Ryanair bid for Aer Lingus

bk

Blowfish wrote: »

You are implicitly assuming that they'll cut the second flight, when the opposite could be the case.

Oh, they will definitely cut the flights.

They don't want a mixed fleet of both Airbus and Boeing and all the parts and engineering headaches that go with that. Not when relatively young Airbus aircraft like these are in such demand on the second hand market.

Nor do they want the headaches of holding onto the expensive Aer Lingus pilots and the expensive Aer Lingus engineers. Remember these are the only people rated to fly the Airbus. Ryanair pilots aren't type rated to fly Airbus and vice versa. Same goes for engineers.

It makes much better sense to sell off the Airbus at a nice profit. Fire all the expensive Aer Lingus engineers and pilots.

Sure they might stick a second 737 on a route where there is loads of demand, but routes where there is little demand will definitely be cut, to get better utilisation out of one aircraft. This will definitely lead to higher ticker prices.

Why wouldn't you raise prices (within what the market will support), when you have no competition?

ballooba wrote: »

That does not seem rational to me (aside from the fact that you seem to be implying a direct correlation between price and demand), because a new entrant will step in if the margins increase by that much. I seriously doubt it would take 12 months for a new entrant to emerge. Regardless of that, there are indirect routings which would become attractive. Aside from both of those points, it's likely that these routes would be handed directly to a competitor by the regulator if the takeover were approved. Didn't this happen with some BMI routes when they were taken over by BA?

The long and short of this is that a takeover by Ryanair is not ideal for consumers, but it's nowhere near as bad as the fear mongers are making out.

LOL indirect routings??? Your having a laugh now, do you really think it would be cheaper to fly London -> Heathrow -> Manchester/Barcelona, etc. with BA?

Such flights are very expensive. Ryanair will definitely increase prices, but not by enough to make indirect routings an option. At least I hope it doesn't get that bad.

Plus you have the massive inconvenience of a much longer trip.

I'm not scare mongering. I think Ryanair are a great company. But we have to remember that they are a company. Their only goal and drive is to make money. Given the opportunity of being a defacto monopoly, you can bet they will take every chance to make the most of it.

ballooba

You're now implying that they will cut flights because they don't want to run a mixed fleet. I thought Ryanair had lots of surplus Boeings. A switch from Airbus to Boeing is of little concern to consumers.

As for indirect connections, this is one of three scenarios I listed. The others being new entrants and forced handovers by the regulator. There are already attractive indirect connections that are alternatives to Aer Lingus / Ryanair. DUB -> AGP via MAD is one that I can think of. As for Manchester, there are rail and road alternatives that can be combined with flights or ferries. All of this only comes into play though if all the other airlines in Europe ignore Ireland and these established routes.

bk

ballooba wrote: »

You're now implying that they will cut flights because they don't want to run a mixed fleet. I thought Ryanair had lots of surplus Boeings. A switch from Airbus to Boeing is of little concern to consumers.

In the winter months they have spare AC, not during the summer and they aren't ordering anymore.

ballooba wrote: »

As for indirect connections, this is one of three scenarios I listed. The others being new entrants and forced handovers by the regulator. There are already attractive indirect connections that are alternatives to Aer Lingus / Ryanair. DUB -> AGP via MAD is one that I can think of. As for Manchester, there are rail and road alternatives that can be combined with flights or ferries. All of this only comes into play though if all the other airlines in Europe ignore Ireland and these established routes.

Oh great, I thought Ryanair was supposed to be our new saviours and that they were going to keep the same number of aircraft and prices were going to stay the same.

Now it turns out we will have to suffer paying way more and wasting time with indirect flights and long train journeys. That is just fantastic!!! :mad:

ballooba

The fact is that none of us know exactly what Ryanair or any other new owner would do with Aer Lingus. Nor do we know what other airline groups would do in response to an Aer Lingus takeover. We can all come up with scenarios for what may happen. No one has shown me any plausible reason why this should be blocked. There does not seem to be a queue of suitors for Aer Lingus.

bk

ballooba wrote: »

The fact is that none of us know exactly what Ryanair or any other new owner would do with Aer Lingus. Nor do we know what other airline groups would do in response to an Aer Lingus takeover. We can all come up with scenarios for what may happen. No one has shown me any plausible reason why this should be blocked. There does not seem to be a queue of suitors for Aer Lingus.

Actually two other airlines have shown interest in Aer Lingus, Ethiad and Turkish.

