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David Learmount (above) and Dublin Airport (top)

David Learmount is the operations and safety editor of Flight International magazine and an expert on aviation issues.

he went on RTÉ R1’s News at One with Aine Lawlor to discuss the possible takeover of Aer Lingus by British Airways-parent IAG,

Aine Lawlor: “David we had IAG, this merged former British Airways and Iberia Airlines setting out a stall this morning saying Aer Lingus would remain a stand-alone company and the sale would secure its future. But I suppose in terms of guarantees on being stand-alone, we always remember, there used to be a company here called British Midland.”


David Learmount:
“Indeed, yes. I think, you know, Aer Lingus’s a little bit different. Let’s get this straight, Aer Lingus could continue to exist on its own but it will be very limited and it will only ever be a niche carrier but then, maybe that’s right, and maybe that’s obvious, Ireland is, you know, a niche on the edge of Europe. But because it’s an island, because Ireland is an island, that means airlines are far more important than they are to people who are landlocked, so Aer Lingus could survive without a merger but it will be very limited.”

Lawlor: “Limited in what way?”

Learmount: “Well I mean the opportunities are not there you see really what you’ve got to do is look outside, I’m not recommending this, I don’t have a view on whether this merger will go ahead, so let’s get that straight, I’m not arguing in favour of it, what I am saying though is that if you have a look at the way the world is going consolidations merger and alliances are the way that airlines are staying afloat. Let’s have a look at another couple of countries, which are relatively small and have a relatively low population compared with the big boys. Belgium – Sabena, dead ages ago, it doesn’t have, you know, a national carrier any longer. Hungary – Marleve – dead. The Swiss would have gone under were it not for, you know, if Switzerland were in the EU because it couldn’t have supported, you know, Swiss the way it did, so you know loads of carriers like KLM and Air France have got together, Lufthansa and Austrian Airlines, like I say, Aer Lingus could survive on its own, it doesn’t need anybody but if you have a look outside at the way that, that aviation is going and the way that you cannot protect airlines any longer because the world is globalizing, then, you know, Aer Lingus is going to look rather lonely so if it’s not IAG you’ll find other people sniffing round in due course.”

Lawlor: “And the Heathrow slots that we hear so much discussion about, 24 slots as far as I understand it that Aer Lingus has, are they their property outright or do they belong to Heathrow, how do they value that?”


Learmount:
“No, I mean, basically, theoretically they are not owned by any body but in practical terms they are owned, if an airline uses them they own them, because basically the rights are like this it’s use it or lose it, Aer Lingus uses every slot it’s got so effectively, unless Aer Lingus wants to sell a slot it hangs on to them, if Aer Lingus is acquired one of the parts of the value which IAG would be paying for it is the access to those slots, now if you were to ask me what IAG would then do with the slots I wouldn’t say it won’t repurpose some of them, one or two, one of the things you’ve got to realise though is the feed into Heathrow from Dublin for BA’s intercontinental flights is highly value,d they’re not going to kill them off.”

Lawlor: “So, the other thing which is a big question for the political masters here who will have to make the final call is how essential those slots are to this country’s connectivity, to this country’s capacity to do business with the rest of the world.”

Learmount: “Well they are very important, because Heathrow is a very good hub but Dublin has links to Paris, to Frankfurt, you’ve got other hubs and they are not very far away, you’ve got links to Amsterdam, you don’t actually need Heathrow but it’s jolly nice to have…”

Listen here

Earlier: Put That Down

(Photocall ireland, BBC)

13 thoughts on “Playing Slots

  1. Spaghetti Hoop

    The man speaks sense.

    While Howlin and Co. are dithering on this it might be worth airing any comment from Michael O’Leary too. Like him or hate him he’s a stakeholder.

    1. Mulch

      No, O’Leary is far too biased in this case. If IAG buy it, Ryanair get a windfall through shares and through reduced competition on routes. Its up to the government to look after the national interest. This is the one time where money should absolutely be the last thing on the government’s mind. 300m is nothing in the long term.
      IAG can promise the sun, the moon and the stars, but the fact remains, if the government sell, we have no control in Aer Lingus anymore.

      1. Spaghetti Hoop

        What IS the national interest? The airline would retain its brand and identity, so there will still be a perception of Aer Lingus as an Irish airline even without the government 25% stake. The days of airline nostalgia and loyalty are long gone.

        1. Mulch

          Nothing to do with nostalgia, or even the brand. Its simply the connectivity with LHR that i’m concerned about.
          Its putting a number on the business we do with the UK.
          Yes, we have connections to other main hubs, yes we have connections to other London airports, but LHR is the key. IAG will more than likely reduce the frequency of flights and try to compensate by putting larger aircraft operated by BA onto the LHR to DUB route (A321’s instead of A320’s) to pick up some of the slack. This will free up a couple of slots that will undoubtedly be used to cross the water to the US.
          IAG make money by doing this. Put simply, they don’t care if this impacts the business done between us and the UK in terms of trade or tourism. Its up to the government to quantify this.

          1. Spartacus

            Whilst agreeing wholeheartedly with your analysis, I feel compelled to add that in all of the talk of LHR-DUB connectivity, at risk are the even more vital LHR-ORK and LHR-SNN routes. It’s not all about Dublin, lads.

