Aer Lingus turnaround is on track, says chief executive Mueller

Aer Lingus puts its first half results improvement down to increasing transfer traffic at its Dublin base, the closure of its loss-making London Gatwick operation and tight cost control.

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“In the first quarter we still had Gatwick going and Shannon long-haul [services],” says chief executive Christoph Mueller.

Since then the Irish carrier has pulled Gatwick and decided to stop operating from Shannon to the US in the winter.

If the Gatwick operation had run a full financial year Aer Lingus would have lost €40 million ($51 million) on these services alone, he says.

Although the Gatwick strategy, launched in April 2009 before Mueller joined, was in principle a good one, it was introduced at a time when demand was extremely low.

In addition, the marketing campaign took aim at easyJet. It was probably a mistake to take on easyJet with just two aircraft at one of its largest and most profitable airport operations. “It was too much in easyJet’s face,” he says.

One of the main challenges facing Aer Lingus is the extremely sluggish Irish market, says Mueller.

While traffic is rising in many European countries in line with GDP growth, in Ireland it is currently falling. Traffic at Dublin airport fell by 13% in the first quarter of 2010.

With its home market stuttering, Aer Lingus has “switched on the connectivity in Dublin”, says Mueller.

“In the second quarter this was a real breakthrough – we are quite happy with what’s happening on the revenue side.”

Aer Lingus is promoting its Dublin hub as a transfer location for travellers connecting from its European network to its transatlantic services.

It has signed a feed deal with Irish regional carrier Aer Arann on 12 routes and has now had through fares on its network since quarter one, he says.

The arrangement with Aer Arann has seen over 100,000 passengers carried since it began earlier this year.

Although Dublin has not been seen as a natural transatlantic transfer point it has a geographic advantage over others, says Mueller.

“We can offer a really shorter travel time compared to services over Heathrow,” he adds.

The extended codeshare deal with United Airlines, which has seen Aer Lingus operating United’s Madrid-Washington route since March has shown “positive trading result at the operating profit level”.

This deal is about to be expanded to other routes, says Mueller.

See this blog on what Aer Lingus thinks about alliances.

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