Aer Lingus sells travel shops

Aer Lingus plans to make its exit from the high street as cost effective as possible, according to its public relations manager Declan Conroy.

The airline's decision to dispose of all of its travel shops is part of a restructuring plan to sell off its assets "where appropriate".

A street presence is now deemed "surplus to requirements" says Conroy. Aer Lingus' booking offices on Upper O'Connell Street, at the junction of Dawson Street and St Stephen's Green, George's Street in D·n Laoghaire, Sarsfield Street in Limerick, Castle Street in Belfast, and Academy Street in Cork are all being sold.

Aer Lingus owns the freehold on both the Upper O'Connell Street shop - for which it is guiding £1.5 million (€1.9m) through Cumiskey Auctioneers - and on its Belfast shop.

The rest are held on long leases. The Dawson Street/St Stephen's Green premises has been held on a 35 year lease since 1994 with a rent of £88,000 (€111,740). The agents are looking for a premium of £100,000 (€127,000) for the lease.

The George's Street shop in D·n Laoghaire is due to come on the market and has a rent of £22,250 (€28,257). The lease is expected to fetch between £25,000 (€31,750) and £50,000 (€63.50)

The lease on 4 Sarsfield Street in Limerick will be assigned by Rooneys, which is looking for over £100,000 (€127,000) in what is a rapidly developing retail area. The rent is £33,000 (€41,910) per annum with reliefs in the first five years and the final 15. The airline is vacating the property after less than a year. It had previously occupied a property on Limerick's O'Connell Street for more than 50 years.

Number 2 Academy Street in Cork has been occupied by Aer Lingus since the mid 1990s, and has a 35-year lease, with a rent of £17,500 (€22,225). Hamilton Osborne King is looking for a premium of £35,000 (€44,450) on the lease

"We are looking at our cost base in terms of the cost of distributing our product and the commission we pay to travel agents," says Conroy.

While the events of September 11th accelerated the company's downturn, he believes the disposal of these travel shops would have happened anyway.

"With the increasing use of the internet and telephone for bookings there is no real need for high street frontage. The shops had become surplus. We were already looking at our cost base before September 11th happened."

In January of this year, Aer Lingus reduced the commission it pays travel agents from 9 per cent to 7 per cent and is now looking to reduce it further.

Bookings through travel agents account for 70 per cent of its business, but the company now needs to "cut our cloth to suit our new measure," says Conroy.

He says this downsizing does not mean they are going the route of the profitable low fares airlines like Ryanair and Luton-based operation Easy Jet, by suspending their business class service.

"We looked hard at that option, and made a conscious decision to go with a model we believe has proven itself, a two-type service, offering economy and business class. Customer demand and business traffic has suffered from the global recession but that doesn't mean the model is wrong. "

Unlike some of its rivals, Aer Lingus' internet sales account for "very little" of its business and it has been criticised as being a cumbersome website. The airline is in the process of revamping it to make it more user-friendly.

A recent study by the World Tourism Organisation showed that one in every four travel purchases would be made online in the next five years.

Once people successfully master online booking, says Karl Stewart of Lambert Smith Hampton, "they realise it is much more convenient than going into an office in town and queuing for half an hour. "

Aidan O'Hogan of Hamilton Osborne King says there will be an impact on the market both in terms of "travel agents and booking offices. The practical function won't disappear in total, they will just merge into other services."

One industry analyst says that Aer Lingus' scaling down of its operations is to "eliminate high costs without reducing the effectiveness of the sales effort"

"It's a matter of looking at high profile locations and asking if they really need them in this day and age with internet distribution and telesales penetration, especially as a large proportion of bookings are through travel agents. Aer Lingus was one of the few left with a purely retail sales presence on the streets.

Most of the other airlines with offices here are not just a sales presence but are there to give an overall Irish presence."

The move away from high profile city centre locations began over a decade ago. Up to the early 1990s Aer Lingus had a presence on Grafton Street in the premises now operated by British fashion retailer JigSaw, which paid the airline over £100,000 (€140,170) in key money.

Ryanair bailed out of its booking office at 3 Dawson Street several years ago; it is now Tr∅ D cafΘ.

TAP, the Portugese Trade and Tourism board, is seeking over £100,000 (€140,170) for the lease of its premises at 54 Dawson Street in Dublin with a rent of £48,000 (€67,53) payable on the ground floor unit. Lisney's Kevin Ryan says TAP has decided it no longer needs a presence on the ground floor and will confine its offices to the upper level.