Aer Lingus will apparently be approving a €1.3 billion takeover bid by IAG, which is the parent company of British Airways. IAG also controls Iberia, and really is one of the three European airline “superpowers” (Air France/KLM, British Airways/Iberia, and the Lufthansa group).
This takeover bid is fascinating for many reasons, and has most of the elements of a good soap opera/reality TV show:
- This is the third takeover bid, after the first two were rejected
- Does British Airways really care about Aer Lingus, or do they just want Aer Lingus’ Heathrow slots, since they are the fourth largest operator out of Heathrow?
- Ryanair owns ~30% of Aer Lingus while the Irish government owns 25%, so this is about to get really interesting politically
So if this goes through I would expect it won’t be an especially clean takeover, and that there will be lots of contingencies in regards to what British Airways does with those Heathrow slots (if they had their choice they’d probably slash all of the Dublin service and use them for something else).
Is this all a ploy for British Airways to get more slots at Heathrow?
But what are the implications of this deal in terms of miles and frequent flyer benefits?
Could Aer Lingus join oneworld?
Aer Lingus was in oneworld until 2006, when they decided to leave. At the time they were primarily a low cost carrier and didn’t find much benefit to being in an alliance, given the membership fees involved. It’s rare we see an airline leave one of the alliances, so that move surprised many, though made sense at the time. Aer Lingus has grown much stronger the past few years under the leadership of Christoph Mueller, to the point that Aer Lingus is investing substantially in their premium cabin product.
I would assume that if British Airways takes over Aer Lingus they’d once again be part of oneworld. Now, British Airways already partners with Aer Lingus, so it’s possible to redeem Avios for travel on Aer Lingus (which happens to be an exceptional value).
But this also potentially means you could earn and redeem miles from other oneworld carriers for travel on Aer Lingus, which would be great news. Furthermore, there’s quite a bit of value to being able to receive elite benefits when booking revenue tickets on Aer Lingus (like lounge access, priority check-in, priority boarding, etc.).
If that happens I would also expect it to mean the end of the partnership between Aer Lingus and United.
Aer Lingus A330
Addition of fuel surcharges on Aer Lingus?
Given oil prices it’s kind of ridiculous that airlines even have fuel surcharges. But they do, and nowadays they’re not even fuel surcharges, but more generically just referred to as “carrier imposed surcharges.”
On revenue tickets fuel surcharges don’t make a difference. If fuel surcharges were eliminated, the base fare would just be increased correspondingly.
It’s award tickets where fuel surcharges sting.
One of the best uses of British Airways Avios is for travel on Aer Lingus, since Aer Lingus imposes only very minimal fuel surcharges. So for 25,000 Avios one-way you can redeem for business class between Boston and Dublin, which is an incredible value, especially with Aer Lingus slowly introducing their new business class product.
Unfortunately I would expect that if British Airways takes over Aer Lingus they’d probably match fare structures, including fuel surcharges. Which would suck.
How much higher are British Airways’ fuel surcharges than Aer Lingus’? On a roundtrip ticket between Boston and Dublin Aer Lingus charges under $80 in fuel surcharges:
While British Airways charges over $800 in fuel surcharges:
Ouch!
Bottom line on Aer Lingus takeover
I’m especially curious to see how this plays out politically. While all parties seem serious, I’d actually be sort of surprised if the merger goes through “cleanly” given the different parties and interests involved here.
That being said, if the takeover happens I’d say it’s good news on balance for those of us in the miles/points community (though not necessarily good news for those in Ireland). It would be great if Aer Lingus joined oneworld in terms of all the new possibilities for earning and redeeming miles on them. That being said, I wouldn’t be surprised if it means Aer Lingus aligns their fare structure with British Airways, including the addition of fuel surcharges.
How do you feel about the possibility of British Airways taking over Aer Lingus?
@Andreas "is there a possibility they will eventually completely merge EI into BA in terms of branding?"
That will never happen, Politically removing the "Aer Lingus" brand and replacing it with the "British Airways" brand would generate more hostility in Ireland than BA would want and Willie Walsh, being Irish fully understands the dynamics of a decision like this.
