Just hear Aer Lingus are planning to re-instate ,
Dublin-San Francisco & Washington for Summer 2011 ! maybe EI could be on the horision for Cork
its also returing to profitability in Q1 2011
Rapid expansion is NOT on the horizon. I have heard in the past several days that Dublin - San Francisco, is the penultimate route awaiting re-activation - however the timing has to be right. We need to see:
- A firming of the overall Global macro environment, at least at current levels but realistically a further improvement is needed to support Business traffic on this route.
Oil prices remain constant, having declined sharply in the past 21 days approximately. With the latest IEA et al consumption forecasts, significant recovery beyond US$80 per barrel is unlikely in the near to medium term. Even if this were to occur, this would not be a problem for Aer Lingus becasue they have hedged a significant amount of their fuel requirements for fiscal 2011.
Let's be clear on one point though - Aer Lingus will NOT operate the DUB-SFO in a situation where Oil is in excess of the above mentioned prices.
Based upon current fare yields, Aer Lingus need approximately 60% occupancy of the Business cabin and 68% to 70% of the Economy cabin to ensure a B/E result on the DUB-SFO route, albeit with the slight likelihood of a small profit at these rates. We must not forget the softness of the market at the moment and the fact that Revenue per passenger on the DUB-SFO will be some 25%-30% lower than was previously paid before the route was suspended - this includes the Business cabin. If the route is to be re-activated, additional immediate Fixed Costs will be incurred and interest will have to be strong enough to at least support a B/E outcome.
Washington, in its previous form at least, operated directly by an Aer Lingus A330 is highly unlikely to re-occur. The demand is NOT there ex Ireland for regular flights, especially with sufficient services to BOS and JFK - just a one hour plane journey north. Regardless of it being the seat of government, the demand is not there for a reinstatement of IAD on a continuous basis with regular frequencies.
Expansion will be restrained in the near to medium term. In any expansion, a West Coast USA link is top priority for re-activation.
Ceteris paribus, I expect a re-launch/re-activation of a West Coast link within the medium term if expansion is to take place.
With regard to profitability. Some may not realise, Aer Lingus have already been profitable on various individual days during fiscal 2010 to date, something that was rarely achieved during 2009. The Ash crisis won't help and we are going to see a solid €35 million in exceptionals this year.
Weekly profitability and B/E results should be achieved during this coming June, July and August - fingers crossed for no further interruption to services. I've been saying for some time that I don't expect solid profitable results for Aer Lingus until Q2, 2011 and I would still stand by that assumption.
I echo the sentiments of Shamrock350 also in relation to Cork - the environment will have to recover hugely before we are to see any large scale expansion by Aer Lingus.
There's one key word - Demand.
Regards,
EI Premier