Aer Lingus - 5
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Aer Lingus cannot capture the business mans needs on a daily rotation case in mind EDI/GLA to DUB
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To everyone who thinks Air Arann are going to be operating flights for AerLingus, think again, I have it from a very good source in AL that its NOT going ahead.
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OK, so maybe it is not going ahead in the way anticipated, but failing that what are the options, because it occurs to me - and I'm sure many people on this forum - that having the 320 as the smallest type in the fleet (particularly in the current environment) and being forced out of regional UK markets (where they used to have a very good network, as EI-BUD reminded us, above) is not the way to go.
RE certainly needs somewhere else to put its fleet once the PSO dies off and FR is only going to tighten the screws on EI as it seeks to take it over, one way or another, so something does need to be done.
RE certainly needs somewhere else to put its fleet once the PSO dies off and FR is only going to tighten the screws on EI as it seeks to take it over, one way or another, so something does need to be done.
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Think it would make a lot of sense to both companies for Aer Arann to operate the thinner routes to UK regional airports and code share their flights. All Aer Arann flights booked from regional airports should be able to connect onwards to Aer Lingus flights from Dublin, Cork etc.
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Wait for it - a new Dublin Shannon route by EI/RE ATR will be the start of another green shoot recovery in snn just like the baby from EMA was heralded in Cork.
Is the proposal a code share or a franchise operation? The ATRs should work ex snn to many UK regional destinations - that would be a good clawback for the snn side of the house.
Is the proposal a code share or a franchise operation? The ATRs should work ex snn to many UK regional destinations - that would be a good clawback for the snn side of the house.
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Geez aviation is so cyclical it gets boring when it comes round again. I of course refer to Aer Lingus Commuter who did exactly this sort of thing with SD360s, SF340s, Fokker 50s and the 146! This predates the rebirth of Ryanair of course!
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The 5Q- what time or what show were they talking about Aer Arann doing a Dublin/Shannon route in conjunction with Aer Lingus?
Sounds mad to me, Aer Arann did alot of marketing on this route when it was flying, there were some good fares, a good schedule and they said average load was 11 passengers, Aer Lingus operated plenty of flights on the route (330s enroute US) and hence EI have some idea of the numbers I would imagine. Ryanair said it was appalling (the loads when they operated). Did EuJet actually operate this route when they were around? I know they had planned to.
Sounds mad to me, Aer Arann did alot of marketing on this route when it was flying, there were some good fares, a good schedule and they said average load was 11 passengers, Aer Lingus operated plenty of flights on the route (330s enroute US) and hence EI have some idea of the numbers I would imagine. Ryanair said it was appalling (the loads when they operated). Did EuJet actually operate this route when they were around? I know they had planned to.
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Well if this is true, I think it's great news for both companies. Aer Lingus will finally have right size (and right cost) aircraft operating on regional routes there by freeing up it's A320's to allow them be deployed on the type of routes it was designed for and Aer Arann will have access to a much larger customer base, and, should there be a decent number of routes, they should have some protection from an FR on-slaught. Overall, good logical thinking in my opinion.
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RE/EI
ATR's have a much higher seat mile cost than an A320 so it will not work unless it can attract some high yield passengers. Reverting to this model will represent a significant u turn by Aerlingus.
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ATR's
Why then did EI get rid of the FK50's, Saab 340's etc if commuter types are so compatible with the low cost model. None of the major low costs use ATR's.
Ryanair did in the early 1990's on KIR LTN, GWY LTN and WAT LTN but got rid of them.
I agree that they serve a different market but they cannot compete with the likes of FR and EZY a point borne out by RE'S David v Goliath battle on ORK DUB.
The Cork business community heaped praise on Aer Arann for their service at Corporate lunches and in magzines but by and large chose to fly with Ryanair when given a choice.
Ryanair did in the early 1990's on KIR LTN, GWY LTN and WAT LTN but got rid of them.
I agree that they serve a different market but they cannot compete with the likes of FR and EZY a point borne out by RE'S David v Goliath battle on ORK DUB.
The Cork business community heaped praise on Aer Arann for their service at Corporate lunches and in magzines but by and large chose to fly with Ryanair when given a choice.
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Ryan2000,
There is a stark difference between ATR's and the TP fleet EI used to operate . 738's and 320's are fine for high yield-airport sectors but for the peripherals such as DUB-BHX,MAN, EDI, CWL, LPL, GLA etc etc. it doesn't make financial sense to operate such a large aircraft. Much cheaper to run a lower pax a/c on these lower yield, shorter sectors. It's costing Ryr a fortune to run DUB-ORK service. The only reason they're still running is because of RE competition. I Guarantee if RE pulled off the route in the morning, FR would follow suit almost immediately.
