Obligation driving Aer Lingus membership in transatlantic JV
Aer Lingus is slowly moving towards joining the transatlantic joint venture with British Airways, a step that it was “obligated” to take when it was purchased by International Airlines Group (IAG).
Terms of the Dublin-based carrier’s membership are finalised and it is applying the necessary antitrust approvals to join the immunised partnership with American Airlines, BA, Iberia and Finnair, says Stephen Kavanagh, chief executive of Aer Lingus, at a Wings Club luncheon in New York on 29 March.
Aer Lingus anticipates joining the joint venture in the next 12-18 months when all of the approvals are in place, he says.
The airline’s membership was not voluntary. Aer Lingus was “essentially obligated” to join the partnership when it as bought by IAG in 2015, says Kavanagh. It is doing so now with some “level of enthusiasm” based on the agreements reached over the past 18 months.
“Our entry into the joint business has allowed us is to really retain that level of historic cooperation with businesses and partners, such as JetBlue,” he says. “We are confident that the DNA that is everything within Aer Lingus can be protected and harnessed within the JV.”
Aer Lingus has codeshare partnerships with JetBlue Airways and United Airlines in the USA, FlightGlobal Diio schedules show. It connects to the former at Boston and New York John F Kennedy, and the latter at Chicago O’Hare.
Joint venture member American operates hubs at Chicago O’Hare and New York JFK.
Kavanagh repeatedly mentioned JetBlue and the carriers’ partnership in his remarks.
Aer Lingus’ membership in the transatlantic joint venture was not supposed to take this long. Both IAG chief executive Willie Walsh and Kavanagh said separately in early 2016 that they expected the necessary agreements to be in place shortly.
“That’s the subject of negotiations between the joint business partners,” said Walsh in February 2016. “That is ongoing. We would expect that to conclude in the next few months.”
Asked today what delayed Aer Lingus’ membership, Kavanagh dodges the question saying simply that the agreements are in place and the necessary antitrust applications are being made.
However, his comments on maintaining Aer Lingus’ partnerships with other carriers and its own “DNA” suggests that these were sticking points in the membership discussions.
Aer Lingus will coordinate its capacity, schedules and pricing between Europe and the USA with American, BA, Iberia and Finnair as a part of the partnership. Airlines tout this kind of integration as allowing them to improve connectivity and boost revenues by working together.
Connectivity was one of the drivers behind IAG’s investment in Aer Lingus. Walsh has said the carrier’s Dublin hub allows it to connect US destinations to the UK and European market that BA cannot due to slot restrictions at London Heathrow.
This is Aer Lingus’ strategy as well. Kavanagh speaks of building a “Dublin gateway” to Europe, connecting its transatlantic network to its European services.
The airline plans to grow transatlantic capacity by about 10%, including new service to Philadelphia and Seattle, in 2018, he says. It increased capacity in the market by 12% last year.