Where Will Aer Arann’s 'New Beginning' Strategy Take the Carrier?

Irish regional carrier Aer Arann, which currently exclusively operates under the Aer Lingus Regional brand for Ireland’s national carrier, has announced it is creating 50 additional jobs as part of its 'New Beginning' strategy following the recent entry into service of its first new generation ATR 72-600 turboprop. The 50 new jobs will increase employee numbers by 15 per cent at Dublin Airport and at the airline’s headquarters in Dublin in flight and cabin crew, engineering and support roles and will bring the company’s overall staff numbers to 370.

Aer Arann has seen a 32 per cent rise in Aer Lingus Regional passenger numbers in the past 12 months and this year is on track to carry in excess of 1.2 million passengers. It recently moved all flight arrivals and departures to Terminal 2 at Dublin Airport, and now operates from the same terminal as Aer Lingus’ mainline services which facilitates better connection opportunities to the latter’s transatlantic services - a significant and growing part of the business which is on target to bring 100,000 passengers through Dublin’s newest terminal this year.

Under the guise of Aer Lingus Regional, Aer Arann now operates 550 weekly flights on 27 routes from Cork, Dublin, Shannon, Kerry and Ireland West Airport to the UK and France aims to double its passenger numbers to over two million over the next five years. "Our franchise partnership with Aer Arann has gone from strength to strength since its inception in 2010. It has enabled Aer Lingus and Aer Arann to work as a team in developing many new routes and increasing the frequency of service on existing routes,” said Christoph Muller, Chief Executive Officer, Aer Lingus.

The extension of the Aer Lingus Regional deal until 2022 provides long-term stability for Aer Arann, but what other opportunities exist for the regional carrier. Well, there are additional network opportunities across the UK and France that could support its business model and meet O&D demand and possible transfer feed into Dublin and further expansion from Cork and Shannon is likely in 2014. There have even been suggestions recently that the carrier could seek to replicate its success with Aer Lingus with another European legacy carrier or even set up a new operation away from the Aer Lingus operation.

If this is to occur it is most likely to take place at London Southend due to the business activities of Stobart Air, which owns the airport and is a 42 per cent joint majority shareholder in Aer Arann with Invesco Asset Management. In its latest annual report Stobart Air says in phase two of its development at London Southend it will seek to “replicate the Aer Lingus Regional model using London Southend as the UK base and servicing Scotland, Benelux and Northern France”. According to the report Stobart is targeting a “minimum of 300,000 passengers per annum”.

According to Andrew Tinkler, Chief Executive Officer, Stobart Group, the Aer Lingus Regional operation will bring “significant revenue and profit” through the airport helping to improve its value. “Our next phase is to use the airline [Aer Arann] to start new routes out of London Southend with focus on spring 2014,” he added in the company’s annual report.

There are also suggestions that Aer Arann could also establish a base at Stobart Air’s other UK airport, Carlisle. After a fairly lengthy process, the company has finally secured planning consent for the development of Carlisle Airport, subject to legal intervention. “We are currently understanding route and carrier planning for Carlisle Airport and are aiming to capitalise on the business potential for London-bound traffic, as well as providing an exclusive new in-bound route for some of the Lake District's 40 million visitors each year,” said Tinkler. The suggestions are Aer Arann could operate twice daily services to London Southend and a daily link to Dublin, again from spring 2014.

In an interview with The HUB earlier this year, Aer Arann executives confirmed that the business is now on a strong financial footing and this will provide the platform for growth. From June 1, 2013 the airline is introducing a new link between Dublin and Birmingham and from July 1, 2013 a new Dublin - Manchester route will commence – both routes are already flown by Aer Lingus’ mainline business. With additional frequency growth Aer Arann’s total capacity at Dublin Airport will be up around a quarter this summer compared to last year.

"We recently outlined a package of measures to grow Aer Arann as part of our “new beginning” strategy. These measures included a restructuring of the company, significant investment in new aircraft, extension of the franchise agreement with Aer Lingus until 2022, and the addition of new routes to Manchester and Birmingham,” said Seán Brogan, Interim Chief Executive Officer, Aer Arann. “Given these measures, an increasing customer base and expanding route network, we now need to grow our team. These new positions mark another milestone in the future of Aer Arann, and we look forward to welcoming our new recruits over the next 12 months."

The main focus for Aer Arann under the Aer Lingus Regional brand is providing air services between the UK and Ireland. In the table below we look at the largest O&D markets between the UK and Ireland, highlighting the airport pairs that are currently already served by the carrier or by its rivals. The largest airports by O&D demand not currently served by Aer Lingus and Aer Lingus Regional are London Stansted, Liverpool John Lennon, London Luton, East Midlands, Newcastle, Leeds Bradford, Glasgow Prestwick, London City, Southampton and Exeter.

These airports are all already served from Ireland by airline rivals but could be growth options for Aer Lingus Regional, especially some of the regional destinations, while new services from Cork and Shannon could be introduced to markets already served from Dublin. Additional frequencies are likely to also be added on some existing routes and the carrier has already suggested a fourth daily rotation could be introduced on the Dublin – London Southend link.

Of the UK markets currently not served by either Aer Lingus or Aer Lingus Regional, Liverpool John Lennon (October 2004 – June 2006) and Newcastle (October 2006 – April 2009) are both markets that in the last decade were served by Aer Lingus mainline from Dublin, while Aer Lingus Regional has previously offered flights to London Luton from Waterford, a former Aer Arann route.

There are also other UK points that are currently not served directly from Ireland, including Doncaster Sheffield and Durham Tees Valley (both former Aer Lingus Regional routes from Dublin in 2010), Inverness (a destination served by Aer Arann between April 2006 and August 2009); Guernsey (last served from Dublin by Flybe in 2008), Humberside (served by Ryanair in 2006), Manston (linked to Dublin and Shannon by EUjet in 2004 and 2005), Newquay (linked to Dublin by Air Southwest up until its closure and linked previously to Cork by Aer Arann, Air Southwest and Eastern Airways) and Norwich (a Flybe route from Dublin up until March 2009).