The devotees of low-cost air travel received some mixed signals last week. Aer Lingus, now selling low-cost fares like never before, announced that it is to acquire 17 Airbus jets in a move to modernise its short-haul fleet.
The company is financially strong with cash of €350 million in its balance sheet and operationally fitter than at any time in the last decade. It is now pressing the Government to allow institutions to buy into the airline.
Ryanair, on the other hand, suffered a significant defeat when an appeal court in the French city of Nancy refused to stay an earlier judgment that the airline is receiving an illegal subsidy for flying into Strasbourg airport. Ryanair plans a full appeal but that could take a year to come to court and, in the meantime, the Strasbourg service will not operate. The court action came about following a complaint from the Air France low-fares subsidiary Brit Air that it was not offered the Ryanair arrangement.
There is something of a pincer movement closing in on Ryanair. Another airline has complained about a subsidy it gets for flying into Pau. Also, the European Commission is investigating whether or not the subsidy (Ryanair prefers the word "support") which it receives for flying into Charleroi in Belgium is illegal. Charleroi, like many of the continental airports which Ryanair flies into, is publicly owned. If the Commission decides that the subsidies given by Charleroi are illegal, then Ryanair may have to withdraw its flights to up to 19 European destinations. No wonder the share price has weakened.
Ryanair however would be entitled to feel reasonably confident about the Commission's decision. The European Union is determined to increase air traffic throughout Europe, and to regional airports in particular, so as to take some of the pressure off larger airports. In addition, if the publicly-owned airports must turn off the subsidy tap, then low-cost airlines, fairly easily, can transfer their flights to nearby privately-owned airports. The suspension of the Strasbourg service has seen Ryanair move to Baden-Baden which is only 25 miles away. There can be little doubt that Alsace's politicians will have something to say about 200,000 passengers a year being lost by struggling Strasbourg to a German rival.
In any event Ryanair's flights to publicly-owned airports amount to less than a fifth of its business. It has overcome adversity before and doubtless will do so again. There can be no doubt that low-fare airlines will continue to grow their customer base and their share of the overall market. Aer Lingus, to its credit, has shown how a cost base can be tackled successfully. Would that other long-established airlines would do likewise.