Aer Arann
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Leaving aside the Aer Lingus Regional routes the core of the RE network is made up of the PSO services, which is a niche on the verge of extinction. And while technically the share of their revenue made up of PSOs is relatively small, the other non-PSO routes benefit from economies of scale from the PSO operation. Assuming the PSOs go away next year (or earlier), I find it hard to see which of their non-EI-Regional routes could still be sustainable apart from WAT-LTN and maybe GWY-LTN and/or DUB-IOM.
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I would think that any ATR version would be hard to make money on, im no aerosexual but i would love to know what the break even pax figure would be on an ATR v something like a B1900 or a DO8.
Maybe RE if they come out the other end still flying may decide to down size to keep afloat. Would you get and second hand decent sized regional things anywere?? In fact is the value of the airline in the name or in the routes it flies or the good will it has??
Maybe RE if they come out the other end still flying may decide to down size to keep afloat. Would you get and second hand decent sized regional things anywere?? In fact is the value of the airline in the name or in the routes it flies or the good will it has??
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Aircraft
I think there is more merit in looking at re with more ambition and a larger vision . The atr is an accountants dream . On relatively short intra European routes aer Arann cud do extremely well . Perhaps some oportunities in the uk also . Think beyond Ireland I suspect . And new shareholders will bring new energy
shamrogue
shamrogue
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Well i know that BE operate the Q400 to from the IOM to PMI and I think may be REU and i did see I think Dash 8 in DUB from somewhere in italy operated by Tyroleon so yeah maybe a look at some niche markets or talk to some smaller tour operators that have to buy space on larger carriers. Im sure an ATR72 has similar kinda range
But really I think we a flogging a dead horse here. maybe a few years ago they may have been able too get some venture capital, but i do think the clock is ticking. Dont forget across the water the owners of Air Southwest are having a hell of a time trying to sell it off and its a going concern with it appears no financial problems so really I think as harsh as it may seem I think we could just add RE to the long line since IONA or AVAIR.
Were for example wud EI get the money MOL wud just shut it at a heart beat? Maybe ANGLO mite buy it or....... just to be radical the regional airports themselves could stum up for it!!
But really I think we a flogging a dead horse here. maybe a few years ago they may have been able too get some venture capital, but i do think the clock is ticking. Dont forget across the water the owners of Air Southwest are having a hell of a time trying to sell it off and its a going concern with it appears no financial problems so really I think as harsh as it may seem I think we could just add RE to the long line since IONA or AVAIR.
Were for example wud EI get the money MOL wud just shut it at a heart beat? Maybe ANGLO mite buy it or....... just to be radical the regional airports themselves could stum up for it!!
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Be positive
Dublin Dispatch,
Yes, RE is more challenging that ASW. However, ASW can't be far off a sale. But remember with RE, Shutz is not that long in place - and look at the timing of his arrival - just before the ASH. So now at least you have 2 heads on shoulders in RE.
Because of the slowdown, certain routes which normally would have appealed to FR/EI or one of the other biggies might work as niche routes. And thus the door opens.
And my final thought, the mgt of RE know a hell of a lot more about operating an airline than I do. So I won't keep trying to double guess them, but there is a market there for the airline.
Cheerio
Shamrogue
Yes, RE is more challenging that ASW. However, ASW can't be far off a sale. But remember with RE, Shutz is not that long in place - and look at the timing of his arrival - just before the ASH. So now at least you have 2 heads on shoulders in RE.
Because of the slowdown, certain routes which normally would have appealed to FR/EI or one of the other biggies might work as niche routes. And thus the door opens.
And my final thought, the mgt of RE know a hell of a lot more about operating an airline than I do. So I won't keep trying to double guess them, but there is a market there for the airline.
Cheerio
Shamrogue
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Hey gang
I noticed alot of references to Aer Aranns reliance on the PSO routes, however, I did read in some of the media reports that they had tried to address this situation and PSO routes now account for approx 30% of their business.
There have also been suggestions that that they try to diversify by fly from Irish regional Cities to major European centres. Well, I thought that was the idea in leasing Bae 146 from Nex?! I would be interested to see exactly what the figures were like for those routes......given that I can understand the €6 million loss for 2010, but not those for 2008-2009!
Ultimately I think new owners will have to look at different ways to serve airports like Galway and Waterford where Aer Arann have a virtual monopoly. That may or may not involve flying further afield even to get more "bums on seats"!
Overall, its a sad situation for all the management and staff especially Padraig O'Ceidigh who have pour alot of blod sweat and tears into the company. Hopefully there is good news on the horizon!
C
I noticed alot of references to Aer Aranns reliance on the PSO routes, however, I did read in some of the media reports that they had tried to address this situation and PSO routes now account for approx 30% of their business.
There have also been suggestions that that they try to diversify by fly from Irish regional Cities to major European centres. Well, I thought that was the idea in leasing Bae 146 from Nex?! I would be interested to see exactly what the figures were like for those routes......given that I can understand the €6 million loss for 2010, but not those for 2008-2009!
