Aer Arann plots route down recovery road

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Irish regional Aer Arann it looking to build on a turnaround which has seen it increase turnover 60% in the first quarter over the same period last year, just months after leaving Irish bankruptcy protection late last year.

The carrier could barely have faced a more challenging backdrop as it battled its own financial difficulties last year. It was transitioning its own business, beginning a franchise deal with Aer Lingus, amid the finanical crisis in its home market of Ireland when the fall out from last year’s volcanic ash cloud disruption pushed it over the edge.

“If we had not had the volcano, we would be able to get where we are now, earlier,” explained Aer Arann chief executive Paul Schutz during the recent French Connect event in Lille. As it was the airline was forced into examinership last August – the Irish equivalent of bankruptcy protection. But the airline continued to operate normally and by November emerged with all jobs at the carrier intact and fresh investment from UK haulage firm Stobart Group.

aer arann atr

The early signs since then are encouraging. Alongside the jump in revenues, operating costs were cut a quarter year-on-year in the first quarter. “We are up two units to 13[ATR turboprops] - so its a 60% increase in turnover based on around 20% growth in fleet," says Schutz. "The airline will add another one or two [aircraft] this year. But it’s really about securing the first quarter performance for all four quarters, not just one.”

One of the keys has been the franchise deal with Aer Lingus, operating flights largely linking Cork and Dublin to points in the UK under the Aer Lingus Regional banner. The agreement, expanded in December, sees Aer Arann fly around 8% of Aer Lingus capacity – representing about half Aer Arann’s total capacity. Its part of a transition at the airline, which historically grew out of operating domestic public service obligation routes, into expanding beyond the Irish market and developing flights under its own name alongside the franchise operations.

"I think it is important we retain and grow our own brand. We have to continue growing our top line, that is the only way you will counter everything that is being thrown at us," he says, pointing to additional tax burdens facing the sector such as UK air passenger duty and emissions trading. "We are a regional carrier and regionals should not be forgotten. We have had to transform ourselves. We have the Aer Lingus move, between Ireland and the UK. Lets replicate that by going into Europe."

One of the next steps in its expansion is London Southend airport, which it shares owners with through the Stobart Group. The latter invested €2.5 million in 2010 to develop a partnership with Aer Arann as part of a five-year agreement between the Group’s Stobart Air division and the Irish airline. Aer Arann in late March launched its first flights, linking Galway and Waterford, from the London airport. This is precursor to more growth at the east London airport. "Southend will be the opportunity in 2012," says Schutz. "I think Southend offers an opportunity for a lot for a London destination from a lot of European regional airports."