Eoghan O'Mara Walsh: Aviation is key to recovery of tourism
St Patrick's Day normally signals the start of Ireland's tourism season, and the Dublin festival attracts thousands of US tourists — such as these visitors having fun in Temple Bar in 2017 — but Covid brought all that to a halt. Picture: Adrian Dennis/AFP/Getty Images
Is that an American accent you have heard recently? Well, it might just be, as US tourists have once again been free to enjoy the Irish tourism experience ever since the non-essential travel ban was lifted in mid-July.
However, regrettably, the volume of US visitors is only at a fraction of what it was in pre-pandemic times. Back in 2019 — in those halcyon bygone times when nobody had heard of a place called Wuhan — North American visitors spent a whopping €1.8bn while in Ireland on holiday.
That was nearly twice what British visitors spent, and it helped Ireland’s tourism sector solidify its position as the largest indigenous industry and biggest regional employer in the country.
Covid put a near-total halt to global travel and tourism, and the arrival of Americans — along with other international visitors — came to a halt.
As an island nation — predominantly dependent on air access — Ireland was particularly exposed as the Government here chose to impose some of the strictest restrictions across Europe on our aviation sector.
The pace of the vaccine rollout, both at home and in key source markets, has given hope. Belatedly, and slowly, the Irish tourism economy has been allowed reopen and trade once again. July 19 was a key date when — albeit weeks after our European counterparts — international travel was allowed recommence, with the adoption of the digital Covid certificate.
A week later the same documentation was the tool that allowed pubs and restaurants to facilitate indoor dining and drinking. The next stage of the reopening plan, due to be announced by the Taoiseach at the end of this month. must surely allow the final elements of the tourism economy to reopen; namely organised indoor events including conferences, corporate meetings, events and group dining.
But, if the supply side of the equation has slowly coughed into life again, the demand side is still very much in ICU. Let nobody be fooled by the staycation market — this is short-lived, favours only a few regions, and falls vertiginously once the schools go back.
International visitors have been, for many years, the bedrock of tourism and hospitality businesses up and down the length and breadth of the country and without them, the industry has real problems.
Take Dublin as an example: It has never been a staycation destination for the Irish market and particularly so now that there are no concerts or major sporting events. The result is that year-to-date occupancy in Dublin hotels stands at a miserable 23%. That means three out of every four beds in the capital city are empty every night.
Ouch.
So how do we resurrect international aviation to Ireland? Many look enviously at European governments who have thrown billions at their national airlines. Aer Lingus and Ryanair — Ireland’s two biggest airlines — have stronger balance sheets to weather the storm and have been more circumspect in looking for state aid.
Both, though, want the Irish Government to provide a comprehensive stimulus package to reboot aviation here and stimulate new routes and increased capacity. This was a key recommendation of a Government-appointed taskforce last year that comprised all the key aviation stakeholders including the CEOs of Aer Lingus, Ryanair, DAA and Shannon Airport amongst others. The recommendation was clear and cogent:
Such a policy decision by the Government would likely cost in the region of €100m but would immediately boost aviation and tourism and support the hundreds of thousands of jobs that they sustain.
Unfortunately, the recommendation has not been implemented and Minister Eamon Ryan, with direct responsibility for transport, has been found wanting.
Of course, such support would need EU approval, as — in effect —it is indirect state aid. But, if Angela Merkel can get the green light for €9bn to Lufthansa, it would seem that the Irish proposal would be nodded through without difficulty.
And for tourism purposes, of all the source markets we want to see return in strength, it is the American market. The picture on the west coast is particularly difficult.
Both regional airports will struggle to attract direct transatlantic routes and will focus, in the near term, on rebuilding their networks with Britain and Europe.
Dublin Airport, though, has the potential to recover much more quickly and this will benefit Ireland as a whole. Its strategic position as a hub airport between North America and the EU bloc had been hard won. Aer Lingus’ owner IAG very effectively sold Europe as the destination to the American market with a stopover in Dublin. This, of course, opened up lots of direct routes to Dublin and was a boon for Irish tourism.
Certain obstacles, though, continue to remain beyond our ken. Although we welcome vaccinated Americans here, that is not reciprocated by the US administration. As a result, airlines are very slow to commit to transatlantic routes if they can only fill the aircraft with US-originating passengers.
Back in 2017, in a pre-Covid world, then taoiseach Leo Varadkar committed to doubling Ireland’s global footprint by 2025. He stated that Ireland would be “an island at the centre of the world” and the growth in aviation connectivity made that claim very credible indeed.
Sadly, the pandemic has put a stop to such an ambition — whether it is a temporary pause or a permanent halt remains to be seen.
Budget day is only seven weeks away at this stage. Every vested interest and representative group will loudly be shouting its case to ministers Donohoe and McGrath. However, it seems clear that for exports, FDI, and tourism, aviation and global connectivity simply has to be top of the economic agenda.
Failure to enable Ireland’s aviation recovery will leave a legacy of long-term economic damage. The tourism industry will have its own budget asks: The EWSS to June of next year, a step-change in tourism investment, and certainty on the Vat rate amongst others.
However, none of these will be worth a dime unless there is a full recovery in international aviation and budget day must deliver in this context.
• Eoghan O’Mara Walsh is the chief executive of the Irish Tourism Industry Confederation