PS The new 500's are extremely fuel efficient too.
I see your point about competing with FR and EZY on the smaller routes but I still think there's a market there for RE operating for EI.
CP.
There is a stark difference between ATR's and the TP fleet EI used to operate . 738's and 320's are fine for high yield-airport sectors but for the peripherals such as DUB-BHX,MAN, EDI, CWL, LPL, GLA etc etc. it doesn't make financial sense to operate such a large aircraft. Much cheaper to run a lower pax a/c on these lower yield, shorter sectors. It's costing Ryr a fortune to run DUB-ORK service. The only reason they're still running is because of RE competition. I Guarantee if RE pulled off the route in the morning, FR would follow suit almost immediately.
PS The new 500's are extremely fuel efficient too.
I see your point about competing with FR and EZY on the smaller routes but I still think there's a market there for RE operating for EI.
CP.
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Commuter types don't fit into a low cost model. But what is being discussed here is a franchise arrangement to revenue share. I don't think there has been any talk of any shares/money changing hands.
Consider a simple example. You bring in punters from somewhere like Cardiff and land them in 1.5 - 2.0 hours before the 105 heads off to JFK. The benefit to AL is obvious. Filling up seats that otherwise would have gone empty. Probably be sold off quite cheap as the profit would have been made on the ex DUB pax. The punters save themself a trip up to London or BHX or wherever else they head off to. They also benefit from passing through immigration at DUB.
Of course the same scenario will work for Chicago, Boston etc etc.
Consider a simple example. You bring in punters from somewhere like Cardiff and land them in 1.5 - 2.0 hours before the 105 heads off to JFK. The benefit to AL is obvious. Filling up seats that otherwise would have gone empty. Probably be sold off quite cheap as the profit would have been made on the ex DUB pax. The punters save themself a trip up to London or BHX or wherever else they head off to. They also benefit from passing through immigration at DUB.
Of course the same scenario will work for Chicago, Boston etc etc.
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Ryan2000,
You made an excellent point that the seat mile cost of an A320 is lower than that of an ATR. The same argument can be made that the A380's seat mile cost is lower than an A380 yet we don't see them flying short haul sectors. The creation of seat mile values are a useful idea from an accounting view in terms of allocating overheads etc. but it doesn't affect the total cost of operating the aircraft (check the $/cycle cost of a PW100 -v- a CFM56 or even the fuel cost). The simple truth is that in terms of overall cost, operating an ATR on a short route is lower cost than using an A320.
If EI are having to drop prices constantly (and as a result dropping yield), then you quickly get to a point where even filling an aircraft with low yield passengers will result in you making a loss on the sector. I believe they would be wise to start using the A320's on appropriate routes where there is a) the demand and b) sufficient yield relative to their costs to make it viable. A deal with Aer Arann will result in access to a low cost operation (i.e. ATR's + RE crews etc.) while still maintaining a degree of the revenue. All of this is of course based on Aer Lingus's current cost base. Should this reduce, then the number of routes where the A320 can be used cost effectively increases.
These are just my two cents but I believe Aer Lingus are becoming a bit more realistic by understanding that while they're tickets are low cost(ish) their cost base is not (and will not be low cost for a while to come). Making an agreement with Aer Arann will maintain a portion of the revenue generated on these seemingly unprofitable sectors and allow in the more efficient use of their assests on alternative routes be they ex Dublin or further afield. Aer Arann also get access to additional routes, the benefit of selling under a known brand and depending on the agreement, a more steady income from their operations.
All the best,
P2C
You made an excellent point that the seat mile cost of an A320 is lower than that of an ATR. The same argument can be made that the A380's seat mile cost is lower than an A380 yet we don't see them flying short haul sectors. The creation of seat mile values are a useful idea from an accounting view in terms of allocating overheads etc. but it doesn't affect the total cost of operating the aircraft (check the $/cycle cost of a PW100 -v- a CFM56 or even the fuel cost). The simple truth is that in terms of overall cost, operating an ATR on a short route is lower cost than using an A320.
If EI are having to drop prices constantly (and as a result dropping yield), then you quickly get to a point where even filling an aircraft with low yield passengers will result in you making a loss on the sector. I believe they would be wise to start using the A320's on appropriate routes where there is a) the demand and b) sufficient yield relative to their costs to make it viable. A deal with Aer Arann will result in access to a low cost operation (i.e. ATR's + RE crews etc.) while still maintaining a degree of the revenue. All of this is of course based on Aer Lingus's current cost base. Should this reduce, then the number of routes where the A320 can be used cost effectively increases.
