Money from Dubai

Aer Lingus starts services to Dubai this month, but is that a sign of things to come? Will the emirate invest in the carrier? Chief executive Dermot Mannion isn’t ruling it out to TTN’s KEITH J FERNANDEZ
Flight plan for Dubai: Mannion

DUBAI is doubtless an attractive first port of call in Aer Lingus’ east-bound long-haul expansion, beginning March 27, for several reasons.

After six months with Dermot Mannion at the helm of Aer Lingus, the emirate seems a logical choice, having been his home for the 18 years he was at Emirates Airline. However, he tells TTN over the telephone on a brisk February afternoon (“It’s nine degrees here,” he says) in Dublin, it’s the two cities’ common spirit of enterprise that makes a non-stop connection between the two only natural – besides the attraction, of course, of US immigration pre-clearance at Dublin airport.
And as Aer Lingus goes public later this year, Dubai could well stump up some loose change to fund its fleet and network expansion.  Excerpts from the interview:

Why Dubai? What potential do you see in the Gulf market?
On my return to Ireland, I felt an instant connection on my return to Ireland in terms of the enterprise culture that prevails both here and in Dubai. So a non-stop air service is a very necessary connection between these two hubs.
When I arrived at Aer Lingus, my colleagues had already deemed Dubai to be the most attractive new long-haul destination for us, in terms of tourism and leisure travel, as well as the potential for premium traffic in both directions.

Your launch frequency is thrice weekly, when can we expect that to go daily? Are you looking at other GCC markets, especially since Gulf Air does Bahrain-Dublin?
For now, Dubai is very much our preferred gateway into the region, as its business and leisure capital. Aer Lingus has agreed a series of connected fares with Emirates to fly to about 10 destinations around the Gulf and in the Far East. This will allow us to dip our toes into many different markets and assess their potential for us. We expect delivery of future new aircraft by summer 2007 and at that point we will decide to either open new routes or expand our frequencies on existing routes. We’re taking a very iterative approach, one step at a time.

What facilities will you be offering on this flight for a very spoilt Middle Eastern market?
Our most important marketing tool, we believe, is the high quality of our cabin crew. Irish nationals are noted the world over for their charm, wit and very good customer service orientation particularly suited to the cabin crew role. We believe in providing a value for money service in economy with a range of entertainment options that is very acceptable. Our full service Premier class is among the best in the industry.

So can we expect an Irish pub in the sky?
(Laughs) Passengers can expect a warm Irish welcome on board Aer Lingus, irrespective of whether they’re travelling economy or Premier.

Your launch fare is Dh1400. When can we expect fares to go up?
The Dh1400 price is very much a launch price to kickstart the route. Traffic will be monitored once the route develops, but we expect fare levels will inevitably rise as public interest begins to grow in the Middle East, so now is a very good time to get low fares to Ireland.

Some airlines have reduced agents’ commissions to zero. What are you offering them?
Agents’ commission remains at seven per cent.

How about Irish visas? At this moment, your government’s only facility is in Saudi Arabia.
We are awaiting a facility in Dubai to issue Irish visas and expect this to be opened within a matter of weeks. It is a very important step to attract traffic from surrounding markets, with the objective of making travel to Ireland as easy and seamless as possible. This is most likely to be through the offices of Enterprise Ireland, which would be given a special approval to issue visas from their office in Dubai.

Could you elaborate on your dual approach: low fares in Europe but a full-service model on the long-haul network?
We have found it works very well for us. We offer low fares in Europe, and match the competition on price, beating them hands-down on service. This has been a profitable approach for us. Our full-service long haul offering is also profitable, which puts us in a unique position in Europe.

You’re opening 15 new routes to Europe this year, but what about long-haul markets?
Our primary focus once we take delivery of our new long-haul aircraft is likely to be North America with an expected liberalisation of traffic rights. Beyond that, much depends on additional further long haul capacity.

What’s the status on Aer Lingus’ privatisation plans? Will this be a trade sale or an IPO? Are you looking for investors in the Middle East?
Our date target for completion is the summer of 2006. Our preferred solution is an IPO and this is what the government’s advisory panel has recommended. The overall value of the airline has been suggested as being one billion euros, but how much government ownership will be sold has yet to be determined.
Given my own background and knowledge of Dubai’s emergence as a major financial centre, I would expect interest from investors in the Middle East and Dubai.

I believe you also want to expand your fleet?
Aer Lingus needs to grow the fleet for short-haul and long-haul activity and the additional equity will go towards that. Our ambition by 2010 is to double our long-haul capacity to 14 aircraft and expand our short-haul capacity by 60 per cent from our present strength of 28 aircraft.
I see Dublin emerging as a major transport hub in its own right, especially since we have pre-clearance for US immigration. That is a hugely attractive proposition for passengers from the Middle East and the Near East.

According to reports, Aer Lingus’ profit this year is forecast at 85 million euros. How do you plan to achieve that? What about 2006?
Our 2004 net profit result was break-even after restructuring provisions, with a 30 per cent network capacity increase. The 2005 result will be announced in a couple of weeks, and it will show a significant progress above that level. In 2006, we will increase network capacity 18 per cent over 2005, so we’re projecting continuous profit growth.

So what do you say are your successes at Aer Lingus?
In the six months I’ve been here, I make no apology for saying I’ve spent that time assessing the talent within the organisation. I will announce a new organisational structure shortly and it will place a heavy influence on developing internal talent.

You were at Emirates 18 years before joining Aer Lingus. What’s the most dramatic change you’ve seen in the way both airlines operate?
There’s an old expression that says, “the more things change, the more they remain the same”. In my experience there are great similarities between the enterprise culture of both airlines. Emirates has a young and dynamic management team that backs young talent, quite similar to Aer Lingus.

As a passenger, what are the best and worst bits of the flying experience?
In the end, airlines around the world are flying these aluminium tubes in varying shapes and sizes, and it is the cabin crew who make the difference. A warm welcome from cabin crew is the most important thing and here at Aer Lingus that’s something we pride ourselves on.

You were a banker. What brought you into airlines and are you going to go back to banking?
(Laughs) Banking is a profession I needed to go into therapy to recover from! There’s another old expression in the airline industry, “once you get the smell of jet fuel into your nostrils, there is no turning back”. The life and vitality of the airline industry simply cannot be matched by banking, or indeed any other industry.