To understand fully why this will never happen requires a small understanding of Irish history
As an interested ex-heavy user of EI and Irish citizen, this is fascinating to watch. I wouldn't worry too much about it though for now - this a politically explosive issue (coming as it does on the back of a lot of national asset sell-offs already the last few years and as we approach Govt. elections within the next year) and the Govt. certainly won't want to make a firm decision on this with any...
As an interested ex-heavy user of EI and Irish citizen, this is fascinating to watch. I wouldn't worry too much about it though for now - this a politically explosive issue (coming as it does on the back of a lot of national asset sell-offs already the last few years and as we approach Govt. elections within the next year) and the Govt. certainly won't want to make a firm decision on this with any haste - or probably, at all, if they can avoid it.
That said, IAG wants EI for a reason one way or the other; having offered 5-year slot guarantees and a veto on their use other than for Irish flights, BA would almost certainly be pulling the rug on their own Dublin flights either way. Could they possibly be considering using Dublin and EI as a lower-cost proposition for customers heading t/atlantic what with Heathrow capacity constraints and high passenger charges, freeing up Heathrow for higher fare traffic or those who'll pay a good bit more for direct/BA brand?
What if you already have tickets with Aer Lingus. If the takeover goes through will they be honored as is or will surcharges apply? Are there fuel surcharges if you don't go through Heathrow?
@ Debbie P. -- Yes, all tickets will absolutely be honored. And fuel surcharges have nothing to do with Heathrow, only the airline.
As a primarily United flyer this would be a disaster. After loosing British Midland it took a long time to recover with Aer Lingus. This would be another kick in the teeth for *A travelers in western Europe.
@Ken: if IAG keep the companies separate then those cheap flights won't necessarily go away. Vueling are still cheap.
I can't believe anybody hasn't posted this yet :)
https://www.youtube.com/watch?v=ZAg0lUYHHFc
But in all seriousness. This is all about IHG pushing the lack of runway space in London back up the election agenda,
Less competition in the marketplace always screws the consumer. If this goes through it will be the end of cheap flights BOS-DUB once BA gets their grubby hands on things and starts charging YQ.
How do I feel? Incredibly bummed. I was hoping to use Aer Lingus to fly to Dublin using Avios in 2016, and if the fuel surcharges change as you predict, I would have to find another airline to fly on. I was looking forward to flying into Dublin. :(
I guess this is probably why their Chief Executive decides to take a new job.
@Andreas: unlikely, as the separate brand allows them to fly long haul from DUB. I see the acquisition as BA/IAG getting runway capacity that they not been able to get at LHR/LGW for many years (I'm oversimplifying in the interest of brevity).
Is there a possibility they will eventually completely merge EI into BA in terms of branding?
@ Andreas -- In theory I suppose that's possible, as BA did with bmi. That being said, I think it's unlikely. The company has enough of its own identity, and if anything I think BA would benefit from having Aer Lingus operate in a similar fashion to how they are now.
This will be awful as the IAG degradation of service and standards - just look at what is happening at BA - will clearly happen at EI as well. Eventually EI will disappear. It will be a sad day if this goes through.
@Stuart - if they want to screw with IAG, then sure they can, but not really that useful from a business perspective except for the LHR slots perhaps.
I was wondering if this would come to pass. Without a doubt, the LHR slots are a huge part of this. Another interesting thing from a "soap opera" perspective is that Etihad owns, I believe, about 5% of Aer Lingus. So there are lots of interesting players in this ownership group. It's not beyond imagining that EY wanted to make a move to buy a majority position in EI as well - which would have...
I was wondering if this would come to pass. Without a doubt, the LHR slots are a huge part of this. Another interesting thing from a "soap opera" perspective is that Etihad owns, I believe, about 5% of Aer Lingus. So there are lots of interesting players in this ownership group. It's not beyond imagining that EY wanted to make a move to buy a majority position in EI as well - which would have put them in control of all of those LHR slots AND solidify Dublin as a transatlantic hub. None of that would be good news for BA/IAG.