These are just my two cents but I believe Aer Lingus are becoming a bit more realistic by understanding that while they're tickets are low cost(ish) their cost base is not (and will not be low cost for a while to come). Making an agreement with Aer Arann will maintain a portion of the revenue generated on these seemingly unprofitable sectors and allow in the more efficient use of their assests on alternative routes be they ex Dublin or further afield. Aer Arann also get access to additional routes, the benefit of selling under a known brand and depending on the agreement, a more steady income from their operations.
All the best,
P2C
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Papa2Charlie;
That was an excellent point I would concur with Ryan2000 that the 320 has indeed got much lower seat mile costs however, seat mile costs are not very relevant when the loads are dire. or when the yield is awful.
Aer Lingus need a way of offering frequency that wont bankrupy them. I mean an ATR with 50 Passengers would be much cheaper to operate than an A320 with say 75/80. When Aer Lingus axed the props they were losing a fortune and estimated to have been losing £13 per seat for every seat flown on the Dublin Heathrow route. Flybe are the example to watch, they operate good frequencies on many thin routes and are a strong opponent to the like of Ryanair or Easyjet. In fact I notice that Ryanair avoid them like the plague.
When Aer Lingus axed the props it was about the start of the celtic tiger, there was a much lower range of destinations to continental europe as Ryanair were only flying to Paris BVA and Brussels CRL. In turn the traffic was very strong on Ireland UK routes which lead to the need for high frequency of Ryanair services and this combined with Aer Lingus' state of losses lead to Aer Lingus pulling many of these services. I dont think the decision to axe the Props was because they were so high in seat mile costs but overall the decision was made based on overall costs and a streamlining of the types operated. That said tradition has it that LOCOs should only operate one type (ref Southwest, Ryanair), but as far as I can see that need always be so.
Aer Lingus is not LOCO in the normal sense, they do not only do point to point, they offer connections. They fly long haul and also offer different classes of cabin on these routes.
Aer Lingus now need to lever their strenghts and this in my view is going to be their future. Dublin is opening a new terminal and Aer Lingus need to market Dublin as the Key Connection point to the USA from all over UK and Europe. Marketing Dublin as the fast and easy to use Airport complete with low fares and pre immigration clearance, this could stabilise the USA routes and also give Aer Lingus a means of bypassing some of the pain that head to head with Ryanair gives and at the same time gives passenger numbers and in time yield.
Why would passenger want to fly from the british regions to USA via Amsterdam when they could go to Dublin and clear US immigration.
Many Airports in UK and EU dont have USA flights, examples as follows;
Leeds Bradford (JFK was operated briefly and reasonably successful)
Doncaster
Aberdeen
Cardiff
London Luton
London Stansted (limited options)
Glasgow (limited range and frequency)
Norwich
Eindhoven
Tenerife (spoke to a group on a TFS DUB flight who were doing TFS DUB SFX (with overnight in Dublin)
Canary Islands
The Spanish regions are badly connected to the states and Iberia charge a bomb via MAD
Newcastle
Blackpool
Liverpool
East Midlands
Gloucester (Manx2 do well ex IOM On this service)
Oxford
London Gatwick (major scaling back of LGW US services)
Add then any other airport around EU that has no services which are many.
Also in the last few years since many LHR routes from the regions have been axed by BA and Bmi. The opportunities for connections have mostly been transferred to KLM or others, but not necessarily Aer Lingus?
Make Dublin the crossroad to the USA like Emirates have done at Dubai, and KLM do so successfully ex Amsterdam.
No matter how much resource that Ryanair put into short haul to hurt Aer Lingus they could never hurt AerLingus' TA traffic and there are opportunities but Aer Lingus need to market them and develop Dublin via the new Terminal.
EI-BUD
That was an excellent point I would concur with Ryan2000 that the 320 has indeed got much lower seat mile costs however, seat mile costs are not very relevant when the loads are dire. or when the yield is awful.
Aer Lingus need a way of offering frequency that wont bankrupy them. I mean an ATR with 50 Passengers would be much cheaper to operate than an A320 with say 75/80. When Aer Lingus axed the props they were losing a fortune and estimated to have been losing £13 per seat for every seat flown on the Dublin Heathrow route. Flybe are the example to watch, they operate good frequencies on many thin routes and are a strong opponent to the like of Ryanair or Easyjet. In fact I notice that Ryanair avoid them like the plague.
