Aerfair
 

Saturday, November 28, 2009

PLANS for a low-fares, long-haul airline which would operate flights from Ireland to the US will be presented to investors this week.

Bloxham Stockbrokers have put together a comprehensive plan for the airline, which would need an investment of $200 million (€134m) to launch.

AerFair would operate flights from Dublin to Boston, London to San Francisco, Frankfurt to New York and Paris to Chicago.

Ryanair’s chief executive, Michael O’Leary will be among the investors who will receive the document.

Mr O’Leary has previously expressed an interest in establishing a low fares, long-haul service, separate to Ryanair.

Bloxham said AerFair wouldoffer simple point-to-point services between Europe and the US at low fares.

It would fly to secondary airports, which would be located close to big cities. It is also proposed that only passenger bags will be carried on AerFair flights.

"No connections and no cargo services will allow Aerfair to operate optimally while minimising operating costs and turnaround times," said Bloxham Stockbrokers analyst, Joe Gill.

It is proposed that the carrier is incorporated in Ireland to access skilled aviation finance and legal services, a 12.5% corporate tax and a supportive regulatory system, according to Bloxhams.

AerFair would offer two cabins – the LowAerFare and the premium AerForce1.

The airline’s model would facilitate a 30% to 50% reduction in fares relative to existing averages while producing profits for the carrier.

It will generate "significant ancillary revenues," according to Bloxhams which said long flight times will be exploited by offering passengers a wide range of goods and services under optimal marketing conditions.

"AerFair will create an entirely new on-board wi-fi based retail offering. In addition to existing items available from legacy carriers it will offer other products such as ground transport tickets, theatre tickets, on board gambling and gaming options together with mobile telephony," said Mr Gill.

The airline would target a 4% share of the EU-US air travel market within five years, implying an annual revenue pool of at least $360m and passenger volume of 1.2m.

AerFair will target after tax margins of at least 6%, implying annual net profits of at least $22m.

AerFair is targeting an initial equity investment of $200m to fund its launch, fleet development and a full build out of the model over five years.

Bloxham was in discussions with Boeing in the preparation of the document.

This story appeared in the printed version of the Irish Examiner Saturday, November 28, 2009

Wasn't this tried before? CityBird if I remember correctly?

Im really really really trying to not turn cynical.....

AAAAGGGGGHHHHHHHHHHHHHHHHHHHHH!!!!!

Oh dear


Another AirFarce

I think we have all heard Ducks Fxxt before

If there was anything to be made in Lond Haul at the Moment would MOL not be there and not just as a shareholder.

Sorry to be gloom and doom but IT WILL NOT SUCEED and if operations do commence there will be lots of people with BIG Holes in the Wallets


Manchester/USA EIN cannot pay with seriously low fares So AerFare will certainly not


Keep Dreaming

Love to all

Cheap aircraft, good airport deals negotiated in current climate, long term hedged fuel at current prices, Irish pre-clearance, plenty of people wanting work who will do it cheap, why can't it work?

All tried before
 

It will fail for a number of reasons - given the current economic climate the targeted passenger market may well not have the money to afford even cheap deals. A number have tried before and failed, all with varying business models - super exec, low cost etc. It does not mention kit, but ETOPS, wide body four engine/two engine will all play a part. I am beginning to worry that the penny still has not dropped:bored:In life nothing is for nothing. The Irish national carrier is in the s***.Most European carriers are in the s***.
Why does this group not buy one of these, turn it around with their 'business model' and succeed??? The boards of these carriers are not all idiots:confused:

How convenient (not).

I just drive,

Do you understand how hedging works?

The banks who generally provide such hedging products through their Trading/Investment arms have had their fingers seriously burned recently in this Crisis.

Only the very highest credit worthiness will be awarded decent "long term" hedging contracts, and even those come at a much higher price than previously known.

It is highly likely that another lowcost startup will be forced onto the spot market, both currency and fuel for it's requirements. And that's a variable feast I'm afraid. You can get hurt by both currency and fuel movements.

Just ask Silverjet, Zoom, Eos or Maxjet how that feels......

It won't work.

And lastly, it's not turnaround times that make long haul profitable. It's filling the front cabin and filling the belly with freight.

It's doomed.

Focusing on the Dublin-Boston proposal, the first obvious objection is that Aer Lingus are already operating that route aggressively. This new fare would need to be really good for passengers to accept an alternate airport such as Manchester NH or Hartford CT.

I'm wondering about this "secondary airport" that Dublin apparently has. It can't be Casement (EIME), can it, at just 6000 ft? Apart from that, the only long runways outside Dublin are Belfast and a couple on the other side of the country: Shannon (11,000 ft) or Connaught (EIKN, 7,500 ft). (According to World Aero Data, that is.)

More here from the Irish Times.

If Abu Dhabi doesn't rescue Emirates from the detritus of Dubai World, Airbus may yet be knocking on Irish doors. Soon too!

Ahah! I detect the authentic voice of an MBA, with spreadsheets showing the profits to 2 places of decimals, once the income predictions and cost predictions, sorry guesses, have been adjusted to produce that outcome.

Not to worry, there's usually an sucker who can be persuaded that if you reduce the revenue "relative to existing averages", you can reduce the costs by even more relative to existing averages, so as to achieve the profits that somehow elude the multitude of carriers on the route whose revenues and costs are the existing averages.

The other problem with MBAs is that the part of the job that needs life experience is beyond their grasp, obviously, so they forget to take competitive reaction into account. There's more than enough spare capacity going back and forth across the pond to sustain a price war that kills off any new entrant that makes it as far as the expensive inaugural.

Anyone know where one could get a copy of this report by bloxham its not available on there website !

Stansdead, yes I do. Perfectly. Thanks.

Quote:

---

But any such plan is contingent on securing a fleet of low-cost, long-haul aircraft, which are not currently available.

---

Gee isn't it a coincidence that there are a whole bunch of green A330's all ready to go and ETOPS approved. My my. Now that management have showed their hand and shown that they didn't really want to deal at all but just drag things out for good measure we will finally see what is in store for Aer Lingus. Don't be surprised if you see the long haul being snapped up by FR/Aerfare, their 30% stake cashed in in return and what is left either taken private or sold off to the highest bidder. The government will be cornered into selling off their stake with scare tactics of a firesale and a backdoor deal to protect the LHR slots to keep the TD's and the voters happy. Meantime a whole bunch of senior managers at AL have just become overnight instant millionnaires and sorted for life. Nice work if you can get it.

All nice on paper !
 

[QUOTE]The other problem with MBAs is that the part of the job that needs life experience is beyond their grasp, obviously, so they forget to take competitive reaction into account[QUOTE]

Anyone would want to be mad in the head to go up against BA/AA/DL/AF/KL/CO etc across the pond. They would kill any new long haul low cost start up just like they killed the silverjets and maxjets of this world. BA are looking to flog Open skies this says a lot.

The question is does Michael O'Leary actually want to receive the docment...

I just drive,

No offence meant.

The point is that long term hedging is far more difficult and expensive than in, say 2007.

New starts ups (unless it has big backing and cash galore) will find it difficult to get hedging at competetive contract pricing.

Just an observation....why is an airline analyst at a stock brokerage circulating a business plan for a new airline?

Papa2charlie;
exactly what I was wondering myself! :confused:

MOLs view of long haul
 

Interesting interview in a daily journalistic masterpiece yesterday where the man himself states that while he is interested in a long haul project when he retires,it would need first class to make it a goer,seems even he has concluded loco on longhaul is a no go.