Also why can't Aer Lingus continue on their own? Why do you think they have to be taken over?

After all they are profitable now, one of the only profitable companies that the government own.

They are effectively competing with Ryanair now, one of the most competitive and aggressive and largest airline in Europe, that is quiet an achievement. They have very effectively turned themselves around and transformed into a low cost airline.

Please explain to me how the Irish public benefits from going from two large, Irish owned and very competitive airlines, with a few smaller airlines. To just one large Irish owned airline and lots of small airlines?

I just don't see the logic of how we are supposed to benefit from this?

ballooba

bk wrote: »

Actually two other airlines have shown interest in Aer Lingus, Ethiad and Turkish.

Where are they? Where is their offer?

Aer Lingus is not a large airline in any sense of the word. They are a minnow and they have the offering of a minnow. They have a large presence in Ireland which acts as a bit of a barrier to any serious entrant with a concerted effort at serving the local market. We would benefit from the presence of a large non-LCC in Ireland as we would have decent international connections and a decent frequent flyer offering. I have Etihad gold status so I would love to see them take over EI.

Vic_08

Tarabuses wrote: »

Why does your graph only go as far as March 2009?

Because obviously the share price during the worst financial period in decades is enormously relevant, far more so than the current price which is double that shown at the end of the graph above.

The fact that the share price has net increased over the last 3 years doesn't nullify his "sell it quick before it's in the toilet" argument, no not at all.

ballooba wrote: »

No one has shown me any plausible reason why this should be blocked. There does not seem to be a queue of suitors for Aer Lingus.

bk has patiently explained to you the deatails of the bloody obvious; having a single airline controlling a very large % of all commercial traffic out of our small island, especially an airline with a proven track record of cutthroat tactics towards everyone, is a very bad thing for everyone except that airline.

Solair

It would be disastrous for competition in Ireland!

Ryanair would end up with an almost total monopoly at Cork other than a few holiday-flights, and a huge % of the routes out of Dublin and Shannon.

Aer Lingus and Ryanair together operate most short-haul European flights in/out of Ireland.

How's is merging them any good for anyone other than Ryanair's shareholders?

There would be no incentive to keep fares down or service levels improving and we would probably end up in a situation like we were in in the 1980s with huge ticket prices, only without the 'frills'.

Being an island, air transport is absolutely vital for Ireland too. If we get these kinds of things wrong they could have huge economic impacts, much more so than in other countries where there's easy road/rail access.

I don't really buy this 'green shirt' thing. Ryanair is an Irish multi-national owned by its share holders. It's HQ may well be in Dublin, but I don't necessarily think that we should assume that just because they've an Irish base that they're automatically going to run Aer Lingus in anything other than a purely commercial way that suits them.

I would rather see Aer Lingus being bought by another major airline.

Also, from Ryanair's perspective, what's the deal here?

I know they've a bit of a thing about buying Aer Lingus but, I don't really see why.

Aer Lingus is a small national airline with limited scope. It's using a completely different fleet type to Ryanair (so no savings there) and has typical old-school airline issues with pensions, high costs etc.

From a Ryanair shareholder perspective, I don't really get this obsession with Aer Lingus.

Do they not have bigger fish to fry?

I would see this deal as potentially bad for both Irish airlines to be perfectly honest.

I don't see how it benefits Ryanair and I think it could be very damaging to Aer Lingus and to Irish aviation in general as it just reduces competition so much.

If Ryanair want to launch transatlantic or other long-haul routes e.g. to Asia, they would be far better off going it alone and building their own fleet than buying a former state-owned airline like Aer Lingus. They'll never be able to modify an organisation like that to the Ryanair way of doing business.

ballooba

Vic_08 wrote: »

bk has patiently explained to you the deatails of the bloody obvious; having a single airline controlling a very large % of all commercial traffic out of our small island, especially an airline with a proven track record of cutthroat tactics towards everyone, is a very bad thing for everyone except that airline.

I've seen nothing plausible in there to concern me as a (regular) consumer.

bk

ballooba wrote: »

I've seen nothing plausible in there to concern me as a (regular) consumer.

And I have yet to see an explanation from you as to how the Irish public benefits from going from having two major Irish airlines to just one?

Savman

Jesus ballooba, facepalm moments all round. It's staring you in the face but your EI agenda is blinding your logic.

