[article] O'Leary plans Aer Lingus Lite, not Ryanair II

Navan Junction

Irish Times, 17/10/2006


Simply by running Aer Lingus more effeciently, Michael O'Leary could squeeze out more profits. If Ryanair takes over the former State-owner airline, it will not necessarily be bad for the consumer, concludes Marc Coleman


Ryanair's unexpected bid for Aer Lingus is beginning to look like something out of Monty Python sketch. Or should I say Monti Python? The spelling change has some significance: Aer Lingus has hired former EU commissioner Mario Monti in an attempt to get the EU Commission to block Ryanair's bid for the company on the grounds that it might be bad for consumers.

But only three years ago, Aer Lingus' former Chief Executive Willie Walsh admitted that Aer Lingus had been "ripping off its customers for years" through its fares policy. By contrast - and however controversial may be its approach to industrial relations - the impact of Ryanair on consumers has been overwhelmingly positive.

In the days before the liberalisation of the Dublin-London air route, Aer Lingus' monopoly allowed it to push up its fares by 75 per cent between 1980 and 1985. And this extent of increase was measured in real terms, in other words stripping out the impact of then rampant inflation. As a result, passenger numbers on the route declined, in spite of massive emigration.

Following the deregulation of the route, prices fell in real terms by 65 per cent between 1985 and 1990, significantly boosting passenger numbers.

Ryanair's strategy of low fares and no frills has seen it become Europe's largest airline. Aer Lingus management, trade unions and the government have been unanimous in warning that a takeover of Aer Lingus by its rival could undo some of the benefits that competition has done.

At the Dublin Economic Workshop's annual conference in Kenmare last weekend, leading economist and former Chairman of the Competition Authority Pat Massey contrasted the new found enthusiasm of government and unions for competition in air travel with their strident opposition to competition in Dublin's bus market.

For Michael O'Leary, the fact that Ryanair is in the dock of opinion for attempting to curb competition must appear somewhat Kafkaesque. But however hypocritical he might feel his critics to be, the question they ask needs answering: Could a Ryanair/Aer Lingus merger drive air fares back up?

A market share of 40 per cent is usually seen by economists as the threshold above which dominant firms can throw their weight around. An example of this was in 1992 when Aer Lingus' market strength allowed it to restrict British Midland's entry into the Irish market by refusing to process tickets on behalf of British Midland - thereby preventing travel agents from issuing tickets combining flights by both airlines. In that instance, however, the Commission was able to act and fined Aer Lingus for the practice.

Taking Dublin airport as an example of how a merger might impact, Aer Lingus and Ryanair together account for 61 per cent of passenger movements.

But while this is far above what the Commission considers to be a threshold defining 'dominance', it is considerably below the market shares of several existing alliances of airlines in other major European airports. In Copenhagen's Kastrup airport, the Scandinavian airline SAS/Star alliance has 85 per cent of market share. In Athen's the Greek airline Olympic has 73 per cent of market share and in Vienna, Munich and Paris incumbent airlines - or alliances thereof - have shares of 70, 67 and 62 per cent respectively.

Ryanair claim that unlike these alliances, Aer Lingus and Ryanair will - even if joined at the hip - still behave like two different companies and will compete 'vigorously' with each other. Even if they don't, the customers for the two airlines want different things: Aer Lingus customers like its reliability, traditions and long haul capacity whereas Ryanair customers want to get from A to B as cheaply as possible within Europe.

But this still begs the question. Why would Ryanair want to takeover a company that will compete with Ryanair?

O'Leary's move is definitely motivated by the opportunity of greater profits. After all, compared with Ryanair's margin of 22 per cent, Aer Lingus posted an 8 per cent margin in 2005. From O'Leary's point of view - and in spite of Willie Walsh's cost cutting some years ago - Aer Lingus remains overweight

. Whereas O'Leary's airline employs 3,063 employees and carries around 35 million passengers, Aer Lingus employs 10 per cent more employees, 3,475 to be precise, but carries just 8 million passengers, less than one quarter of Ryanair's passenger complement. With numbers like that, O'Leary won't need to raise fares to increase profits.

