Aer Lingus - 2
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Unfortunate error there by EI; what was the reason for the average fare being underquoted? In any case, if EI declared the error, how can it be accused of lying. Clearly, FR isn't too interested in semantics!
I note see today that Airbus's CEO/MD has announced a freeze in recruiting, which would probably require staff being transferred to the 380 line, although I still find it hard to fathom why they would pole-axe the 330; with the 340 as good as dead and the 380 struggling, the 330 is the only element of their widebody line which is actually getting anywhere - and Airbus is going to put their r'ship with airline customers under threat - particularly airlines like EI, which are potential 350XWB/787 customers.
Obviously, I'd love EI to get 777s (and presumably any 777 deal would be a precursor to a 787 deal down the road), but how many is Boeing talking about? Two new (?) acft to replace the two being ordered for next May/June, or more, to replace the older 330s, which - despite their relatively young age - seem to be giving more and more reliability problems. (Finally, is there any common thread/cause for these breakdowns?)
I note see today that Airbus's CEO/MD has announced a freeze in recruiting, which would probably require staff being transferred to the 380 line, although I still find it hard to fathom why they would pole-axe the 330; with the 340 as good as dead and the 380 struggling, the 330 is the only element of their widebody line which is actually getting anywhere - and Airbus is going to put their r'ship with airline customers under threat - particularly airlines like EI, which are potential 350XWB/787 customers.
Obviously, I'd love EI to get 777s (and presumably any 777 deal would be a precursor to a 787 deal down the road), but how many is Boeing talking about? Two new (?) acft to replace the two being ordered for next May/June, or more, to replace the older 330s, which - despite their relatively young age - seem to be giving more and more reliability problems. (Finally, is there any common thread/cause for these breakdowns?)
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i have yawned for years at the specualtion re where AL is going but I think it has reached as in now the most important juncture in its history.....a lot will tell post privitisation.
The only way I see AL fighting back against FR is aggressively.....post September one may see a different style from AL.....they'll have to react otherwise M O'L will wipe the floor with AL and he has started.......he'll cherry pick profitable AL rte's and dump seats on them.
The only way I see AL fighting back against FR is aggressively.....post September one may see a different style from AL.....they'll have to react otherwise M O'L will wipe the floor with AL and he has started.......he'll cherry pick profitable AL rte's and dump seats on them.
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I can see MO'L making this month HELL for EI and the privatisation process; he will try everything to make the process as uncomfortable as possible and to sow doubt about the airline's future prospects; it wouldn't surprise me if he put out the possibility of "bringing forward" plans to go on long haul routes, since this is clearly where EI's best prospects are. (It wouldn't have to be true - just as long as he destabilises the process - if he can do that and scupper EI's chances of raising funds for long haul development, he'd probably view it as a start).
I agree with you totally that EI has to be aggressive, although not in the same, in your face manner as MO'L; it needs to be best where it matters - a good quality, friendly and efficient service - as stress free as possible, without the meanness of FR. I tend to believe that A321s will play a larger role in the EI fleet, because a 220 seat 321 is about the only narrowbody which will have equivalent seat-mile costs to, or better than, the FR 738s. It can also improve utilisation by offering overnight services to places like ATH, LCA, IST, DME etc.
If EI can start new routes 4-5 weekly (not just 1-2 wkly, that's just asking for it) with A321s and do so in such a way that it would not make commercial sense for FR to take them on, then it has a way forward; EI could also allege predatory practices, bearing in mind that there must be lots of much weaker EU flag carriers FR could pick on rather than targeting EI, which already has margins second only to FR - higher even than EZY and much higher than the likes of AZ, IB, LH, SK etc. Go pick on them!
From the govt's perspective, if it wants this process to work, it needs to take a tough line with the EU on the whole Open Skies nonsense; either it will get the green light (which - according to correspondence I've received from the EU - it is entitled to) or it will go ahead on this basis; the greater the threat FR poses on short haul, the more urgent it becomes to get long haul working.
I agree with you totally that EI has to be aggressive, although not in the same, in your face manner as MO'L; it needs to be best where it matters - a good quality, friendly and efficient service - as stress free as possible, without the meanness of FR. I tend to believe that A321s will play a larger role in the EI fleet, because a 220 seat 321 is about the only narrowbody which will have equivalent seat-mile costs to, or better than, the FR 738s. It can also improve utilisation by offering overnight services to places like ATH, LCA, IST, DME etc.
