Thursday 29 September 2016

Aer Lingus: In ten years time, will history be kind on government decision to sell stake in airline?

Mike Lavery

Published 26/05/2015 | 15:58

Aer Lingus
Aer Lingus

FOR almost 80 years, the green Shamrock of Aer Lingus has been a source of Irish pride and a key enabler of "brand Ireland."

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Since 1936, when its first flimsy De Havilland Rapide took to the skies from what is now Dublin Airport, the airline has been an instantly  internationally recognisable symbol of a nation, which at the time was isolated economically, and politically for the duration of World War Two and for years afterwards.

How do you put a price on such an asset?

IAG's initial offer of €1.3bn, many felt did not reflect the true value of the airline. The Irish Government's stake, after privatisation in 2006, was 25pc - which meant the taxpayer's share of the sale would be just €325m.

Fears were raised about job security, the airline's valuable Heathrow "slots" and the future of Aer Lingus itself. Many analyses did not factor in  customer service, which the airline has prided itself on for decades, as a valuable multplier.

When a passenger boards a foreign airline for the first time, the crew effectively act as ambassadors, not only for the flag carrier, but for the nation itself. 

There is a hard to define quality about the Irish welcome, but as someone who has travelled on many of the world's airlines, it is a definite reality - a feeling of "coming home" when you step on board an Aer Lingus flight after a trip from Australia or Asia or the Americas.

I still remember the pride, as a schoolboy, of seeing the first Aer Lingus Boeing 747 Jumbo, making a slow pass over Dublin, of schoolkids rushing to the classroom windows to see it as it arrived from Seattle in the early 1970s.

During the dark days of the Troubles, when Ireland's name was often associated with bombings and violent death, the airline, despite the hard economic times of the 1970s and 1980s, literally flew the flag for Ireland.

In 1986, I flew with  a media party with the then Taoiseach, Garret Fitzgerald, to Bristol on an Aer Lingus Boeing 737 to mark the 50th anniversary of the airline.

In 2011, it celebrated its 75th birthday.

Quite an achievement, especially when you consider the famous airlines it has outlasted, like TWA and Pan Am.

Aer Lingus has not just a commercial, but a vital strategic aspect to it. Should we lose control of an aviation gateway into Ireland simply because money is on the table?

Many will remember the then chairman of CIE, Todd Andrews, overseeing the closure of vital rail transport links throughout Ireland in the early 1960s, including the Bray to Harcourt Street line, which is now part of the Luas Green Line.

The economic arguments at the time were persuasive: Britain was doing the exact same.

But looked at from the perspective of history, should a more balanced view have been taken? Of preserving vital infrastructure, rather than digging it up?

Ten years down the line, will we regret a decision to sell the State's stake in Aer Lingus?

IAG has reportedly given guarantees to maintain the Heathrow slots for up to seven years, but what then? There are also said to be commitments regarding Dublin, Cork and Shannon airports.

The sad truth is that Aer Lingus, if sold off, will become a very small cog in a vast airline enterprise. Commercial decisions, rather than patriotic or strategic considerations for Ireland, will be the deciding factors.

Aer Lingus' financial position, after some huge losses following privatisation, is strong. The airline is looking to the future, with major growth planned in its long haul routes, which have shown impressive revenue growth in the first quarter.

A key part of the strategy is the acquisition of nine of the most advanced Airbus aircraft yet, the A350-900, which promises to set new standards in customer service and operating costs.  The first will arrive inside three years.

It would be a real tragedy if, ten years down the road, we realise we have lost a vital aviation asset for good.

It is difficult, without a crystal ball, to forecast the future of aviation over next decades.

There are many who say a small airline like Aer Lingus, with a fleet of 50 aircraft, cannot survive when all the evidence from the US, where four airlines now control 80pc of the routes, or Europe, where consolidation is the order of the day, appears to point in one direction.

Yet Aer Lingus, with its proud story of surviving some of the worst times in our history,  is a unique asset for Ireland - and one  which  should not be discarded lightly.

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