Ultimately I think new owners will have to look at different ways to serve airports like Galway and Waterford where Aer Arann have a virtual monopoly. That may or may not involve flying further afield even to get more "bums on seats"!
Overall, its a sad situation for all the management and staff especially Padraig O'Ceidigh who have pour alot of blod sweat and tears into the company. Hopefully there is good news on the horizon!
C
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PSO subsidises more than just the flight. The DUB PSO contracts require red-eye flights, so the small airports charge out of hours fees for early/late handling and ATC services when they might otherwise be closed.
This indirect support to the airports has probably kept the normal charges/operational costs down and thus cross subsidized REs commercial routes and allowed them the financial cushion to rapidly expand in the last few years. Without the PSO routes an airport like Sligo/Galway will probably have to scale back opening hours raise charges. So RE face losing a significant revenue stream and higher costs.
Bloxham Stockbrokers column in yesterdays Independent noted the unsustainable level of subvention:
"Mr Gill pointed out that between 2002 and 2008 Aer Arann received €108m in subsidies to operate so-called public service obligation (PSO) routes to small regional airports in a period when it carried a total of just six million passengers....These are remarkable sums of money and help explain why PSOs are unlikely to be sustained after 2011,"
'Radical overhaul' needed for Irish airports to contribute to recovery - Irish, Business - Independent.ie
This indirect support to the airports has probably kept the normal charges/operational costs down and thus cross subsidized REs commercial routes and allowed them the financial cushion to rapidly expand in the last few years. Without the PSO routes an airport like Sligo/Galway will probably have to scale back opening hours raise charges. So RE face losing a significant revenue stream and higher costs.
Bloxham Stockbrokers column in yesterdays Independent noted the unsustainable level of subvention:
"Mr Gill pointed out that between 2002 and 2008 Aer Arann received €108m in subsidies to operate so-called public service obligation (PSO) routes to small regional airports in a period when it carried a total of just six million passengers....These are remarkable sums of money and help explain why PSOs are unlikely to be sustained after 2011,"
'Radical overhaul' needed for Irish airports to contribute to recovery - Irish, Business - Independent.ie
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Aer Arann
It's very sad news regarding Aer Arann and their present situation - but the cold, hard reality is that the entity is not viable in it's current form. You can only keep accumulating losses for so long before the ''wolves come to the door'' so to speak - unless you have a very large cash base to support operations - which EI have demonstrated very well over the past two years.
The level of losses that have been recorded are completely unsustainable. While I understand that the Volcanic Ash situation impacted RE's operations and performance, it is not credible that €6 million in losses can be attributed directly to the crisis - this is completely disproportionate to those losses recorded by both EI and FR.
The company's forward revenue projections mentioned across the business media last week also seem a little optimistic.
We must not forget the human factor involved in this and the many people who are concerned for their jobs - but I find it difficult to see any other outcome than one in which RE as an overall entity is scaled down by at least 25%.
Management may be very informed and very pro-active and it's absolutely correct that huge efforts have gone into the company over the years - but who thought it sensible to acquire a 20 year lease on the Head Office building for example?
RE are ultimately another victim of the terrible economic crisis that continues to ravage this country. Sadly, domestic demand will remain depressed for years to come as continuous austerity measures are needed to service the sovereign debt that grows larger with every passing second. The risk of the IMF being called in and a general domestic hyper crisis grows larger with each passing day.
Any future RE operation will have to be leaner, capitalised and not dependant on PSO routes.
EI Premier
The level of losses that have been recorded are completely unsustainable. While I understand that the Volcanic Ash situation impacted RE's operations and performance, it is not credible that €6 million in losses can be attributed directly to the crisis - this is completely disproportionate to those losses recorded by both EI and FR.
The company's forward revenue projections mentioned across the business media last week also seem a little optimistic.
We must not forget the human factor involved in this and the many people who are concerned for their jobs - but I find it difficult to see any other outcome than one in which RE as an overall entity is scaled down by at least 25%.
Management may be very informed and very pro-active and it's absolutely correct that huge efforts have gone into the company over the years - but who thought it sensible to acquire a 20 year lease on the Head Office building for example?
RE are ultimately another victim of the terrible economic crisis that continues to ravage this country. Sadly, domestic demand will remain depressed for years to come as continuous austerity measures are needed to service the sovereign debt that grows larger with every passing second. The risk of the IMF being called in and a general domestic hyper crisis grows larger with each passing day.
Any future RE operation will have to be leaner, capitalised and not dependant on PSO routes.
EI Premier
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I'd worry a bit about the reliance on airports which have runways too short for Ryanair to use them.
With improvements to the road network, other airports are not as inconvenient. When the Gort bypass is completed, Galway will be all of 45 minutes from Shannon. Sligo is already about 40 minutes from Knock, before any improvements come on stream.
