With the dust barely settled on the general election – and haggling still to commence in earnest about coalition formation – all industry eyes are now turning to manifesto commitments and whether they will find their way into a new programme for Government.
During the election campaign, each political party made a concerted play to the business community with a suite of pro-enterprise policies. Employer PRSI rebates, a cut in the hospitality VAT rate and business support funds were all discussed as parties belatedly acknowledged the challenging cost environment for SMEs.
But as important as competitiveness is, an arguably more critical issue for the economy is that of connectivity. With no bridges, tunnels or roads off the island, air access is of strategic national importance. Fianna Fáil, Fine Gael and Sinn Féin all committed pre-election to lifting the passenger cap at Dublin Airport, but none were brave enough to state how they would do this.
This surely represents the biggest handbrake on development for a country that is the textbook definition of a small open economy. If not addressed urgently, it will undermine all the lofty economic promises bandied about in recent weeks.
Ireland’s tourism and aviation sectors are intrinsically linked and mutually interdependent. Tourism relies on aviation to bring in visitors, and airlines rely on tourism to fill seats. With the bulk of the Irish tourism economy made up of international visitation, and with 90 per cent of those tourists arriving by air, the current ceiling on Dublin Airport’s growth is an issue of real concern to industry chiefs.
Many politicians, and indeed some tourism leaders, call for routes to be redirected to regional airports. But the days of telling airlines where to land are well and truly over, and aviation economics dictates a different outcome. As a key point-to-point destination, and a growing strategic hub between the European bloc and North America, it is Dublin or bust for most carriers.
Despite lots of indignant talk from politicians in recent months about not intervening in the planning process, there is now a national tourism strategy committed to growth levels that can only materialise if that same passenger cap is lifted
Ireland needs to develop Cork and Shannon airports, too, and state aid rules should be urgently aligned with EU permissible levels. But further growth at regional airports – as welcome as that would be – will not compensate for lost business to Ireland as a result of Dublin’s restrictions. The next Government needs to get serious about this.
The outgoing coalition was quick to point out that much of the last Programme for Government had been delivered. As of last month, this now includes a new national tourism policy, which was published after lengthy gestation. Since the pandemic and the generous supports for the tourism industry, there is a feeling that Government focus has drifted elsewhere.
The sector hasn’t received the attention it warrants, and the new national tourism policy is a case in point. Normally, such a policy would be announced with great flourish by both the Taoiseach and the line minister. Yet the policy was published quietly, with little fanfare and no media traction. Nonetheless, it is welcome that there is now a published commitment by the State as to how tourism is expected to fare over the next few years, albeit its implementation will fall to the incoming coalition.
The passenger cap represents the biggest handbrake on development for a country that is the textbook definition of a small open economy
An 80-page policy with 61 recommendations takes careful reading and, like all such documents, it is full of wholesome language, good intentions and worthy claims. The industry pushed, during the consultation phase, for some hard metrics and it is important to see targets have been included.
Notably, there is a commitment to deliver an average of 5.6 per cent revenue growth for inbound tourism each year out to 2030. No surprise there, as it mirrors what the tourism agencies had previously stated and it reflects the “responsible ambition” of the industry.
What is interesting, though, is the inconsistency it reveals at the heart of Government policy. To achieve such a level of growth from international visitors will require the Dublin Airport cap to be lifted. It simply can’t happen if Dublin is constrained at current levels. So, despite lots of indignant talk from politicians in recent months about not intervening in the planning process, there is now a national tourism strategy committed to growth levels that can only materialise if that same passenger cap is lifted.
Since the pandemic and the generous supports for the tourism industry, there is a feeling that Government focus has drifted elsewhere.
Substitute tourism for exports or FDI, and the same issue is at play. Put simply, if an economy such as Ireland’s is to continue to prosper, then the arbitrary passenger ceiling, as well as the proposed night-time flight restrictions, at the country’s main gateway needs to be resolved.
What is clear is that issues relating to an industry such as tourism all have economic arguments at their core. Tourism needs a whole-of-Government approach due to its strategic importance to the country, and all decisions and policy must be formulated primarily with an economic lens.
Donald Trump’s “America First” policy risks jeopardising Ireland’s FDI model, so increased focus and attention by the new Government on indigenous sectors such as tourism and hospitality is more important than ever.
Eoghan O’Mara Walsh is CEO of the Irish Tourism Industry Confederation
