Friday 15 November 2019

History shows us Aer Lingus sale would be a grave mistake

An Aer Lingus plane taxis before take off at Dublin airport. Reuters
An Aer Lingus plane taxis before take off at Dublin airport. Reuters

Sean Barrett

The report that a senior official in the Department of Transport wrote to the UK Competition and Markets Authority urging it to force Ryanair to sell its stake in Aer Lingus indicates how anxious the Department is to sell Aer Lingus to British Airways/IAG. The department indicated that the government is unlikely to sell its shareholding in Aer Lingus while Ryanair continues to be a minority shareholder.

The department is so keen to facilitate the BA takeover of Aer Lingus that it has intervened in a case still before the UK courts. It functioned for years as the downtown office of Aer Lingus and it now appears to be acting like a downtown office of Aer Lingus and BA/IAG. Thirty years ago the department set fares of £208 from Dublin to London and £240 from Cork and Shannon to London and brought in legislation to imprison and fine heavily anyone charging lower fares. A parliamentary revolt stopped the legislation. Fares fell by over 50pc on the first day new competition was finally allowed.

A parliamentary revolt has been avoided this time by invoking the Stock Exchange takeover rules. Parliamentary democracy should not be subservient to the Stock Exchange.

In the present parliamentary vacuum PR gurus have told us that by not owning any of Aer Lingus the Government would have more control than now, an absurd version of property rights.

This takeover has an added anticompetitive ingredient in that it subordinates a developing Dublin hub to Heathrow so that it cannot develop as a competitor.

We are told that British Airways/IAG has superb development plans for Irish aviation. Outside the PR world, the British Airways track record in the United Kingdom regions is appalling. It has developed no North Atlantic services from Manchester, Birmingham, Glasgow, Edinburgh or Belfast. It has a track record of minimal interest in routes to Ireland and none at all in the Irish regional airports.

Its poor record in Scotland, Wales, Northern Ireland and the English regions speaks for itself.

Ireland needs aviation to develop this outer offshore island. Aer Lingus generates 11 million passengers from a home population of 4.6 million people. This is four times better than British Airways' 38 million passengers in a population of 64 million.

April is the latest target month, which proponents of the Aer Lingus takeover have set for absorption into the IAG entity. It is deep in irony. In April 1948, the Government sold the Aer Lingus North Atlantic fleet to British Overseas Airways. In April 1958, the mistake was rectified and service was restored after a lost decade. Why was Ireland so poor for so long? In his book 'Preventing the Future: Why was Ireland so poor for so long?' Tom Garvin cites Sean Lemass that by selling the fleet the new government was throwing away an opportunity of building know-how. Aviation was going to be a key industry in the future post-war world and Ireland was depriving itself of important expertise. "The government decision was deplorable because the one thing needed here was to increase occupations which involved a high degree of technical knowledge and training".

The transatlantic air services could have provided those dollar credits which Ireland desperately needed. Garvin blames the Labour Party for the 1948 debacle. It regarded aviation as elitist and did not share the development vision of Lemass. Today, Labour has the opportunity to compensate by voting No to the takeover.

British Airways has nothing to offer in the development of Irish aviation. I reject the pessimistic view of the Aer Lingus board and management that the airline has no future except as part of British Airways/IAG. The takeover must be rejected so that a new board can plan the future development of Aer Lingus.

Sean Barrett is an Independent senator and transport economist

Irish Independent

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