Both those airports are probably facing up to a future of extending the runway or closing the airport. If they extend the runway, Ryanair can come in, if they close, it's no good to Aer Arann.
With improvements to the road network, other airports are not as inconvenient. When the Gort bypass is completed, Galway will be all of 45 minutes from Shannon. Sligo is already about 40 minutes from Knock, before any improvements come on stream.
Both those airports are probably facing up to a future of extending the runway or closing the airport. If they extend the runway, Ryanair can come in, if they close, it's no good to Aer Arann.
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The reality is that there are too many airports trying to get a chunk of the international market in Ireland. I would fear for Sligo and maybe Galway in the long term and I cant see any sense in the madness of adding another airport in the midlands as proposed. To be fair there never was a strategy for locating airports in Ireland in suitable locations ie: Shannon and Knock but we got to live with them now.
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Good points 840. Galway missed the opportunity to re-locate the airport to a vastly superior site NW of Oranmore 10 years ago. This would have allowed significant RWY extension which is not possible at EICM.
RE's earlier ATR72's were WAT limited on some routes ex-EICM - not sure whether this applies to the new 72-500's - but some routes from EICM operate through EIWF - is this for commercial or operational reasons?
RE's earlier ATR72's were WAT limited on some routes ex-EICM - not sure whether this applies to the new 72-500's - but some routes from EICM operate through EIWF - is this for commercial or operational reasons?
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I would think that any ATR version would be hard to make money on, im no aerosexual but i would love to know what the break even pax figure would be on an ATR v something like a B1900 or a DO8.
The DHC8 is a guzzler compared to the ATR. This due mainly to the fact that it has significantly more powerful engines.
This however has the obvious benefit of allowing a higher MTOW so I guess it's a tradeoff.
In simple terms I understand it to mean that the ATR is better suited the shorter scale regional routes whereas the dash is more suited to "long haul regional" routes!
Open to correction of course...
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C.
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Seven buyers express interest in buying Aer Arann. UK regional carrier Flybe is not believed to be among the bidders.
Seven potential buyers express interest in struggling Aer Arann - Irish, Business - Independent.ie
Seven groups show interest in Aer Arann - The Irish Times - Sat, Sep 04, 2010
Seven potential buyers express interest in struggling Aer Arann - Irish, Business - Independent.ie
Seven groups show interest in Aer Arann - The Irish Times - Sat, Sep 04, 2010
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Originally Posted by ryan2000
Unwise to go head to head with Ryanair on Cork Dublin since 2005.
Originally Posted by Cyrano
Yes, but...
Leaving aside the Aer Lingus Regional routes the core of the RE network is made up of the PSO services, which is a niche on the verge of extinction. And while technically the share of their revenue made up of PSOs is relatively small, the other non-PSO routes benefit from economies of scale from the PSO operation. Assuming the PSOs go away next year (or earlier), I find it hard to see which of their non-EI-Regional routes could still be sustainable apart from WAT-LTN and maybe GWY-LTN and/or DUB-IOM.
Leaving aside the Aer Lingus Regional routes the core of the RE network is made up of the PSO services, which is a niche on the verge of extinction. And while technically the share of their revenue made up of PSOs is relatively small, the other non-PSO routes benefit from economies of scale from the PSO operation. Assuming the PSOs go away next year (or earlier), I find it hard to see which of their non-EI-Regional routes could still be sustainable apart from WAT-LTN and maybe GWY-LTN and/or DUB-IOM.
But, the majority of routes Aer Arann operate are not dependent on the PSO money to be profitable. Unlike what Michael O'Leary would have you believe, Aer Arann, like Ryanair, pay increased charges on their PSO routes, which offsets any profit they make from the PSO subsidies. And where regional airports have no PSO routes, i.e Waterford, they get much higher operational subsidies than the regional airports with PSO routes.
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Fine to talk about protecting their Market share; but look who they were taking on, an airline with vast amounts of cash reserves. The fares war was good while it lasted but look what where left with. A token Cork Dublin service and Aer Aran in Examinership. Of course it's not all down to one route but it must have been burning cash when competing with 5 737 800's a day.
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They can sniff all they want, probably seeing figures on some of there routes. Once they see the Airport charges in the regional airportswithout funding they will probably run a mile. They dont have the aircraft to make it viable in my opinion, not enough seats. Looks like Arann should get investment in the coming weeks to help them go forward.I Think there will be huge changes in Aranns busniess plan in tyhe near future,Down size fleet and RE routes.
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Me thinks all that may be left of value is the good will the name has. Accoriding to the Indo yesterday on of the interested parties is the aircarft lessors!! Im guessing all the want is a load of cheap aircraft to repaint n lease on to the next mug who wants to loos a fortune in the avaition industry. was in not Richard Branso who once said, whats the definition of a millionare... a billionare that got involved in the airline industry!!!