While Aer Lingus green uniforms and shamrock would stay under him, he would be likely to make significant changes. By cutting Aer Lingus hierarchy and transforming its management culture, he would cut staff numbers.

Aer Lingus turnaround times - the time an aircraft stays on the ground between flights - remain high by Ryanair standards and would probably be reduced. Some of the frills of an Aer Lingus service - such as seat reservations - might disappear. But Aer Lingus lite, rather than Ryanair mark II, still seems the most accurate description of what O'Leary would create if his bid succeeds.

Nonetheless, one potential danger of a merger deserves attention. Between them, Aer Lingus and Ryanair will control a majority of the so-called 'slots' for take off an landing at Dublin airport. A merged airline might have more power to control the regime by which competitor airlines - such as low fare airlines like Hapag Lloyd - can compete for flights out of Dublin.

If the EU Commissions endorsement of Air France taking over KLM is anything to go by, a Ryanair takeover of Aer Lingus is unlikely to be vetoed. But in doing so, the Commission is likely to ensure that competitor airlines are not deprived of the means to compete.

If that happens and if the two companies merge, then customers may have little to worry about (although the same cannot be said for some Aer Lingus staff). For as well as pioneering a new approach to flying, Ryanair has been the most successful pioneer of a new business model for European airlines, one that has weakened forever the grip of incumbents.

Using less hierarchical management and staff structures and the ability to market air fares cheaply afforded by the internet, O'Leary has not just reduced airline costs, but also shown competitors how they can cut their barriers to entry: If it behaves like Aer Lingus two decades ago, Ryanair will meet its own Ryanair.

Marc Coleman is Economics Editor of The Irish Times

© The Irish Times

Lennoxschips

Even if they don't, the customers for the two airlines want different things: Aer Lingus customers like its reliability, traditions and long haul capacity whereas Ryanair customers want to get from A to B as cheaply as possible within Europe.

Ryanair "A to B"... pull the other one...

El Stuntman

this article is good in that it points out how hopelessly contradictory the unions postion is - they're suddenly bleating about the benefits of competition while simultaneously trying to stop it in other sectors!!

hypocrites!!

bring it on MOL, bring it on....the day of judgement is at hand....

therecklessone

El Stuntman wrote:

this article is good in that it points out how hopelessly contradictory the unions postion is - they're suddenly bleating about the benefits of competition while simultaneously trying to stop it in other sectors!!

Only contradictory if you ignore the basic premise that the primary role of a trade union branch is to represent the interests of its members. AL unions (branches) are using whatever ammunition is available to themto protect their members interests, in this case they are playing the competition card. The parent organisations meanwhile employ different methods to achieve their stated aims.

El Stuntman wrote:

bring it on MOL, bring it on....the day of judgement is at hand....

Bring what on? What are people hoping to see in the event of a Ryanair merger with AL? Prices will come down, but at what cost? Will they abandon the busier (and more expensive) city airports? Will they cease to provide connecting flights at those city airports and move to a point-to-point model? More importantly, will they move towards the Ryanair customer (dis)service model?

I'mnot hostile to either airline, I recognise the value they both bring to the industry and fly regularly with both. Don't think I'd be as keen on a merged entity.

El Stuntman

therecklessone wrote:

Only contradictory if you ignore the basic premise that the primary role of a trade union branch is to represent the interests of its members. AL unions (branches) are using whatever ammunition is available to themto protect their members interests, in this case they are playing the competition card. The parent organisations meanwhile employ different methods to achieve their stated aims.

you must admit it's pretty laughable all the same

therecklessone wrote:

Bring what on? What are people hoping to see in the event of a Ryanair merger with AL? Prices will come down, but at what cost? Will they abandon the busier (and more expensive) city airports? Will they cease to provide connecting flights at those city airports and move to a point-to-point model? More importantly, will they move towards the Ryanair customer (dis)service model?

surely the article made the reasonbable point that if they do either (a) screw the consumer by increasing fares or (b) annoy the consumer by decreasing the perceived level of service (big deal, you get a seat number pre-allocated on AL! imho, that's about the only service difference) - then other airlines will step in to fill that gap

"the invisible hand of competition": Adam Smith said that a long time ago and he's still spot on, what the unions want is cosy protection. Feck them!! (that's my Day of Judgement riff btw)

Slice

A Ryanair-owned Aer Lingus would seriously damage the prospects of the DAA and its hopes for a second terminal as envisioned in its current form. Ryanair has always had ambitions for getting involved in the airport industry and this is its way of doing so - whereas long haul is of no interest to O'Leary whatsoever. I can't believe that so few, especially in the media actually see the AL takeover for what it is.

