Economics 20/05/2010: No comment needed

This is in just now from Ryanair:

Starts

IRELAND LOSES RYANAIR HANGAR AND UP TO 200 JOBS TO GERMANY AND FRANKFURT HAHN AIRPORT

(Thursday, 20th May 2010) ...At a press conference in Mainz today, hosted by Ryanair’s Michael O’Leary and Minister for Economics and Transport, Hendrik Hering, Ryanair announced that it would invest €25m in building a new two bay aircraft maintenance hangar including two aircraft simulators and a 16 room cabin crew training centre, in a move which will create up to 200 new Ryanair jobs at Frankfurt Hahn Airport.

...This new facility and jobs will replace those previously offered to the Irish Government earlier this year in the empty Hangar 6 at Dublin Airport. Ryanair regrets that even today, many months later, Hangar 6 remains unused for base maintenance, while up to 900 SRT Engineers remain unemployed, drawing the dole. Many of these people could have found skilled, well paid work, with Ryanair, had the Irish Government accepted the airline’s offer to buy or lease Hangar 6 and divert a significant proportion of Ryanair’s base maintenance to Dublin Airport.

Speaking today in Germany, Ryanair’s Michael O’Leary said:

“While we are pleased to announce this new investment in Germany and Frankfurt Hahn Airport, I regret that the Irish Government stood idly by and did nothing to win these new jobs for Ireland. The Irish Government talks a lot about competitiveness, but is short on action.

“At a time when traffic and tourism is collapsing in Ireland, the Irish Government prefers to impose tourist taxes, and order big increases in Dublin Airport’s fees, rather than work with the world’s largest airline to lower access costs, win investment in maintenance or create hundreds of well paid engineering jobs at Dublin Airport.

“Sadly in Ireland, we are stuck with a Government which likes talking about the “smart economy” but prefers implementing “dumb policy”. The sooner they reverse these tourist taxes and slash high costs at the Government owned DAA airports, then the sooner Irish airports and tourism can return to low cost access and traffic growth”.

Ends. Thursday, 20th May 2010

Economics 15/11/2009: When Ryanair gets serious...

Per my continued opposition to absurd tax measures, see the following statement from Ryanair and my comment below:

Apart from landing another rainy cloud on Mrs Coughlan's fine parade (after all it does call Tanaiste out as being somewhat disingenuous in her claims), this statement is worth looking at a bit closer:

If the Irish economy is losing €600mln in tourism revenue, the VAT on this loss will likely be ca €80-100mln (as some services bear reduced VAT). This is the first round of losses to the Exchequer.

But every euro spent by a tourist in this country goes to pay for goods and services here, which in turn generates banks deposits and payments to suppliers. These payments are then used to generate new economic activity, thus triggering a second round of tax receipts. And the merry-go-round then goes on to the third round and so on. 

Given the average OECD private spending multiplier is approximately equal to the M1/M3 multiplier, which is roughly 3.8-6 (depending on the range of years chosen, with the lower number coincidentally referring to the years of the most recent global markets boom), then these losses are indeed much greater than those claimed in Ryanair note. 

Back of the envelope calculation suggests the Exchequer will be foregoing some €120-250 million more in revenue on top of the first round losses. And this is before we factor in income taxes and other taxes, such as charges on fuel that foreign motorists might pay while touring Ireland.

So we are now back to the old equation: put a €10 tax in place, lose some €100-230 million in revenue. Good luck running the country with these mathematics...

Note: that article attacking my and Ryanair analysis of the travel figures that predicted the yet-to-materialise substitution effects of Irish travel tax is available from the Irish Times site (here).