Aer Lingus
extra products that are valued by customers but are offered on an “opt in, not opt out basis,” says Kavanagh.
Ancillary revenues have already climbed by almost 8% in the fi rst half of 2010 and are now generating around €18 per passenger.
Network strategy In terms of network strategy, Aer Lingus has been challenged by weak economic conditions in the Irish economy, as well as many other parts of Europe, coupled with intense competition in its short-haul market and unsustainable losses in its long-haul operation.
Its recent recruitment of former Southwest Airlines executive, Lee Lipton, as director of network planning is indicative of its intention to get to grips with its many challenges.
On the short-haul front, one area that has required a signifi cant overhaul is the carrier’s Gatwick base. This was launched in 2008 with an extensive range of European destinations, but losses rapidly mounted in the face of a competitive onslaught, in particular from easyJet.
“The implications of competition were regrettable,” says Kavanagh. With the benefi t of hindsight, he adds: “The timing was unfortunate with the recession hitting. Assets have been redirected [focusing on the core Irish market and Malaga], we now have a sustainable operation at Gatwick and the potential is still there.” However, future developments will be looked at on an opportunistic basis. For the rest of its short-haul network, Aer Lingus remains focused on its core Irish market at Dublin, and serving main gateways. Flight schedules are being adjusted to refl ect time or price sensitive market requirements. “We will let
www.routesonline.com
Upwards of 80% of traffi c is price sensitive with very little true business traffi c. Levels of [Ireland’s] GNP growth went into signifi cant decline, so we went back to basics to understand the price sensitivity
demand drive capacity and not vice versa,” states Kavanagh.
There are no immediate plans to change the size or composition of the short-haul fl eet, which is made up of 30 A320s and six larger A321 aircraft. Some of the latter will be returned in 2011 and replaced with existing A320 orders. The company will, however, evaluate the potential use of smaller regional jets in the context of an overall network review.
Aer Arann partnership Earlier in 2010 Aer Lingus began a franchise agreement with Aer Arann, which has allowed it to extend its presence to a number of smaller markets using ATR72 turboprop equipment, where A320s would provide too much capacity. “This has allowed us to open up thinner markets and add frequency on existing routes,” says Kavanagh.
Expansion plans for this relationship are, however, on hold due to Aer Arann entering examinership (the Irish equivalent of fi nancial administration) following the ash cloud crisis earlier this year.
At the time of going to press it appeared likely that Aer Arann had received approval for a survival scheme and Kavanagh says he was “completely confi dent” that this would allow for the future exploration of route development opportunities.
Long-haul routes Turning to the company’s long-haul routes, Kavanagh notes: “Retrenched Irish originating demand was the main contributor to losses. Now we are back into positive territory.”
Long-haul operations, which were previously focused on point-to-point traffi c, have been “taken apart and now focus on connections, which have transformed the long-haul business,” he comments.
Schedules now focus on the core US market (a Dubai service was operated briefl y and then suspended) and the number of destinations has been reduced to concentrate on ones with large Irish American populations –
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