Ryanair would devour Aer Lingus, this is a worrying development as far as Irish air travel goes. I don't believe this is a smoke and mirrors trick by MOL, he wants rid of EI and why wouldn't he, as imperfect as EI are they have come fighting back in recent times and seem to be in much better shape now.

There isn't an airline that can or will compete with a Ryanair monopoly out of Dublin, they are simply too aggressive and would have too much of a market share.

Don't overlook the US pre-clearance in DUB leaning in EI's favour, they haven't quite tapped into the Eastern & European feeder market yet but it's a huge, huge competitive advantage for the BOS, ORD & JFK routes over most of the big dogs running from Paris or London for example.

We know EI took advantage back when they had the lion's share and kept fares high, but the solution in present day Ireland is not to hand a fierce competitor a golden opportunity to return to those dark days.

Optimistically, I don't think this will happen, there is simply too much political influence working against FR and I think this is a step too far. Don't count on the EU Competition rules either, IAG were able to circumvent that when they took over bmi to muscle out Virgin for those highly coveted Heathrow slots. Despite considerable opposition from Branson & Co., the buyout went ahead regardless.

No shamrock waving sentiment here for EI, but we need their presence on this island if only to keep FR honest competitive.

dowlingm

The question is what if anything BA/IAG will do. Having swallowed BMI at substantial cost (on a gross basis rather than net) they are now back in Belfast and Dublin from London Heathrow in their own colours. There is therefore a question mark over the future of the remaining codeshares and what in turn that does to EI's economics irrespective of ownership.

LXFlyer

BA have stated they will compete on point to point but continue to code share for onward traffic.

ballooba

Savman wrote: »

Jesus ballooba, facepalm moments all round. It's staring you in the face but your EI agenda is blinding your logic.

By your 'all round' comment it seems that you assume to speak for people other than yourself. You don't, every poster on this site is an individual, unless they are an agent of an organisation acting within their remit. And just because they don't agree with you does not mean they have an agenda. I see bullying behaviour like this from pressure groups and their spokes people all the time. I remain unconvinced that any of this is bad for the consumer. As for airlines that could offer a differentiated product to compete with Ryanair on their home turf, Virgin would not be a bad option. Although I only have experience of their Australian business. Not everyone wants a LCC, Aer Lingus just don't offer a quality product. That's not an agenda by the way, that's being a consumer.

Savman

I could be mistaken but I think it was part of the criteria for the EU accepting the BA deal, that they had to keep the interline open for connecting pax.

In fact I have an upcoming itinerary with VS, connecting in LHR, and the outgoing flight number has changed from BD to BA so I'll get to find out what the story is...the hard way!

Savman

ballooba wrote: »

By your 'all round' comment it seems that you assume to speak for people other than yourself. You don't, every poster on this site is an individual, unless they are an agent of an organisation acting within their remit. And just because they don't agree with you does not mean they have an agenda. I see bullying behaviour like this from pressure groups and their spokes people all the time. I remain unconvinced that any of this is bad for the consumer. As for airlines that could offer a differentiated product to compete with Ryanair on their home turf, Virgin would not be a bad option. Although I only have experience of their Australian business. Not everyone wants a LCC, Aer Lingus just don't offer a quality product. That's not an agenda by the way, that's being a consumer.

That's fair enough, but I don't know where you are going with your conspiracy theory that we are all part of an EI pressure group

I'm not against the idea of an Aer Lingus takeover and I would agree that a big player like Virgin or Etihad would fit the bill and bring numerous advantages to Irish passengers. My gripe is at the very concept of an all-Ryanair market which would be a game changer in a very bad way.

LLU

ballooba wrote: »

I've seen nothing plausible in there to concern me as a (regular) consumer.

And clearly you never will. But I think it's quite likely that many other readers will be able to take on board the fact that with less competition in the field, there would be less incentive for Ryanair to offer low fares, and fares would rise.

bkehoe

Solair wrote: »

From a Ryanair shareholder perspective, I don't really get this obsession with Aer Lingus.

Do they not have bigger fish to fry?

I would see this deal as potentially bad for both Irish airlines to be perfectly honest.

I don't see how it benefits Ryanair and I think it could be very damaging to Aer Lingus and to Irish aviation in general as it just reduces competition so much.

.

In my opinion it's quite simple why Ryanair want to take over Aer Lingus now.
EI is vulnerable at the moment due to the governments desire to sell their stake to raise cash and the share price represents much better value for money than their previous takeover attempts.
And if the deal is blocked then FR may be forced to sell their current shareholding as a nicely inflated price compared to what it was.

