MAJOR AIR CARRIER TESTS DISCOUNTING ATLANTIC ROUTE.
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
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|Title Annotation:||Aer Lingus Group PLC|
|Date:||Nov 1, 2004|
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