New Aer Lingus Routes from Cork

MG

Aer Lingus today announced four new routes from Cork - Rome, Nice, Munich and Faro - to operate for the summer season in 2005.

This is a welcome boost for Cork and the region. Mind you, I haven't forgotten that AL screwed Cork last year by dumping the Dublin route, discontinueing the semi-direct flights to Europe and their squeezing of Jetmagic.

This is some ways restores the connections of Cork to Europe. Personnally the Munich route will come in very handy and will bring "low cost" to Cork. At the moment "low cost" is simply the strating point before you add all the other costs of getting to Dublin.

I reckon this will save me €70 per person per flight and about 10 hours travel time for each return journey.

dmeehan

i dont know why AL didnt start the JetMagic routes once they had pushed JM out of the market. finally its nice to have some more connections outta cork. i forsee myself using the munich route a bit!

Flukey

This is what they should be doing. Cork and Shannon need to develop themselves. Shannon has for too long relied on the crutch of the stopover rather than standing on their own two feet. Some of their arguments for keeping it are a bit silly. They say that the stopover helps the whole south and west regions. Someone sitting on the tarmac in Shannon is doing much for a restaraunteeur in Killarney or a B&B in Portumna, are they? If flights into Shannon help the south and west so much, wouldn't removing the stopover and allowing direct flights into Cork and Knock help it even more? It is not a Shannon v Dublin situation as they like to paint it.

Hopefully Cork can build on this and go out and sell itself more and Shannon should do the same, instead of relying on their crutch.

sliabh

Flukey wrote:

Shannon has for too long relied on the crutch of the stopover rather than standing on their own two feet.

Absolutely! It has to be the worst run and least efficient airport in the country. I have heard so many scary stories about the place from two relatives that fly through there relating to the fire service, security, overstaffing staffing, nepotism and a generally appalling attitude to running the airport. They get away with it as the stopover means they don't need to compete and there is a huge "mid-west" lobby group which is on call to shout down any effort to reform the place.

Just as an example at the weekend I learned the duty free shop has 24 staff and 18 supervisors!

MG

Was poking around the AL site last night for Cork Munich flights and noticed a few things:

Got a reasonably priced flight to Munich in May for €120. Not bad. I was hoping to find flights for friends to visit so I tried the reverve flight (ie starting in Munich). For travel on the same dates as my €120 flight, the same flights starting in Munich costs €212. Can anyone explain this to me?

Furthermore, I tried for flights in June and July and the cost was €160-€220 (naturally more if starting the journey in Munich). I know the whole low cost thing is mostly smoke and mirrors but really! I'm sure I paid less than this in the old days of the Cork-Frankfurt (via Dublin) flight. And these fares are higher than most of the Jetmagic non-low cost business model.

Can anyone enlighten me? It is just to early to book or are low cost airlines the farce I always suspected?

sliabh

MG wrote:

Was poking around the AL site last night for Cork Munich flights and noticed a few things:

Got a reasonably priced flight to Munich in May for €120. Not bad. I was hoping to find flights for friends to visit so I tried the reverve flight (ie starting in Munich). For travel on the same dates as my €120 flight, the same flights starting in Munich costs €212. Can anyone explain this to me?

The pricing is determined on the fly based on a number of parameters. The basic ones are supply and demand. So you will pay more for the flight in Summer. But they also factor in the "wealth" of where you are travelling from. Try booking a flight to Ireland from the US and you will see it is more expensive than going from Ireland.

MG wrote:

Can anyone enlighten me? It is just to early to book or are low cost airlines the farce I always suspected?

I have been travelling weekly to Munich since April with AL. The flights were around 400 initially. Then they decided to go low fares and from May there was a dramatic drop. I have had fares as low as 180, and the plane would be two thirds full. But now we are in August I am usually paying around 300-330 and the plane is totally loaded each week.

At the end of the day I am getting cheaper flights and AL are getting more bums on seats.

MG

While it is obvious that prices will be higher in peak periods, I don’t really see the logic of the price difference due to origin of journey. The flights are the same, presumably the cost of selling the flights are the same and supply and demand is no different for an Irish person than for a German. If a German is willing to pay €92 extra per return flight, then why not exhaust the demand at the higher rate before lowering prices for the next passenger. Surely Aer Lingus are not doing a social service? The only commercial reason for this that I can see is to keep the repeat business happy (assuming that flights originating from Ireland have a higher probability of repeat business). And even that seems a pretty flimsy reason.

As for low fares, I must have a look at home to see what rates I was paying to FFH in the past few years – I think it would average out at about £180 or €228.

dmeehan

the flights might not neccessarily be the same

for example you have to take into account the prevailing wind/jetstream. it might not make any difference on a short haul flight, but it makes an hour of a difference LHR-SFO and back extreme example i know, but...

therecklessone

MG wrote:

While it is obvious that prices will be higher in peak periods, I don’t really see the logic of the price difference due to origin of journey. The flights are the same, presumably the cost of selling the flights are the same and supply and demand is no different for an Irish person than for a German.

