Aer Lingus initiated fundamental actions in 2009 and early 2010 to address the difficult market conditions which then faced the Group.
Following an in-depth review of our business model and addressable markets in 2009, Aer Lingus concluded that it needed to revise its strategic direction. Aer Lingus has positioned itself as a 'value carrier' on the basis that the pure low cost and low fares model is not sustainable while a full service model would not be viable in serving our key markets. The fundamental elements of this revised strategic approach included better matching of capacity to demand (involving reduction of long-haul capacity and reductions in capacity on over-served short-haul routes), a renewed focus on generating revenue per seat rather than simple maximisation of load factor as well as more emphasis on partnerships and connectivity to deliver on our primary mission of connecting Ireland with the world. In addition, the Group launched a €97 million cost saving programme (known as the 'Greenfield' programme).
We continued to pursue this same strategic direction during 2011.
The pure low cost/low fares model, in the image of Ryanair, is not sustainable for Aer Lingus for the following reasons:
- Deeply discounted aircraft are no longer available.
- Our market proposition and customer expectation is for central rather than secondary peripheral airports, implying higher airport charges.
- Tax funded marketing deals with secondary peripheral airports are no longer available.
- The cost overhang of the Aer Lingus staff seniority list.
Equally, the 'full service' model adopted by many flag carriers is not competitive because:
- There is a relatively small business market to/from Ireland.
- Our Dublin hub is in a disadvantageous geographical position for short-haul connecting flows.
- Most importantly, low fares are embedded in the Irish market place and in the Irish consumer mindset.
The market positioning adopted by Aer Lingus may now be shown as: