Aer Arann: Ireland's other airline

Refreshingly honest is the only way to describe Aer Arann chairman Padraig O'Ceidigh. "What you see is what you get with us," he says, addressing the Airline Business/UATP Airline Distribution conference here in Dublin yesterday (29 March). What you do get is one of Europe's fastest growing regional airlines which O'Ceidigh's team has turned around from a small Irish island-hopper back in 1994 to a business than will turn revenues of some Euro100 million this year.

And there are no flash powerpoints or consultant plans to woo the audience on Aer Arann's great strategy to achieve this feat. "Our model was put together on the back of an envelope," he said. "If you'd told me 10 years ago we are going to have an airline that is European regional airline of the year I would have said we're not going to get there. But we have done it, one step at a time. One of the key fundamentals I had was to keep it as simple as we possibly could."

The transformation has been achieved largely by going from being totally dependent on selling its tickets via the Aer Lingus distribution system to direct sales. It was a move forced on it after the market crisis following 9/11. "In 2001 I realised all our cash is with Aer Lingus - it's not with us." In a downturn that spelt bad news for Aer Arann. "You've got a problem when suppliers start looking for upfront cash and your cash is with another carrier."

"We'd hit a wall, our money was being drained from us. We decided on a radical change - to be standalone. It was a big risk but we made a bold call and decided to be a point-to-point regional airline." It has not been an easy ride, said O'Ceidigh. For two years he didn't take any salary out of the company.

But the leap of faith has worked. Aer Arann now sells 92% of its tickets directly, compared to 15% four years ago. It sold just 8,000 seats on its old interline arrangements last year. With its fleet of 12 ATR turboprops it carried 1 million passengers in 2005. This will rise to some 1.3 million passengers this year, he said.

Aer Arann's achievement is all the more impressive because it has taken place in the backyard of two of the industry's most competitive carriers: Aer Lingus and Ryanair. So what of the future: "All I can tell you is we're going to do our best," said O'Ceidigh.