February 16, 2011
By Staff Reporter
Faced with mounting losses and a threat to its very survival, Aer Lingus recently examined its annual contribution to maintaining the facilities at both airports as part of a comprehensive review of expenditures.
Shannon in particular would have lost out heavily if it lost the pre-clearance facility. The County Clare airport has been battling over the last decade to maintain its position as a leading transatlantic arrival and departure point.
Aer Lingus pays about $1 million a year to the U.s. Immigration and Naturalization Service and Aer Rianta, the Irish airports management entity, to help fund the pre-clearance facilities. Similar sums are paid by continental Airlines and Delta, the two other major carriers serving Ireland from the U.S. The money is levied as part of airport landing fees.
Ireland is one of only five countries and jurisdictions in the world that has U.S. immigration pre-clearance facilities. The others are Canada, the Bahamas, Bermuda and Aruba.
Once passengers are cleared at either Dublin or Shannon, he can proceed straight to baggage claim at his U.S. destination, thus avoiding potential long lines for immigration checking.
As Aer Lingus examined its expenditure to see if its money was being well spent, Delta indicated that it was happy paying for the pre-clearance service. Continental also did not indicate any dissatisfaction with it. And now Aer Lingus says it is happy too.
“We will continue with pre-clearance,” Brian Murphy, Aer Lingus vice president for sales and marketing in North America, said this week. “We decided after looking at it that this was not really an issue.”
The decision by Aer Lingus is certain to please the Irish Department of Foreign Affairs. The department expressed alarm at the prospect of the pre-clearance service being discontinued stating that it had been a hard won political concession and not one to throw away lightly.
Meanwhile, not everything Aer Lingus is doing lately is being praised. Indeed, travel agents have reacted angrily to the airline’s decision to slash the commission paid on ticket sales from 5 to 1 percent beginning in the new year.
The move is part of an ongoing cost-cutting strategy and is expected to saving the airline in the region of euro 10 million a year.
In the past 12 months, Aer Lingus has reduced its cost base by over euro 200 million and recently announced it had embarked on a further tranche of cost reductions aimed at saving euro 130 million.
Announcing the commission cut the airline said it would also offer all travel agents a “volume based remuneration scheme.”
Travel agents have been slowly losing their margin on tickets sales and business has also migrated to website booking. The commission used to be 9 percent and had dropped to 7 before going down further to the current 5.
“This slashing of commissions is a savage action by Aer Lingus,” said Tony Brazil, president of the 365-member Irish Travel Agents Association.
He said travel agents had stood by Aer Lingus in good and bad years and now it looks like “they want to desert the whole travel industry.”
As part of the airline’s survival plan, travel agents had agreed to a commissions being cut to 5 percent to help them, but Brazil said “it was never on that it would go below that.”
“They are doing serious damage to the fabric here. Aer Lingus have closed all their travel shops. If you don’t have a piece of plastic or a credit card you can’t make a booking directly with them unless you use a travel agent. We have provided a unique service right around the country to provide the vehicle by which they could survive.”
The ITAA said it is looking at all its options in responding to the move and they are seeking an immediate meeting with Transport Minister Seamus Brennan.
Andrew Bushe contributed to this story.