AER LINGUS and Aer Arann are in advanced talks about a commercial alliance that would see them operate joint flights from provincial UK cities to Dublin and Cork. But this will not involve Aer Lingus taking an equity stake in its rival.
It is understood that Aer Arann would operate feeder services on behalf of Aer Lingus from certain UK cities to its main Irish bases at Dublin and Cork. This is a form of code sharing that is common in the airline industry.
Passengers flying into Ireland with Aer Arann would also be able to connect with Aer Lingus services to either the United States or continental Europe. The two airlines already operate a similar code sharing agreement on the Cork to Dublin route.
Such a deal would allow Aer Lingus to supplement its services between Britain and Ireland at a lower cost than by expanding its own services, which use large A320 aircraft. It might also enable Aer Lingus to eliminate or reduce its own services on certain routes between the two countries, thereby helping to reduce its cost base.
Aer Lingus and Aer Arann only compete on a limited number of routes, including Dublin-Cardiff and Dublin-Manchester.
For Aer Arann, this commercial tie-up would yield much-needed revenue for the loss-making regional airline, with Aer Lingus likely to buy a set number of seats on each of Aer Arann’s smaller turbo-prop aircraft.
Details are expected to be announced shortly. The board of Aer Lingus meets on Friday and this deal is thought to be on the agenda.
A spokesman for Aer Arann said: “Talks with Aer Lingus have been under way for quite some time. We’re looking at ways of expanding the current interline agreement.”
No comment was available from Aer Lingus. The Department of Transport is thought to be aware of the talks taking place and is supportive of the airlines extending their commercial co-operation.
Aer Lingus’s new chief executive Christoph Mueller is keen to pursue partnerships with other airlines as part of his strategy to turn the airline around. It will shortly commence a joint venture with United Airlines to operate flights between Washington DC and Madrid.
Aer Lingus is also believed to be considering joining one of the large global airline alliances. The airline is expected to outline its strategy to the market at an investor day on January 26th. Aer Lingus and Aer Arann are both loss-making. In August last year, Aer Arann owner Pádraig Ó Céidigh told The Irish Timesthat he had held "preliminary" discussions with potential investors and would be prepared to relinquish majority control if it was in the airline's best interests.
Aer Arann made 57 staff redundant in 2009 and cut pay by on average 7 per cent. It does not publish its financial information. Aer Lingus is seeking to agree a deal with staff that would trim €97 million a year off its cost base and cut 676 jobs. It made an operating loss of €93 million in the first half of 2009.