El Stuntman

Slice wrote:

A Ryanair-owned Aer Lingus would seriously damage the prospects of the DAA and its hopes for a second terminal as envisioned in its current form. Ryanair has always had ambitions for getting involved in the airport industry and this is its way of doing so - whereas long haul is of no interest to O'Leary whatsoever. I can't believe that so few, especially in the media actually see the AL takeover for what it is.

interesting stuff Slice

I was under the impression that the new terminal had already been given the go ahead - can you please expound on this some more?

why would MOL not be interested in long haul if it's profitable?

Lennoxschips

the new terminal has only been given the go ahead in the form of a fancy powerpoint presentation.

El Stuntman

Lennoxschips wrote:

the new terminal has only been given the go ahead in the form of a fancy powerpoint presentation.

oh

what are the required remaining steps to get the diggers in?

therecklessone

El Stuntman wrote:

you must admit it's pretty laughable all the same

No, its not. Its the branch representing the interests of its members. Thats its job, thats what the members pay their dues for.

El Stuntman wrote:

(big deal, you get a seat number pre-allocated on AL! imho, that's about the only service difference)

Wrong.

Ryanair operate as a point-to-point airline, they do not take responsibility for onward connections. Delayed by 6 hours into Stansted so missed your Ryanair flight to Italy? Tough

Aer Lingus are a member of the One World Alliance (for the moment anyway) and provide trasnfer services for passengers and baggage. In addition, they serve major European hubs, allowing onwards connection with airlines outside of the OW Alliance.

Aer Lingus are more likely to compensate passengers for delayed/cancelled flights (try getting a hotel for the night out of Ryanair)

Lennoxschips

i have no idea.

but remember the bertie bowl and eircom park. all i'm saying is that i'm not getting my hopes up.

El Stuntman

therecklessone wrote:

No, its not. Its the branch representing the interests of its members. Thats its job, thats what the members pay their dues for.

well then if naked self-interest is their game, they should say so

I hate them dressing this up as 'being in the best interests of the consumer' - what a load of crap.
I'd respect them a lot more if they said "we're out to protect our member's handy little numbers in AL and feck anyone who gets in our way" - at least it'd be true

Slice

Well to quote myself from the other thread regarding Ryanair's takeover plans for Aer Lingus:

I don't have much against either Ryanair or Aer Lingus; however the biggest losers from such a merger would be Dublin Airport and consequently Dublin/Ireland as a whole.

After September 11th, when Aer Lingus was on the verge of bankruptcy, Ryanair was in dispute with Aer Rianta over a number of issues including Dublin's Terminal 2 and landing charges at Dublin Airport. Remember how Ryanair suspended any expansion of its Dublin hub over this dispute even though there was plenty of demand for even greater supply at Dublin Airport. This pent-up demand at the time was capitalised on by Aer Lingus when the airline started expanding again at the helm of Willie Walsh and co. Well, the only reason why Ryanair is now adding more routes to Dublin is because of Aer Lingus and the increased competition it's offering.

If Ryanair, a company that accounts for about 30% of traffic at Dublin Airport can single-handedly stifle growth at the Airport in such a way think of what it could do to Dublin Airport if it accounted for 60% traffic there (which would be the case if it took over Aer Lingus) and became the only airline to use Dublin Airport as its hub.

Michael O'Leary's promise that competition would still exist between a Ryanair-owned Aer Lingus and Ryanair itself on those routes both airlines operate on is a falsity because it guarantees Ryanair exclusive access to the market Aer Lingus would otherwise expand into had Ryanair not bought into Aer Lingus in the first place.

