Ryanair battle with Aer Lingus to spark passenger price war
Published 20/07/2015 | 02:30
Ryanair is planning a winter offensive at Dublin Airport to take on IAG following its looming €1.36bn takeover of Aer Lingus.
Within weeks of the Aer Lingus takeover being completed, Ryanair is expected to reveal details of additional winter services from Dublin that will see it square up for what could be increasingly vigorous competition between the rivals at the capital.
It will make for a price war that will benefit consumers, particularly on routes to continental Europe.
The number of Ryanair aircraft based at Dublin next winter will rise from 21 to 25, with increased frequencies on routes to destinations such as Berlin, Madrid and Manchester.
But it's believed the number of planes based at Dublin next winter could now be increased beyond that 25, possibly to 30.
Outgoing Aer Lingus chairman Colm Barrington has thrown down a gauntlet to Ryanair, saying its bigger rival will now have to work harder to compete against the former State-owned airline.
"We've been competing with Ryanair for nearly 25 years," said Mr Barrington.
"We've been keeping our heads above water doing that. I think now, with the greater strength of the marketing network from IAG, Ryanair's going to have to try even harder to compete against us."
Ryanair has already agreed to sell its near 30pc stake in Aer Lingus to IAG, with the takeover set to be completed as early as next month.
While IAG boss Willie Walsh has said he wants to buy Aer Lingus to boost its transatlantic traffic, he'll also be focusing on the Aer Lingus short-haul network that accounts for the bulk of the Irish airline's passenger traffic.
The Aer Lingus short-haul routes have come under pressure since Ryanair began an assault on primary European airports, such as Brussels Zaventem, over the past year. Aer Lingus, though, has carefully managed the threat.
Aer Lingus has also had considerable success in driving connecting traffic on its short-haul network from the UK, France and Italy to its expanding North America network.
However, Ryanair is poised to take delivery of as many as 38 new aircraft between September and next March, and a total of almost 400 new aircraft will be delivered up to 2023.
It's flying 308 aircraft this summer and the total will top 520 by 2024, enabling it to carry 120 million passengers a year.
Ryanair has been talking to officials at Amsterdam Schiphol and Paris Orly as it plots further expansion into primary airports, having traditionally served smaller, secondary airports. It's also starting flights to Israel later this year.
Chief executive Michael O'Leary has said the only primary European airports Ryanair won't fly to are Heathrow, Frankfurt Main, and Charles de Gaulle in Paris, because they're too expensive. However, he has said Ryanair will be at all other main airports within five years.
In a statement, Ryanair said: "Our full winter 2015/2016 schedule is now on sale and any further schedule additions will be announced as they happen."
Analyst Stephen Furlong at Davy Stockbrokers said IAG will begin a process of improving Aer Lingus profit margins.
IAG, which owns British Airways, Iberia and Vueling, will be able to leverage considerable purchasing power for Aer Lingus and negotiate other deals that should help to cut its costs.