LOSS-MAKING Irish carrier Aer Lingus yesterday took a step closer to the no-frills model of rival and onetime suitor Ryanair with the extension of extra charging under a plan to boost revenue.
The former state airline drew a muted response from investors with its offer of basic ticketing plus top-up fees for meals, access to lounges and seat selection as it tries to revive passenger numbers in its battered home market. It said that in 2009 it made an operating loss and burnt through €400m (£348.7m) in gross cash but had a strong balance sheet with sufficient liquidity for investment needs in the short term and for lease repayments.
Ryanair, which has some of the industry’s lowest costs and carries more than six times as many passengers as Aer Lingus in which it has a 30 per cent stake, makes extra money on top of ticket sales by charging for meals and baggage and has even toyed with introducing a toilet fee.
But Aer Lingus chief executive Christopher Mueller, brought in last September to staunch the losses that threatened its independence, said a “pure low-cost model” was not sustainable and the airline would differentiate itself from Ryanair.
To enhance revenue, Aer Lingus said it would “unbundle” paid product options for passengers, offering low fares for the majority with additional premium “enhancements” on demand. Aer Lingus will still offer features such as reclining seats, adjustable window blinds and seatback pockets which Ryanair has abolished to cut costs to the last penny.
Mueller said the Irish market which -- unlike Ryanair -- Aer Lingus relies on for much of its revenue, was a “basket case” and would remain tough throughout this year.
City A.M. Reporter