Michael O'Leary has made no secret of the fact that he wants to be the one to build Dublin's terminal two and he's still very much critical of the DAA. His plans, as stated many times before is to use a Ryanair-owned T2 as a hub for Ryanair and a terminal dedicated to low-cost air travel. If he also has control of Aer Lingus he would be in a much stronger bargaining position to do so since Ryanair can once again stifle growth at Dublin Airport without the threat of competition from AL. If he's successful in a takeover of AL, I'm sure he would also use his media savvy to capitalise on the fact that the DAA's current plans for T2 include demolishing Pier C, which is the weakest part of DAA's T2 plans. If he can mobilise public opinion against the DAA's current plans for T2 because of this he would come a lot closer to getting it his way. I'm not sure if I'm completely correct on this but Ryanair's proposed location for it's own T2 didn't involve destroying Pier C.

El Stuntman

Lennoxschips wrote:

i have no idea.

but remember the bertie bowl and eircom park. all i'm saying is that i'm not getting my hopes up.

yikes, that bad?

the terminal ain't a Bertie vanity project though

Calina

El Stuntman wrote:

oh

what are the required remaining steps to get the diggers in?

AFAIK Ryanair have lodged a planning objection. See here for RTE report on same.

PhoenixRising

El Stuntman wrote:

I'd respect them a lot more if they said "we're out to protect our member's handy little numbers in AL and feck anyone who gets in our way" - at least it'd be true

I think you may have missed the huge restructuring in 2002, where thousands of staff were culled. Aer Lingus is a completely different company now. I think you'd find it hard to find anyone left in Aer Lingus with a 'handy number'. In fact many areas of the airline have been left chronically understaffed, especially on the flight operations side. Several flights have been cancelled over the last few weeks due to lack of crew. That's a fact.

El Stuntman wrote:

bring it on MOL, bring it on....the day of judgement is at hand....

I'm still at a loss as to why people want to see a monopoly in Irish aviation. Monopolies do not favour the consumer. It's an indisputable law of economics. I had to laugh at Tony Ryan's gaffe on RTE where he admitted the takeover would create a monopoly...doh! Personally, I couldn't think of anything worse than a Ryanair monopoly. I'm still waiting to hear a coherent argument for it. People seem to think that MOL is some kind of people's champion. These same people will be screaming blue murder in a years time when they're stuck in one of Ryanair's backwater airports, flight cancelled, no hotel and told to f**k off by MOL..

El Stuntman

PR, if they are really so understaffed, why do they have more staff than Ryanair but only 22% of the passenger volume?

does not compute!!

read the article, 85% of flights through one airport (Copenhagen - great airport btw) controlled by a single company and people aren't prophesying the end of the world as we are here....

PhoenixRising

El Stuntman wrote:

PR, if they are really so understaffed, why do they have more staff than Ryanair but only 22% of the passenger volume?

does not compute!!

Well the two airlines operate in different markets. Yes, Aer Lingus has adopted a low cost model, but the services the two airlines supply are vastly different. Aer Lingus supply a more comprehensive range of services such as interlining through all the major European hubs, dealing with transfer passengers and their baggage, they still operate within the One World alliance and even have to have a department dedicated to dealing with One World ticketing issues and such. Which incidentally is why they want to pull out of One World. Apparently the benefit to staying in doesn't outweigh the cost of the resources required. Long-haul flying also puts a huge strain on resources and requires a lot more staff to operate. Aer Lingus have a larger engineering and maintenance department than Ryanair do, as well as a larger ground handling section.

You see what is misleading about Ryanair's figures is that they don't mention how many people Ryanair have to employ indirectly to keep their operation going. For all the departments that Aer Lingus employ staff in, Ryanair just do without these departments and outsource the work. Ryanair still need people to clean, cater, maintain, handle their flights etc..but all this work is outsourced so these people do not show up on Ryanair's books. As is usually the case, anything that MOL says has to be taken with a large helping of salt.

BuffyBot

Michael O'Leary has made no secret of the fact that he wants to be the one to build Dublin's terminal two and he's still very much critical of the DAA.

