Why do the Gov not want Ryanair to take over Aer Lingus?

Dannyboy83

I was just reading this article.

What are the reasons they do not want Aer Lingus to be taken over by Ryanair?

It looks like Aer Lingus is going to implode shortly anyway.

http://www.irishtimes.com/newspaper/finance/2009/1202/1224259892134.html?digest=1

Aer Lingus warns 1,000 jobs may go after talks fail

CIARÁN HANCOCK Business Affairs CorrespondentAer Lingus warned yesterday that more than 1,000 workers could be made redundant over the coming months after the airline failed to reach agreement with unions on a plan to cut €97 million from costs by 2011.
Chief executive Christoph Mueller said failure to agree a deal meant the airline would ground aircraft in the new year and close loss-making routes. This strategy was decided by the board of Aer Lingus at a 90-minute “extraordinary” meeting at its headquarters yesterday evening.
The board will meet again on Friday to decide the scale of the cuts, Mr Mueller said. Aer Lingus’s hardline approach has raised the prospect of industrial action, possibly before Christmas.
Aer Lingus had originally sought 676 job cuts but Mr Mueller said this would now be “north of 1,000”.
Talks with unions broke down at about 8am yesterday morning following seven weeks of negotiations. Mr Mueller said the two sides were “so close to an agreement this morning [Monday] that it was almost ready for a signature”.
“The board has decided today to move,” he said. “It is regrettable.”
It is understood that agreement was close to being reached with craft workers, ground operations, and head office and support staff. But there was still some distance to be bridged in talks with pilots and cabin crew.
“We haven’t reached an agreement with the pilot association and to a lesser extent with the cabin [crew],” Mr Mueller said.
He said proposals from the pilots, which included an extra 4 per cent stake in the airline, were “not sustainable” and the price was “too high”. It is understood that the pilots offered cost savings of €30 million a year. This included pay cuts of 10 per cent, extra productivity and other concessions.
The pilots are also thought to have proposed that the company establish a tax-efficient share-saving scheme that would have given them access to an extra 4 per cent stake in the airline. These shares are currently worth about €12 million. The pilots already own about 4.5 per cent of Aer Lingus.
No comment was available from the pilots’ representative body Ialpa last night. Impact, which represents cabin crew, said it was disappointed with Aer Lingus’s decision. The union said it had submitted cost-saving proposals that have been “checked and verified” by accountants Grant Thornton.
“The union remains available to discuss alternatives with the company,” a spokesman said.
It remains to be seen if the National Implementation Body, the State’s main troubleshooting mechanism under social partnership, will once again seek to get involved in the dispute.
Siptu divisional organiser Gerry McCormack said the union “would welcome an intervention to get this resolved”

Rb

I would absolutely hate for Michael O'Leary to get his hands on Aer Lingus. These days, Aer Lingus is the slightly more expensive choice on average for the people who specifically do not want to travel to certain destinations with Ryanair. Ryanair need the competition in the market to stop them going OTT with their scabby allowances and rules, if they gain control of Aer Lingus we, the customer, are going to be screwed.

Daragh101

Dannyboy83 wrote: »

I was just reading this article.

What are the reasons they do not want Aer Lingus to be taken over by Ryanair?

It looks like Aer Lingus is going to implode shortly anyway.

mostly because ryanair would more are less have a complete monopoly in Ireland, and could then start charging stupidly high prices that no one wants.

Darragh29

I'd say the government would be afraid that Ryanair would make a holy and utter show out of this government when it comes to putting in place real and meaningful reform and forcing efficiencies, improvements and change on highly unionised and deeply entrenched workers.

It wasn't that long ago that there was a law banning travel agents in Ireland from selling seats below the price that Aer Lingus was selling them at, under the theat of imprisionment.

P. Breathnach

Darragh29 wrote: »

... It wasn't that long ago that there was a law banning travel agents in Ireland from selling seats below the price that Aer Lingus was selling them at, under the theat of imprisionment.

I think that is an urban myth. Can you show evidence for your claim?

