Aer Lingus - 2
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In correspondence with the EU, I was advised that if negotiations between the EU and the US hit problems, the EU could give the Irish (or anyone else) permission to renegotiate with the US, subject to the following:
- The agreement would be subject to EU approval and would have to contain certain clauses (since the mini deal was made under EU supervision, we can assume that these clauses were in there?), and
- The EU had to be satisfied that granting the right to negotiate would not compromise or undermine ongoing EU/US negotiations. Given that the sticking point is not something which concerns Aer Lingus, they can hardly claim this is the case. Furthermore, since our US bilateral is easily the most backward, counter-productive and anti-competitive of any of the 25 EU states, amending it to allow our "mini deal" to go ahead could hardly be regarded as a threat to any other member state.
Furthermore, since the EU has said its confident that a deal can be done by year end and since, at this stage, Aer Lingus can't do anything more for the Winter, what difference would it make for the EU to allow the minister to give assurances in relation to increased US access in time for privatisation? That's really all EI and potential investors need right now. (And if Open Skies doesn't go ahead as planned, the mini deal still can, because it won't make any difference to the sticking point.)
The govt really needs to take a hard line on this. If the privatisation is a flop and if EI doesn't get the funds to increase its fleet and add new US routes, the airline will be in serious trouble and MO'L will make it hurt ...
- The agreement would be subject to EU approval and would have to contain certain clauses (since the mini deal was made under EU supervision, we can assume that these clauses were in there?), and
- The EU had to be satisfied that granting the right to negotiate would not compromise or undermine ongoing EU/US negotiations. Given that the sticking point is not something which concerns Aer Lingus, they can hardly claim this is the case. Furthermore, since our US bilateral is easily the most backward, counter-productive and anti-competitive of any of the 25 EU states, amending it to allow our "mini deal" to go ahead could hardly be regarded as a threat to any other member state.
Furthermore, since the EU has said its confident that a deal can be done by year end and since, at this stage, Aer Lingus can't do anything more for the Winter, what difference would it make for the EU to allow the minister to give assurances in relation to increased US access in time for privatisation? That's really all EI and potential investors need right now. (And if Open Skies doesn't go ahead as planned, the mini deal still can, because it won't make any difference to the sticking point.)
The govt really needs to take a hard line on this. If the privatisation is a flop and if EI doesn't get the funds to increase its fleet and add new US routes, the airline will be in serious trouble and MO'L will make it hurt ...
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Open Skies
Can't see the US making any concessions before November's election. EI need to let the Government know that the situation is very serious.
This isn't a time for political games.
It's potentially as serious as the Autumn of 2001 for Aerlingus. We must allow the transitional agreement to come into effect.
This isn't a time for political games.
It's potentially as serious as the Autumn of 2001 for Aerlingus. We must allow the transitional agreement to come into effect.
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We don't actually need any concessions from the Americans; it's the EU which is providing the obstacle. The Americans have been pushing our lot for years to move towards Open Skies and it was only grudgingly that they agreed to a phased period for letting the stopover die. The Americans would be only too happy to agree that the Irish-US deal comes into effect, regardless of the O/S problems; that's the stage we're at now. Since no Irish airline has any interest in controlling a US carrier, there'll be no objections at Congress level.
As for other long haul routes, yes, of course, they should do that, BUT there are a number of issues here:
- It's well known in the US market and that's its traditional long haul stamping ground, so it's relatively easy to establish itself in new markets.
- Similarly, it's less well known in Asia and without wishing to kick EI, its long haul product isn't quite Cathay. To establish themselves there, they'll need significant investment in the service product; do they want to do that?
- Is the A332 the optimal aircraft for these routes, particularly on the homebound legs? The A332 should be ok for BKK, possibly HKG, but KUL and SIN are out.
So, with that in mind, I think the focus will be on N/A routes; the minister has a month to get the green light from the EU to allow the Irish/US mini-deal to go ahead as it is; nothing will happen this winter; all that is wanted is an assurance for potential investors.
As for other long haul routes, yes, of course, they should do that, BUT there are a number of issues here:
- It's well known in the US market and that's its traditional long haul stamping ground, so it's relatively easy to establish itself in new markets.
- Similarly, it's less well known in Asia and without wishing to kick EI, its long haul product isn't quite Cathay. To establish themselves there, they'll need significant investment in the service product; do they want to do that?
- Is the A332 the optimal aircraft for these routes, particularly on the homebound legs? The A332 should be ok for BKK, possibly HKG, but KUL and SIN are out.
So, with that in mind, I think the focus will be on N/A routes; the minister has a month to get the green light from the EU to allow the Irish/US mini-deal to go ahead as it is; nothing will happen this winter; all that is wanted is an assurance for potential investors.