If you think that was anything more than bargaining bluster, I'd be very surprised. He has no more interested in running airports than he is hairdressers. His interests is however, in squeezing the best deals for his airline out of airport operators.

Mad Finn

El Stuntman wrote:

you must admit it's pretty laughable all the same

I'll grant you it's ironic.

But by the same token you must accept that market watchers and captains of industry who bleated for years about the benefits of competition now turning around and cheering O'Leary on as he attempts to build up an effective monopoly on flights out of Ireland are guilty of far worse hypocrisy.

Furthermore, in their sneering patronising insistence that we must accept this corrolary of the market economy that the rich get richer and when in positions of power are perfectly entitled to **** over the less well off they are merely paving the way for the next generation of bomb-throwing revolutionaries.

If the trade unions, and indeed the wider public at large have come to accept the argument that a properly regulated market with freedom of information and reasonable ease of entry can lead to efficiency of operations that yield benefits to both suppliers in terms of reasonable profits and to customers in terms of improved products and services, why then can they not accept that in good grace?

Why instead do they turn around and effectively say 'Hah! You suckers! Monopolies rock just as long they're private monopolies run by companies that we can invest our fat piles of cash in. You didn't fall for that old bull**** that we are committed to tolerating competitors if we can get away without having them, did you?'

What possible motivation and interest could Ryanair have in operating Aer Lingus as a competitive entity to its existing operation? How would MOL sell that to his ultra pragmatic shareholders?

He's planning an asset stripping job with loads of redundancies, curtailing of services and increased fares. And he'll sell off the long haul to somebody else. It will be good for Ryanair shareolders, a nightmare for the Irish travelling public.

If he gets away with it. I don't know what O'Brien is up to but he seems to be throwing a spanner in O'Leary's works.

El Stuntman

Mad Finn wrote:

If he gets away with it. I don't know what O'Brien is up to but he seems to be throwing a spanner in O'Leary's works.

I don't know what he's up to either - seems daft

maybe it's his way of paying all the taxes that he's been avoiding ever since he got rich off this country and promptly moved out to avoid paying his fair share?

Slice

Buffybot: If you think that was anything more than bargaining bluster, I'd be very surprised. He has no more interested in running airports than he is hairdressers.

This was taken from the Finfacts website (posted yesterday) having been regurgitated by them from one of the national dailies:

Ryanair has said it will oppose planning permission for second terminal at Dublin airport and has offered to build an alternative terminal "at no cost" to the Dublin Airport Authority (DAA).

Speaking at a press conference in Dublin last month, Ryanair Chief Executive Michael O'Leary said Ryanair had written to the DAA offering to build a second terminal at a cost of €250 million.

The company says that a Ryanair-built facility would save the DAA €610 million.

O'Leary said: "The DAA cannot be trusted to build efficient, low-cost facilities. . . . Having announced the second terminal in August 2005 at a cost of €170 million . . .the DAA have now designed this facility, and the costs have exploded 12 months later to over €750 million."

BuffyBot

This was taken from the Finfacts website (posted yesterday) having been regurgitated by them from one of the national dailies:

I'm quite aware of what they SAY. When it comes to doing it, it's another matter entirely.

dRNk SAnTA

BuffyBot wrote:

I'm quite aware of what they SAY. When it comes to doing it, it's another matter entirely.

Alright well thats quite a cynical attitude.

I do think Ryanair would've had a terminal built because they obviously would be very interested in achieving the lowest landing charges possible. He could've just outsourced the building and running of the terminal to a 3rd party.

Thats neither here nor there. The article points out that other european airports have much bigger monopolies. In the end the airline industry is awfully competitive and too much abuse of a monopolistic position would be a great incentive for new airlines to come to Ireland.

Anyhow, its looking unlikely ryanair will gain control of the AL now. I'm not entirely sure what I personally want, I suppose if its a choice between a union controlled AL or a ryanair controlled AL - I think I could make a good guess at which would give me the lowest fares.

BuffyBot

too much abuse of a monopolistic position would be a great incentive for new airlines to come to Ireland.