Have I missed something here?

You're comparing Cork-Munich flights with Munich-Cork flights, yes? Then how can they possibly be the same, unless one of the trips involves time travel?

Example:

Cork - Munich, leaving 01/05 returning 10/05.

For the flights to be the same, they would have to be:

Munich - Cork, leaving 10/05, returning 01/05.

Therefore the extra €92 is for the fuel required for the Back to the Future effect.

On a more serious note, airline tickets are priced according to the market within which they are sold. A flight from Dublin to the US is more expensive than London to the US, because there is more competition in the UK.

[edit]meant to add that initial pricing on Cork-Munich may be artificially low to build upa demand in the region for a new flight, though why that wouldn't apply on Munich-Cork I don't know. Also bear in mind that there may be more demand on the Munich-Cork route for the flights you selected, so the cheaper tickets are already gone?[/edit]

sliabh

A large international firm I used to work for based it's pricing strategy on "what the market will take".

So if punters would pay more then charge them more. Their market research people used to ask focus groups things like the usual did you like the product and so on. Then with they get into "how much do you think such a product should be".

From that start figure they then ask would you pay more (if the punter said EUR7 then they ask would you pay 9 or 10) to get an idea how many people would pay at each price level. The whole lot gets calculated out so they can see things like raising the price 5% only causes a 2% drop in customers.

The actual price of manufacturing the product never really entered into things as long as they were not making a loss.

MG

Just to clarify, I am talking about comparing Cork-Munich-Cork with Munich-Cork-Munich.

To take an example,
Person A: C – M – C on 10th May returning May 17th cost €34 for each leg.

Person B: Now to compare the M-C-M you can compare with the dates 3rd, returning 10th and 17th returning the 24th. In this way you are actually physically on the same plane as person A on both the 10th and 17th. Each leg costs €80. Try any Tuesday in May – it works the same.

My point is that the market is global. If the German market can take €80 then sell all the tickets to German based people at €80. If Irish people want to travel then let them pay €80 too until demand for the €80 flight peters out in Germany and Ireland and a price reduction is required to bring in the next set.

Not that I am advocating a price rise for us mind.

All fares quoted exclude taxes and charges……….

MG

Forgot to mention too that because the supply of seats is effectively fixed, there is no question of a different price strategy in different countries. For a consumer product it might make sense to have different pricing strategy in different geographical markets because supply is flexible.

EvilDoctorK

MG .. All Airlines do this all the time. Pricing depends on your point of origin, minimum stay, point of purchase, advance purchase and many many other things.

Airline tariffs are usually fiendishly complex for lots of reasons (not all good reasons but that's the way they are)

You can fairly much guarantee that the person sitting next to you on any flight will not have paid the same as you.

MG

EvilDoctorK - I understand that prices can differ but in this case the only differentiating feature is the point of origin. I still haven't heard a convincing reason for this. If I was getting a return bus or train ticket from Dublin to Cork, I would expect the ticket to cost the same as a return Cork to Dublin. I'd like to understand the economic rationale for it.

EvilDoctorK

The economic rationale (in as much as there is one) is pricing that each market will tolerate

Obviously Aer Lingus reckon that they have to work harder to sell sufficient seats ex Cork rather than ex Munich ... therefore they offer lower prices ex-Cork .. the route links the two places ... obviously they could try to fill it with ex-Munich passengers but probably there's not enough demand for that ... so they are selling ex Cork tickets at lower prices

Another element could also be that Irish people are more used to paying lower fares (again relates to what the markets will tolerate) .. Low cost carriers are a newer phenomenon in Germany .. and I think there's not much of them in Munich as yet which is very dominated by Lufthansa.

Lots of reasons possible ... is it logical .. not necessarily ... could they change it tomorrow .. sure they could if they wanted but they probably reckon they'll fill the plane nicely enough without doing so.

When thinking about economic rationale ... sure all the seats cost the same for the airline to "produce" ... the issue is the airline is trying to maximise revenue from each seat .. the ideal situation is not only that every seat is full on the plane as it takes off (a seat empty after take off is totally useless they are in that sense a "perishable good"). The key thing for the airline is that every seat has been sold to the individual willing to pay the highest price for that seat .. this is what airline tariffs seek to accomplish.

GerardKeating

MG wrote:

Got a reasonably priced flight to Munich in May for €120. Not bad. I was hoping to find flights for friends to visit so I tried the reverve flight (ie starting in Munich). For travel on the same dates as my €120 flight, the same flights starting in Munich costs €212. Can anyone explain this to me?

This is nothing new, It has always been the case (well for at least the past few years) that flights starting in ireland (i.e. Cork-Munich) are cheaper than the reverse (Munich-Cork).

Maybe AL is giving the "owners" a better deal.

therecklessone

MG wrote:

Just to clarify, I am talking about comparing Cork-Munich-Cork with Munich-Cork-Munich.

