Aer Lingus May Launch UK Domestic Flights and Expand Long-Haul Network

Turbine

Just reported on the RTÉ News at One that Aer Lingus are considering launching intra-UK flights and are looking to expand the long-haul network to start a new route to the US East coast or Canada in 2013.

Some key quotes from today's Q1 announcement:

Q1 losses reduced by 32.8% from €55.9 million in 2011 to €36.1 million in 2012

Q1 revenue increased by 15.4% in 2012 compared to Q1 2011.

Operating profit for 2012 to match 2011 despite increased revenue, due to higher fuel costs which increased 31.4% and higher airport charges which increased by 7.8%.

Retail revenue per passenger increased by 8.5%.

Q1 Passenger numbers increased by 6.6% in 2012 compared to Q1 2011.

Q1 Long-haul passenger volumes up by 12.1% and yields up by 11.2% in 2012 compared to Q1 2011

"We now share the more upbeat view on industry trends expressed in IATA’s April 2012 airline business confidence survey and if current trends continue, Aer Lingus’ operating profit for 2012 should match that achieved in 2011. However, the performance of certain short haul routes is weaker than expected and our business continues to be subject to inflationary cost pressures", said Aer Lingus CEO Christoph Mueller.

Read more: http://www.irishexaminer.com/breakingnews/business/aer-lingus-reports-smaller-loss-in-q1-550023.html#ixzz1toQVbmoo | http://www.businesspost.ie/#!story/Home/News/%22Encouraging%22+start+to+year+for+Aer+Lingus+-+Mueller/id/19410615-5218-4fa2-26d9-299d34050253

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The plans for intra-UK flights have come about because of the forced release of some of BMI's Heathrow slots, which was one of the conditions set down by the European Commission when they approved BA's takeover of BMI.

The slots BA must release are for specific routes including Edinburgh and Aberdeen. 14 slots in total are to be made available, but 2 are currently leased to Transaero, so only 12 can actually be used. 7 of the 14 slots must be used on routes between Heathrow and Scotland.

Virgin Atlantic are also bidding for the slots as part of plans to launch a new UK domestic network.

Assuming Aer Lingus acquire the slots, it could tie in with Etihad's plans for a new code share deal, which could include its Heathrow-Abu Dhabi route.

Some further reading for anyone interested:

http://www.irishtimes.com/newspaper/finance/2012/0330/1224314097191.html
http://atwonline.com/airports-routes/news/aer-lingus-eyes-bmi-heathrow-slots-0327
http://www.telegraph.co.uk/finance/newsbysector/transport/9193152/Virgin-eyes-BMI-slots-for-launch-of-UK-flights.html

donvito99

This is quite a remarkable move by Aer Lingus, I do think Intra-UK will be far more successful and sustainable than Europe Ex Gatwick.

This also gives more logic to EY interest.

Dacian

donvito99 wrote: »

This is quite a remarkable move by Aer Lingus, I do think Intra-UK will be far more successful and sustainable than Europe Ex Gatwick.

I disagree. With the UK rail network growing more popular, intra-UK flights are coming on more pressure than ever before.

Now an option could be for EI to get the slots and utilise them to operate another version of the current Aer Lingus Regional operation. An A320 doing LHR-Aberdeen may not make much sense but a Dash-8/E170/ATR-72 would be a lot more economical.


Aer Lingus AGM is today...should be quite interesting.
http://www.irishtimes.com/newspaper/finance/2012/0504/1224315587137.html
....It will be interesting to see if chairman Colm Barrington gives any guidance on the payment of a dividend in the near term.

.....Is Etihad the board’s preferred buyer of the Government’s 25 per cent stake? Is it the preferred buyer in the eyes of management?

....What shape exactly will this commercial partnership take and what are the benefits for Aer Lingus?

....What is the fallout from British Airways’ acquisition of UK rival BMI?

Turbine

Dacian wrote: »

Now an option could be for EI to get the slots and utilise them to operate another version of the current Aer Lingus Regional operation. An A320 doing LHR-Aberdeen may not make much sense but a Dash-8/E170/ATR-72 would be a lot more economical.

Aberdeen-Heathrow is twice the distance of Dublin-Heathrow, so it would be stretching it to use an ATR on the route.

As long as its profitable using an A320, then there'd be no reason to give the route to Aer Arann. The whole point of the Aer Lingus Regional franchise agreement is to allow Aer Arann operate routes that would otherwise be uneconomical for Aer Lingus using an A320, while receiving a franchise fee. Aer Arann would then build up the route to a stage where it can be operated profitably by an A320 again. There's clearly no need for that on Scotland-Heathrow routes.

Hannibal

I've heard lots of rumours the last year EI were going to return to the west coast of the US and possibly Canada but the article yesterday said the east coast, is this a misprint? because they already serve Boston, NY, Washington and Orlando so they seem to cover the east coast pretty well as is.

