AER LINGUS chief executive Christoph Mueller has two main strategies for Ireland’s flag carrier: to preserve cash during the recession, and to forge closer links with bigger, full-service airlines while ditching its focus on being a low-cost carrier, a strategy devised by former chief executive Willie Walsh and continued by Dermot Mannion, who left last April.
In an interview with The Irish Timesin London yesterday, Mr Mueller set out his stall to make Aer Lingus "Ireland's civilised airline", a dig at Ryanair, which is both its biggest rival and its largest shareholder.
Lossmaking routes have been ditched; delivery of nine new Airbus aircraft has been deferred at no cost; €74 million in staff costs are being removed; and the route network is more focused. These are all a response to the recession and an effort to return the airline to profitability in early 2011. “It’s [the market] bad, bad, bad,” Mr Mueller said. “I haven’t seen such a thing in my entire life in the sector.”
As Mr Mueller sees it, the low-cost model is “broken” due to a lack of available aircraft at knockdown prices. “I think the low-cost model is not sustainable,” he said.
“Why? Because the deeply discounted aircraft are not available.”
He also said he believed the trend of regional and state governments in Europe incentivising low-cost operators to run services from their airports was nearing an end. “They cannot continue to justify pumping money into . . . low-cost carriers while the local economy is in the doldrums.”
Mr Mueller said he wanted Aer Lingus to occupy the middle ground, offering competitive fares with adds-ons such as assigned seats that recline, good customer service, frequent-flyer miles and access to airport lounges.
The bad news is that baggage charges will remain. “Why should someone with only hand luggage pay the same as someone bringing a refrigerator?” he joked.
Aer Lingus’s German chief believes airlines need to huddle together for warmth in these recessionary times and he is keen to sign more partnerships and alliances for the Irish flag carrier.
The franchise deal with Aer Arann could potentially feed traffic to Aer Lingus’s transatlantic service through Dublin from the north of England. Aer Lingus has a partnership with JetBlue in the US, which offers onward connections to the US east coast for passengers leaving Dublin and Shannon.
In March, Aer Lingus will begin flying from Washington DC to Madrid in partnership with United Airlines. “That joint venture could go to four aircraft in the future.”
Mr Mueller said he believed Asia could be fertile ground for Aer Lingus by feeding Irish passengers into one of the big European hubs.
The airline produced a slide yesterday illustrating the “market potential” for a daily service from Dublin to various destinations in the Asia-Pacific region. It ranged from 18 a day to Tokyo to 52 for Sydney. “Clearly, we cannot fill an aircraft with just that number,” he said. “It can only be done with an alliance partner.”
So will Aer Lingus rejoin a global alliance such as OneWorld, Star or SkyTeam? “All of the carriers will end up sooner or later in one of the three alliances.”
