Aer Lingus says business travel between Britain and Ireland is down

Aer Lingus is experiencing a “softness” in demand for short-haul business routes, with a particular drop-off in travel between Ireland and Britain, the airline’s chief executive Lynne Embleton said on Friday.

Ms Embleton was speaking after International Airlines Group (IAG), which owns Aer Lingus, published its results for the three months to March 31st.

“Where we do see some weakness is in people travelling for business purposes, particularly short-haul, and particularly between Britain and Ireland actually, where we are seeing numbers down for people who are travelling for overnight or short business trips,” she said. “We’re seeing really good strength in short-haul leisure, particularly around the Mediterranean. We’ve got new routes to Greece and Italy this year, and they are going really, really well.”

On whether inflation and rising interest would exacerbate the cost-of-living crisis and hit passenger numbers, Ms Embleton said travel has recovered from the Covid-19 crisis and that current high rates of travel would not be a flash in the pan.

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“We’ve put almost 20 per cent more fleets across the Atlantic than we had before the pandemic, and our passenger numbers have been keeping pace with that,” she said. “The strength is the rebound from pre-pandemic in Ireland, but also really strong demand from the rest and the exchange rate really helps that. We’re bringing a lot of Americans over to Ireland, and we’re seeing that in our load factors.

“We saw just how miserable life gets when you can’t travel and I am pretty optimistic people will continue to want to travel, and this isn’t just a pent-up demand issue. People get a lot of pleasure from travelling. Business works better when it is face-to-face, and I think we will continue to see demand for flights.”

However, the Aer Lingus chief said she could not promise that customers will not see higher air fares this summer. “The costs the industry experiences are generally passed on to customers. There have been increases in ticket prices for us, but also for many other airlines. It’s really important our prices are competitive. That in turn means controllable costs need to be competitive too.”

Ms Embleton also said more stands need to be constructed at Dublin Airport to ensure the airline can continue to grow.

“We are pleased to see the second runway at Dublin Airport, but what we really need to see is stands and terminal capacity. That’s so important for us to be able to operate, to grow Aer Lingus, but also to grow the Irish economy. We want to see those build quickly by the DAA. They do have the capital in their plans to develop the airport, so we need to see that happen.”

IAG noted that Aer Lingus is also seeing a softness in demand on technology industry-related routes, but noted the airline is “more seasonally exposed” than its sister companies in the group.

IAG, which also owns British Airways as well as Spain’s Iberia and Vueling, reported operating profit before exceptional items of €9 million in the first quarter compared to a loss of €718 million in the same period last year, and the €179 million loss expected by analysts.

The company noted this was the first time since 2019 that it achieved a positive outcome in the first quarter, representing “ongoing strong customer demand across all our airlines”. It said it benefited from a strong yield performance across the group and lower fuel prices.

IAG said the outlook for the summer was “encouraging” with around 80 per cent of expected second-quarter revenue now booked. “We currently expect our full year 2023 operating profit before exceptional items to be higher than the top end of our previous guidance of €1.8 billion to €2.3 billion.”