PeakOutput

imo

the only reason o'learly wants aer lingus is it is a ready made transatlantic option for him

he has already said he wouldnt rebrand aer lingus and it would operate independantly

i think it would be great personally he wont put up fares because his business model works only if the fares are cheap. if he starts edging up the price he loses his customer base immedietely. sure he might get away with it for a year or two but then one of the other carriers will see the opportunity and come into ireland in a big way and take his business away. a low fares transatlantic service would be awesome.return to the east coast of america for 250euro? yes pleae

blackbetty69

PeakOutput wrote: »

imo

the only reason o'learly wants aer lingus is it is a ready made transatlantic option for him

he has already said he wouldnt rebrand aer lingus and it would operate independantly

i think it would be great personally he wont put up fares because his business model works only if the fares are cheap. if he starts edging up the price he loses his customer base immedietely. sure he might get away with it for a year or two but then one of the other carriers will see the opportunity and come into ireland in a big way and take his business away. a low fares transatlantic service would be awesome.return to the east coast of america for 250euro? yes pleae

thats true.. obviously if o leary is the main man in irish aviation - controlling both ryanair and aer lingus, another company will come in and seize the opportunity for competition

Darragh29

P. Breathnach wrote: »

I think that is an urban myth. Can you show evidence for your claim?

Listen to the interview with Michael O' Leary on the Marian Finucane Show last Sunday... I hope he wasn't making it up...

P. Breathnach

Darragh29 wrote: »

Listen to the interview with Michael O' Leary on the Marian Finucane Show last Sunday... I hope he wasn't making it up...

I heard the interview, and I didn't hear him say that.

I did hear him say a few strange things, though.

Darragh29

P. Breathnach wrote: »

I heard the interview, and I didn't hear him say that.

I did hear him say a few strange things, though.

That's where I heard it!

Dannyboy83

The show is here:
http://www.rte.ie/podcasts/2009/pc/pod-v-281109-51m49s-marianleary.mp3

I don't have time to check it now myself, but I do recall him saying something similar, basically about how the government tried to block him out of the market, via some sort of pricing scheme.

mout

"The Bill is seeking to make it a crime here to charge too little for its service. The original intention was that if one charged too little one could get two years in jail and/or a fine of £100,000."

Dail debate December 1985
http://historical-debates.oireachtas.ie/D/0362/D.0362.198512040003.html

seclachi

I`m guessing because Aer lingus is the national carrier and that if ryanair was in charge it would cut any non profitable routes, which may not serve the country's interests.

Dannyboy83

Anyway, back to the question.

I haven't heard a good reason yet.
The notion of Ryanair putting up their prices is an odd one, they are not the only low cost carrier.

It smells the same old stink to me.
Ideology over reality. And they know O'Leary wouldn't bend down to kiss their ring.
1000 people could lose their jobs because the Airline cannot be managed, but they won't allow it to be run by a man who has built the biggest airline in the world.

Business as usual then.

Dannyboy83

seclachi wrote: »

I`m guessing because Aer lingus is the national carrier and that if ryanair was in charge it would cut any non profitable routes, which may not serve the country's interests.

The government have their 2 jets to go wherever it is they go.
And we know all too well they'd rather spend 164,000 to fly to Texas and see Michael Dell, than to take the Aer Lingus equivalent costing 2k

The worst that would happen, is that Ireland would use a taxi to get to London and fly on to the rest of the world, which is often the case anyway. Considering O'Leary is a megalomaniac, I'd say we could hope for considerably better.

Tipsy Mac

It would make too much sense for Ryanair to take them over and make them more efficient and let Aer Lingus grow.

seclachi

Dannyboy83 wrote: »

The government have their 2 jets to go wherever it is they go.
And we know all too well they'd rather spend 164,000 to fly to Texas and see Michael Dell, than to take the Aer Lingus equivalent costing 2k

The worst that would happen, is that Ireland would use a taxi to get to London and fly on to the rest of the world, which is often the case anyway. Considering O'Leary is a megalomaniac, I'd say we could hope for considerably better.

