Aviation conferences and meetings in November

The 2015 meeting of the European Aviation Conference (EAC) will take place this year in Cranfield University on November 19th and 20th. Academics, business and industry figures will debate whether the momentum behind airline liberalisation over past decades is now spent, as some evidence suggests.

The conference programme may be inspected and a booking made on the conference website.

Preceding the EAC will be the 2nd COST Workshop on Air Transport, Regional Development, Airport Hubs & Connectivity, which will take place at the University of West London (17 November) and Cranfield University (18 November). The program for the Workshop is available on the German Aviation Research Society (GARS) website where, as always, aviation-research-related information is updated continuously; see www.garsonline.de

Garret FitzGerald Lecture and Autumn School

UCD College of Social Sciences and Law will host the Garret FitzGerald Lecture and Autumn School on Monday 19th October, in the UCD Sutherland School of Law. The daytime School (from midday) will focus on the significance of the social sciences. The evening Lecture will be delivered by Professor Cass R Sunstein,Harvard Law School, on the theme ‘Is Behavioural Science Compatible with Democracy?’. More details and bookings here.

What is the problem that selling Aer Lingus is supposed to solve?

I am writing this in the Aer Lingus lounge in Heathrow’s new Terminal 2, somewhere I spend a lot of time. Like a lot of other Irish people, I am a loyal customer of the national carrier, for a very simple reason: it’s a fantastic airline. It serves lots and lots of destinations direct from Dublin — no more going through London to get anywhere, which was once very often the case. It’s cheap — thanks to competition with Ryanair, British Airways and others. It offers the things that frequent fliers want — lounge access and terrific service. It pays decent wages. It’s Irish.

What’s not to like?

When deciding whether or not to sell the State’s remaining stake in Aer Lingus, you have to make value judgements, whether you admit to doing so or not: there are no “scientific” grounds to prefer one outcome to another. It’s the customer experience that matters to me, and I don’t see why you would think that selling the State’s stake would improve that in the long run.

So, what’s in it for me consumers?

Here’s a radical thought: ballot Aer Lingus customers, and see what they think. Isn’t the customer supposed to be king?

Barking up the wrong Apple tree

There is lots of excitement this morning about a story in the Financial Times about the European Commission state-aid investigation into Apple’s tax arrangements in Ireland. The story first appeared online under the headline “Apple hit by Brussels finding over illegal Irish tax deals”. When put on the front page of today’s print edition the headline was “Apple hit by Brussels findings over Irish backroom tax deals”. The story begins:

Apple will be accused of prospering from illegal tax deals with the Irish government for more than two decades when Brussels this week unveils details of a probe that could leave the iPhone maker with a record fine of as much as several billions of euros.

Preliminary findings from the European Commission’s investigation into Apple’s tax affairs in Ireland, where it has had a rate of less than 2 per cent, claim the Silicon Valley company benefited from illicit state aid after striking backroom deals with Ireland’s authorities, according to people involved in the case.

The headline and story resulted in widespread opprobrium from the usual sources being directed at Ireland. The reality is that the headline is nonsense and the presentation of the story in the text was misleading (at best). Anyone with even a summary understanding of the issue would immediately see that, but there are plenty who love jumping to and jumping on adverse conclusions about Ireland’s corporation tax regime.

The errors include:

  • there are no “fines” in state-aid cases
  • the case does not involve “billions of euros”
  • there are no “preliminary findings”
  • there is no “rate of less than 2 per cent”

And that’s just the first two paragraphs!

At present Apple pays very little corporate income tax on its profit earned on sales made outside the US. These profits will be taxed based on the source-location of the risks, assets and functions from which the profits are derived. The risks, assets and functions that generate Apple’s profits are mainly in the US and under current rules the US is granted the taxing right for the bulk of Apple’s profits. The fact that the US allows Apple to defer the payment of this tax until the profits are transferred to a US-incorporated company is a matter for the US.

Sometimes we tend to use the word “repatriate” when it comes to these profits. But Apple’s non-US profits don’t have to be repatriated to the US; they go there directly and there is no stop-off in Ireland. Yes, Apple’s non-US profits are accumulated in Irish-incorporated companies but almost everything about these companies happens in the US.  Using US rules, Apple was able to create this situation and maintain that these companies did not have a taxable presence in the US.  The EC investigation will examine none of the headline issues about these companies highlighted in the US Senate Report last May.

The EC can only investigate the taxing of activity that happens in Ireland and decisions that are made in Ireland. In its June announcement, the EC said the Irish element of its investigation relates to:

the individual rulings issued by the Irish tax authorities on the calculation of the taxable profit allocated to the Irish branches of Apple Sales International and of Apple Operations Europe;

It is the profit attributed to just the Irish branches of the companies that is in question not the entire profits of these companies. In his opening statement to the US Senate hearing last May, Sen. Carl Levin (D) said: Continue reading “Barking up the wrong Apple tree”

Doublespeak of the day

According to the Irish Independent, Minister Noonan was worrying in public last night about the shortage of family homes in the Dublin area. But he also apparently said:

“We need to get property prices up another bit.”

To which the only possible response is: “why”?

If you are stuck in a malfunctioning currency union and can’t devalue, then don’t you want to get all costs down as much as possible, especially if they are going to feed into wage demands? Why interfere with the market in this particular case?