AIRLINE passengers will continue to pay the €3 air travel tax until at least next spring.
The estimated €30 million generated by the tax is expected to be spent on marketing supports for destinations with significant inbound passenger numbers, mainly UK regional airports and Germany.
An order to abolish the tax will not go ahead because the Department of Transport is not happy with pledges from the airlines about increasing the number of airline passengers coming to Ireland.
Minister for Transport Leo Varadkar would only say yesterday that he expected to be able to make an announcement within the next fortnight and that there were “still some discussions to be concluded with the airlines and Tourism Ireland”.
He added: “What I’m looking for from airlines is some solid propositions as to what they’ll do in return for the reduction and it can’t happen without that.”
Department sources said that increasing flights to destinations such as Lanzarote were “no good to Ireland” because 90 per cent of the traffic was going to the Canaries, rather than inbound.
Over the next number of months marketing will be aimed at the UK, Germany and perhaps France and Italy.
It is believed the tax will continue until the spring when the Minister will review it again in advance of next year’s summer schedules, to see then what new routes with significant inbound traffic would be put in place.
Earlier this month Mr Varadkar told the Dáil that he was waiting until the airlines decided their winter schedules. He said then: “I definitely do not want to give the airlines something for nothing.”
He was not “comfortable in advising the Minister for Finance that the responses have been sufficient” from the airlines. Abolishing the tax was part of the jobs initiative with the proviso of pledges from the airlines.
At the launch yesterday of funding of almost €6 million for four tourism projects, Mr Varadkar said he had monitored the drop in the airline tax from €10 to €3 but passenger numbers had not increased significantly. “They are only up about 4 or 5 per cent on this time last year so there hasn’t been a huge increase.”
He said there were other factors involved including the cost of fuel, and that people were less well off not just in Ireland but internationally, “so there isn’t a direct correlation between the travel tax and the number of people flying”.
But, he said, “the airlines made a very strong play on the fact that the travel tax was damaging tourism and was the reason as to why they were cutting routes and capacity. When it was reduced from €10 to €3 there was only a small improvement.”
The Minister also defended the retention of the 4.5 per cent VAT reduction, despite reports that many businesses were not cutting prices. He said “the key thing really is for businesses that can afford to pass it on to pass it on and a lot of them have done that – a lot of the big hotel chains, down to McDonald’s, you name it, have done it”.
He added that “in other cases they’re absorbing increases in costs or taking on more staff”.