Errr, no. Just look at what Ryanair did to MyTravelLite, Go and to a lesser extent, easyJet when they tried to take a bit out of the Irish market.

dRNk SAnTA

BuffyBot wrote:

Errr, no. Just look at what Ryanair did to MyTravelLite, Go and to a lesser extent, easyJet when they tried to take a bit out of the Irish market.

EasyJet were driven out of the Irish market because they became involved in a price war right ryanair and lost. It doesnt matter whether easyJet had stayed here or not, consumers benefited from the price war. Thats generally the point of competition you know, and it emphasises my point that any excessive margins would entice new entrants.

BuffyBot

it emphasises my point that any excessive margins would entice new entrants.

Which then tend to be driven out, as per the three above..

El Stuntman

dRNk SAnTA wrote:

EasyJet were driven out of the Irish market because they became involved in a price war right ryanair and lost. It doesnt matter whether easyJet had stayed here or not, consumers benefited from the price war. Thats generally the point of competition you know, and it emphasises my point that any excessive margins would entice new entrants.

yah

the invisible hand of competition

Economics 101

Mad Finn

El Stuntman wrote:

yah

the invisible hand of competition

Hidden hand my backside.

Isn't mumbo jumbo great? Muslims are a bunch of medieval mutton heads because of their literal interpretation of their 7th century faith and their belief in suicide bombing as a fast track to paradise etc etc


We don't believe in any of that superstitious nonsense but we DO believe in an invisible hand that moves markets to greater efficiencies.

Mmmmm. Spooooky!!

Have a guess how many fingers of my invisible hand I'm holding up to that idea

wwhyte

Mad Finn wrote:

Isn't mumbo jumbo great? Muslims are a bunch of medieval mutton heads because of their literal interpretation of their 7th century faith and their belief in suicide bombing as a fast track to paradise etc etc

We don't believe in any of that superstitious nonsense but we DO believe in an invisible hand that moves markets to greater efficiencies.

Mmmmm. Spooooky!!

Well, the difference between the literal interpretation of Islam and the metaphor of the invisible hand is that the invisible hand is a metaphor...

El Stuntman

Mad Finn wrote:

Hidden hand my backside.

We don't believe in any of that superstitious nonsense but we DO believe in an invisible hand that moves markets to greater efficiencies.

markets are good at creating competition, competition is good

governments are not, governments running airlines is a bad idea

(be careful what you say about the Muslims btw....they don't have a great sense of humour about these things)

Mad Finn

wwhyte wrote:

Well, the difference between the literal interpretation of Islam and the metaphor of the invisible hand is that the invisible hand is a metaphor...

Certainly is, the way Adam Smith wrote it. He made it clear that markets operated 'as though an invisible hand were at work'

Which is a subtley different thing from saying that there IS an invisible hand which is how a lot of today's free-market faithfull describe it.

Mad Finn

El Stuntman wrote:

markets are good at creating competition, competition is good

I agree. And for that reason Ryaniar should not be allowed buy Aer Lingus.

El Stuntman wrote:

governments running airlines is a bad idea

They don't. They have a minority stake. So they have as much rights as other stakeholders.

El Stuntman wrote:

(be careful what you say about the Muslims btw....they don't have a great sense of humour about these things)

Yes. But most of them are sensible enough to realise that it was the purveyors of market mumbo jumbo that I was having a go at. Not them.

No sign of a suicide bomber anywhere near me yet.

jjbrien

The one thing i did notice about Ryanair recently was when Ryanair and Aer Lingus competed on the Dublin Liverpool route the fares were very cheap. When Aer Lingus pulled out Ryanair put the fares up again there it is now very hard to find a cheap flight to Liverpool with Ryanair. This would happen across the board if Ryanair got control of Aer Lingus. But i dont think thats going to happen. As it is Ryanair has 19.4% of Aer Lingus it not enoough to gain control but it enough to infulunce the board of Aer Lingus and stop a take over bid from else where

El Stuntman

Mad Finn wrote:

I agree. And for that reason Ryaniar should not be allowed buy Aer Lingus.

so we disagree (surprise, surprise)

who cares what we think! it's down to 2 things now - (1) what Ryanair decide to do next (should be revealed today or Monday when they put out their offer doc - looks like they're not going to increase the bid price however) and (2) assuming they stay with the takeover attempt, what the EU does (precedent in this industry suggests they are very much pro-consolidation in the airline industry)

Mad Finn wrote:

They don't. They have a minority stake. So they have as much rights as other stakeholders.

and we as citizens are stakeholders in the Government. So, speaking as a stakeholder, I'd like to see the Board (Bertie/Martin) take a juicy 30% return on this investment and return it to me in the form of a tax-break dividend in the budget
I have this wierd notion that the Govt has no business being in business!

