare with connecting flights abroad, such connections are guaranteed. In the event of any disruption the passenger is looked after and taken to his destination by the quickest means available. Baggage is checked through to final destination.

9.All Government Departments are allowed a 10% rebate on that. portion of a journey which takes place on Aer Lingus services. This Public Service discount is part of our Government approved tariff. It applies only to bookings made directly with Aer Lingus and is allowed for in the CTO billing. The rationale for this discount is that Aer Lingus passes on to the Public Service the saving achieved by virtue of a high volume of bookings made directly with the airline through a centralised system. This makes it cheaper for Government Departments to deal directly with the airline, as well as giving them the benefit of the better service due to Aer Lingus’ experienced staff and direct (reservations) links with the great majority of other international airlines.

10.In addition to the generally applicable 10% discount referred to above, Aer Lingus also offers to the staff and family of the Department of Foreign Affairs resident abroad a discount of up to 40% on the normal (full) or excursion fare for all personal (vacation) travel back to Ireland.

11.Aer Lingus has suggested that those Government Departments generating a substantial amount of travel consider either a direct electronic link with the airline or having an Aer Lingus sub-office in-house, These possibilities are open for discussion. In particular Aer Lingus would welcome discussion on the installation, in a central point in the Public Service, of a computer terminal which would provide directly information on seat availability worldwide, as well as reservations and possibly ticket issue facilities.

12.Reference has been made, in other submissions to the Committee to a general directive to “use Aer Lingus as much as possible”. We have two points to make on that score:

(i)This kind of directive is common practice by Governments everywhere. The Committee heard of the policy of the UK Government in that respect. In recent times we have encountered very specific directives to use their national carriers from the Government of the USA, Germany, France and Switzerland.

(ii)In purely economic terms it makes good sense to use an Irish-based carrier. It is a most basic form of import substitution with important implications for the balance of payments and for employment.

For these reasons we have asked that a Government directive be issued, along the lines of those existing elsewhere, requiring Government and other Public Service travel abroad to use Aer Lingus services wherever possible.

13.One particular submission (evidence) made to the Committee contained the extra-ordinary assertion that there was no benefit to the Irish economy from the greater use (by Government Department travellers) of Aer Lingus, because the Irish airline has a “full sharing arrangement” of the revenue with the other carriers on the route. This is so far from being the case that one wonders whether the witness in question is even remotely familiar with the way Aer Lingus operates. It was alleged for instance that on the London route Aer Lingus shares all revenues 51/49% with British Airways. The truth of the matter is that we retain all the revenue we are paid by the passengers we carry with the exception of a maximum 1% which is transferred to British Airways in token recognition of their agreement to spread flight timings over the whole day instead of concentrating all services at the most popular timings. Aer Lingus actually carries almost 65% of the traffic on Dublin/ London (Heathrow) and earns (and retains) a corresponding share of the revenue. The same principle applies on all our other routes. We make no transfers at all on the North Atlantic, or on routes to Germany, Scandinavia, Belgium and Spain. On routes to France and Switzerland the transfer is limited to 2%. Where we are the sole operator on a route the question of transfer does not arise.

14.We wish to place on record our concern at the number of unsupported and unwarranted assertions made concerning Aer Lingus by witnesses who appeared before the Committee. The misinformation as to revenue sharing referred to above is only one example. Elsewhere equally unfounded and damaging assertions were made e.g. that Aer Lingus has no interest in offering the lowest fare to prospective Government Department travellers, that Aer Lingus has neither the interest nor the capability to deal with any part of the travel package other than air transport, that Aer Lingus is unable or unwilling to offer the services of other carriers or the full range of fares available from such carriers, that Aer Lingus pays no special attention to the travel needs of Government Department, that Aer Lingus credit terms to Government Departments are less generous than those available from travel agents or credit card companies. As may be seen from this submission we believe that an objective assessor would not only dismiss these allegations as substantively untrue, but would conclude that the reality was in fact the opposite to what our critics asserted.

15.We must also say that we found some of the claims made to the Committee as to savings that might be achieved if different procedures were followed to be rather questionable, insofar as they were either obscurely defined or relied on approaches of doubtful practicality. In several cases for instance the “savings” relied on the use of fares that would involve restrictions and risks that, in our view, would be totally unacceptable to any business traveller. The impression was given that such fares were readily available without restrictions, cancellation penalties or other risks. In other cases there was a misleading implication that certain promotional fares were available (without restrictions?) through particular channels that are not open to Aer Lingus. This is simply not the case. Any fare that is legally available can be bought from Aer Lingus directly.

16.Aer Lingus does not regard the Public Service as some kind of captive customer. We believe that it is in the national interest that public servants would use our services as much as possible. In return we must offer good service and good value as well as impartial advice on the options open to Public Service travellers including the services of other carriers and the full range of legally available fares. Contrary to what has been asserted we do have an incentive to offer imparital advice on the service/price combination best suited to our customers in the Public Service. It is the most compelling of all incentives: since Government Department travellers are not compelled to use Aer Lingus regardless (nor should they be) they will take their business elsewhere if we give them bad value or bad advice. Quite frankly we believe that the service we offer to Government Departments is not only better than they could get from any travel agent or credit card company, it is also cheaper.

21 February, 1985