  2. Soundings

    If the government wants to sell something, it should sell RTE, which doesn’t have an intrinsic value of national importance. Selling Aer Lingus or ceding control over its operations is just dingbats, and goes against the national interest.

  3. spider

    I don’t understand how they can rationalise selling to one company, but refuse to sell to another…

    1. Zaccone

      Because Ryanair and IAG have/had completely different strategic aims, and operational plans, for Aer Lingus.

      Ryanair buying Aer Lingus would have resulted in Air Lingus being asset stripped, and Ryanair achieving a near monopoly over short haul routes from Dublin.

      IAG buying Air Lingus will result in Aer Lingus maintaining their profitable short haul network from Dublin. IAG’s has no incentive to disassemble the already profitable Aer Lingus short haul network – it is not in competition with other IAG flights. IAG will also maintain Aer Lingus connections to the UK, as this feeds into their long-haul network going South/East, and extra passengers are needed to compete with the Middle Eastern carriers.

      IAG’s only major strategic re-focus is likely to be a focus on connecting more UK passengers through DUB when going transatlantic, to take advatange of the pre-clearance in Dublin (and to free up slots in Heathrow). This will result in MORE traffic for Aer Lingus, not less.

      General opinion in the aviation community is this is a good move for both Aer Lingus and Ireland. An IAG takeover is the best possible takeover option for Aer Lingus. And a takeover will happen sooner or later – regional national airlines are no longer a viable commercial entity in global aviation.

      Potential job losses are likely to occur if admin jobs are consolidated amongst the IAG group however, that’s what the unions are complaining about.

      1. Mulch

        “IAG’s has no incentive to disassemble the already profitable Aer Lingus short haul network – it is not in competition with other IAG flights.” – Yes it is, BA fly from Dublin to LHR daily.

        “IAG will also maintain Aer Lingus connections to the UK, as this feeds into their long-haul network going South/East, and extra passengers are needed to compete with the Middle Eastern carriers.”
        They don’t require to maintain Aer Lingus for this. They can just increase the aircraft size on their BA flights out of Dublin. Reduced competition will also mean higher prices.

        “IAG’s only major strategic re-focus is likely to be a focus on connecting more UK passengers through DUB when going transatlantic, to take advatange of the pre-clearance in Dublin (and to free up slots in Heathrow). This will result in MORE traffic for Aer Lingus, not less.”
        No it will not. Pre-clearance is nice, but they are not going to split resources between two airports like that for passenger convenience. It makes no business sense.

        “General opinion in the aviation community is this is a good move for both Aer Lingus and Ireland.”
        Do you have a source? Aer Lingus, maybe, but Ireland, im not sure.

        Agree on the job losses and the difficulties of national carriers, but its precisely because of our links to LHR that if the airline is managed well that it should survive.

        1. Zaccone

          >> Yes it is, BA fly from Dublin to LHR daily.

          >> They don’t require to maintain Aer Lingus for this. They can just increase the aircraft size on their BA flights out of Dublin. Reduced competition will also mean higher prices.

          There are currently 24 BA/EI flights flying DUB > LHR on a daily basis, in a 14 hour window. Or one every 30minutes, roughly (though some are scheduled at similar times). A consolidation of this to remove some of the flights that are currently clashing (replacing lighter planes with larger ones to ensure capacity remains constant), won’t have much of an effect for passengers. Prices are unlikely to change with FR ever present in the background, willing to take advantage of any slack. LGW, LCY etc are all still in play – we won’t be returning to the days of £400 to London any time soon.

          >> No it will not. Pre-clearance is nice, but they are not going to split resources between two airports like that for passenger convenience. It makes no business sense.

          EI are already making strong in-roads into the UK transatlantic market by pushing both the time saved by the geographic positioning, and the convenience of per-clearance. Routing more transatlantic pax to DUB serves IAG well by freeing up space in LHR – for longer haul routes. If AIG had unlimited space at LHR you would be correct, it would not make sense to have two hubs. But with the current (and likely for the foreseeable future) limited space in LHR, utilizing EI out of DUB for its unique competitive advantage in transatlantic flights is both logical and required.

          >> Do you have a source? Aer Lingus, maybe, but Ireland, im not sure.

          http://www.flyertalk.com/forum/aer-lingus-gold-circle-club/1638313-aer-lingus-iag-take-over-bid-master-thread.html

          http://www.boards.ie/vbulletin/showthread.php?t=2057346794

          There are two public threads where the average opinion is significantly more well informed than you’ll see elsewhere on the internet – and I can assure you the feelings within the industry, on an anecdotal level, are similar.

    2. smoothlikemurphys

      If company A owns, say 50% of the market and they want to buy Company B, who also have 50% of the market, that’s a bad thing for consumers because one company now controls everything, can effectively charge what they like, etc.

      However, if Company C enter the mix and at present they control 0% of the market, Company B could be sold to them as it maintains a healthy competitive landscape at 50/50 for both A and C

    1. read twice

      Reckon that might be down to the voice-recognition software. Say “marleve” with a posh english accent (i.e. soft “r”) and you’ll hear “mawlev”. I know how me ma might say “ma lev”, but Hungarians say “mawlev”.

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