If FR do take over EI then they succeed in taking out a huge competitor. Not a lot of people are in a position to offer all cash like FR are. The cash expended in the takeover is pretty much irrelevant to them as due to their incredibly successful business model, profitability and growth they will never have a problem financing a future aircraft order with loans.

And the ultimate benefit if it does go ahead; far better utilisation for their fleet, higher load factors and ultimately much more profit due to higher fares. They would not be doing this if it was not advantageous to their core business which is bringing people from A to B for as much profit as the market allows. It's incredibly naive for anybody to even remotely consider that they won't align the route networks to be non-competitive and set fares at a more profitable level (i.e. HIGHER) as one of the first things they do.

ballooba

Savman wrote: »

That's fair enough, but I don't know where you are going with your conspiracy theory that we are all part of an EI pressure group

Where I am going is that you are not a 'we', you are a you. You seem to seek speak for a group. Also, just because you do find yourself on the side of popular opinion does not make you right or that you should bully those with minority voices. If anything, recent economic experience in this country should make that even more obvious.

jackofalltrades

n97 mini wrote: »

A couple of observations:

1. We already had a greedy expensive airline with a near monopoly operating out of Dublin airport (well, a duopoly, operated with BA), and look what happened to them.

New competitors would have to take on one of the most competitive and commercially aggressive airlines out there with a massive cash reserve for a long and sustained price war.

2. Ryanair operate a near monopoly to Prestwick and the prices are among the cheapest on all of Ryanair's routes.

They compete against another airport serving Glasgow. aswell as trains/buses and private cars on inland routes.

3. There are plenty of big non-Irish airlines with deep pockets.

Can't think of any with deeper pockets than Ryainair and who would risk a price war in their own backyard for the smaller opportunites that the Irish market would offer.

ballooba wrote:

They are blocking the entry of a new entrant more than anything. If Aer Lingus disappear then someone else will take up the slack.

What airline do you think is being blocked from entering the market?

ballooba wrote:

We would benefit from the presence of a large non-LCC in Ireland as we would have decent international connections and a decent frequent flyer offering.

Given the state of the economy i'd say there's little demand for a non-LCC carrier. I also don't think that a new carrier could over any kind of significant increase in routes served out of Ireland.

n97 mini

Does anyone here actually believe that in 10 years:

1. Aer Lingus will still exist?

2. Ryanair won't have a bigger market share than it has today?

I don't...

n97 mini

jackofalltrades wrote: »

New competitors would have to take on one of the most competitive and commercially aggressive airlines out there with a massive cash reserve for a long and sustained price war.

Yup, they sure would, and that's business for grown-ups. And anyway, the odds are probably better than taking on an airline that is state owned, where the state writes the rules with the approval of that airline.

jackofalltrades wrote: »

They compete against another airport serving Glasgow. aswell as trains/buses and private cars on inland routes.

Yup, and competition works well. So maybe the solution is to do what they did in Belfast and get a 2nd airport instead of the DAA/state monopolising the capital's air infrastructure.

jackofalltrades wrote: »

Can't think of any with deeper pockets than Ryainair and who would risk a price war in their own backyard for the smaller opportunites that the Irish market would offer.

Lufthansa, Air France-KLM, to name but two with fleets over twice the size of Ryanair's. If margins are good, they'll be interested. If they're not good, it won't really matter as we'll already be getting cheap tickets.

L1011

bmaxi wrote: »

Listening to some commentators, EU blocking of a deal is not a given this time. If O'Leary is bluffing he's taking a very expensive chance.

Said commentators claimed there wasn't any chance of the deal being blocked last time

The OFT are almost certainly going to order them to divest their shareholding anyway, so there isn't a hope this is going to suceed.

O'Leary takes expensive chances all the time

n97 mini wrote: »

Does anyone here actually believe that in 10 years:

1. Aer Lingus will still exist?

2. Ryanair won't have a bigger market share than it has today?

I don't...

Yes.

Ryanair's business plan has run out. There aren't enough new airports left to extract subsidies from. There is no airframe vendor to bully a cheap price out of. Rising fuel costs and taxes have killed the "ooh, lets fly to somewhere random for the weekend" market. They have no more planes on order so there is no more expansion for some years. The only way from here is stagnation or down unless they completely change their business model.

etchyed

ballooba wrote: »

fear mongers

You have repeatedly used this term to disparage other posters, without actually directly addressing their points. In particular you're clinging on pretty hard to the notion that new entrants would mitigate any problems caused by Ryanair's dominance were it to take over Aer Lingus. That is a complete fallacy.

