December 2nd, 2008
11:35 AM GMT
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LONDON, England - As you contemplate that question, remember that Ryanair is not just a "low-cost" airline or a "no-frills" airline. It is one of Europe's biggest airlines, full stop. It will soon operate a fleet of 195 planes. Most of its competitors have been forced to rebuild their business models to emulate Ryanair, so the line between "budget" airlines and the rest is blurred. Beyond maybe British Airways, Lufthansa and Air France-KLM, the rest of Europe's carriers are dressed up as "normal" carriers but their service is closer to Ryanair or easyJet than they would admit. Aer Lingus is one of them.

Shareholders must decide what kind of airline they want Aer Lingus to be.
Shareholders must decide what kind of airline they want Aer Lingus to be.

Frankly, if you think of Ryanair as one of the few successful carriers and Aer Lingus as a loss-making dinosaur, then I go back to the original question. Does an island of 4 million people need two carriers?

Watch my report on the Irish airlines

Ryanair's Michael O'Leary of course thinks not. That's why he has launched another bid, and this time is half the value of his first offer two years ago. That may be why the Aer Lingus board so quickly rejected the offer. But it's not up to the board. It's up to the shareholders. O'Leary has nearly 30 percent of Aer Lingus shares. The Irish government has around 25 percent. So, Dublin and the regulators in Brussels may not react so quickly, this time. Consolidation is moving apace throughout Europe, finally. The threat to European airlines is too much capacity, not fewer airlines.

BA's Willie Walsh predicted 30 airlines would go out of business this year. This morning, an airline analyst said on the radio the number has hit 25. Yet AirAsia has just announced a long-haul low-cost flight from Kuala Lumpur to Stansted. Stansted is one of Ryanair's main hubs. British Airways is trying to merge with Iberia and tie the two tightly with American Airlines, if the U.S. authorities finally allow that. So, strong airlines appear to be getting stronger. Ryanair and easyJet will face more competition all around. O'Leary says that will work in his favor when it comes to the regulators.

Last week, AirAsia's Tony Fernandes predicted the aviation world will split in two: big international carriers that cater exclusively to those willing to pay to sit in the front of the plane, and all the rest. If he is correct, then Aer Lingus shareholders will have to decide which side of the line the carrier with the shamrock can afford to become.

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soundoff (14 Responses)
  1. earle,florida

    Unfortunately, Ireland has an albatrose around it's neck called, "Massive Unemployment",and is the epicenter of Europe's (global) slowdown. Their business model worked well during the outsourcing," relocation boom". Sadly, they'll be lucky if any of the ,"Two Airline's" survive.

    December 3, 2008 at 1:04 am |
  2. Sam in Spain

    Jim,
    I don't think that Ireland needs 2 carriers but Air Lingues being the National Carrier will certainly not want to concede(pride or arrogance?).
    Lufthansa, B.A.(B-–AW-), Air France/KLM are all too expensive on long haul so I am very pleased to see Air Asia offering returns London to Malaysia for £200 return.
    After all, most people travel "cattle class" at too high prices, and the airlines are stopping too many times to pick up passengers or drop them off.
    I look on the airlines as nothing more than a taxi, except a taxi is much more comfortable.

    I did all my trips during the mid 80's (3 round world) as well as others
    and of all the airlines I rated Cathey Pacific as the best and I have flown with many many carriers. I was at the right time both in respect of costs and places. Now I don't fly having been there, seen it and done it.

    I am also pleased to know that there are (from what I have read) some 5 new carriers starting up or just gone into service.

    In the current economic crisis, I would advise ALL those in financial trouble to either take a holiday at home or not take one at all.

    December 3, 2008 at 1:20 am |
  3. maria

    No , they don't need two airlines, but they surely don't need Ryanair to be the 'national' one. It has no regards for it's clients/passengers and even less for their flight crew, who work (too) long hours for dismall pay. Let's hope they won't be too tired if something bad happens on board.
    And how about the way passengers are treated when a flight is canceled or delayed ??? You will just have to fend four yourself !!!
    I will not fly that company, ever !!

    December 4, 2008 at 11:15 am |
  4. Brian

    Earl from Florida is right about one thing. Aer Lingus will not survive on their own, but he is totally wrong about Ryanair. They have the best business model that ever existed in the airline business. They will make more acquisitions in Europe and looking to the future, as soon as they start long haul flights through the eventual take over of Aer Lingus, American Airlines, Delta etc better watch their backs. Ryan air have an eye on taking their long haul business to Europe too. Employment is not great in Ireland after the end of the Celtic Tiger, but when things turn around again, as they will do, a country like Ireland with a small but well educated English speaking population will recover faster than the bigger economies. Bigger population means bigger problems.