If EI can start new routes 4-5 weekly (not just 1-2 wkly, that's just asking for it) with A321s and do so in such a way that it would not make commercial sense for FR to take them on, then it has a way forward; EI could also allege predatory practices, bearing in mind that there must be lots of much weaker EU flag carriers FR could pick on rather than targeting EI, which already has margins second only to FR - higher even than EZY and much higher than the likes of AZ, IB, LH, SK etc. Go pick on them!
From the govt's perspective, if it wants this process to work, it needs to take a tough line with the EU on the whole Open Skies nonsense; either it will get the green light (which - according to correspondence I've received from the EU - it is entitled to) or it will go ahead on this basis; the greater the threat FR poses on short haul, the more urgent it becomes to get long haul working.
RYR longhaul?
Be careful what you wish for .... they wouldn't ... would they? 
http://www.cardatabase.net/modifieda...hp?id=00007321
Now back to the serious stuff ...
As for EI's roots, don't forget that the airline has a history of innovation, although not all of it successful for various reasons.
Examples;
Branching out of the core business into leasing & maintenance
One of the first state owned flag carriers to base aircraft outside their 'state'
Europe's first all jet airline
There's also a long history of T/A medium haul, plus a decade of long haul to LA.
With the right strategy, correct aircraft and a managment team with vision and capitol, coupled with a flexible workforce, EI could very well make a gower of the oppertunites ahead.
Think about this; 4th highest number of slots at EGLL, short, medium and long haul options from a major world hub ... if they get it right.
JAS
http://www.cardatabase.net/modifieda...hp?id=00007321
Now back to the serious stuff ...
As for EI's roots, don't forget that the airline has a history of innovation, although not all of it successful for various reasons.
Examples;
Branching out of the core business into leasing & maintenance
One of the first state owned flag carriers to base aircraft outside their 'state'
Europe's first all jet airline
There's also a long history of T/A medium haul, plus a decade of long haul to LA.
With the right strategy, correct aircraft and a managment team with vision and capitol, coupled with a flexible workforce, EI could very well make a gower of the oppertunites ahead.
Think about this; 4th highest number of slots at EGLL, short, medium and long haul options from a major world hub ... if they get it right.
JAS
If O Leary tries to interfere with the floatation then its clear he sees Aer Lingus as a threat to him. Just because ryanair begin a new route does not mean it will be a success.Many times the Aer Lingus and Ryanair flights arrive together an Manchester and most of the time Aer Lingus are carrying more passangers.Ryanairs new route to Berlin has not decreased the Aer Lingus load.Would you like to spend 8 and a half hours with Ryanair and its mobile phone chatting passangers?,Fuertaventura return.Yes Aer Lingus must keep its costs in order and supply its customers with a better product but they are aware of that.If both airlines compete on the same route its the foreign airline that will suffer.The business is there for both airlines if they dont try to destroy each other.
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I think if FR/MO'L were to go out and target EI, shareholders in FR could justifiably ask why they are not targeting other flag carriers, which have considerably lower margins and struggling much more.
There is also a potential advantage EI has on longer flights - not just the better service, but the fact that FR (so far) prefers not flying overnight. If EI were to serve the likes of ATH, IST, LCA, etc, it could operate the service overnight from Dublin and have it back to DUB in time for another day's flying; if FR were to do so, it would do the route by daylight, eating up utilisation which could be used on shorter routes (preferably elsewhere).
I agree with your comment that there is a market for both airlines to exploit without crossing each other's paths and that FR is not necessarily the winner if they do, but I still think FR is going to make life as tough as possible in the lead up to EI's privatisation and don't think that won't include spreading scare stories or planting rumours like long haul routes or the like - purely to spook investors.
There is also a potential advantage EI has on longer flights - not just the better service, but the fact that FR (so far) prefers not flying overnight. If EI were to serve the likes of ATH, IST, LCA, etc, it could operate the service overnight from Dublin and have it back to DUB in time for another day's flying; if FR were to do so, it would do the route by daylight, eating up utilisation which could be used on shorter routes (preferably elsewhere).
I agree with your comment that there is a market for both airlines to exploit without crossing each other's paths and that FR is not necessarily the winner if they do, but I still think FR is going to make life as tough as possible in the lead up to EI's privatisation and don't think that won't include spreading scare stories or planting rumours like long haul routes or the like - purely to spook investors.
