Since I wrote yesterday that Aer Lingus appears poised to accept a third takeover offer from British Airways (and Iberia) parent IAG, I’ve gotten several messages from readers quite concerned.
You wouldn’t expect a mostly US audience to worry over consolidation in the European airline sector, especially when it’s a non-alliance member being acquired. But Aer Lingus is a British Airways partner already, and one of the few ways to redeem British Airways points across the Atlantic without paying big money in addition to miles in the form of high fuel surcharges.
The first thing to know though is that nothing will change right away. The transaction has to be accepted. Then it has to close. The airlines will continue to operate fully independently at first. So I wouldn’t expect to see anything meaningful different over the next year.
We do not know what, if anything, will ultimately change.
There’s very little that British Airways members will look forward to with this acquisition, because BA and Aer Lingus are already partners so you can use BA points for Aer Lingus awards. But here are the things to look out for.
Fuel surcharges
The biggest concern that’s been expressed to me so far is that flying award trips on Aer Lingus will begin to incur fuel surcharges.
in fact, there are fuel surcharges now. They’re just low. The worry is that with the same folks in charge at Aer Lingus as are in charge at British Airways, you could see higher fuel surcharges and so more expensive award tickets.
We’re getting very speculative and way ahead of ourselves, but if that happened it’s certainly plausible that we could see.
- Avios become the currency of Aer Lingus, as at British Airways and Iberia
- Points become transferable, to and from Aer Lingus accounts, as with British Airways and Iberia (as long as an account has been open 3 months and has had some activity in it).
- Lower fuel surcharges charged by Aer Lingus to its own members / for redemptions in its own currency, as we see at Iberia.
So while it’s plausible that British Airways awards on Aer Lingus could get more expensive, as long as we’re speculating there’s a path that even if this happens there still could be ways around it.
Join oneworld alliance?
British Airways and Iberia, owned by IAG, are members of oneworld. If IAG acquires Aer Lingus, we could see the Irish carrier join that alliance — especially as Aer Lingus has pursued more of a premium strategy (investing in its business class product) than its recent past focus on being more of a low cost carrier.
This doesn’t necessarily follow though. IAG owns Vueling but hasn’t converted it to the Avios program (though you can earn and redeem through Iberia Plus, it has its own independent points program) and it hasn’t joined oneworld.
If Aer Lingus does become part of oneworld, that would be a plus for American AAdvantage members who could then use miles for and earn miles on Aer Lingus flights. They’ll find that Dublin is a great place to connect.
Of course, BA is a much better program to use for redeeming Aer Lingus flights across the Pond — Boston to Dublin and to Shannon costs just 12,500 points each way in economy and 25,000 points each way in business because both are just shy of 3000 miles flown. 50,000 miles for roundtrip transatlantic business class is a pretty good deal!
End of United partnership?
United and Aer Lingus codeshare and have a lounge access agreement. It’s not impossible that this could continue, especially if Aer Lingus doesn’t join oneworld, but it would be surprising to see if Aer Lingus becomes an alliance member. If Aer Lingus becomes a part of oneworld, we could see it join the transatlantic joint venture with American, British Airways, Iberia, and Finnair. Anti-trust immunity across the Atlantic with those carriers could be consistent with codesharing with others, though I’d just personally be surprised if that would last.
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And don’t forget – before pursuing it’s low-cost strategy, and then returning to a more premium model – Aer Lingus has previously been a member of OneWorld.
With Aer Lingus part of BA, it will have no incentive to undercut BA fares. At present, passengers can choose a low-cost routing like BOS-DUB-LHR to get to/from London, and this somewhat constrains BA’s fares on nonstop service. With Aer Lingus part of BA, it won’t undercut BA which will give BA greater opportunity to increase its nonstop fares. This, like all consolidation, tends to harm consumers. Certainly there’s been a remarkable level of consolidation on the atlantic already.
If this deal goes through — which seems likely at the point — I have little doubt that it will be bad for me as a USA traveler with plenty of Avios points and who likes to do the BOS-DUB award trick. I’d be shocked if BA didn’t harmonize fuel surcharges with Aer Lingus. I would also expect less price competition across the Atlantic. At least within Europe, DUB will still have Ryanair, so that probably won’t matter much.
It is what it is. The airline industry isn’t run for the advantage of folks who know how to game it. 🙂
The other big imponderable is Monopolies. With the acquisition of BMI, BA was forced to divest some LHR slots but bettered the regulators and is shortly to get them back. EI has large numbers of LHR slots. DL/VS would love them and, perhaps UA/LH would like them also, but they’re shorthaul slots as were the BMI ones. But these slots are absolutely crucial in terms of maintaining competition across the Atlantic, and keeping a lid on fares, especially C fares.
I would expect former Air Lingus flights to charge high fuel surcharges just like BA main does if they do get bought out. 🙁
Gary, what do you have to say about VA, JL, and QR dropping YQ from their fares (as reported by Frommer’s and ABC)?
How soon should award redemptions on these carriers become YQ-free?
@propoganda I reported on VA days ago, their US routes won’t have YQ, Delta already doesn’t add fuel surcharges to their awards and that should apply to their own miles and other partners right away. With no fuel surcharge in a paid fare it shouldn’t apply in a points booking.
If it joins the transatlantic JV there will be fuel surcharges on redemptions identical to BA. End of.
That said, the EU will take a close look at whether they need to draw a line now.
Whilst the logical guess is that BA will apply outrageous fuel surcharges to Aer Lingus reward flights, they may just not but instead cut the seat availability and use the lack of YQ as a marketing tool to get people to fly BA and collect AVIOS with the prospect of a great cheap flight redemption deal.