Silver lining for Shannon in budget

TUESDAY’S Budget will mean reduced circumstances for almost everyone but there was some good news for Clare tourism and Shannon airport.
Business people in the Banner’s tourism sector have been looking for the removal of the €10 air travel tax since it was first announced, with Michael O’Leary blaming it for Ryanair’s failure to meet agreed targets at Shannon. While dismantling his services from Shannon, O’Leary frequently cited the tax as part of the cause, which he claimed would ultimately result in the virtual closure of the airport.
Mr O’Leary has been the most prominent critic of the Government’s decision to introduce the tax but he was reluctant to give the slightest credit after it was cut by 70%.
“The reduction in the €10 tourist tax to €3 was forced on them by the EU Commission’s infringement proceedings. It is regrettable that this Government didn’t have the  vision to go the whole way and scrap this stupid tourist tax altogether, when at this new €3 level it will bring in less than €35 million per annum. While the Government reduces the tourist tax by €7, the Government-owned Dublin Airport Authority monopoly has increased airport fees by over €11 per departing passenger over 2010 and 2011,” he said.
Tourism providers in the Mid-West have struggled through the last three years and Michael Vaughan, chairman of the Irish Hotel’s Federation’s Shannon branch, said the tax cut is positive for the industry. “It has to be a good thing, we need incentives, not disincentives and a reduction in the tax is a step in the right direction.”
However, he said it will still take some time to restore strong passenger numbers to Shannon. He added that although national promotional bodies aren’t having their funding cut, it is still uncertain what will be made available for the promotion of the region.
Clare TD Pat Breen has also been critical of the tax and like Mr O’Leary, said it should have been abolished rather than cut.
“When short-haul routes were axed from the airport last year, the devastating effect rippled into every B&B, guesthouse and hotel in this county. Over half of the visitors coming to Clare do not arrive through Shannon any more. More affordable access, increased capacity and new routes are required if a tourism revival is to happen in this county.
“Leaving an air travel tax in place, irrespective of its monetary cost during an economic recession, sends out all the wrong signals. In my view, Minister Lenihan should have gone the whole hog and abolished this anti-tourist tax completely.”
A spokesman for Shannon Airport declined to comment on the reduction.
Speaking in the Dáil, as he announced the cut in the €10 tax, Mr Lenihan said, “An air travel tax on passengers departing Irish airports was introduced on 30 March 2009. The tax is expected to yield €105 million in 2010, despite the impact of volcanic ash on air travel earlier this year.
“Similar taxes apply in the UK, France, Australia, New Zealand and the US. An air travel tax will apply in Germany and Austria from January 2011. I wish to be clear that this reduced rate is being applied on a temporary basis until the end of next year.”
Minister Lenihan said the tax would be increased again unless there is an “appropriate response” from the airlines but with an election looming and Fianna Fáil facing a drubbing, it is very unlikely that he will be preparing next year’s budget.
Also this week, the Dublin Airport Authority (DAA), which controls Shannon and Cork as well as Dublin, announced a new financial incentive scheme, which aims to increase the amount of traffic at the three airports in 2011.
The Grow Incentive Scheme will see all three airports effectively waiving all airport charges for passenger traffic once an overall threshold of 23.5 million passengers is reached.
Twenty-three-and-a-half million is equivalent to the throughput across the three airports in 2010, with an allowance made for the impact of the volcanic ash crisis.
The DAA’s director of strategy, Vincent Harrison, said that there are now good prospects for growth in 2011. “Irish airport charges are already highly competitive and the addition of these new incentives makes Dublin, Cork and Shannon airports even more attractive for business. The combination of the Government’s decision to reduce its aviation tax, coupled with the DAA’s rebate of all airport charges for extra traffic delivered to our airports next year, provides a powerful incentive to stimulate passenger traffic into and out of Ireland during 2011.”