Aer Lingus buyout - Interest good for consumer

Etihad Airways, which already owns 3% of Aer Lingus, has indicated that it would be interested in purchasing Ryanair’s 29.9% stake in the national carrier.

This would seem to have the potential of linking Aer Lingus with a global carrier in the emerging economies and would pose no real threat to competition on the existing routes served by Aer Lingus.

When Etihad bought into Aer Lingus, Transport Minister Leo Varadkar welcomed the move as a “good thing”. Was he thinking that this might afford the Government the opportunity of selling off its 25% in Aer Lingus at the best possible price?

In July, Etihad signed a code-sharing agreement with Aer Lingus. This allows it to sell tickets on Aer Lingus flights linking Dublin with various airports, including London Heathrow.

Competition is vital in keeping prices down and thus is crucial to our tourist industry. Accordingly, the Etihad arrangement could be good for consumers by keeping Aer Lingus and Ryanair in full competition.

If Etihad were to purchase Ryanair’s entire share of Aer Lingus, it would push it over 30% and it would have to offer to buy out the remainder of the Aer Lingus shares, but as a non-European investor it cannot own a majority share of a EU carrier. Thus reports of the potential purchase of the Ryanair’s share in Aer Lingus are little more than speculation.