Globally 2010 is on track to be the warmest year on record. The Artic is warming twice as fast as the rest of the planet, and this summer its sea ice is melting at a near record pace. The sun is heating the newly open water, so it will take longer to re-freeze this winter and the resulting thinner ice will melt more easily next summer.

Scientists are not sure what will happen when a large portion of the Artic Ocean changes from white, sunlight-reflecting ice to dark, sunlight-absorbing water. But most are concerned. Some believe that new air movement may disrupt the Northern Hemisphere’s jet streams, and this could in turn change storm tracks, rainfall patterns and food production far to the South.

But a new report from Forfás, Adaptation to Climate Change: Issues for Business, could bring opportunities as well as risks to Irish businesses, including tourism.

The report opines that a warmer more reliable summer season could support an extension of the peak season, as the relative attraction of other regions (e.g. the Mediterranean), may weaken due to weather extremes. It sees potential for the development of new tourist products, in particular water-based holidays.

But the report also sees some risks, many relating to extreme weather events and heavier winter rainfall, such as experienced last winter. Coastal erosion is also a worry.

This report is well worth a browse, partiuclarly given that there is an excellent Executive Summary which can be access by CLICKING HERE – ADAPTATION TO CLIMATE CHANGE: ISSUES FOR BUSINESS – SUMMARY REPORT.

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August 31st 2010

Its not exactly happy days are here again time, but better results are being forecast for the international air transport industry. The International Air Transport Association (IATA) is now predicting the industry will make a small profit this year of $2.5 billion.

That’s quite a turnaround from airline losses of $9.5 billion recorded in 2009. It’s just a drop in the ocean of the $63.35 billion losses incurred by just the 6 major US carriers between 2001 and 2009, as reported by the US Transportation Department. So there’s a long way to go, but a start has been made.

And today Aer Lingus reported that operating losses for the first half of the year fell from €93 million to €19 million. This was an excellent performance particularly in light of the major disruption caused by the ash cloud in April and May. Aer Lingus Chief Executive, Christoph Mueller, expects an operating performance for the full year of not less than break-even.

Aer Lingus – Flying back to profitability

But back to global air transport, the progress toward profitability varies from region to region around the world. Asia Pacific, North America, and Latin America are showing the strongest recovery, while Europe lags this, and European airlines are expected to lose $2.8 billion this year, according to IATA.

The principal reasons for the move towards recovery include improved economic conditions globally, reduction in capacity leading to increased load factors, with fares being reported up by as much as 18% this summer compared to a year ago, and more stability in fuel prices.

But this is not all good news for consumers, as airlines are pulling back on deeply discounted fares, and cheap fares will become increasingly difficult to find. Airlines too, have become hooked on "fees" and a new study shows that worldwide carriers took in $13.5 billion from fees in 2009, a 43% jump in just one year. The company which carried out this study also predict that fees are going to stick around and become even more pervasive.

IATA is predicting a return on invested capital of 2.8% this year, less than half peak levels and still far from reaching the industry’s cost of capital. Still, investors are taking a positive outlook on airline financial prospects with share prices up 7% so far this year.

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August 24th 2010

After decades of spectacular growth, Chinas economy overtook Japan in the second quarter, and is now on track to eclipse Japan this year as the worlds second largest economy, behind the United States.

Unseating Japan, and in recent years passing Germany, France and Great Britain, underscores China’s clout and gives credence to the forecast that they could pass the United States and become the world’s largest economy by 2030, less than 20 years from now. But it was also forecast in the 80′s that Japan’s economy would some day overtake that of the United States, and clearly that is not about to happen anytime soon. And so it may be with China.

For those about to write off the US economy just remember this, at almost $15 trillion GDP, it still is larger than the next 3 largest economies COMBINED, China $5 trillion, Japan $5 trillion and Germany $3.3 trillion.

A trillion dollars look like in figures – $1,000,000,000,000.