The barriers to entry that Ryanair would have at its disposal would be immense. Others have already explained to you how it works. Ryanair would lower prices extremely aggressively to price competitors out of the market, then increase prices again once they'd gone. And this is not a hypothetical discussion. This is what Ryanair does, has done and will continue to do, given half a chance. Indeed, it's what any good business will do if it can get away with it. That's why we have competition law. This is all pretty basic stuff, and you're resolutely failing to acknowledge it.

Savman

ballooba wrote: »

Where I am going is that you are not a 'we', you are a you. You seem to seek speak for a group. Also, just because you do find yourself on the side of popular opinion does not make you right or that you should bully those with minority voices. If anything, recent economic experience in this country should make that even more obvious.

If your "voice" spouts opinion that doesn't hold up to very basic scrutiny, it doesn't mean the whole world is trying to 'bully' you nor does it entitle you to play the victim card as part of some warped siege mentality. You should read what is being posted, some posters went to great lengths, on your behalf, to explain in detail why an FR/EI merger is completely sinister and bad for business. If you still believe otherwise, good for you, but spare me the innocent victim BS please.

If you think internet forums are scary I sincerely hope you never have to set foot on a transatlantic Ryanair flight. I am not the big bad wolf, MOL is.

n97 mini

MYOB wrote: »

The only way from here is stagnation or down unless they completely change their business model.

Well, if the rest of what you say is true, then it's going to be the same for every other airline, or even worse, as their costs/prices are higher to begin with. Ergo, Ryanair's market might be smaller, but their market share -- as per my original question -- might be bigger.

bk

n97 mini wrote: »

2. Ryanair won't have a bigger market share than it has today?

Actually, this isn't certain at all. Ryanairs market share increase has stagnated recently. Ryanair currently has no new orders for new aircraft so they can't actually expand further for the next few years, not without buying out other airlines.

They have a number of large new competitors coming along. Norweigan, the low cost Scandinavian airline has put in an order for 300 aircraft, the biggest aircraft order ever and they will likely replace Ryanair as the biggest airline in Europe.

Then you have the likes of Wizz Air, who are busily copying Ryanairs low cost model, but doing so out of even cheaper locations in Eastern Europe, with Eastern European pilots, cabin crew, engineers, etc. and thus Eastern European wages.

Things aren't looking so hot for Ryanair at the moment.

bk

ballooba I note that you still haven't answered my very simple question:

How does it benefit the Irish public to go from having two major Irish airlines to just one major Irish airline?

M three

Savman wrote: »

If your "voice" spouts opinion that doesn't hold up to very basic scrutiny, it doesn't mean the whole world is trying to 'bully' you nor does it entitle you to play the victim card as part of some warped siege mentality. You should read what is being posted, some posters went to great lengths, on your behalf, to explain in detail why an FR/EI merger is completely sinister and bad for business. If you still believe otherwise, good for you, but spare me the innocent victim BS please.

If you think internet forums are scary I sincerely hope you never have to set foot on a transatlantic Ryanair flight. I am not the big bad wolf, MOL is.

Your're having a laugh, what are you saying would possibly happen on a ryanair transatlantic flight? If such a thing existed.

You'd have no problem with ryanair if they werent trying to take over the inept, inefficient, badly run Aer Lingus

Capt'n Midnight

M three wrote: »

Your're having a laugh, what are you saying would possibly happen on a ryanair transatlantic flight? If such a thing existed.

You'd have no problem with ryanair if they werent trying to take over the inept, inefficient, badly run Aer Lingus

737's can fly transatlantic

This from 2007 - IIRC it was a very long flight since they had to fly near Iceland / Newfoundland for single engine safety reasons
http://www.flightglobal.com/blogs/airline-business/2007/05/crossing-the-atlantic-in-a-737.html

But Flyglobespan has configured its new fleet of two transatlantic-capable 737-700s with 120 30-inch economy class seats.

http://www.flightglobal.com/news/articles/sun-country-launches-unusual-transatlantic-service-with-343214/ - ETOPS so may be so long


Also Boeing vs, Airbus is about whether EU or US gets the money. But then again the engines will cost as much over the life of the plane , how many of Ryanair's have CFM's ?