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There's not much he can usefully say, publicly, on this matter. His efforts and those of his department should be focused on getting the green light for EI on t/a access. I think that the Shannonsiders have accepted that the end for the stopover is nigh.
Quite a few interesting articles in today's papers - the Sunday Times has a large article on EI and the SBP as well; the Sunday Indo has a story on fears about the privatisation being a flop. That can't be allowed to happen; for EI's floatation to be a disaster would put its future seriously at risk, especially as far as long haul expansion is concerned and one thing that Cullen knows he can do about this is to be able to say, in advance of the privatisation (which will be in the last week of September), is that EI can expand its US routes on the basis of last year's mini-deal.
Incidentally, one of the papers (I think it was the ST) gave a list of the airline's priority list for US growth: SFO, Philadelphia, Florida, Mid-Atlantic (BWI?) and Texas. One question that occurs to me is this: Could EI return to BWI and MCO, on the basis that it did previously, i.e. without these cities counting as one (or two) of three cities is can add under the "mini deal"?
Quite a few interesting articles in today's papers - the Sunday Times has a large article on EI and the SBP as well; the Sunday Indo has a story on fears about the privatisation being a flop. That can't be allowed to happen; for EI's floatation to be a disaster would put its future seriously at risk, especially as far as long haul expansion is concerned and one thing that Cullen knows he can do about this is to be able to say, in advance of the privatisation (which will be in the last week of September), is that EI can expand its US routes on the basis of last year's mini-deal.
Incidentally, one of the papers (I think it was the ST) gave a list of the airline's priority list for US growth: SFO, Philadelphia, Florida, Mid-Atlantic (BWI?) and Texas. One question that occurs to me is this: Could EI return to BWI and MCO, on the basis that it did previously, i.e. without these cities counting as one (or two) of three cities is can add under the "mini deal"?
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I think they could do that; WW once said that BWI would work without the stopover; MCO would obviously work for the Summer and they'd only have the stop in one direction, but also no cargo.
Still, there's a hell of a difference between settling for 1:1 and going for what the mini-deal should allow, 3:1. Cullen needs to push hard for this; after all EI has been through over the past few years, the EU should not be allowed to mess things up, particularly over something as irrelevant to EI as foreign o'ship of US carriers. They need to play hard ball too; Bertie has considerable clout at EU level, having concluded the Constitution deal during our last presidency, so he has a role to play. It's not just EI's interests; it's ours as a whole which will be undermined, so if the EU wants its next Constitution to get anywhere (bearing in mind it needs a referendum in Ireland), "don't mess EI about" should be the message coming from Merrion St.
Still, there's a hell of a difference between settling for 1:1 and going for what the mini-deal should allow, 3:1. Cullen needs to push hard for this; after all EI has been through over the past few years, the EU should not be allowed to mess things up, particularly over something as irrelevant to EI as foreign o'ship of US carriers. They need to play hard ball too; Bertie has considerable clout at EU level, having concluded the Constitution deal during our last presidency, so he has a role to play. It's not just EI's interests; it's ours as a whole which will be undermined, so if the EU wants its next Constitution to get anywhere (bearing in mind it needs a referendum in Ireland), "don't mess EI about" should be the message coming from Merrion St.
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Perhaps the question is, does Ahern? I think he and Cullen both do. Cullen's silence through all of this is interesting; he has neither committed himself to a particular result, but nor has he rejected it as impossible. I suspect that the Dept of Transport has its own Plan B in place for some time, i.e. if there is a delay here, this is what we'll do and this is what EI will do.
They know that they'll have little problem with the Americans, but it's the Eurocrats who are the big obstacle. Now, there is, understandably a suspicion, given the past few years' experience, that they may not be trying quite so hard, but I suspect that there is general expectation in the west that the Shannon stopover is gone and they're working to that assumption. However, I also suspect - and I may be extremely naive in this - that there is a realisation at govt level that if EI can't develop its long haul routes, they're at FR's mercy; it's not just a question of not wanting O'Leary to kill EI (though that in itself would be reason enough), but also the fact that EI's growth and development of long haul is crucial to economic growth in future; foreign airlines may come and go, but EI needs to be there, growing and developing its network. For that, a successful privatisation - and fleet renewal - is essential.
Am I right? We'll find out in the week or so leading to privatisation ...
They know that they'll have little problem with the Americans, but it's the Eurocrats who are the big obstacle. Now, there is, understandably a suspicion, given the past few years' experience, that they may not be trying quite so hard, but I suspect that there is general expectation in the west that the Shannon stopover is gone and they're working to that assumption. However, I also suspect - and I may be extremely naive in this - that there is a realisation at govt level that if EI can't develop its long haul routes, they're at FR's mercy; it's not just a question of not wanting O'Leary to kill EI (though that in itself would be reason enough), but also the fact that EI's growth and development of long haul is crucial to economic growth in future; foreign airlines may come and go, but EI needs to be there, growing and developing its network. For that, a successful privatisation - and fleet renewal - is essential.
