Monday October 13 2008

Screwed again. the word coming down the tracks from tomorrow’s Budget is that a new airport departure tax is to be introduced.

no doubt it will be glossed up with some sort of pious environmental dressing, but don’t be fooled. This is a revenue issue. you can see why governments love departure taxes.

With 30m passengers passing through the three main airports, the €10 tax will deliver €150m to the Government in one easy stroke. better still, someone else will have to collect it. Michael O’Leary will kick and scream, and declare that the Muppets in Merrion Street have done something incredibly stupid again.

but a departure tax is incredibly good news for Ryanair. it doesn’t refund the departure tax to people who don’t travel. Miss your Ryanair flight, and not only are you paying the highest fares on the plane to get the next one, you pay the departure tax on the double. Ryanair will have a lot of extra cash to pocket.

Will fewer people travel? there has been an immediate impact of recession on the travel business with the demise of three tour operators and two major charter airlines. Business-class seats are harder to sell.

Crisis

but people are still travelling in large numbers. they are booking earlier and paying less, but they are still travelling. and the signs are that they will continue to do so in 2009.

Incoming figures from Britain and the US show that, although individual spend is down and is likely to continue to decline, raw figures of visitor numbers are bearing up from our two biggest markets.

that is no compensation for the airlines, who find their load factors are down because of extra capacity, for the B&B sector, which is looking into a deep crisis, or for the tourist shops who have seen retail sales collapse.

Next year outbound holiday numbers will dip below one million for the first time in four years. This weekend in Reus, the Irish Tour Operators Federation predicted that the years of massive growth are over.

Next year, capacity is likely to decline by 10pc, as tour operators retrench and stay clear of new markets or even the Greek resorts developed by XL.

Holiday companies will complain, but most holiday companies are now charging e20 in fuel or airport charges. Budget Travel will charge you e12 for a bus transfer. Airlines will complain, but they are the ones who invented the ancillary charge. that is before you count the accidental extras such as the extra e5 that hundreds of thousands people end up paying for unwanted insurance.

Barrage

Fuel surcharges are a feature of all long-haul flights, where Aer Lingus charges e220 return for flights to the US west coast, for instance. Airport charges are also going to soar.

the new terminal in Dublin has to be paid for somehow, as will Cork’s airbridges if they are ever built, while Shannon will need to replace its Iraq stopover income.

Outbound tourists are getting used to being screwed. the Government must feel it is being left out in this barrage of extra charges. you can see why it wants a slice of the action. This will be good news for Belfast, where the UK’s airport departure taxes have made competition with Dublin difficult.

there is one snag. Inbound tourists are not trapped like the rest of us by this departure tax. British Prime Minister Gordon Brown has already put a hefty charge on flights from Britain, our key incoming market with more than five million tourists a year.

At a time of fear in Irish tourism, an extra few euro on the price of a holiday could be the deal-breaker in the decision between Allihies and Antalya.

We will never know how many people changed their mind when the little box at the end of the booking process threw up Ireland’s departure tax. neither will the airline that goes bankrupt ever know whether the extra tax was the one that broke the back of his P&L. the hotelier who shuts up shop won’t know who to blame either.

that, too, is good news for Brian Lenihan.