Saturday, 15 August 2015

IAG Takeover of Aer Lingus means more competition

                                                 

I read with interest "Dogfight in the skies: the two men changing the face of aviation" published by Irish Independent on Saturday 26th July.  I disagree with many of the points raised, as IAG's imminent takeover of Aer Lingus far from diminishing competition is certain to raise competition bar increase connectivity which is a win-win for consumers. Competition keeps everybody on their toes and innovate.

The reality is British Airways retrenched from UK regional points to focus on London Heathrow many years ago , it never operated Transatlantic services from Belfast for example. The market has evolved considerably Aer Lingus Regional operated by Stobart Air connects majority of UK regional cities to Dublin Airport fare more than London Heathrow. Therein lies the advantage IAG could leverage traffic flows over Aer Lingus Dublin's hub to the benefit of Aer Lingus and wider Irish economy.

The Irish government's aviation policy is enabling competition to flurish through it's Open Skies agreements and fifth freedom rights, gone are days of the only route to Canada was over London Heathrow and summer peak only services, now Dublin has year-round service to Toronto with Aer Lingus and Air Canada Rouge, additional new destinations have opened up to Halifax and St John's.

More significantly the Irish government's draft aviation policy has created new competition opportunities on the North Atlantic, with the launch of Ethiopian Airlines new Boeing 787 Dreamliner service between Addis Abba, Dublin and Los Angeles bringing a new dynamic.

Icelandic low fare carrier Wow Air introduced a new route between Dublin and Reykjavik on 2nd June, carrying 3,300 passengers in first month of operation with a load factor of 81pc with many passengers connecting onward's to Boston and Washington Dulles.

In the years ahead new technology aircraft Airbus A321NEO-LR and Boeing 737 MAX currently in development will create new point to point city pair opportunities between Ireland and North American. Danish low fare carrier Norwegian indicated interest in serving points between Ireland and US East Coast with Boeing 737 MAX.

As the North American market is dominated by airline alliances controlling 83% of total market share, intra alliance rivalry will intensify as they fight for greater market share. Major Low cost carriers have been hindered from entering this lucrative market due to ongoing regulatory issues and pricing in the current aircraft cycle is not yet attractive enough for an off-shot of an existing low fare carrier to enter the fray.

The International Consolidated Airlines Group is developing Barcelona El Prat airport into a European Hub in it's own right. IAG owned low-cost carrier Vueling Airlines serves 140 short- and medium-haul destinations, American Airlines operates daily services to Charlotte , New York JFK and Miami, Philadelphia and Qatar Airways is boosting Doha route capacity by 32.1 per cent.

The Irish government made the right decision to sell it's 25.1 per cent to IAG as Europe's airline industry continues to consolidate and evolve among five big carriers Air France-KLM, Easyjet, IAG, Lufthansa, and Ryanair competition will intensify as they battle for a larger share of Europe's market.

The Irish consumer will get a taste of growing rivalry this winter as Aer Lingus reinstates it's Liverpool service taking on Ryanair in it's own backyard and as Ryanair considerably increases frequencies from Dublin to Barcelona and Madrid taking on Aer Lingus and IAG carrier's Vueling and Iberia Express respectively.

Irish Aviation Research Institute © 15th August 2015 All Rights Reserved

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