AER LINGUS KEEPS SHANNON DANGLING – BREEN

January 8th, 2010 - Pat Breen

(A Look Ahead at What 2010 Holds for Shannon and Aer Lingus)
By: Pat Breen T.D.

Aer Lingus is still playing games with Shannon, as the Oireachtas Committee on Transport has learned in recent weeks along with Shannon Airport Director, Martin Moroney,

From first hand experience recently, the members of the Transport Committee would have a great deal of sympathy for the airport Director as he, unlike Transport Committee members including myself, is not in a position to speak out when Aer Lingus led us all up the garden path.

The political antennae of the TDs and Senators on the Transport Committee were pricked up at the November hearing convened to hear both sides of the case regarding the latest financial crisis at the airline. Members of the Committee were not slow in noting and pointing out that the level of representation from Aer Lingus had changed dramatically from the previous meeting with the airline. Previously, the Aer Lingus Chairman and the Chief Executive attended when the issue of the Ryanair bid for Aer Lingus was on the table. But in November the level of seniority had been substantially diluted. It was probably understandable that the airline’s Director of Human Resources, Michael Grealy was assigned to attend at he could answer questions about redundancy proposals as well as major changes in pay and conditions including pension rights which are to be tackled at a future meeting. But at his side was the Aer Lingus Director of Corporate Affairs, Enda Corneile, the man whose job it is to present all aspects of the airline’s affairs in the very best light,

At that meeting when pressed by the government’s Deputy Timmy Dooley and myself, Mr. Corneile spun a very fine web of what appeared to be most positive prospects for Shannon and especially about services to the US which were of urgent concern. Mr. Corneile stated that the airline was in deep discussions with the Shannon Airport Authority on a series of initiatives including stepping into the gap in east-bound flights which will be left when Ryanair pulls out 70 per cent of its flights at the end of March. But what was most heartening of all was the statement from Mr. Corneile that indicated that Aer Lingus had been listening to what Shannon interests have been saying and that the airline was looking at the possibility of bringing a small capacity aircraft onto the New York run from Shannon and also contemplating the earlier departure time that business interests in particular have been calling for.

It was all very positive and therefore there was no mystery when Airport Director, Martin Moroney, briefed the Mid West Regional Authority a matter of a week or two later. He was not pulling any punches about the tough times that Shannon Airport is going through and was not dressing up the pretty bleak outlook for 2010. While he predictably felt constrained by the confidentiality of discussions, he did confirm that serious talks were in progress with Aer Lingus. While giving very little away, the overall thrust of his remarks was more than hopeful and indicated a new beginning in relationships between Shannon and the airline.

Yet a matter of a week or so later, all those hopes were smashed when the new Aer Lingus chief executive, Christoph Mueller came to Shannon and promptly shot down all that had been floated by his own senior management to an Oireachtas committee and by his own team involved in the discussions with the Shannon Airport Authority.

It has become transparently clear that yet again Aer Lingus is using Shannon as a pawn in a much more sophisticated strategy. The carrot of new initiatives and services at Shannon is held out when the airline is looking for concessions from the trade unions or from airport authorities. But when it comes to commitment time, the carrot that was dangled is abruptly taken away.

There is no denying that Aer Lingus is in a very precarious situation. The airline pinned its profit-making on long haul services which propped up the short haul routes where the airline is under the most intense pressure from low cost airlines led by Ryanair. The key to profits on the long haul routes to the USA was business travel which generates 30 per cent of receipts while only accounting for 10 per cent of passenger numbers on carriers. Consequently the world business slump meant that while airlines slashed back capacity, even with 80 per cent seat occupancy, long haul services could not turn a profit in 2009. The outlook is even grimmer for 2010 with the International Air Transport Association predicting losses of € 3.8billion for European carriers. For a small airline like Aer Lingus the news is even worse because IATA is also forecasting that the recovery in civil aviation will be slow and that it will be 2012 before air traffic gets back to the levels of 2008.

The Association of European Airlines has placed on record its worries and explained that revenues from peak season traffic underpins loss-making business in what are called the shoulder months of the year. This is particularly the case with Aer Lingus transatlantic services from Shannon. Aer Lingus admits that routes to Shannon pay off in the summer months but become a drain when moving into losses in the winter months. This is also the very real basis for the fears at the Shannon Airport Authority that Aer Lingus will move towards seasonal services at Shannon. And if Aer Lingus decides to trim back to seasonal services on the North Atlantic from Shannon, there will be no compelling reason for American or other carriers to serve Shannon with year-round flights.

END

He is a member of the European Affairs Oireachtas Committee appointed Rapporteur on the in-depth review of civil aviation in Europe ordered by the Committee on Economic Affairs and Development of the Council of Europe where he is a member.