When Aer Lingus axed the props it was about the start of the celtic tiger, there was a much lower range of destinations to continental europe as Ryanair were only flying to Paris BVA and Brussels CRL. In turn the traffic was very strong on Ireland UK routes which lead to the need for high frequency of Ryanair services and this combined with Aer Lingus' state of losses lead to Aer Lingus pulling many of these services. I dont think the decision to axe the Props was because they were so high in seat mile costs but overall the decision was made based on overall costs and a streamlining of the types operated. That said tradition has it that LOCOs should only operate one type (ref Southwest, Ryanair), but as far as I can see that need always be so.
Aer Lingus is not LOCO in the normal sense, they do not only do point to point, they offer connections. They fly long haul and also offer different classes of cabin on these routes.
Aer Lingus now need to lever their strenghts and this in my view is going to be their future. Dublin is opening a new terminal and Aer Lingus need to market Dublin as the Key Connection point to the USA from all over UK and Europe. Marketing Dublin as the fast and easy to use Airport complete with low fares and pre immigration clearance, this could stabilise the USA routes and also give Aer Lingus a means of bypassing some of the pain that head to head with Ryanair gives and at the same time gives passenger numbers and in time yield.
Why would passenger want to fly from the british regions to USA via Amsterdam when they could go to Dublin and clear US immigration.
Many Airports in UK and EU dont have USA flights, examples as follows;
Leeds Bradford (JFK was operated briefly and reasonably successful)
Doncaster
Aberdeen
Cardiff
London Luton
London Stansted (limited options)
Glasgow (limited range and frequency)
Norwich
Eindhoven
Tenerife (spoke to a group on a TFS DUB flight who were doing TFS DUB SFX (with overnight in Dublin)
Canary Islands
The Spanish regions are badly connected to the states and Iberia charge a bomb via MAD
Newcastle
Blackpool
Liverpool
East Midlands
Gloucester (Manx2 do well ex IOM On this service)
Oxford
London Gatwick (major scaling back of LGW US services)
Add then any other airport around EU that has no services which are many.
Also in the last few years since many LHR routes from the regions have been axed by BA and Bmi. The opportunities for connections have mostly been transferred to KLM or others, but not necessarily Aer Lingus?
Make Dublin the crossroad to the USA like Emirates have done at Dubai, and KLM do so successfully ex Amsterdam.
No matter how much resource that Ryanair put into short haul to hurt Aer Lingus they could never hurt AerLingus' TA traffic and there are opportunities but Aer Lingus need to market them and develop Dublin via the new Terminal.
EI-BUD
No matter how much resource that Ryanair put into short haul to hurt Aer Lingus they could never hurt AerLingus' TA traffic and there are opportunities but Aer Lingus need to market them and develop Dublin via the new Terminal.
10%, 15 % ?
Aer Arran is not the solution to EI problems.
Thread Starter
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True, Aer ARANN (sp!) is not the solution to all of EI's problems, but it certainly offers potential. As EI-BUD and Papa2Charlie have pointed out, there is little sense in operating an aircraft just because it has commonality with the rest of the fleet and offers the lowest seat mile costs - and that at the cost of allowing another airline - FR to push it out of market after market. Let's face it, EI with a 320 is not going to be able to compete with FR and its 738s; we've seen this and we can either wait and watch EI fritter away what's left of its cash pile, or it can change while it still can.
There are a lot of markets in which EI could compete much more effectively, if it had a smaller, more appropriate type; the sad irony for EI is that it could have been doing this back in the early to mid-1990s, when it had F-50s and a big UK network, but the SNN stopover was holding it back.
It can either do that by acquiring acft itself, or find an acft with a mutual need, and RE seems to fill that role admirably.
However, I think EI's most urgent concern now is the T/A routes and with all of the new restrictions on US bound flights, I can't help thinking that 2010 is going to be an EXTREMELY tough year for all US carriers; if I were EI, I'd think of finding a new lessor for the soon-to-be-delivered A330, and even possibly looking at other non-US routes (Toronto?).
There are a lot of markets in which EI could compete much more effectively, if it had a smaller, more appropriate type; the sad irony for EI is that it could have been doing this back in the early to mid-1990s, when it had F-50s and a big UK network, but the SNN stopover was holding it back.
It can either do that by acquiring acft itself, or find an acft with a mutual need, and RE seems to fill that role admirably.
However, I think EI's most urgent concern now is the T/A routes and with all of the new restrictions on US bound flights, I can't help thinking that 2010 is going to be an EXTREMELY tough year for all US carriers; if I were EI, I'd think of finding a new lessor for the soon-to-be-delivered A330, and even possibly looking at other non-US routes (Toronto?).
