Sir, - I would like to make a number of points in relation to the analysis of Aer Lingus by Dr Garret FitzGerald (August 15th).
Firstly, as a commercially mandated company, Aer Lingus's prime role is to operate a profitable business. The Group has a responsibility to act in a commercial manner and to achieve the best possible financial return on the shareholder's investment. The airline, which has returned increasing profits in each of the past three years publishes its key financial details in a comprehensive and open fashion through its Annual Report and Accounts which is available to all stakeholders. In addition, the Group provides detailed reports to its shareholders of all its activities on an ongoing basis.
Few companies have been subjected to the same degree of public scrutiny of their business over the past number of years. In addition to almost daily analysis in the media, a number of independent audits and examinations have taken place, including that of the European Commission, over the eight year period of the Aer Lingus recovery plan. Without exception these various examinations found that Aer Lingus had achieved, and in many cases exceeded, its business targets, particularly in the area of cost containment and efficiency.
The publication of performance data, as in any business, is a sensitive area. The decision to make information on the airline publicly available is set against a number of factors, including the competitive environment, best business practice and the benefit to both the business and the audience groups.
Secondly, the profit-focused strategy being pursued by the Aer Lingus Group is also reflected in the airline's management of its network of routes. In a realigned structure, Aer Lingus now operates three distinct profit centres, Transatlantic, European and Commuter. The alignment of our business in such fashion allows each profit centre to take responsibility for its own costs and revenues and thereby focus in a clear manner on achieving specific profit targets.
Within this mandate, the primary focus is route profitability rather than market share and with this focus, our financial results, including those on high-volume, competitive routes have improved strongly, as demonstrated by our improved profit performance.
While market share is an important factor in any competitive environment, the focus must be clearly more profit-centred, rather than the blind pursuit of market share as an end in itself.
Thirdly, in relation to the issue of staff resources, it is important as in any business to make the distinction between different product offerings in the market. To borrow an analogy from another industry, there are many different types of supermarkets with different emphases on cost, quality, service, head count etc. All are perfectly valid subject to one governing criterion - commercial profitablity.
In an era where air transport has become commoditised, Aer Lingus intends to stand out from the competition by committing ourselves to quality customer service. In the airline we are instituting our "Programme for a Better Airline" which is based on the concept of constant improvement in every aspect of our business, a clear focus on the customers' needs and the delivery of value for all our customers, while maintaining profitability.
The nature of the Aer Lingus customer-service based ethos requires an investment in people, training and technology beyond the commodity-type air transport providers. The airline has achieved efficiencies in the area of work practice changes and reorganisation and we are fundamentally committed to achieving more, but Aer Lingus is an airline offering added-value products and services, not just in business class but for all customers.
The full-service and back-up offered to all customers, the facilities and services provided to special needs customers, the network of routes operated and the range of options for connecting passengers all add to our cost base, but equally they are areas where the customer benefits, thereby resulting in enhanced profitability.
Our commitment going forward is to find ways of continuing to provide better levels of customer service while reducing our unit costs. In our Business Plan and in many public statements we clearly cite both these issues as key to our continued viability.
Finally, as in any business, issues relating to ownership are clearly a matter for the shareholder. As a group which has recognised the importance of profitable growth in a globalised industry and of positioning itself accordingly, the key task for Aer Lingus is to explore means of securing this from a position of strength with a sound financial and operating performance. We are determined to continue to achieve improvements in efficiency, while being ever more responsive to customers' needs for better value and service and ever mindful of our strategic positioning in an evolving global industry. - Yours, etc.,
Dan Loughrey,
Group Corporate Affairs Director, Aer Lingus, Dublin Airport.