Am I right? We'll find out in the week or so leading to privatisation ...
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IPO next week
Next week is IPO time for Aer Lingus, leading to privatisation on or about the 25th September.
It's also expected that the govt will issue a statement about Open Skies sometime during the next week or two, which will hopefully provide some confidence for the whole process. Dermot Mannion will be starting the roadshow on or about the 4th September.
Interesting points in this article from the Guardian:
http://money.guardian.co.uk/business...856906,00.html
Most we're aware of already - long haul fleet, developing hub at DUB etc, although I wonder if the recent problems at LHR (which aren't going to end anytime soon) will make Dublin a more pleasant alternative? Certainly, the DAA will need to be made do its part (and with the EUR265m it picked up from the Great Southern Hotels sale, it can hardly plead poverty), particularly as regards connection facilities.
Fingers crossed ...
It's also expected that the govt will issue a statement about Open Skies sometime during the next week or two, which will hopefully provide some confidence for the whole process. Dermot Mannion will be starting the roadshow on or about the 4th September.
Interesting points in this article from the Guardian:
http://money.guardian.co.uk/business...856906,00.html
Most we're aware of already - long haul fleet, developing hub at DUB etc, although I wonder if the recent problems at LHR (which aren't going to end anytime soon) will make Dublin a more pleasant alternative? Certainly, the DAA will need to be made do its part (and with the EUR265m it picked up from the Great Southern Hotels sale, it can hardly plead poverty), particularly as regards connection facilities.
Fingers crossed ...
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Official - Govt. to sell stake in Aer Lingus
Govt, Aer Lingus detail privatisation plans
http://www.rte.ie/news/2006/0828/aerlingus.html
Aer Lingus price range by second week in Sept
http://www.rte.ie/business/2006/0828/aerlingus.html
http://www.rte.ie/news/2006/0828/aerlingus.html
Aer Lingus price range by second week in Sept
http://www.rte.ie/business/2006/0828/aerlingus.html
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Transatlantic the key?
The govt and EI have said that one of the key results of the privatisation will be investment in long haul fleet expansion, but so far, the "vibes" have been pretty poor, as far as reports coming out are concerned. I think the govt - and potential investors - realise now that if the privatisation process is to be a success, the govt needs to get clearance from the EU to proceed with the Irish/US mini-deal. Who knows how long the other issue will take? It could be all over by Christmas and indeed, the EU has indicated that it is optimistic that this will be the case, but then it could go on for another year.
The core issue is that since the sticking point - US airline ownership and access to LHR - has nothing to do with EI, what harm for the EU Commission if it gives the green light? The fact is that of all EU countries, our bilateral with the US is the most restrictive; virtually every other country has Open Skies or close to it - the UK (and I think, Greece, but that's their problem) being the exceptions, which means that the delays don't cost them as much as they cost EI. The govt needs to play hardball on this, if it's interested in the privatisation being a succes; otherwise, investment brokers may recommend holding off until the O/S issue is sorted out.
As far as eastbound growth is concerned, Shanghai was mentioned as a possibility, which is "out of the blue", given that HKG, BKK, SIN and KUL were said to be the front runners. Interesting option - particularly for freight, but again, is the 332 the ideal freight carrier and again, if they go for anything bigger, can DUB handle it - runway restrictions? And furthermore, if they do go east, they'll need to rethink their service product pretty dramatically ...
The core issue is that since the sticking point - US airline ownership and access to LHR - has nothing to do with EI, what harm for the EU Commission if it gives the green light? The fact is that of all EU countries, our bilateral with the US is the most restrictive; virtually every other country has Open Skies or close to it - the UK (and I think, Greece, but that's their problem) being the exceptions, which means that the delays don't cost them as much as they cost EI. The govt needs to play hardball on this, if it's interested in the privatisation being a succes; otherwise, investment brokers may recommend holding off until the O/S issue is sorted out.
As far as eastbound growth is concerned, Shanghai was mentioned as a possibility, which is "out of the blue", given that HKG, BKK, SIN and KUL were said to be the front runners. Interesting option - particularly for freight, but again, is the 332 the ideal freight carrier and again, if they go for anything bigger, can DUB handle it - runway restrictions? And furthermore, if they do go east, they'll need to rethink their service product pretty dramatically ...
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Well said, you should offer your consultancy services to Aer Lingus / the government. It'd probably work out a whole lot cheaper than the current consultants they're paying, and save AerLingus a small fortune 
A bit unrelated, but I was on the Aerlingus site there one night a few months ago and the booking engine was showing flights to Bangkok, Hong Kong and Cairo
Didn't notice any out of place US services.
