Aer Lingus, which has grown 40% by passengers carried since 2014, just announced its adding two more routes from Dublin (DUB) to Montreal (YUL) and Minneapolis (MSP), is now serving a total of 15 North American cities. To capitalize on this, the airline will refresh its brand by introducing a new livery and uniforms in the first quarter of 2019.
Although we don't know what either will look like, the airline will definitely retain the use of the famous Irish shamrock, said Kavanaugh.
"We felt the timing was right to reflect that ambition and take the opportunity to modernize and refresh the brand," Kavanaugh told TPG. "The Aer Lingus brand is iconic. The shamrock has flown on the flag for many many years. We are going retain the inherent and innate Irishness but we are going to attempt to modernize the brand and make it relevant to an airline that is changing in terms of its network, its proposition."
Aer Lingus was acquired in 2015 by IAG, the owner of British Airways and Iberia, and has consistently been the group's most profitable airline.
"Our ambition is to be the leading value carrier across the North Atlantic and we will continue to add new routes and capacity on an ongoing basis over the coming years,” Kavanaugh said in a statement.
Surprisingly, Kavanaugh said the carrier's growth has come despite it cutting costs across the board — like not cleaning aircraft at every turn on short-haul. It's focused on improving its Net Promoter Score, a measure of customer loyalty which rates passenger satisfaction on a variety of elements, on aspects that passengers really care about, like improving its IFE screens or wrapping its headphones in plastic. Customers didn't seem to care if aircraft were less clean but were much happier with the other changes to service, according to the airline.
The brand refresh doesn't just mean a new look, but real improvements on the passenger experience side. Starting in the first quarter of 2019, the airline will begin to serve a complimentary glass of wine or beer on transatlantic flights for passengers who purchase "smart economy" tickets (one step above its basic saver fare).
While business-class passengers enjoyed 400Mb of free WiFi, those in coach will now get a taste of the action — "smart economy" passengers will now enjoy 20mb of free social messaging on transatlantic routes. Although that's not a whole lot of data, it's quite rare for an airline to offer any sort of free Wi-Fi on long-haul flights. It may be a move against Norwegian, which serves a similar transatlantic market but gives its flyers unlimited, albeit slow, free Wi-Fi.
In both his speech and interview with TPG, Kavanaugh consistently referred back to wanting to be the top transatlantic value carrier. While Aer Lingus is clearly a step above low-cost carriers like WOW and Norwegian, it is competing for the same travelers. So how will they beat them?
"We compete with them on price, but we beat them on product," Kavanaugh said.
Aer Lingus can compete with low-cost carriers like WOW or Norwegian. Kavanaugh said, because of the depth and maturity of its route network, competitive business class prices and product, and bundled smart economy fares. Aer Lingus has a better connecting proposition than WOW, and its pre-clearance for US immigration at Dublin airport deeply improves the passenger experience. in the airline's view.
In fact about 50% of Aer Lingus passengers are just traveling through Dublin and onward to other European destinations. The airline thinks it can expand to smaller airports like it did in Hartford (BDL) — essentially all of that traffic is connecting onwards. In fact, Norwegian just axed routes from New York Stewart (SWF) and Providence (PV) to Edinburgh (EDI) and Belfast (BFS), so there's now less competition on those "secondary" North Atlantic routes.
Right now, Aer Lingus serves about 3% of the transatlantic market. Kavanaugh says us that it wants to build upon that by possibly growing its fleet of 13 Airbus A330 widebodies, as well as by adding flights to the Midwest and East Coast with its 12 new narrowbody A321LRs that will be delivered early next year.
"Would it be crazy to try for 5% [of the market]?" asked the CEO. ""I think our ambition is based on reality."
For that to happen, Kavanaugh says Aer Lingus needs to go from 17 to 30 long-haul aircraft. For now, it thinks its A330 and A321LR duo is a winning combination, and it will use those jets to increase frequencies at airports it already serves. It'll keep focused on reducing the cost of flying which in turn will attract, and retain, customers.
Finally, when asked about its AerClub loyalty program, Kavanaugh said that it's had difficulties getting it off the ground when it replaced the legacy Gold Circle program.
"It's been difficult for us, to be frank," Kavanaugh said, but "we absolutely recognize the importance of reward."
Beginning in the first quarter of next year, Aer Lingus flyers will be able to redeem and pay with Avios online — currently you have to call in to redeem points for an award ticket on the carrier. Chase and Amex are both transfer partners with the airline's loyalty program.
A sweet spot in the British Airways Avios program was using Avios on Aer Lingus flights to avoid BA's massive fuel surcharges. Although he wouldn't specify, Kavanaugh did seem to acknowledge that its a real pain point for BA flyers, and it doesn't sound like passing along those costs is in Aer Lingus' plans.
"We rely upon price, we have ambitions to grow at the same pace we've grown in the last few years. We are not going to do that by taking the price elasticity of our customers for granted. We have a value proposition where we work very hard to deliver cost savings and to past those cost savings along to competitive airfare and we see Aer Club and Pay with Avios as another positive reinforcement of that competitive value proposition."
