# new major trans-Atlantic low cost carrier?



## Carolinian (Oct 8, 2006)

Europe's largest low cost carrier (LCC), Ryan Air, has bought almost 11% if the outstanding stock of Irish flag carrier Aer Lingus, and has made a tender offer above current market value for the remainder.  It's stated purpose is to enter the trans-Atlantic market.

This would seem to be a good match, since both airlines are Ireland based and largely Irish owned.  Over the last year, Aer Lingus has already been trying to reinvent itself as an LCC.

Ryan Air has great sales, including a couple of times a year having a promo giving away several million free tickets (the most recent was 5 millioin tickets), where you only have to pay taxes and fees.

Soon we may be seeing the ''Ryan Air effect'' on other airlines trans-Atlantic fares.

Ryan Air has an extensive route network in Europe (  see www.ryanair.com/site/EN/dests.php?flash=chk ) so if would offer a lot of flexibility in travel to Europe.


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## TomCayman (Oct 8, 2006)

Ugh... 29" seat pitch on a transatlantic... ugly.

There already is a low cost carrier across the Atlantic... from Canada... www.flyzoom.com , seems like they have not done away with quite all of the frills (eg on their overnight flights they might still have window shades, unlike Ryanair)


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## Carolinian (Oct 8, 2006)

The best thing for travellers will be the impact on fares of other airlines.  I wonder if they will do things a little differently on trans-Atlantic flights, as far as seat pitch and window shades are concerned.

For intra-Europe flights, I will put up with those conditions to get the fares.  My last two flights with RyanAir, the fares were free and 1 penny,  The last, even with taxes and fees still came to only GBP 11.75.


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## geoffb (Oct 8, 2006)

It seems like a long shot that this happens. The offer was refused by the board and the government might step in if they see the purchase as anti-competitive.


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## philemer (Oct 8, 2006)

Don't forget www.Icelandair.com as a low cost option.


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## Carolinian (Oct 9, 2006)

I haven't flown Icelandair yet, due to the lack of useful earning of ff miles and the need to get to one of their gateway cities in the US, which are not convenient to me.  Some years ago, they flew out of Norfolk, which would have worked for me.

What is also interesting is the fact that there is some significant crossownership between Icelandair and Europe's second largest LCC, EasyJet.  I have often wondered if that might bring at least some coordination between flights of the two.  It would make it easier to reach many European destinations if Icelandair changed its London airport to EasyJet's base at London-Luton, for example.

If Ryanair has made a corporate decision to enter the trans-Atlantic market, then the easiest way in is of course to buy an existing carrier, which they are trying to do.  But if that doesn't work, the next option would seem to be starting up their own flights.  Having watched the Ryanair strategy, it would seem that if they do this they will look to serve major population centers from less used airports that they can make sweet deals with on costs.  It would be nice, for example, if they sought to serve the Washington, DC area from Richmond, Va.




			
				philemer said:
			
		

> Don't forget www.Icelandair.com as a low cost option.


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## Carolinian (Oct 9, 2006)

Far from being anti-competitive, such an acquisition would make Ireland much more of a competitor against the big boys of trans-Atlantic air travel, like BA, AA, Air France, etc.  For the market within Europe, Ryanair's competitors are outfits like EasyJet, BMI Baby, etc. not Aer Lingus.

Board refusals generally do not stop takeover attempts.  The acquiring company then moves to deal directly with shareholders.




			
				geoffb said:
			
		

> It seems like a long shot that this happens. The offer was refused by the board and the government might step in if they see the purchase as anti-competitive.


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## Keitht (Oct 9, 2006)

There is more on the story here from BBC News


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## geoffb (Oct 9, 2006)

Carolinian said:
			
		

> Board refusals generally do not stop takeover attempts.  The acquiring company then moves to deal directly with shareholders.



True but in this case the government and the employee unions are major shareholders.


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## Ireland'sCall (Oct 9, 2006)

Neither the Government nor the Unions could block the take over as Ryanair only need 51%. There may be an EU issue though.


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## Carolinian (Oct 9, 2006)

Do they even have unions at Ryanair?  If not, union entanglement may be a bit much to pay for acquiring Aer Lingus trans-Atlantic routes.  Acquiring an existing carrier would seem to solve a few bureaucratic hurdles, however, as opposed to jumping through the hoops necessary to come in as a new carrier.

Richard Branson's new Virgin America, for example is already having planes delivered but does not yet have the paperwork completed to start up flying its new US domestic airline.

One interesting statistical comparision from the BBC story:
Aer Lingus is listed as have 35 aircraft (with none noted to be on order)
Ryanair is listed as having 107 aircraft (with 281 or order)
It would appear that while Aer Lingus may be considered the flag carrier, Ryanair is clearly the dominant Irish airline.  The money is clearly with the LCC's, even ones like Ryanair which regularly give away millions of free tickets.


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## Lee B (Oct 10, 2006)

Carolinian said:
			
		

> The money is clearly with the LCC's, even ones like Ryanair which regularly give away millions of free tickets.


You know, of course, that they will not give away tickets after they have shut down their competition.


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## Carolinian (Oct 10, 2006)

Europe has several profitable LCC's competing with each other, and there seems to be no danger of Ryanair shutting down EasyJet, SkyEurope, Germanwings, Air Berlin, BMI Baby, Wizz, etc.  All of the above have had promotions giving away substantial blocks of tickets.  Germanwings had one that ended recently giving away 444,000 tickets.  I think the one at SkyEurope is still on.

And even many of the legacy carriers, like Air France, KLM, and British Airways are profitable in spite of the rock bottom fares of the LCC's.





			
				Lee B said:
			
		

> You know, of course, that they will not give away tickets after they have shut down their competition.


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