Analysis:Aer Lingus's cost base in Belfast will be significantly lower than in Shannon, writes Ciarán Hancock
While not a popular one in the Shannon region, Aer Lingus's decision to open a new base in Belfast would seem to make sound commercial sense.
Belfast International Airport (BIA) is the second busiest on the island with 5.5 million passengers expected to pass through it doors in 2007.
A master plan for growth, drawn up by BIA last year, estimated that passenger numbers would grow to 6.9 million by 2015 and to 12 million by 2030. It seems only logical, therefore, that our national airline would want to get a slice of the action in Belfast by announcing eight new routes that could carry up to one million passengers a year.
As part of the move, daily flights to and from London Heathrow are being rerouted from Shannon to Belfast. This will end Aer Lingus's short-haul services from Shannon.
While Shannon-Heathrow was profitable, Aer Lingus says it can get twice the return by operating these aircraft from Belfast to London.
In addition, its cost base will be significantly lower in Belfast. The pay structures and work practices of staff in Shannon are based on agreements negotiated many years ago, which Aer Lingus argues are out of step with its low-cost competitors, primarily Ryanair. The 100 staff employed in Belfast will be on terms comparable with what other airlines offer there.
Yesterday's announcement also signalled Aer Lingus's commercial independence since it floated on the stock market last October. In years gone by, the transport minister would most likely have intervened to make sure the regions were looked after. This time round, Noel Dempsey regretted Aer Lingus's decision, but said it was "based on commercial considerations over which the Government has no control".
Aer Lingus's decision to quit the Shannon-Heathrow route is likely to make 45 ground staff redundant. This is to be regretted. As is the fact that no airline will now fly from the Co Clare airport to Heathrow, although Ryanair operates to other airports in London. About 320,000 people used the Shannon-Heathrow route each year, roughly one-tenth of the Clare airport's total passengers.
Aer Lingus chief executive Dermot Mannion said it was a "very difficult and sensitive" decision for the airline to take.
It was also a brave one, given that Aer Lingus is in the midst of difficult negotiations with its trade unions about the introduction of changes to pay structures and work practices for staff in Dublin, Cork and Shannon. Talks have been ongoing since the start of this year. The decision to axe Shannon-Heathrow is likely to harden the resolve of Siptu and Impact.
Jack O'Connor, Siptu's general president, has not ruled out industrial action and said Aer Lingus's management had reneged on commitments given before last year's flotation. "This has added to the general atmosphere of mistrust," he said.
Aer Lingus was keen to point out that services from Shannon to New York, Boston and Chicago are guaranteed until the end of 2008, at least.
Ironically, the last time Aer Lingus flew from Belfast was in 2001, when services from Northern Ireland's capital made a stopover in Shannon before heading on to the US.
This time around, Aer Lingus is putting its efforts into short-haul routes. About 1.2 million businesspeople use BIA every year and Aer Lingus will be hoping its Heathrow route will draw a good number of these.
With Northern Ireland's First Minister, Ian Paisley, and his Democratic Unionist Party colleague Jeffrey Donaldson both publicly welcoming Aer Lingus's decision, and with the official launch taking place at Stormont, it is probably not unreasonable for the Dublin-based airline to expect civil servants travelling to and from London to use its services.
This move, however, is not just about Heathrow. Aer Lingus is also launching flights from Belfast to Amsterdam, Barcelona, Rome, Budapest, Malaga, Faro and Geneva.
These are clearly aimed at tourists, a market that is likely to swell as the North's economy grows in the years ahead.
Aer Lingus will also be hoping to attract the near 500,000 Northerners who are estimated to fly from Dublin airport on scheduled services each year. Many more take charter flights from Dublin.
Not that Aer Lingus will have the market all to itself. BMI and Ryanair both operate from the George Best airport on the other side of Belfast, while easyJet announced four new routes from BIA earlier this month.
With a powersharing government now firmly established, the North's economy looks set for take off.