I don't see why a YYZ route would result in lower pax numbers to ORD; yes, they are fairly close geographically, but they're entirely different markets. For one thing, EI does a lot of onward connections with UA via ORD and it wouldn't have the same coverage of the US market from YYZ. Likewise, in the event of a route to YYZ, I'd expect to see EI do a deal with Westjet, for onward domestic flights in Canada.
I certainly agree that the 757 proposal looks very interesting; why wait until the 321NEO is around before developing new, smaller markets. Why let US carriers with the right equipment (other 757s!) steal its markets from under it?
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Just further to the news on the EU rejection of FR's plan, some excerpts from the EU response:
Some excerpts from the commission's press release I linked above:
* In 2007 the Commission prohibited Ryanair's first attempt to acquire Aer Lingus (see IP/07/893) and this decision was upheld by the EU General Court (MEMO/10/300).
* Commission took into account changes in market circumstances since 2007, [...] market positions of Ryanair and Aer Lingus have become even stronger; combined market shares going up from 80% in 2007 to 87% in 2012 for short-haul flights out of Dublin. [...] number of routes to and from Ireland operated in competition by Ryanair and Aer Lingus has increased from 35 in 2007 to 46 in 2012.
* There is competition from other scheduled carriers on only 7 of these 46 routes.
* EI and FR are the only scheduled carriers focused on point-to-point connections to/from Ireland, instead of feeding into hubs like LHR (BA), FRA (LH), etc.
* Proposed merger would therefore have removed the "currently vibrant competition between Ryanair and Aer Lingus"
* "In short, customers' travelling options would have been substantially reduced and it is unlikely that competitors would have been able to sufficiently constrain the merged entity in its market behaviour. Higher prices for passengers would have been the likely outcome."
On Ryanair's proposed remedies, particularly the divestiture of large parts of EI operations to FlyBe and cession of slots to IAG/BA for a guaranteed period of three years:
* Commission's investigation demonstrated that these remedies were insufficient
* Flybe not a suitable purchaser capable of competing sufficiently with the Ryanair/Aer Lingus merged entity.
* IAG/BA would not constrain the merged entity to a sufficient degree and would have little incentive to stay on the routes beyond a 3 year period
* Insufficient degree of certainty over whether remedies would/could be put in place in a timely manner
* Insufficient degree of certainty over whether the remedies would work in practice for a sustained period of time
* Views and perspectives on FR remedy packages from "large number of market participants in Ireland and internationally, including competitors, customers, travel agents, consumer associations, public authorities and airport operators." This was done three times, based on the varying remedy packages proposed by FR.