February 17, 2011
By Staff Reporter
Second, Aer Lingus’s new CEO has announced his desire to drive growth through the addition of more long-haul flights to the airline’s schedule.
Third, last week saw an announcement by Gulf Air that it is introducing the first direct flights ever between Ireland and the Middle East. Gulf’s move could presage similar decisions by other airlines.
Aer Lingus management is busily trying to ready the airline for its partial sale, which is expected to take place next year, possibly in the fall. At time of going to press, an announcement from the Irish government about which investment banks it was going to use as advisors on the partial privatization was believed to be imminent.
In industry circles, there is speculation that Allied Irish Banks will be retained in the domestic arena, while a joint bid by Goldman Sachs and Citigroup is the favorite to win the international contract.
There is still a great deal of uncertainty about whether the partial privatization will take the form of a public offering or a sale to institutional investors. According to Dermot Mannion, Aer Lingus’s incoming CEO, that uncertainty will not be cleared up in the near future:
“The timing of this is all important,” Mannion said last week. “If the stock markets are doing well, are very buoyant, flotation will be the right thing to do. But if the markets are not doing well, then a private placement may be the route.”
Mannion was speaking to The Irish Times in his first major interview since been named as the airline’s new boss. The Sligo-born executive, who comes to Aer Lingus from a senior position with the Dubai-based Emirates airline, emphasized that he saw the main potential for the airline’s growth to lie in the development of more long-haul routes.
Some observers noted that, in doing so, Mannion seemed to publicly accept that there is little room for a carrier like Aer Lingus to try to outmaneuver Ryanair on shorter routes,
“To be honest,” Mannion said, “with Ryanair and several other airlines operating out of Ireland, growth on the short-haul side is going to be very, very limited. We simply have to look at long-haul. That is the business I know. That is where the growth is. We simply have to create a significant long-haul business.”
Mannion alluded to the possibility of feeding in flights to what he called “intermediate” airports, such as those in Singapore and Dubai. He also described the long-haul possibilities between Ireland and Australia as “very substantial”.
The widespread belief in the aviation industry is that Aer Lingus needs to develop strategic partnerships, in addition to its current membership of the One World Alliance, if its long-haul business is to be expanded. Mannion appeared to concur with this consensus:
“We could go it alone, but we probably need links with another airline,” he said. “If you look at any of the successful airlines around the world at present, it’s all about feeding traffic into larger networks,”
At present, no airline operates direct long-haul flights from Dublin to any destinations except those in the United States. That will change in December, when Gulf Air begins its thrice-weekly service to Bahrain. The airline hopes to carry almost 1000 passengers per week on the route. If it is successful, an increase to a five-days-per-week schedule is expected.
Gulf Air CEO James Hogan professed delight at the plans the new service:
“We have organized a number of charter flights for the Irish travel trade over the past few years, and we therefore know that the Irish business community and public are keen to fly to the Gulf,” he said.
Ireland’s ambassador to Bahrain, Tom Russell, also welcomed the announcement:
“The seven thousand Irish citizens living in Gulf countries will now have easy connection with Ireland, as people in Ireland will have with them,” Russell noted.
The decision by Gulf Air to introduce the Dublin route has been a long time in the making. Sources say that the Dublin Airport Authority (formerly Aer Rianta) had been in talks with the airline for a decade before the deal was finally announced. The airport authority’s CEO, Declan Collier, drew particular attention to the way in which the new route could prove a boon for Irish business:
“We will continue to work closely with Gulf Air to support this route network into the future,” Collier said, “and I have no doubt that the new service will further strengthen and develop business links between Dublin, Bahrain and the wider world to the east and south.”
Gulf Air brings the number of airlines operating scheduled services out of Dublin to 48. The airport serves 116 destinations.