Ryanair bid for Aer Lingus

ballooba wrote: »

That doesn't really seem to me a problem. If the situation gets anywhere close to what fear mongers are predicting then there will be new entrants or an upscale by existing competitors. Dublin Airport has plenty of capacity as we know from painful expense.

It isn't about space at Dublin Airport, it is about other airlines finding it very difficult to compete with Ryanair and getting burned before and fearing trying to compete with Ryanair on their own turf.

What Airline do you think is going to overnight suddenly bring 45 aircraft, plus maintence crews, checkin staff, etc. to Dublin Airport? Only to get into a massive price war with Ryanair on their home turf.

Not going to happen.

Let me tell you what would happen if Ryanair buy Aer Lingus:

1) All those routes where Ryanair and Aer Lingus compete (e.g. Manchester, Barcelona, etc.) Ryanair cancels the Aer Lingus flights, thus immediately increasing prices on the Ryanair flights due to there now being only one flight where there were two.
2) Ryanair sells off Aer Lingus shorthaul Airbus fleet *
3) Ryanair may keep the longhaul fleet and start operating transatlantic.
4) Ryanair sells some or all of the Aer Lingus Heathrow slots.

While eventually you might see some other airlines enter the market to compete, it will take months or even years for them to do so and in the meantime Ryanair will milk the routes with no competition for all its worth.

And when competition does eventually enter, it won't be in any way as wide spread or consistent as Aer Lingus. Rather then have one strong competitor to Ryanair, you will have lots of different airlines, with much smaller ops, competing on just one or two routes. For instance you might get competition form BA on the UK routes, Iberia on Spanish routes, Wizz Air to eastern Europe, Norweigan to Scandanavia, etc. But you wont have one strong competitor like Aer Linugs with real scale of ops to compete with Ryanair.

* Ryanair doesn't need them or the hassle of a mixed fleet. They have plenty of spare 737's and their is high demand for Airbus aircraft in the second hand market at the moment.

The fleet doesn't matter.

But the fact that if this happens, at least for the next 12 months, if not longer, you will be paying probably double for most flights out of Ireland should certainly worry you.

Even when other airlines eventually do enter, the price of tickets will still likely be higher as they will have higher operating costs then Aer Lingus due to their smaller operations here.

You just seem to have an irrational hatred of Aer Lingus. Fair enough they had a crappy monopoly for decades and Ryanair breaking this was brilliant. But it shocks me that you can't see that this is just handing that old monopoly to Ryanair.

The Aer Lingus of today is a very different company and is a very good competitor to Ryanair.

How anyone thinks that the elimination of a competitor is good for consumers baffles me?

ballooba wrote: »

It's funny that you mention irrationality, because those arguments are ridiculous. Fares will not double, that is baseless scare mongering. Even if fares rise marginally, this for better service would be welcome.

It is based on pure logic and business sense.

Ryanair and Aer Lingus mirror one another on many routes (e.g. Manchester, Barcelona, etc.) and I mean they even leave Dublin for these destinations at exactly the same time!!

If Ryanair buy Aer Linugs, they will of course close the Aer Lingus routes to these places and thus prices will rise.

This is only pure business logic. No irrationality here.

It would then take many months, if not more then a year for any other airline to bring up a new route to challenge Ryanair. In this period Ryanair will of course raise prices and milk it for all it is worth. How can any sane person not see this?

Do you think Ryanair are just going to leave extra money on the table, in the goodness of their hearts, not a chance. The only reason for Ryanair to buy Aer Lingus is to take out a competitor. The only reason to take out a competitor is to take out competition and raise prices. Yes eventually some competition may arise, but in the mean time Ryanair will make the most of it.

This is business 101.

BTW I have no problem with someone else like Ethiad buying Aer Lingus. Just not Ryanair as it will leave no significant competition in Ireland.

ballooba wrote: »

You claimed that fares will probably double in the twelve months following takeover. Is that a rational argument?

Well if you reduce capacity by 50% on a route, then yes it is rational to predict a doubling in fares.

Think of it this way, one aircraft is capable of taking 150 passengers *. So a route has a maximum of 300 passengers between Aer Lingus and Ryanair.

200 people look to buy tickets for this route. Prices are low because both airlines are desperately trying to fill their aircraft.

But now take out one aircraft. You still have 200 people looking to fly, but only 150 seats. Guess what happens, prices rise dramatically due to supply and demand.

Again this is only pure business logic of how supply and demand works.

The only reason Ryanair would be interested in buying Aer Lingus, is to take out a competitor, reduce competition, raise ticket prices and strip and sell off the asset of Aer Lingus.

None of this would be good for the travelling public of Ireland.

* The actual capacity of a 737 is 189 passengers, using these figures for simplicity.