Printer Friendly

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, 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 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 have stayed out of the international market. Aer Lingus is well aware of the risks and according to 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 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.

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.

Last year, Aer Lingus traffic on the route was 277,023 passengers.

CONSUMER MARKET INSIGHTS
COPYRIGHT 2004 Media Contact Resources, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2004 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Title Annotation:Aer Lingus Group PLC
Publication:Market Europe
Geographic Code:4EUIR
Date:Nov 1, 2004
Words:365
Previous Article:LOWER INFLATION TO SUSTAIN GROWTH IN FRENCH SPENDING.
Next Article:UK FOOD SHOPPERS FOCUS ON HEALTH.
Topics:


Related Articles
Airline News - Europe.
Airline News - Europe.
Company Watch - Aer Lingus.
Company Watch - Ryanair.
Company Watch - Aer Lingus.
Low Cost Airline News - Europe.
Airline Finance News - Europe.
Airline News - Europe.
Company Watch - Ryanair.
Low Cost Airline News - Europe.

Terms of use | Privacy policy | Copyright © 2020 Farlex, Inc. | Feedback | For webmasters