Turbine

Dotsey wrote: »

I've heard lots of rumours the last year EI were going to return to the west coast of the US and possibly Canada but the article yesterday said the east coast, is this a misprint? because they already serve Boston, NY, Washington and Orlando so they seem to cover the east coast pretty well as is.

Yeah I was half expecting them to say San Francisco on the news yesterday when they mentioned North America. But I'm not surprised considering the cost of fuel has gone up by a third over the last year. Aer Lingus have said there wouldn't be enough high-yielding traffic on the route for it to be profitable, so they're entirely reliant on the price of fuel coming down for it to work.

I don't know where they could fly to on the East coast other than Miami or Baltimore. I think a route to Canada is probably more likely.

Dacian

Good point on the ATR range though.So an ERJ45/E170 would be more suited to that route? (purely as an example)

Turbine wrote: »

Aberdeen-Heathrow is twice the distance of Dublin-Heathrow, so it would be stretching it to use an ATR on the route.

As long as its profitable using an A320, then there'd be no reason to give the route to Aer Arann. The whole point of the Aer Lingus Regional franchise agreement is to allow Aer Arann operate routes that would otherwise be uneconomical for Aer Lingus using an A320.......

I wasn't thinking of Aer Arann. "Aer Lingus Regional" is a franchise agreement, it can be operated by another airline than RE.

I recognise that the London-Scotland route is proven, still doesn't mean a 174 seat A320 will be workable. EI already operate the 144 seat A319 from BFS, perhaps more of these or the smaller E170/E190?

The LHR slots that EI have indicated interest in are dedicated intra UK. While Virgin claim they want them, they have no network/fleet structure to actually operate them unless they themselves lease the slots out. And more importantly if VS gain these slots they will have to sramlbe to find capacity for their proposed s/h operation.

Another bit of speculation is that if EI acquire those LHR route specific slots they could interline onto Ethiad flights from LHR. This plan of course relies on EI to get the slots and EI to start codesharing with EY!

Turbine

Dacian wrote: »

I wasn't thinking of Aer Arann. "Aer Lingus Regional" is a franchise agreement, it can be operated by another airline than RE.

The same point applies to any airline operating under the franchise.

Dacian wrote: »

Good point on the ATR range though. I shall remove that from my post.
So an ERJ45/E170 would be more suited to that route? (purely as an example)

Not anymore with the price of fuel, hence why FlyBe got rid of the fleet of ERJ 135/145s they inherited from BA Connect. But again, the Scotland-Heathrow market has a proven demand, so there'd be no need to put a 44-seater aircraft on a route where you can fill a 174-seater.

Dacian wrote: »

The LHR slots that EI have indicated interest in are dedicated intra UK. While Virgin claim they want them, they have no network/fleet structur to actually operate them unless they themselves lease the slots out.

Virgin want to develop a new domestic UK network to feed their own long-haul network.

Dacian wrote: »

Another bit of speculation is that if EI acquire those LHR route specific slots they could interline onto Ethiad flights from LHR. This plan of course relies on EI to get the slots and EI to start codesharing with EY!

Exactly and as mentioned in my OP, Virgin Atlantic are bidding for the slots as well so there's every chance they won't get them.

But it was confirmed on Tuesday that Aer Lingus are looking to develop a code share agreement with Etihad.

aquascrotum

Would any of this have anything to do with the IAG attempted selloff/shutdown of the BMI Regional / BMI Baby services?

Was going to post separately about the BMIbaby shutdown from Belfast City from June on - which is a major blow to the airport. 400k-odd passengers used BMIb last year apparently. And personally it sucks for me as I used their East Midlands route monthly.

The airport seems to think they can replace the routes though and have said they'll make announcement next week afaik - does anyone have any information as to who they might have in mind? Ryanair have already gone from City, and Flybe don't seem to have favoured launching sunshine destinations from Belfast as yet...though they did soak up a couple of Ryanair's routes. And if EI Regional did establish, there is an established EI hub in Belfast International. Who else could the airport be talking to?

Turbine

aquascrotum wrote: »

Would any of this have anything to do with the IAG attempted selloff/shutdown of the BMI Regional / BMI Baby services?

No its come about because the European Commission have forced BA to release some slots at Heathrow as a condition of taking over BMI.

No doubt Aer Lingus may look at opportunities ex Belfast as a result of BMI Baby pulling out, but that's nothing to do with these plans.

Hannibal

Turbine wrote: »

Yeah I was half expecting them to say San Francisco on the news yesterday when they mentioned North America. But I'm not surprised considering the cost of fuel has gone up by a third over the last year. Aer Lingus have said there wouldn't be enough high-yielding traffic on the route for it to be profitable, so they're entirely reliant on the price of fuel coming down for it to work.

I don't know where they could fly to on the East coast other than Miami or Baltimore. I think a route to Canada is probably more likely.

I've heard rumours of Toronto and San Jose but as I said only rumours with this announcement they look highly unlikely.