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Dept of Transport to seek EU approval for increased US access
The Dept of Transport has confirmed that it will be seeking approval next month (i.e. after the privatisation) from the EU Commission to allow the Irish/US deal agreed last November to go ahead. The Sunday Business Post reports that there have been concerns from fund managers (yeah, and everyone else for the past ten years! ) that the lack of access would deter investors, since long haul is supposed to be the key to the airline's growth.
http://www.thepost.ie/ezineSBP/story.asp?storyid=17164
Although there has to be some disappointment that the deal cannot happen sooner, the fact that the approach to the EU is being made public must indicate some level of confidence at the outcome. That said, the govt must be prepared to play hardball. There are issues of Competition Law, insofar as if the Commission rejects the govt's approach and insists on the Irish deal continuing as is, the effect of this will be to maintain a competitive disadvantage for EI (and indeed, Ireland generally). That said, it is difficult to see what the EU could possibly gain from getting in the way, particularly as the Irish situation meets the EU's conditions for giving the go ahead: (i.e. that the proposed bilateral meets the EU's requirements - it was negotiated under EU supervision, AND the fact that increased Irish access could have no effect on ongoing negotiations, since the issue causing the delay - ownership of US carriers - is of no relevance to EI).
Getting the go ahead for increased access is particularly important for EI because for the first time, it will give is certainty as to when it can add new routes and consequently, when it can add capacity. Assuming the EU gives the green light next month, it will make life much easier for EI to conclude negotiations with manufacturers and lessors for adding capacity on the long haul routes.
) that the lack of access would deter investors, since long haul is supposed to be the key to the airline's growth.http://www.thepost.ie/ezineSBP/story.asp?storyid=17164
Although there has to be some disappointment that the deal cannot happen sooner, the fact that the approach to the EU is being made public must indicate some level of confidence at the outcome. That said, the govt must be prepared to play hardball. There are issues of Competition Law, insofar as if the Commission rejects the govt's approach and insists on the Irish deal continuing as is, the effect of this will be to maintain a competitive disadvantage for EI (and indeed, Ireland generally). That said, it is difficult to see what the EU could possibly gain from getting in the way, particularly as the Irish situation meets the EU's conditions for giving the go ahead: (i.e. that the proposed bilateral meets the EU's requirements - it was negotiated under EU supervision, AND the fact that increased Irish access could have no effect on ongoing negotiations, since the issue causing the delay - ownership of US carriers - is of no relevance to EI).
Getting the go ahead for increased access is particularly important for EI because for the first time, it will give is certainty as to when it can add new routes and consequently, when it can add capacity. Assuming the EU gives the green light next month, it will make life much easier for EI to conclude negotiations with manufacturers and lessors for adding capacity on the long haul routes.
Last edited by akerosid; 11th Sep 2006 at 17:42. Reason: Addition of link
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US Ireland agreement
The Government and its predeccessors have been playing hardball with themselves on this issue for years. They knew that increased access would be good for the country but pandered to local interests in Shannon.
Aerlingus prior to Willie Walsh taking over didn't even whisper about the need for a more liberal US Ireland agreement.
Its ironic that the EUnow stand in the way of common sense.
Aerlingus prior to Willie Walsh taking over didn't even whisper about the need for a more liberal US Ireland agreement.
Its ironic that the EUnow stand in the way of common sense.
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The former management actually did as much as it was allowed to do; when she was minister, Maire Geoghegan Quinn banned anyone from EI from making public comments on the stopover and even wanted them to discipline anyone that did!
However, it was Bernie Cahill who persuaded then transport minister, Brian Cowen, to change the rule to the current 1:1 (which was only supposed to be transitional) on the basis that the airline could not justify investment in new aircraft (the old 747s being pretty long in tooth at the time) if the rule remained as it was.
That said, it is fair to say that there was a lot of lethargy, but the main fault has to lie squarely with govt; it had no vision and even less interest and of course, as we know, a rudderless vessel is completely at the mercy a strong wind and that blew from the midwest. All told, it's been a pretty pathetic and embarrassing history.
However, it was Bernie Cahill who persuaded then transport minister, Brian Cowen, to change the rule to the current 1:1 (which was only supposed to be transitional) on the basis that the airline could not justify investment in new aircraft (the old 747s being pretty long in tooth at the time) if the rule remained as it was.
