What plans have they got then?
The following are some of their plans:
i) Continue to operate as two seperate airlines, with seperate an unique product offerings, with EI retaining a higher level of on board service focusing on business travellers and those needing the connectivity offered by a legacy carrier, including frequent flyer scheme etc;
ii) Continue with EI’s long haul operations;
iii) Ring fence slots at LHR and effectively hand these over to the Irish government to be used exclusively by EI. This will include the removal of BFS-LHR and the reinstatement of SNN-LHR.
FR will be ruthless when it comes to cutting costs at EI and making the business more efficient, but the intention is to retain a seperate product between the two airlines.
If you think that this will drive out competition then bear in mind that FR is one of the only airlines in the world that truly operates in a Contestable Market theory, that is to say that it is the threat of entry which keeps the fares low, not the actual presence of a competitor. This would be applied to EI too, and therefore whilst there may be less competitors on some routes, the fares will still be low to ensure nobody else comes in to steal market share with lower operating costs/fares.
The Commission are on rocky ground with this one. Permitting mergers between carriers such as TAP and PGA set a precedent which they have then gone against on this takeover proposal. In Portugal these were pretty much the only two regular scheduled carriers too.
I love the general hatred of RYR that comes through on topics like this (Skymonster, IF IL62), yet they are one of the only airlines delivering growth in Europe, and still consistently delivering profit. They have reduced the cost of travel substantially, and if you’ve ever bought a cheap ticket with them then you cannot criticise their strategy as you’ve subscribed to it. If you haven’t flown with them out of principle, but do like the fact you can fly with BA to Europe for £50 then stop and think about why you can now fly with BA for £50? It’s not because the management thought this would be a generous thing to do..it’s because they were forced to by the threat of competition from airlines such as RYR and EZY. What these airlines, and RYR in particular have done is to remove the cream from the top of profits, applying economic theory to this they have removed the ability of airlines to make Super-Normal profits (i.e. inflated profits) and instead make only Normal profits (i.e. a fair amount). This has opened up air travel to a lot more people, and why shouldn’t those people have the right to travel?
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