National airline destined to remain a niche carrier

THE very future of Aer Lingus is again at stake.

The impending strike will cripple the airline’s schedule of about 100 flights a day, displacing about 50,000 passengers and further erode the brand of the national flag carrier.

The airline’s myopic vision of setting up a base outside the Republic will cost it dearly.

Ryanair, Aer Lingus’s biggest competitor, announced 151 new routes across Europe in 2007 and in that time opened new bases in Britain, Spain and Germany. Ryanair will add 125 short-haul aircraft to its fleet between now and 2012, by which time it will operate 262 aircraft.

Meanwhile, Europe’s second largest low cost carrier easyJet will be operating 172 short-haul aircraft by 2009, while Aer Lingus currently operates around 30 short-haul aircraft with just three on order.

If Aer Lingus does not expand its commercial interests, it will remain a niche carrier on the most westerly peripheral country in Europe.

Aer Lingus must capitalise on Europe’s deregulated air transport market and begin to grow bases across the Irish and British Isles where it has a strong brand.

The objective of airlines is to grow profits and it does this in two ways.

Firstly, it retains its longstanding passenger markets that have proven themselves and build synergies with these existing passengers through strong brands, reliability, connectivity, convenience, loyalty programmes and so forth and secondly it expands into new markets.

Traffic from Shannon to Britain reached about 1.27 million passengers last year. However, from 2000 to 2004 traffic between Shannon and London was relatively stagnant as both Ryanair and Aer Lingus were collectively carrying about 600,000 passengers per year.

Sensing an opportunity, easyJet began London Gatwick to Shannon services in January 2005.

Ryanair responded by starting both Gatwick and Luton services to Shannon in May 2005, while also increasing its frequency from Stansted.

Subsequently, easyJet pulled off the Gatwick route at the end of the summer 2006 season and Ryanair dropped the daily Luton service, leaving the London (non-Heathrow) market to Ryanair.

Other airlines attempting to add routes to Shannon will face similar fates and sadly this will isolate the airport and it will become a Ryanair monopoly.

Ryanair’s traffic from Shannon to British bases such as Glasgow Prestwick, East Midlands, Liverpool and Bristol saw dramatic growth from just over 50,000 passengers in 2002 to more than 400,000 in 2006 and this has ignited life into an under-utilised airport. It was triggered by a new contract initiated by the management at Shannon Airport, which allowed Ryanair to operate at Shannon at knock-down prices that was not extended to Aer Lingus — a fatal error on the part of management at Shannon Airport.

Aer Lingus’s withdrawal from Shannon now leaves the airport with only one airline serving British and mainland Europe market, thereby isolating Shannon and allowing Ryanair to dictate its future.

Worse, fares will begin to increase now that Aer Lingus is withdrawing, which is bad news for consumers.