However everything is not quite like it seems. China has roughly the same land mass as the United States, but it is burdened with one fifth of the world’s population, and greatly insufficient resources.

Its annual per capita income is more on a par with impoverished nations like Algeria, El Salvador and Albania, which along with China are close to $6,500. The United States was about $46,000 last year, Germany $34,100, France $32,800, Britain $35,200 and even “poor” old Ireland was at $42,000 last year, though that was down from $46,000 in 2008, and $48,000 in 2007.

Many economists say that China’s economy is too dependent on exports and investment and that it needs to encourage greater domestic consumption. The Government faces many big economic challenges, among them sustaining adequate jobs growth for tens of millions of new entrants to the work force, providing a realistic social safety net, reducing corruption and other economic crime, and containing environmental damage related to the economy’s rapid transformation.

Nevertheless there is no doubt that China is reshaping the way the global economy functions, given its prodigious appetite for oil, coal, iron ore and other natural resources, not least water, and its consequent major impact on commodity prices.

There are few areas where China is already number one in the world.  Last year it passed out Germany as the world’s biggest exporter.  It is the world’s biggest manufacturer and consumer of cars.  And it’s the world’s biggest emitter of carbon-dioxide, which scientists link to global warming.  It emitts an estimated 22.3% of the world’s total, ahead of the United States at 19.9%.

Ireland is in 62nd place producing •15%. So with the top dozen emitters accounting for 70% of carbon emissions, and with China and the United States between them accounting for 42.2%, one wonders about the miniscule impact a small nation like Ireland can have. Is it worth the 5% hike in electricity prices as we are about to have introduced? Hardly, particularly at a time when the priority should be the restoration of national competitivness.

Will China become the great new source market for visitor-shy tourist destinations? It is estimated that over 50 million visits will be made “abroad” by Chinese travellers this year. But the vast majority of those will be to destinations adjoining China or nearby. Perhaps in time some useful niche markets will develop for Ireland. Perhaps.

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August 19th 2010

Ireland benefited hugely during the Celtic Tiger years from substantial annual capital investment by Government, rising from about €2 billion in 1997 to a peak of €9 billion in 2008.

Given the changed economic circumstances it was inevitable that this level of capital expenditure would be curtailed. Last week the Government announced its revised programme through 2016.

It’s still a chunky level of investment at just under €40 billion, or about €5.5 billion each year.

The big spending areas are – Transport 32%, Environment 23%, Education 11%, Enterprise, Trade & Innovation 10%, Health 8%, with the balance spread over a number of areas including Tourism, Culture & Sport, which is allocated 2.2% of total capital spend. But tourism will benefit substantially from expenditure in other areas too, particularly Transport.

The revised programme recognises that tourism is an important internationally traded service requiring a significant programme of investment over the 2010-2016 period. This, it suggests, will support the tourism industry in contributing to national economic recovery and delivering strong employment benefits.

In the region of €190 million will be invested in tourism related infrastructure to promote Ireland as a high quality tourism destination and to maximise the economic contribution of the tourism sector.

While acknowledging the recent significant drop in overseas visitors, the programme states that tourism remains a valuable internationally traded service which can again deliver significant value added and employment to the economy.

The reprioritised programme for tourism will be administered through Fáilte Ireland. For further details CLICK HERE.

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August 5th 2010

While things may be difficult in the great big world of Irish tourism, we must never travel without hope. News that Ireland eased out of recession in the first quarter of this year is very welcome.

However modest the recovery, it is something that can be built on, provided we have the courage and motivation.

Liam Griffin is one of Ireland’s leading entrepreneurs and hoteliers. But he is also a very famous hurler, and successful hurling manager, having managed Wexford to All Ireland glory in 1996. He is a successful sports columnist and regular contributor to TV and radio sports commentaries.

ITIC spoke with Liam, mostly but not exclusively about tourism. Click on the image below to hear what he had to say.

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August 3rd 2010