I didnt mean it in the sense that the government should use it for there own flights. What I meant was that Ryan could cut all flights to the uk, or stop all flights to say shannon airport because theres no profit in it. Both those things are good for the country however.

P. Breathnach

Dannyboy83 wrote: »

The show is here:
http://www.rte.ie/podcasts/2009/pc/pod-v-281109-51m49s-marianleary.mp3

I don't have time to check it now myself, but I do recall him saying something similar, basically about how the government tried to block him out of the market, via some sort of pricing scheme.

But did it happen?

mout wrote: »

"The Bill is seeking to make it a crime here to charge too little for its service. The original intention was that if one charged too little one could get two years in jail and/or a fine of £100,000."

Dail debate December 1985
http://historical-debates.oireachtas.ie/D/0362/D.0362.198512040003.html

And here are the facts: it was considered, but it didn't happen.

pawrick

hm tough one re Ryanair taking over Aer Lingus - either way the citizen gets screwed in my opinion.

option A - subsidise a poorly managed company (remember is was doing ok under the previous management before they left)

option B - sell to Ryanair - flights direct from Ireland are cut where there is an overlap between ryanair and aer lingus - resulting in you ending up going to the cheaper further away airport. And important landing slots being lost on direct routes from Ireland.

Honestly can't see ryanair not trying to fleece the market if it was the dominant player and as for outside competition coming in? who? who is going to take on ryanair on their own doorstep at what will be a loss making exercise.

Aer Lingus should have been sold a few years back too late now until the market picks up.

Daragh101

P. Breathnach wrote: »

I think that is an urban myth. Can you show evidence for your claim?

An urban myth???....So you think Michael O Leary is charging such low prices for the fun of things?..I know ryanair is a low cost, and therefore a low price airline, but one of the main reasons for having such low prices is to make it impossible for other airlines to compete with them and therefore fource them out of he business......Whenever Aer lingus or air aran supply a route that ryanair do, Ryanair try to fource them out through price.(This has happened many times: ryanair in a lot of cases loose money on a particlar route, in order to fource out competitors. When the competitors leave the route, ryanair rocket their price up and make huge profits. They can now charge huge prices on this route and no one can do a thing about it, as if they want to fly this route they must book with ryanair)

The fact is if Ryanair take over aer lingus, their is no real competition left in the business, therefore creating a monopoly(fact). And if you think ryanair and Michael O Leary wont take advantage of this opertunity to create a monopoly and to make huge profits........well your insane:D

(Also the exact same thing as above did nearly put ryanair out of business, but Ryanair begged to the government to get aer lingus to increase their prices so they wouldnt have to close shop, and now the tieds have turned)

Hookey

I won't fly with Ryan Air on principle, so if they got hold of Aer Lingus I'll be spending a lot more time on boats. There's nothing wrong with Aer Lingus being sold off, just to anyone but Ryan Air if you want to have competition in the Irish market, avoid hidden charges and not be treated like cattle.

Cosmo Kramer

I listened to that Finucane interview on Saturday and it was interesting stuff.

Apart from almost coming across as human and showing some humility (first time I've ever thought that about him), it sounded clear enough that his remaining aviation ambitions involved Aer Lingus, transatlantic routes, or some combination of the two.

I would agree with whoever said his main reason for wanting Aer Lingus is to have a crack at the transatlantic market, and I could see him making a success of it too.

But any sense of service to the country ahead of profit will be a thing of the past, as he's already shown by pulling three planes out of Shannon next year. I would guess it would be Dublin only for Aer Lingus transatlantic if he got in.

GSF

The government would prefer Aer Lingus to collapse and Ryanair to get the monopoly by default than actually take Ryanair cash for Aer Lingus shares. It seems like Bertie really was on O'Leary's side all a long!

