MAJOR AIR CARRIER TESTS DISCOUNTING ATLANTIC ROUTE.Low cost airlines have been around for some time, but not in the international market. Now a major airline is testing the low-cost, low-fare approach on the route between Boston and Shannon, Ireland. Aer Lingus Aer Lingus is Ireland's national airline. Based in Dublin, it operates 41 Airbus aircraft serving Europe, Africa, North America and the Middle East. The airline is 28% owned by the Irish government; it was floated on the Dublin and London Stock Exchanges on 2 October 2006, , the Government owned and operated airline of Ireland, is the first major airline to use the low-cost, low-fare concept on the intensely competitive Atlantic route. The Boston Globe reports that passengers can now fly between Boston and Shannon for as little as $113. The pre-discount price was $850. The airline also eliminated many restrictions such as Saturday night stays and the round-trip requirement. If Aer Lingus succeeds with their new business model, it could ignite competition on international routes to the considerable benefit of consumers and national economies all over Europe. The Aer Lingus strategy has some distinct challenges. One of the most difficult is the fact that it is a Government airline. This means bureaucracy. This means inefficiency. This means higher costs, and of necessity, higher fares. Also, economies of scale work in reverse on long-haul routes. The Boston Globe spoke to a professor of aeronautics aeronautics: see aerodynamics; airplane; aviation. who said that longer trips meant more costs for the airline. This was the main reason that low-cost, low fare air carriers such as Jet Blue and Southwest Airlines This article is about the American airline. For the former Japanese airline, see Japan Transocean Air. For the British airline, see Air Southwest. Southwest Airlines Co. have stayed out of the international market. Aer Lingus is well aware of the risks and according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the news report, has been cutting costs since 2001. The airline's annual report claims to have engineered savings of 30 percent, $438-million, since the cost-cutting program began. A major component of the savings was automating its reservations system. Instead of relying one an expensive, labor intensive Labor Intensive A process or industry that requires large amounts of human effort to produce goods. Notes: A good example is the hospitality industry (hotels, restaurants, etc), they are considered to be very people-oriented. See also: Capital Intensive, Trading Dollars call center approach, Aer Lingus has been advertising its Website. Consumers who prefer to use the phone are served by a voice recognition system. No employees lost their jobs as a result of this transition. The airline said that it relied solely on attrition Attrition The reduction in staff and employees in a company through normal means, such as retirement and resignation. This is natural in any business and industry. Notes: . But success does not depend on cost-savings alone. The airline acknowledged that it needed to attract more passengers. The Boston-Shannon route is the company's second busiest, busier even than New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of . Last year, Aer Lingus traffic on the route was 277,023 passengers. CONSUMER MARKET INSIGHTS |
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