Inside the world of business
Ryanair denies deal to increase tourist traffic
THE GOVERNMENT may have thought it had a deal with Ryanair on the travel tax but the airline is looking for more.
The tax was reduced from €10 to €3 in last December’s budget and the new Government has gone further, proposing to scrap it altogether, possibly as soon as July.
This would be subject to an agreement with airlines to bring additional tourist traffic into the State.
That seemed reasonable. Ryanair has been among the traffic tax’s fiercest critics since it was introduced in March 2009 and has publicly blamed its existence for its decision to cut a number of services out of Ireland.
However, when asked yesterday whether the airline had agreed a quid pro quo with the Government, deputy chief executive Michael Cawley asked: “What deal? We never said we’d increase traffic.”
Ryanair has another target firmly in its sights – the charges applied by the Dublin Airport Authority.
Welcoming the decision to scrap the tourist tax “as a step in the right direction”, it added: “But unless accompanied by competitive airport charges, traffic growth will not return at the Government-owned, high-cost Irish airports”.
The airline denies it has “shifted the goalposts” on this issue.
The Department of Transport will say only that “talks are ongoing . . . about strategies to deliver additional tourists to Ireland in return for the abolition of the travel tax”.
SME loans need a bit of prudence
THE CALL yesterday by credit reviewer John Trethowan for the Government to establish a quarterly survey into bank lending that has the support of all stakeholders is welcome. The publication of two separate sets of data on the lending experience of Irish banks yesterday illustrates the lack of clarity that surrounds the issue of lending to SMEs. As Trethowan published his quarterly review of the lending practices of banks, the CSO put out data on lending that is has collated as part of an EU-wide study on access to finance.
The report from the Credit Review Office met the predictable response from small business lobby Isme, which called for an assessment of the Credit Review Office. While Isme may have the interests of its members at heart, its own data – a Quarterly Bank Watch Survey – is far from impartial. As Trethowan points out, surveying its own members’ experiences means Isme is bound to attract a disproportionate amount of responses from those who have had difficulty accessing finance.
While there is widespread consensus that SMEs are in need of bank finance, the findings of the Credit Review Office must be respected. According to Trethowan’s findings, AIB and Bank of Ireland have lent €8 billion to small and medium-sized businesses in the last year although, crucially, it is not clear how much of this is refinancing and restructuring as opposed to new lending.
While it is in the interest of the Irish taxpayer that viable businesses get the money they need, generating much-needed tax take and employment, it is equally important that banks do not lend to unviable businesses – one of the causes of our current financial crisis.
Banks may only be approving 55 per cent of business loan applications now compared to 95 per cent at the peak in 2007 – as the report states – but this says more about the recklessness of that era than about unreasonable behaviour now. A balance between prudence and flexibility is essential if Ireland’s small business sector is to play a central role in our economic recovery.
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