As summer draws to a close and the pace picks up for autumn, it certainly hasn’t been a quiet time for the airline industry. Apart from being the peak season for travel there has been a lot going on.
The biggest piece of recent news is the acquisition of Aer Lingus by IAG, the parent group of British Airways and Iberia.
Why is this significant? Because it marks another step in the consolidation of the airline industry. Gone are the days that each country can justify having its own airline, most small ones are loss making, some have gone bankrupt. Aer Lingus is the exception. It is a smaller airline but a profitable one. It has a strong position in its Irish home market and across the North Atlantic. The Irish Government has agreed to sell its remaining share in the company to IAG as has Ryanair.
IAG is now the leading “network” airline group in Europe and is delivering healthy profits. It has already acquired bmi and Spanish Low Cost carrier Vueling. Like Aer Lingus it has a strong position in the North Atlantic market, primarily from its Heathrow hub.
By adding Aer Lingus to the stable, IAG can leverage the strengths of both companies to increase its share of this profitable but highly competed market. Specifically, backed by the marketing power of IAG and the strength of its Avios loyality programme, Aer Lingus will strengthen its position in the UK regions to attract more customers to travel to the US and Canada via its Dublin hub. Similarly, it will gain additional feed passengers on its Ireland-Heathrow services from connections to British Airways African, Middle Eastern and Asian services.
This is an important change in the airline competitive landscape and will certainly be a topic for discussion with our WTM panellists this autumn.