CityCentreMan

The reason that the government is afraid to allow Ryanair to take over Aer Lingus is because our leaders are afraid of the unions and lack the imagination to see the benefits that will accrue to the company, the staff and our country by placing our "National Airline" in the hands of a competent leader who has the guts to stand up to the unions and the commercial ability to make it successful..

I personally hate Ryanair's uncomfortable seats, their annoying advertisements, their unfriendly approach and their expensive extras that I would rather not have to pay for.

Occasionally, I get annoyed at their rushed unfriendly staff who are always working so hard that they dont have time to talk.

But then I remember back to the time before Ryanair when the cost of flying was so high that I had to go to London on the Ferry. When the government of the day protected the high costs and inflated salaries of Aer Lingus employees to such an extent that most Irish people could'nt afford to fly.

Unfortunately for Aer Lingus, it is still staffed by many of the same (former) public sector workers who simply do not understand that the taxpayer's purse is no longer open to them. Without the artificial protection & support of the taxpayer, the excessive pay levels and uncompetitive work practices will ultimately result in the demise of the organisation.

In the current negotiations, the hard balling by the unions would appear to to have backfired in that their stance has upped the ante from approx 700 job losses to over 1000.

It must be interesting for Michael O'Leary to watch these guys shoot themselves in both feet in the anticipation that he may eventually step in to pick up the assets (without the staff) at firesale prices when Aer Lingus is eventually forced by liquidator or receiver to sell them.

Dob74

Dannyboy83 wrote: »

I was just reading this article.

What are the reasons they do not want Aer Lingus to be taken over by Ryanair?

It looks like Aer Lingus is going to implode shortly anyway.

One word monoply.
Michael O'Leary has done a brilliant job of running Ryanair. The consumers benefits from robust competition between Aer Lingus and Ryanair.
Michael O'Leary is determind to drive prices lower for consumers.

But what happens when he leaves?
If Ryanair owned Aer lingus they could just say it would be more profitable to reduce the number of flights on the Irish routes and charge the old Aer Lingus prices pre Ryanair. Less hassle for them and more money.

There are nine flights a day between Cork and London. If it was one airline they would be sure to drop a few of them.

A private monoply would be worse than state monoply, M50 for example.
Bad service for big money. Like the old Aer Lingus.

donkey balls

Dannyboy83 wrote: »

Anyway, back to the question.

I haven't heard a good reason yet.
The notion of Ryanair putting up their prices is an odd one, they are not the only low cost carrier.

It smells the same old stink to me.
Ideology over reality. And they know O'Leary wouldn't bend down to kiss their ring.
1000 people could lose their jobs because the Airline cannot be managed, but they won't allow it to be run by a man who has built the biggest airline in the world.

since when was Ryanair the biggest airline in the world? o Leary and before him the late Tony ryan copied the Southwest airline model but o leary went to the extreme end of things).
These are just a few things that set Ryanair apart from most airlines cabin crew have to pay for there own training.
Pilots have to pay 30k to train on the company aircraft(and not garuanteed a job after training)they also have annual medicals to pay for + sim checks.

Dannyboy83

Cosmo Kramer wrote: »

Apart from almost coming across as human and showing some humility (first time I've ever thought that about him), it sounded clear enough that his remaining aviation ambitions involved Aer Lingus, transatlantic routes, or some combination of the two.

He said on that show, that if he did acquire Aer Lingus, there would be no merger. It would be run as a separate airline, and given your belief above about the transatlantic service, which I also share, I don't see any reason why this is a bad thing.
I don't see any reason why it would be run as a low cost carrier either.
Low-er perhaps, but what airline isn't trying to cut costs now anyway?

I don't see how that's a bad thing either from the customers or from the new hires point of view. And I don't see any reason why he would be lying, it wouldn't make much sense.

I would agree with whoever said his main reason for wanting Aer Lingus is to have a crack at the transatlantic market, and I could see him making a success of it too.

Indeed.

But any sense of service to the country ahead of profit will be a thing of the past, as he's already shown by pulling three planes out of Shannon next year. I would guess it would be Dublin only for Aer Lingus transatlantic if he got in.