That said, it is fair to say that there was a lot of lethargy, but the main fault has to lie squarely with govt; it had no vision and even less interest and of course, as we know, a rudderless vessel is completely at the mercy a strong wind and that blew from the midwest. All told, it's been a pretty pathetic and embarrassing history.
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Share price range released
Shares to be issued between €2.10 & €2.70 valuing the airline at between €1.1 billion and €1.3 billion
http://www.rte.ie/business/2006/0912/aerlingus.html
http://www.rte.ie/business/2006/0912/aerlingus.html
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Article about the possible financial implications of pulling out of OneWorld and a few other bits about Aer Lingus
http://www.examiner.ie/irishexaminer...291-qqqx=1.asp
(Free Reg Required)
http://www.examiner.ie/irishexaminer...291-qqqx=1.asp
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Unfortunately, most of the destinations have their own direct flights to New York, but a few (Malaga, Faro) don't.
If they could offer it to a lot of the Eastern European cities that they serve, there could be a big market for people who can't fly directly. Also, there's a market from LA, Chicago and Boston to British cities where New York is the only available transatlantic flight.
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Ridiculous isn't it; why can't they have a simple majority vote and be done with it; why should everyone else be held because of SIPTU's procedures? Thankfully, it's just local issues and hopefully, these can be sorted out.
Interesting article in this month's Irish Air Letter about Aer Lingus developments, particularly in relation to long haul:
This month's Irish Air Letter has some very interesting points on EI and in particular, long haul:
- EI has reportedly identified five cities it wishes to serve - SFO, PHL, MIA, IAD and DFW. (Not news to many of us, particularly the first two, but interesting to see the list nonetheless)
- EI sees a need for 14 long haul aircraft, either 350XWB or 787, mostly likely the -9 model (according to IAL)
- Times report suggested no hurry to order, possibly 2 yrs, by which time an economic slowdown would have taken hold and manufacturers under greater pressure to give good deals (an extremely flawed argument in my view!)
- A "wait and see" strategy could involve EI constraining long haul growth, however, this might not "sit well" with investment cty and a key factor for it (investment community) will be how well EI's mgmt handles the fleet renewal process.
- EI's long haul product would have to be updated, since it's now considerably behind the competition and particularly if EI is considering eastbound growth (because t/a pax obviously don't count!
)
- EI will also need to look at current A330-300s and whether these should be replaced, as they'll be nearly 20 by the time new long haul fleet is introduced in 2012-3.
- New aircraft are a -202 and a -302, not a -301 as had been rumoured (and feared). Two A320s also coming next year (not 3, as had been thought).
- New Open Skies with US may be a double edged sword, as this would invite competition from US carriers, such as US, UA, NW - the stopover acting as a barrier to most of them. However, EI's costs per available seat mile are among the lowest of any t/a carrier, at around 10.85 cents (US); Alitalia's are among the highest at 17.44. Of course, if EI starts to invest in long haul that will go up.
Interesting developments then; of course, the key to the long haul development is the govt's success in getting the green light from Brussels next month, to allow the govt to press ahead with a separate deal with the US.
Interesting article in this month's Irish Air Letter about Aer Lingus developments, particularly in relation to long haul:
This month's Irish Air Letter has some very interesting points on EI and in particular, long haul:
- EI has reportedly identified five cities it wishes to serve - SFO, PHL, MIA, IAD and DFW. (Not news to many of us, particularly the first two, but interesting to see the list nonetheless)
- EI sees a need for 14 long haul aircraft, either 350XWB or 787, mostly likely the -9 model (according to IAL)
- Times report suggested no hurry to order, possibly 2 yrs, by which time an economic slowdown would have taken hold and manufacturers under greater pressure to give good deals (an extremely flawed argument in my view!)
- A "wait and see" strategy could involve EI constraining long haul growth, however, this might not "sit well" with investment cty and a key factor for it (investment community) will be how well EI's mgmt handles the fleet renewal process.
- EI's long haul product would have to be updated, since it's now considerably behind the competition and particularly if EI is considering eastbound growth (because t/a pax obviously don't count!
)- EI will also need to look at current A330-300s and whether these should be replaced, as they'll be nearly 20 by the time new long haul fleet is introduced in 2012-3.
- New aircraft are a -202 and a -302, not a -301 as had been rumoured (and feared). Two A320s also coming next year (not 3, as had been thought).