Turbine

Dotsey wrote: »

I've heard rumours of Toronto and San Jose but as I said only rumours with this announcement they look highly unlikely.

Well the announcement is they're looking at US East coast and Canada, so surely Toronto is now more likely?

BuffyBot

Good point on the ATR range though.So an ERJ45/E170 would be more suited to that route? (purely as an example)

Not with Heathrow's landing costs which make it deeply unprofitable to operate smaller craft into it. There is a reason you rarely see smaller than a 737/A32x scheduled there.

Delancey

The last route EI flew to Canada was if I recall to Montreal , quite why they chose that destination as opposed to Toronto I can only guess ?

troposphere

Not sure how true it is but I think I have read somewhere before that the Aer Lingus Montreal route had more to do Canadian government policy similar to Shannon stopover.

davepatr07

This should of happened years ago. Over 4 million Irish descent in Canada and they still haven't gotten to operating a year round service to either Toronto or Montreal from Ireland. Even Montreal with it's flag has a shamrock and one of the longest running St Patrick's Day parades in North America! Red tape and bureaucracy. The demand is there.

Bearcat

I can see a Canada service too....can't see west coast as the pull on crew resources is way too much for such a tiny airline.

donvito99

the Aer Lingus Montreal route had more to do Canadian government policy similar to Shannon stopover.

Didn't that flight continue to ORD too? Or maybe the other way around.

Also, where to Air Canada and Air Transat fly to in the summer?

troposphere

"The landing rights issue is an irritant for the UAE and Canada so something will happen," he said during a visit to the UAE.

"The Quebec government can only make representation as it's a decision of the federal government."

Limited access to Canadian airports has been a source of frustration for Gulf carriers in recent years.

Aside from Qatar's Montreal service, Emirates and Etihad both fly three times a week from the UAE to Toronto.

But none of the airlines have been allowed to raise their existing number of services.

Mr Tremblay's comments suggest tensions between the UAE and Canada still simmer over the issue despite an improvement in relations in recent months.

Relations reached a low point last year when the UAE imposed a new fee for Canadians visiting the country, ending Canada's status as one of more than 30 countries whose citizens could visit free of charge on a free one-month visa.

Continued

I wonder if Etihad are planning to use Aer Lingus to increase service to Canada?

donvito99 wrote: »

Didn't that flight continue to ORD too? Or maybe the other way around.

Also, where to Air Canada and Air Transat fly to in the summer?

Yea I believe Dublin-Shannon-Montreal-Chicago. This is from 2007 when Ireland signed a new agreement with Canada but that I think that has been superseded by a EU-Canada air agreement.

Transport Minister, Martin Cullen, T.D. has announced today (Saturday, 28 April 2007) that a new Ireland Canada Air Transport Agreement has been reached and will take effect immediately on a provisional basis. The agreement was initialled in Ottawa by senior officials from the Department of Transport and Transport Canada.
The new agreement, finalised yesterday evening (Friday, 27 April 2007 at 10.30pm Irish time), replaces the agreement first negotiated in 1947 and last updated just fifty years ago.

Minister Cullen said: "This is a further major step in Government policy of expanding the regulatory framework to develop new air services to and from Ireland. As a highly open island economy, we must maximise access connections with all of the key business and tourism markets. Air Canada operates a summer service between Toronto and Shannon and Dublin. The new agreement provides for services between any point in Ireland and any point in Canada. In contrast, the previous agreement restricted Irish carriers to just one point in Canada - Montreal. I am confident that the more liberal measures set out in this agreement will allow the development of year round services between Ireland and Canada."

afatbollix

BA all ready fly to Glasgow, Edinburgh and Aberdeen from Heathrow. Maybe they should just double the amount of planes on the route.

brandon_flowers

Funny thing is any of these flights out of/into LHR will not be low fares in any way. LHR-ABZ would be better off with 1/3 business class in an A320. The route would be dominated completely by oil companies many of whom will use only business class. It would also make more sense for Etihad who obviously have had an interest in Heathrow slots for a while now.

Plus if it was part of an agreement during the BMI takeover that BA had to free up slots then I guess they wouldn't be allowed double the aircraft on the route. That would just keep the monopoly in place.

bladeruner

afatbollix wrote: »

BA all ready fly to Glasgow, Edinburgh and Aberdeen from Heathrow. Maybe they should just double the amount of planes on the route.

The whole point of making the slots available is to avoid a monopoly situation.
In any case , if they had a monopoly they would do the opposite and put bigger aircraft on the internal route fewer times a day so that the slots could be used on other long haul routes from LHR.

A Dub in Glasgo

BMI pulled out of the Glasgow - Heathrow route a while ago as they were losing money on it. BA is the only airline if you want to go to Heathrow from Glasgow. You have got to remember that BA has not developed medium / long haul out of either Glasgow or Edinburgh so that they can funnel everyone through Heathrow.