Member Article

O'Leary laments "enormous waste of taxpayer money"

Ryanair faces having to reduce its stake in Aer Lingus Group following a review from the Competition Commission, which boss Michael O’Leary has called “bizarre and manifestly wrong.”

The Commission has found that against a “background of consolidation” in the airline industry, Ryanair’s shareholding in Aer Lingus obstructs its ability to merge or combine with another airline.

Ryanair have strongly criticised the decision, and claims a recent European Commission’s ruling disproves reasoning.

Boss Michael O’Leary, said: “This provisional decision by the UK CC is bizarre and manifestly wrong. The CC’s finding that Ryanair’s shareholding obstructs Aer Lingus’ ability to attract other airlines was disproved by Etihad’s purchase of a 3% stake and the evidence submitted by other large EU airlines, which confirmed that Ryanair’s shareholding was not a barrier to other airlines acquiring a stake in Aer Lingus.

“While Ryanair is one of the UK’s largest airlines, Aer Lingus has a tiny presence in the UK, serving just 6 routes to the Republic of Ireland, a traffic base that has declined over the past 3 years and now accounts for less than 1% of all UK air traffic.

“This case, involving two Irish airlines where one (Aer Lingus) accounts for less than 1% of the UK’s total air traffic, is yet another enormous waste of UK taxpayer resources on a case which has little if any impact on UK consumers.

“UK taxpayer interests would be better served if the UK Competition Commission investigated (rather than ignored) BA’s recent takeovers of BMI, Iberia and Vueling, instead of wasting time pursuing this Irish case, which is of no consequence to UK consumers.”

Simon Polito, CC Deputy Chairman and Chairman of the Ryanair/Aer Lingus inquiry group said: “Our provisional view is that Ryanair’s shareholding is likely to weaken its main competitor on routes between Great Britain and the Republic of Ireland.

‘Whilst not giving it control over the day-to-day running of its rival, Ryanair’s minority shareholding can influence the major strategic decisions that could be crucial to Aer Lingus’s future as a competitive airline on these and other routes.

‘We were particularly concerned about Ryanair’s influence over Aer Lingus’s ability to be acquired by, merge with, or acquire another airline. We thought it likely that such a combination would be necessary to increase Aer Lingus’s scale and achieve synergies to allow it to remain competitive in future.

‘We recognize that there has been competition between Aer Lingus and Ryanair since 2006. However, without Ryanair’s minority shareholding, competition might have been more intense and may be restricted in the future. Passengers on routes between Great Britain and Ireland will benefit from Aer Lingus continuing to compete vigorously with Ryanair and so Aer Lingus needs to be free to take any actions that will strengthen its position in the future.“

This was posted in Bdaily's Members' News section by Tom Keighley .