No Aer Lingus Takeover should be considered without a Deal for Shannon Airport – BREEN.

January 7th, 2015 - Pat Breen

Speaking following the news that a takeover approach had been made from British Airways’ parent Company, IAG, to Aer Lingus, Clare Deputy and Chairman of the Joint Oireachtas Committee on Foreign Affairs Pat Breen T.D. said today (Tuesday) that no Aer Lingus takeover should be considered which does not include clear proposals for the maintenance of key Shannon routes including services to Heathrow and the United States.

“While Aer Lingus rejected a bid from IAG, before Christmas, many Aviation and Media Commentators do not believe that this is the end of the story and a further bid could be on the cards this year. IAG Chief Executive Willie Walsh, a former CEO of Aer Lingus has long been a supporter of consolidation and the view is that his eyes remain firmly set on his previous employer. He will looking at Aer Lingus not just in terms of the lucrative slots which they owe at Heathrow but the opportunity which it could present for British Airways’ to expand their long haul route network.

Aer Lingus’s return to probability and their ownership of over 20 pairs of Slots in Heathrow makes the Airline an attractive proposition for prospective rival suitors. While Ethiad Airways is still considered a major player for consolidation in Europe, the likelihood given the slump in fuel prices in the Middle East is that their interest in acquiring Aer Lingus is not as strong now as previously, leaving IAG and Willie Walsh in prime position as the main suitor.

Acquiring the additional slots at Heathrow is a very attractive proposition for British Airways as it would place them in an even more dominant position at the UK’s most important hub Airport where they already control 53 per cent of the slots.

Across Europe, Airlines are consolidating. Most European Cities do not have direct US Services as these services operate into the main Hub Airports such as Paris, Frankfurt, Amsterdam, Madrid and Heathrow. Airlines then use their short haul network to transfer their passengers into to support their long haul routes at these hubs.

So it is not just the direct link from this Region to Heathrow which poses a threat to Shannon Airport in the event of a further bid from IAG for Aer Lingus being successful but the possibility that the acquisition of the slots would provide the opportunity for British Airways to expand their transatlantic business into Heathrow leaving this Region without those direct US links.

Heathrow is the largest hub in Western Europe giving the business and leisure traveller connections to over 200 worldwide destinations. That is why the loss of the Shannon Heathrow Service was such a body blow to this Region when the slots were moved to Belfast back in 2007.

The highest concentration of FDI’s is located in the Mid-West Region including 70 US Multinationals employing up to 10,000 people. And the West of Ireland tourism product is supported by this connection with 46 onward connections available from Heathrow that no other London Airport provides. Maintaining a link with Heathrow is critical for the Industrial and Tourism Sectors in this Region particularly given the positive indications of continued passenger growth at Shannon Airport and the forecast of a bumper year for Irish Tourism this year.

Aer Lingus has been performing strongly in the transatlantic market over the past few years where it has built up a strong presence. And it is this strong transatlantic performance which would make the Airline more attractive for Willie Walsh.

If BA takes control of Aer Lingus what guarantee would we have they would continue to operate direct US Services into Shannon Airport. While Dublin Airport could continue to attract direct services given that it is Ireland’s Capital City, Shannon Airport would be in a more vulnerable position. British Airways could opt to direct US Services into their Heathrow Hub and then back track those passengers into Shannon Airport. While backtracking may be viewed as a more cost effective by BA, the absence of direct US services would significantly reduce capacity in to this Region with knock on effects for our tourism and industrial sectors.
We must learn lessons from what happened back in 2007. Ensuring that we have direct links to both Heathrow and the United States is essential for future investment and Tourism growth in the Mid West and West Region.

I have raised my concerns with both Aer Lingus and British Airways and I written to CEO’s of both Companies. Any memorandum of acquisition for the takeover of Aer Lingus must include a deal for Shannon Airport and I have made this very clear to both Companies.

In my view, no takeover must proceed without a deal for Shannon Airport.”