Tourism and aviation form a nexus in Ireland that has unique and multiple effects across the economy.
Ireland is disproportionately dependent on air travel services to function while tourism is, relative to other countries, a vital element in the economy, especially outside of Dublin.
These facts underline the urgent need to push aviation and tourism up the political agenda as Brexit negotiations loom. Other sectors are proving to be far more adept on this issue. The agri-food industry is fully energised and campaigning on every facet of Brexit. Financial services lobby groups likewise.
The tourism and aviation sectors are not visible enough on the threats posed by the UK leaving the EU. British tourists remain key consumers of Irish tourism and have proven reliable spenders through various economic cycles. If sterling weakens materially, and obstacles are placed in the way of travelling freely between the UK and Ireland, tourism will be under distinct threat. That risk is heightened by news that airline capacity between the UK and Ireland is being cut in 2017.
It is imperative, not just for the aviation and tourism sectors, but for the economy as a whole that both sectors raise the heat levels domestically and across Europe. To combat the challenges of Brexit, tourism needs to be equipped with the tools that can keep it competitive in the event of a hard Brexit. There are both self-help measures and government initiatives that can assist.
On the self-help side, managing costs will be a critical component of the sector’s response. Amid solid economic growth in the past year or more, cost inflation has started to surface across tourism. Labour and property prices, in particular, appear to have inflated. While that is understandable, it creates price inflation in a product that needs to be keenly positioned before UK consumers. Government can help by ensuring direct and indirect taxes affecting the tourist industry are not elevated during Brexit talks.
In aviation, the challenges of Brexit are possibly even more stark. The EU chief negotiator, Michel Barnier, pointedly referenced aviation in his recent Dáil speech and warned that air connections between the UK and EU could be severely hampered if Brexit goes wrong.
The top five airports Irish passengers fly to are all British. Imagine the disruption that would ensue if tighter immigration and customs checks apply. Not only would that impact the economy in general but it would also make air travel from Britain to Ireland less appealing for holidaymakers.
Ireland needs to progress some big ideas. Top of this list should be a new runway at Dublin Airport. Not only can that infrastructure investment enliven the local economy, but it would also widen the capacity to grow tourism. I am amazed by the quietness among interest groups dependent on aviation and tourism on that topic. Instead of loudly advocating the critical importance of a new runway for ‘Ireland Inc’, they have allowed the agenda to be hijacked by relatively small but vocal opposition groups. Have we reached the stage, again, where the national interest is sacrificed on the altar of local politics?
Brexit is the key issue for anyone who cares about Ireland’s fortunes. A number of Irish industries have already clearly set out their stalls. Tourism and aviation risk being left behind without a concerted and dynamic effort by all concerned.
Joe Gill is director of corporate broking at Goodbody Stockbrokers. His views are personal.
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