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EI-BUD / akerosid,
Some very well made points in your posts....my apologies in advance for this rambling post.
In terms of the use of the aircraft it is a shame that the F50's etc. were disposed of but single fleeting is the flavour of the month and they were probably viewed as a small fleet but generated significant costs. The benefit to EI of an agreement with RE is that the type will never appear on the AOC hence they get the benefits of a smaller aircraft without the hassle.
I have to agree that FlyBe are an interesting operation and Aer Lingus could well learn alot from them particularly with respect to using the Q400 on the type of route for which it was designed. I feel the major benefit FlyBe have is the number of UK regional airports allied to their relative proximity to Europe (e.g. BHX/MAN/SOU to France / Germany). I feel an Irish based operation with similar A/C would face problems getting into Europe efficiently due to the greater distances but RE could easily access the UK with such frequencies.
The opportunity of creating a Dublin hub is worth pursuing in my opinion. The UK regionals have seen a significant drop off in services from BA and others and with competitive costs (driven by an agreement with RE) there could be a good business case for establishing a feeder service. My one query (worry(??) seeing as the DAA are involved) would be the ability of T2 to act as a "hubbing" terminal (e.g. efficient transfer of bags and ease of change for passengers). Has the idea of a hub ever been considered in the design of the new terminal?
The new year will pose some very serious challenges for EI across the board, not just on the T/A routes. Another FR bid (along with management time devoted to fighting it), the "change plan" (Operation Greenfield??), the decision to open an additional base and the MAD/IAD route all spring to mind.
One thought on the T/A routes would be the following....is there scope for operating T/A routes to the US from LGW? EI seem to be developing some recognition in the city and if the crew cost base is as low as they claim at LGW, they could well be highly competitive on T/A routes.
Finally...I seem to remember an article in the Independent some time back regarding Aer Arann holding discussions with potential investors. They have apparently restructured 80% of their debts so presumably the time is approaching where the airline would become reasonably attractive to an investor. The next question is, would there be a benefit to EI to take a stake (25% in RE for EI equity) in RE and use it as a feeder service? There could be decent benefits to EI (over and above a code-share type deal) in terms of revenue to an airline which claims to be heading towards break-even this year, much lower staff costs which could be used as a model for EI employees and finally the opportunity to right size the UK regional routes.
All the best and Happy New Year to all,
P2C.
Some very well made points in your posts....my apologies in advance for this rambling post.
In terms of the use of the aircraft it is a shame that the F50's etc. were disposed of but single fleeting is the flavour of the month and they were probably viewed as a small fleet but generated significant costs. The benefit to EI of an agreement with RE is that the type will never appear on the AOC hence they get the benefits of a smaller aircraft without the hassle.
I have to agree that FlyBe are an interesting operation and Aer Lingus could well learn alot from them particularly with respect to using the Q400 on the type of route for which it was designed. I feel the major benefit FlyBe have is the number of UK regional airports allied to their relative proximity to Europe (e.g. BHX/MAN/SOU to France / Germany). I feel an Irish based operation with similar A/C would face problems getting into Europe efficiently due to the greater distances but RE could easily access the UK with such frequencies.
The opportunity of creating a Dublin hub is worth pursuing in my opinion. The UK regionals have seen a significant drop off in services from BA and others and with competitive costs (driven by an agreement with RE) there could be a good business case for establishing a feeder service. My one query (worry(??) seeing as the DAA are involved) would be the ability of T2 to act as a "hubbing" terminal (e.g. efficient transfer of bags and ease of change for passengers). Has the idea of a hub ever been considered in the design of the new terminal?
The new year will pose some very serious challenges for EI across the board, not just on the T/A routes. Another FR bid (along with management time devoted to fighting it), the "change plan" (Operation Greenfield??), the decision to open an additional base and the MAD/IAD route all spring to mind.
One thought on the T/A routes would be the following....is there scope for operating T/A routes to the US from LGW? EI seem to be developing some recognition in the city and if the crew cost base is as low as they claim at LGW, they could well be highly competitive on T/A routes.
Finally...I seem to remember an article in the Independent some time back regarding Aer Arann holding discussions with potential investors. They have apparently restructured 80% of their debts so presumably the time is approaching where the airline would become reasonably attractive to an investor. The next question is, would there be a benefit to EI to take a stake (25% in RE for EI equity) in RE and use it as a feeder service? There could be decent benefits to EI (over and above a code-share type deal) in terms of revenue to an airline which claims to be heading towards break-even this year, much lower staff costs which could be used as a model for EI employees and finally the opportunity to right size the UK regional routes.
All the best and Happy New Year to all,
P2C.