- New Open Skies with US may be a double edged sword, as this would invite competition from US carriers, such as US, UA, NW - the stopover acting as a barrier to most of them. However, EI's costs per available seat mile are among the lowest of any t/a carrier, at around 10.85 cents (US); Alitalia's are among the highest at 17.44. Of course, if EI starts to invest in long haul that will go up.
Interesting developments then; of course, the key to the long haul development is the govt's success in getting the green light from Brussels next month, to allow the govt to press ahead with a separate deal with the US.
Last edited by akerosid; 20th Sep 2006 at 18:04. Reason: Correct error in text
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Phew! Doesn't give any details of the agreement though... Maybe Shannon got 14 new millionaires tonight
http://www.rte.ie/news/2006/0920/aerlingus.html
How does this make life tougher for Aer Lingus ? Ryanair will generate extra business to the canaries and take some pax from the charters .Some pax will fly with Ryanair once and say never again. Aer Lingus have been living with Ryanair for 20 years and have not folded yet.
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I think the last 20yrs are no comparison to the last 2 months, Ryanair has announced so many routes that Aer Lingus has to feel the punch, and as far as pax flying with Ryanair once and then never again, your living in a dream world fueled by media reports, If Ryanair pax only traveled once with the airline then the company wouldnt be the biggest in europe and routes would be closing every day due to lack of interest, what I see is more and more pax, more and more route, more and more aircraft and more and more profit.
I think the last 20yrs are no comparison to the last 2 months, Ryanair has announced so many routes that Aer Lingus has to feel the punch, and as far as pax flying with Ryanair once and then never again, your living in a dream world fueled by media reports, If Ryanair pax only traveled once with the airline then the company wouldnt be the biggest in europe and routes would be closing every day due to lack of interest, what I see is more and more pax, more and more route, more and more aircraft and more and more profit.
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Long haul issues
I think we are going to see a lot more changes and not all will be good for EI; I don't think EI will be fatally damaged by FR, but I do worry about the long haul issue. I don't believe
What I do believe is of more immediate concern to EI is what happens after next month, if (hopefully when) the govt gets the green light for expansion in US markets; this IS very much a double edged sword for EI, in that airlines which previously flew "one for one" will now feel pretty silly not to take full advantage of the new regulations, especially since they can use ETOPS 757s on Irish routes. That's going to result in a lot more competition; EI needs to make sure it can get its service product right and it needs to be ahead of the game - not just in quality, but in anticipating changes, such as long haul, low cost. Routes between Ireland and the US are going to get an awful lot more crowded and that's only next year, if (as anticipated by last year's deal) they start with 3:1 and then move to total Open Skies from 2008.
EI currently has the lowest CASM (cost per available seat mile) of any t/a airline, but a lot of that has been the result of zero spending on its service product during that period and that has to change, but it needs to develop a product which will not only be good, but which will dissuade other carriers (particularly MO'L's long haul) from following it into a new market. I think EI needs to start sooner rather than later with a new LH-loco product and for that, it needs to get the most economical aircraft available? How does an 8 abreast 330 compare to a 10 abreast 777?
What I do believe is of more immediate concern to EI is what happens after next month, if (hopefully when) the govt gets the green light for expansion in US markets; this IS very much a double edged sword for EI, in that airlines which previously flew "one for one" will now feel pretty silly not to take full advantage of the new regulations, especially since they can use ETOPS 757s on Irish routes. That's going to result in a lot more competition; EI needs to make sure it can get its service product right and it needs to be ahead of the game - not just in quality, but in anticipating changes, such as long haul, low cost. Routes between Ireland and the US are going to get an awful lot more crowded and that's only next year, if (as anticipated by last year's deal) they start with 3:1 and then move to total Open Skies from 2008.
EI currently has the lowest CASM (cost per available seat mile) of any t/a airline, but a lot of that has been the result of zero spending on its service product during that period and that has to change, but it needs to develop a product which will not only be good, but which will dissuade other carriers (particularly MO'L's long haul) from following it into a new market. I think EI needs to start sooner rather than later with a new LH-loco product and for that, it needs to get the most economical aircraft available? How does an 8 abreast 330 compare to a 10 abreast 777?
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I cannot help but notice that Aer Lingus appear to have finally reverted back to the origional Aer Lingus Corporate image and removed all the yellow and red Dot Com rubbish from the checkin areas. Is this a permanent move or just an exercise to make the company look more professional in light of privatisation?