Well, I feel thats a bit irrational and I would dispute that in a number of ways.
If the Shannon area is profitable/worthwhile, why wouldn't easyjet go in there? Why wouldn't Aer Lingus replace whatever Ryanair was removing?
Didn't Virgin Express also leave, citing similar grounds?

If he was running a profitable & important service without the tax, why impose it?

The government/Shannon stood stubborn, now Ryanair are gone, taking 3/4 of the traffic with them. Is that good service?
Isn't it preferable to have some service than nothing?
Isn't preferable to have some revenue than a 10% tax on no revenue? Tourism?
Shouldn't the DAA/government get with the times and adapt to the modern reality/business model of air traffic?
Wouldn't it be better to have 150 jobs than none?

If your entire business is based around low cost (Dell/Rynair) and costs start rocketing, is it acceptable for the government to impose on you, require you to adjust for their benefit?
Michael Dell didn't think so.

If the government increases the corpo tax and damage the multinational's business model, should they hang around out of loyalty?

How about the DAA be shutdown and Shannon be allowed to compete directly with Dublin?
Ryanair would be back like a shot, and others too.

O'Leary has said that he would prefer to bring in 10,000 extra passengers rather than increase tax on existing traffic - thereby reducing it. This makes perfect sense to me. Everybody wins.
That's essentially what we are trying to do with our economy.
The reality now is that everybody is losing. Especially the government.

If the government put a tax on viewing threads, would you still come here?

The Government built a terminal which Ryanair said they could build for 200million, the government said they could do it for 170 million, but they actually spent 1.2 billion. Then they expect Ryanair to pay for their fcukup, but Ryanair isn't the ordinary taxpayer, they are top of their game in the world.
Do you think Intel would hang around here, if we built a Nuclear powerplant than overran costs by 7.05 times its original estimate and expected them to subsidize it?


Then there is the idea of service.
What are the government doing?
The bus from Cork to Dublin costs €12/270km, everybody uses it.
The bus from Cork to Bandon and back costs nearly €20/60km, nobody can afford to use it. Only 2 years ago, it was packed.

Who can afford to get the train to Dublin anymore? Its about €60
Everybody takes the plane instead.
Thats not much of a service.

I feel like if someone had planted a spy in government, in order to sabotage our country, they couldn't do a better job than our present government.
And in spite of all of this, Aer Lingus look like they will be bankrupt anyway

Dannyboy83

donkey balls wrote: »

since when was Ryanair the biggest airline in the world?

I should have said biggest international airline.
http://en.wikipedia.org/wiki/World%27s_largest_airlines#Scheduled_international_passengers_carried

If you take out the domestic American market, Ryanair would not be far off it.

These are just a few things that set Ryanair apart from most airlines cabin crew have to pay for there own training.

Pilots have to pay 30k to train on the company aircraft(and not guaranteed a job after training)they also have annual medicals to pay for + sim checks.

When I was in security, I had to pay for my own license & training.

I work in IT, I do industrial courses, I pay for them. 1 company have paid for me, 1 time in the past, because it was something they needed.

Flight training is expensive and you need to have a certain amount of flying hours. That comes with the territory. You're well compensated afterward.
Pretty much like a doctor, or most other positions with high responsibility.

You're definitely not guaranteed a job after training if the government are the main obstacle in your path. In any profession.

Dannyboy83

People view Dell through a different lense than they choose to view Ryanair.
But you're looking at the same animal.

bonkey

Dannyboy83 wrote: »

1 company have paid for me, 1 time in the past, because it was something they needed.

Whereas Ryanair don't actually need their pilots to be qualified or in good health, right?

baalthor

seclachi wrote: »

I`m guessing because Aer lingus is the national carrier and that if ryanair was in charge it would cut any non profitable routes, which may not serve the country's interests.

There really isn't any such thing as a "national carrier" anymore.

Which non-profitable routes are Aer-Lingus currently operating in the national interest?

(And I don't mean Govt subsidised PSO routes, many of which are operated by Ryanair)