Mad Finn wrote:

No sign of a suicide bomber anywhere near me yet.

LOL, mind your back!!

Mad Finn

El Stuntman wrote:

speaking as a stakeholder, I'd like to see the Board (Bertie/Martin) take a juicy 30% return on this investment and return it to me in the form of a tax-break dividend in the budget

A large part of which will probably go to pay the increased air fares that will ensue when Ryanair "rationalises" its new acquisition Aer Lingus (see JJBrien's post just above this one

El Stuntman wrote:

I have this wierd notion that the Govt has no business being in business!

It is a weird notion. And it has to be taken on faith that governments are ALWAYS worse at operating services than the private sector. There are plenty of examples of perfectly well run services operated by governments. Not least hte public transport systems of many European cities.

But hey, if Catholics want to believe in transubstantiation then you can believe that a Ryanair monopoly on Irish air traffic will be good for the Irish public. Just don't expect everybody else to swallow that wafer.


[

El Stuntman

Mad Finn wrote:

There are plenty of examples of perfectly well run services operated by governments.[

such as Dublin Bus, Iarnrod Eireann, the health service etc?

there may be such examples, they just don't exist in this country

dRNk SAnTA

Mad Finn wrote:

It is a weird notion. And it has to be taken on faith that governments are ALWAYS worse at operating services than the private sector. There are plenty of examples of perfectly well run services operated by governments. Not least hte public transport systems of many European cities.

Yes but this is not comparing like with like. Its usually in the public interest that public transport is run by the government because otherwise important services would not be provided.

But the airline industry is a completely different case. As far as I can see it has become as near to a perfectly competitive market as I can think of right now. We don't need the government to provide us with air transport, there are plenty of private companies who are willing and able to provide it cheaply.

It would obviously be better if 1 company didn't control 60% of Irish air travel however the article in the original post does show that much higher monopolies are common place in other european airports. If this were to happen would it really be the end of the world? Why?

The best case scenario would have been for a 3rd party to buy air lingus and compete with ryanair. That didnt happen, and there are only 2 likely conclusions to this takeover:

1: Either Ryanair succeeds (unlikely now, to be fair) and we put up with the largest and cheapest airline in europe holding a 60% market share. Ryanair have the funds to seriously push AL in the long haul market.

or

2: Denis O'Brien comes in, does a sweetheart deal with the unions, and AL is run as an employment agency rather than a competitive airline. To be honest I can't see what O'Brien is thinking getting into bed with the unions but I really don't see it as a positive move for aer lingus.

I do think that either way air fares will stay low because there are always other airlines who will enter the market over time, and if AL can't compete then they'll simply lose out. I of course want to see AL do well though but I fear union control would be the nail in the companys coffin.

Victor

Can people leave religion out of the discussion?

---

Whereas O'Leary's airline employs 3,063 employees and carries around 35 million passengers, Aer Lingus employs 10 per cent more employees, 3,475 to be precise, but carries just 8 million passengers, less than one quarter of Ryanair's passenger complement. With numbers like that, O'Leary won't need to raise fares to increase profits.

I think arguments like this are slightly idiotic. Aer Lingus do part of their own catering, Ryanair have to buy in theirs. Aer Lingus do long haul flights requiring more crew, but they earn higher fares. :rolleyes:

dRNk SAnTA wrote:

The article points out that other european airports have much bigger monopolies.

Bu those airports have proper competing airports, e.g. Amsterdam has to compete with Groningen, Rotterdam, Maastricht and the Dutch rail and motorway systems. Tell me what airports actually compete with Dublin?