To take an example,
Person A: C – M – C on 10th May returning May 17th cost €34 for each leg.

Person B: Now to compare the M-C-M you can compare with the dates 3rd, returning 10th and 17th returning the 24th. In this way you are actually physically on the same plane as person A on both the 10th and 17th. Each leg costs €80. Try any Tuesday in May – it works the same.

Understood. Didn't think you'd gone into that much detail...

therecklessone

EvilDoctorK wrote:

Obviously Aer Lingus reckon that they have to work harder to sell sufficient seats ex Cork rather than ex Munich ... therefore they offer lower prices ex-Cork .. the route links the two places ... obviously they could try to fill it with ex-Munich passengers but probably there's not enough demand for that ... so they are selling ex Cork tickets at lower prices

Ryanair used to do something similar the weekend of rugby internationals. Flights into Dublin for a 6 Nations tie would be chock-a-block, but empty on the way out. They'd reduce the price on the outbound flights just to get them full (they had to fly anyway).

Essentially, EI have to get them planes full of paying punters. If it is harder to sell ex-Cork, drop your price!

MG

I’m most intrigued by this question. I don’t really buy the argument that Cork –Munich is harder to sell than Munich – Cork. There are several problems with this. Firstly this would only be true if one way flights were in question but the reality is that most flights on this route will be return flights. Therefore demand on the Munich-Cork leg translates quickly into demand for the return leg Cork – Munich.

Only in the first few days and last few days of the service will this not be the case.

There is also the problem with offering the same different price on both legs (if you see what I mean). If demand for Munich Cork is higher, then why not fill the plane at the higher rate rather than offering the same low rate for the return flight. It doesn’t take much to work out that getting one fare of €80 is better than two fares of €34. Conversely if the Cork – Munich leg is so much harder to sell then why not offer Germans a lower price for that leg?

If I can sell out the M –C leg on Tues, thurs and Sat for €80 a head, then why do I need some Cork punter who flew out on the Tuesday taking up a seat on the Munich cork leg on the Saturday. He has bought it for $34 but I could have sold it for $80!

Because the market is global and the majority of tickets are sold over the internet, there isn’t really a German market and an Irish market, but only one market. I should be selling the seat for the most I can based on the demand for the ticket at that time.

I have often seen airlines offer a low price out but a higher price back. This allows them to advertise a low cost with the true cost of the return flight hidden e.g. “Rome for €20”. However, they then charge $80 for the return leg. I can see the sense of that to an extent.

Also there are plenty of low cost carriers in Germany from Ryanair to HLX to German Wings etc so I don’t think it is about a low cost culture. The more I think about it the more I believe it is marketing/image driven rather than (short term) economics.

EvilDoctorK

MG - Indeed you are correct .. it's a balance

Realistically they are problably looking at a split with maybe 70% traffic orginiating in Munich and 30% in Cork ... Munich is a much bigger market offering potential for connecting traffic .. Cork is not

They probably don't have to try so hard (nor have such a big marketing budget to do so) in Munich to sell the seats

There could be a lot of reasons .... You are totally correct in saying that Cork orginating passengers fill the same seats as Munich originating passengers so what's the point in selling those seats to cork folk for 34€ when you could sell them for €80 ! ... but then the plane probably won't be full every day (unless Aer Lingus get very lucky) so the issue would be why not sell it to a cork passenger for 34€ rather than not be able to sell it to a Munich passenger for 80€... You might ask why wouldn't they sell it to a Munich passenger for €34 if that would stimulate demand and get round that problem ... but then you might have a problem with other Munich passengers who would otherwise have happily been paying €80 now only paying €34 - thus offering the ex Cork fares to Munich Passengers could cost the airline Money. You could call it Market Segmentation I guess.

MG

Evil Dr K

Agree but it it must mean AL have very sophisticated forecasting systems - which they might have. I just would have thought it better to see how the uptake was before adjusting price for demand.

EvilDoctorK

They would have forecasting systems alright it may not quite be a science but it's not too far off ... type "Airline Yield Management" into Google and you'll find out more than you ever wanted to know :cool:

sliabh

It's an Irish company - Datalex that provides the software for Aer Lingus I think. Pretty well regarded internationlly too.

Victor

I imagine their are subtleties like the agreement that AL have with say Visa in Ireland and Germany, one might charge more than the other. That and consumer rules and expectations are different.

Separate to the occupancy ratio argument, a German passenger would have different travelling pattern to an Irish one. Maybe Germans won't do weekends away in Cork for the weekend, but Cork people would.

Then of course targetting particular markets (and reducing dependence on the Irish market) might be important to AL.

MG

The credit card charge is shown separately so it isn't that. I can't think of any other costs which might differ between a Cork and a Munich booking.

And if they were trying to reduce the dependance on the Irish market and tap into new markets, wouldn't they offer lower fares from Munich?

For every possible explanation there appears to be a serious flaw. I assume they have a good argument for their fare structure but I don't particularly see it. The balance of passengers they are targetting is probably the best explanation so far.