Monday 19 November 2018

Aer Lingus to quit Oneworld alliance

Tom McEnaney

AER Lingus has decided to leave the Oneworld alliance of international airlines.

The decision, which was formally approved by the Aer Lingus board last Thursday, comes at a time when the airline is expanding its own network of routes and after years of declining take-up of connecting flights with alliance partners.

Over the past four years Aer Lingus has added 48 new routes, while the percentage of flights generated by the Oneworld alliance has fallen from 14pc to 7pc.

Aer Lingus first joined the alliance - which includes British Airways (BA), American Airways (AA), Lan of Chile, Iberia, Cathay Pacific and Finnair - in June 2000. Since then, the airline has recreated itself as a low-cost, point-to-point carrier, while many of its alliance partners have remained full-service operators.

Dermot Mannion, the Aer Lingus chief executive, confirmed the decision to leave the alliance yesterday. He said: "In leaving Oneworld on amicable terms, Aer Lingus is today taking a positive step into a future focused on developing our growing network of direct destinations."

Two airlines, BA and AA, currently account for about 75pc of the traffic generated for Aer Lingus by the alliance. It is understood Aer Lingus is hoping to negotiate new, individual code-share agreements with each of these carriers.

Willie Walsh, the former chief executive, decided to leave the the alliance in 2004 but was persuaded to remain by the chief executives of the other member airlines.

It is understood that Aer Lingus's decision to leave the alliance was prompted by the imminent entry of three new members - Japan Airlines (JAL), which is the biggest carrier in the Asia Pacific region, Malev Hungarian, and Royal Jordanian.

Carrier

Industry sources said the entry of JAL alone would have tied up the Aer Lingus IT department for six months, at a cost of ?2.5m, reconfiguring systems to accommodate the Japanese carrier. JAL's entry to the alliance was not expected to generate significant new revenue for the Irish airline.

Aer Lingus is required to give its partners 12 months' notice of its intention to leave. It is understood that it planned to inform its partners at a Oneworld meeting next Sunday but moved forward that timetable once the Irish Independent learned of the decision.

Industry sources said Aer Lingus may not be required to serve out the notice period. One option would see the airline leave the alliance early next year, when the three new members are due to join. Another scenario would involve the semi-state carrier exiting the alliance as early as October of this year, when the alliance is due to launch a ?7m international marketing campaign.

Although Aer Lingus accounts for only 1pc of Oneworld traffic, its decision to depart will come as a blow to the alliance.

It comes less than a week after both Air China and Shanghai Airlines announced their decision to join the rival Star Alliance.

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