    December 4, 2008 at 11:59 am |
  5. bert shlensky

    isn't it interesting that congress asked the auto companies to submit their plans and all the hearings consist of is the politicing of senators Congress really needs to listen to people to develop reasonable decisons .

    December 4, 2008 at 4:54 pm |
  6. Clyde Barker

    The United Auto workers should not be giving financial concessions without making sure management also gets to give. Management should no longer get pay in excess of 10 times the lowest paid employee ! IMHO !

    December 4, 2008 at 9:35 pm |
  7. Dominick

    Gm opened in 1902 , Ford in 1903 , and Chrysler in 1925.. as close as I can estimate .. so about 83 – 106 years in business ... what did they do with all of the profits that they have made .. surely in the last year or 2 they could not have lost that many years of "profit" , I belive that this deserves more investigation before the tax payers foot the bill to the tune of 34 billion plus .....

    December 5, 2008 at 2:00 pm |
  8. bigjoerice

    "The United Auto workers should not be giving financial concessions "

    "Gm opened in 1902 , Ford in 1903 , and Chrysler in 1925"

    And this relates to airlines how? Try and keep up......

    Sam in Spain – clearly you were lucky enough to do your flying in a different time.

    Whether you sit in first class or steerage, airline travel today is a miserable experience, from check in and security, until you play "did they lose my bags" in baggage claim.

    I think that you might have another avenue to consider about the future of air travel. I think that those who can afford to fly in First Class will start to move to the many business jet operations that are springing up around the world, and leave scheduled airline travel to the great unwashed.

    Netjets is flourishing worldwide and their prices are becoming very competitive to the scheduled airlines; a situation that will only improve as more people take advantage of the service.

    December 5, 2008 at 5:27 pm |
  9. Uma in Liverpool, UK

    @ Clyde Barker and Dominick

    Wrong thread, guys. Try looking at the question, before you post.

    In re: Aer Lingus, if the Irish Government could find another Flag carrier with whom to join forces, that would be good. Ryan-Air isn't so much 'Irish', as 'happens to be based in Ireland'. Aer Lingus is Irish.

    It guts me to see the venerable flag carriers of the European Countries falling, like dominoes. I know I am old-fashioned, but I come from a generation for whom flying was better than being crammed aboard what amounts to an airborne bus.

    The luxury amenities for people who pay heaps of money have got out of control. The complete absence of amenities, for reasonable-cost air-travel has also got out of control.

    I have nothing against 'no-frills' airlines, if that is how people choose to fly. I wish there were a medium-range, in which 'economy-class' was not 'no-frills', but rather, just not 'first-class', where the seats were a reasonable width, and spaced far enough apart for tall people, and meals, drinks, and so forth, were the way they were, 30 years ago. I believe there are many people who would gladly pay extra, to fly with the comfort of 'economy-class' as it was in the 1970s, rather than be air-freight. I also expect a huge number of 'business-class' flyers would drop to that style of 'economy', where amenities are not ludicrous, but are also not absent.

    The airlines are making a mistake, by polarising the 'cheap-seats' and the 'stupidly expensive class' so much. For short-haul flights, it isn't too bad. Long-haul, in what now passes for 'economy', even on Lufthansa, is a fairly miserable experience.

    I remember when flying was gracious. You don't have to be Qatar Air to make passengers comfortable.

    I think Aer Lingus should try to remain Ireland's flag carrier, by making a deal with someone. I hope in better times, that all these mergers can un-merge, so each national airline can return to reflecting the nation for whom it flies. There will always be customers for the Ryan-Airs of the world. I shall not be one of them. I am too old to spend long stretches of time in a cattle-car.

    December 6, 2008 at 10:05 pm |
  10. DENNIS

    No....Ireland, does not need 2 airlines for the size of a country...

    December 9, 2008 at 6:27 am |
  11. Manolo - Chile

    If they are competitive, and financially viable, then why not ???

    December 9, 2008 at 6:18 pm |
  12. Sun

    Foreseeing the future of airline business, the business models of the airlines are to be designed for the world and not for a country.

    December 18, 2008 at 2:46 am |
  13. Michael Miller

    i'm quite afraid of airline travel so i always take the boat or the bus*'`

    October 7, 2010 at 3:13 am |
  14. Spray Insulations

    i am afraid of travelling by plane by i might just get an airline travel when i go to europe this month *"~

    December 4, 2010 at 5:46 am |

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