Airports need guarantees for the future

The potential sale of Aer Lingus to International Airlines Group (IAG), managed by former Aer Lingus pilot and CEO, and previously a management buy-out suitor, Willie Walsh, is raising alarm bells for anyone with anything to do with the airline business.

The viability of Cork and Shannon airports is being called into serious question. They have both had difficulties for some time.

Shannon is pulling out of it but is not secure. Cork is saddled with a very large capital investment debt which greatly inhibits its flexibility and manoeuvrability. The unions are concerned about job losses, not only at the two smaller airports but also at Dublin Airport

Tourism interests are concerned with the possible impact of reduced services into Ireland out of the UK should IAG succeed in its quest.

Businesses and those tasked with attracting high-value, job creating mobile foreign direct investment into Ireland will be concerned.

Business already had connectivity problems from Ireland’s airports, particularly Cork and Shannon, and will be seriously wondering what it means for their future business if access to their customer base is reduced further. Their overseas bosses will be keeping a close eye on it as well.

This country is heavily dependent on foreign companies for highly paid employment, with 70,000 or so employed in overseas owned companies, and a sizeable proportion of our exports. The decisions to be made by the Government, over the next few days and weeks, are crucial to our future and should not be made lightly or for a measly few hundred million.

At this point, we do not really know why Willie Walsh wants to take over Aer Lingus. We do not know where or how it fits into his plans. What we do know is that only a few short months ago, he said that he had no interest in buying the airline. We also understand that a major asset in Aer Lingus’ control is that of its landing slots at Heathrow, one of the largest and busiest airports in the world.

It is reported that these slots are worth north of €400m, which is a sizeable chunk of the reported value of €1.3bn based on the latest proposed offer.

Is this what BA and its CEO are looking for? These slots are being fully utilised by Aer Lingus right now and any loss of these slots to other IAG routes would have an impact on Ireland Inc.

We can only hope that any sale recommendation by the Aer Lingus board is based on sound commercial reasons rather than based on the fact that the company’s senior executives will, it is reported, get to share €30m should the sale to IAG/BA proceed.

Ryanair, with its 29% shareholding, may well be looking at the opportunity of recovering a substantial party of the money it invested in buying its shareholding and in its subsequent attempts at trying to take over Aer Lingus. The British courts have said that it must sell off a substantial part of its shareholding for competition reasons.

Indeed, on that front we could well wonder if BA/IAG has any concerns that its bid might be rejected by the competition authorities given the control that it will have not only over flights to and from Ireland but also its implications for the Irish economy. After all, to the man on the street, if it was proper to reject Ryanair as a buyer of Aer Lingus on competition grounds how then could BA/IAG be allowed to take it over, given its far bigger muscles?

Following a 24 hour delay, on January 4 last, to a long distance BA flight and the need to stay overnight in London, I contacted BA through the recommended channels on its web page. However, despite sending four separate communications over the last three weeks, I have not been in receipt of even an acknowledgement. If an airline depends primarily on its customers, BA doesn’t seem to hold them in much regard. What does that mean for the rest of us?

That recent experience with British Airways and its concept of customer service leaves me extremely concerned regarding anything less than legally enforceable commitments which it might agree to.

Should we be asking why do we have to sell it at all?

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