Aer Lingus definitely need to focus on the US market, but Hong Kong would be a winner if marketed adequately. (That's the problem half the time isn't it!)
Aer Lingus should never forget or neglect its European routes either, that would simply be disastrous
Cork (of course) has potential routes screaming out left right and centre: Frankfurt, Dusseldorf, Milan, Glasgow, Venice, Palma, New York, and Brussels (of course).
A bit unrelated, but I was on the Aerlingus site there one night a few months ago and the booking engine was showing flights to Bangkok, Hong Kong and Cairo
Didn't notice any out of place US services.Aer Lingus definitely need to focus on the US market, but Hong Kong would be a winner if marketed adequately. (That's the problem half the time isn't it!)
Aer Lingus should never forget or neglect its European routes either, that would simply be disastrous
Cork (of course) has potential routes screaming out left right and centre: Frankfurt, Dusseldorf, Milan, Glasgow, Venice, Palma, New York, and Brussels (of course).
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The air cargo business is booming at the minute, especially in the far east. A tidy profit could easily be turned on an A330F based frieghter operation.
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Ryan2000
EI has a great chance to expand out of Cork. In fairness they have already 4 aircraft based there but Ryanair's stubborn refusal to open new routes there leaves the field open to them.
I understand that the old terminal is already beginning to take on a semi derilict look witlh furniture removed and many fittings pulled from the walls.
I understand that the old terminal is already beginning to take on a semi derilict look witlh furniture removed and many fittings pulled from the walls.
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Originally Posted by Charlie Roy
Aer Lingus should never forget or neglect its European routes either, that would simply be disastrous Cork (of course) has potential routes screaming out left right and centre: Frankfurt, Dusseldorf, Milan, Glasgow, Venice, Palma, New York, and Brussels (of course).
Cork (of course) has potential routes screaming out left right and centre: Frankfurt, Dusseldorf, Milan, Glasgow, Venice, Palma, New York, and Brussels (of course).From Dublin an expansion of Scandinavian services - Oslo, Copenhagen, Stockholm, Helsinki. When they are added to the EU, services to Romania and Bulgaria. There's even potential in services to places like Istanbul or Moscow. And potentially more holiday routes - Palermo, Somewhere in Greece.
From Cork more UK routes - Glasgow, Manchester. More sun routes - Palma, Almeria, Valencia. Baltic Destinations - Riga. Frequency increases on existing routes. I'm not sure I agree on all your routes. I feel the A320 is too large an aircraft for Cork-Germany. Also, Dusseldorf (Amsterdam) and Brussels (Amsterdam & Paris) could have a negative impact on existing yields.
The most interesting question for short-haul though is how they handle a situation where they try to turn Dublin into a transatlantic hub. They'll need to up the frequency to double-daily on a number of routes (particularly UK) and need to consider night-stopping as well. This could require a rethink of existing routes in terms of how it could fit into an overall strategy, rather than how many passengers can be shifted point-to-point.
Interesting times ahead.
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I agree that there's still considerable opportunity on s/h; Mannion has already mentioned Russia and Greece. However, I have to say I'm very uneasy about the idea of developing another hub in Europe; to me, it's inviting disaster. EI needs to consolidate its position at its home base; establishing a new base in Europe only invites other carriers - particularly low cost carriers - to go in and compete against it; it has to get itself established and it has to face all the costs associated with a new base - crews, support staff etc ... all money far better (and more urgently?) spent at home.
There are so many stories in business - not just aviation - of companies which made a mess of things because they lost focus. In the old days, as a state owned company, EI could rely upon the state to pull it out of trouble; in the new, privatised environment, there's no safety net. Aer Lingus's focus needs to be on developing short haul and particularly, long haul. It needs to develop an effective hub at DUB (although opinion is divided on whether the day of hubs as passed). I'd much rather see EI investing the money it might spend on building a Eurohub on boosting its long haul network, its service product and other "home" areas, rather than opening up a whole new area for other carriers to attack it on. It doesn't need to do this. Why be diverted from where the important battle really is?
There are so many stories in business - not just aviation - of companies which made a mess of things because they lost focus. In the old days, as a state owned company, EI could rely upon the state to pull it out of trouble; in the new, privatised environment, there's no safety net. Aer Lingus's focus needs to be on developing short haul and particularly, long haul. It needs to develop an effective hub at DUB (although opinion is divided on whether the day of hubs as passed). I'd much rather see EI investing the money it might spend on building a Eurohub on boosting its long haul network, its service product and other "home" areas, rather than opening up a whole new area for other carriers to attack it on. It doesn't need to do this. Why be diverted from where the important battle really is?