One of the more intriguing things about the Aer Lingus decision to cancel 430 flights this summer is how quiet Michael O’Leary has been about it.
At the time of writing the Ryanair chief executive has appeared to pass up what can only be considered by his standards as an open goal. The company’s normally feisty social media feeds have remained silent. As yet there are no viral ads.
It is possible of course that O’Leary has something better to do that is of more benefit to his shareholders, but such considerations don’t seem to have held him back from sticking the boot into Aer Lingus in the past.
He has no shortage of material this time around. There is more than a little of “the dog ate my homework” about the Aer Lingus explanation for why it is disrupting the plans of 23,000 customers.
The reason given by the airline is “mandatory aircraft maintenance”. It is nothing, apparently, to do with the meteoric rise in the price of jet fuel and predictions of shortages from next month which has seen other European airlines cancel flights.
This doesn’t quite add up. Mandatory maintenance is by and large predictable and manageable. It is usually a function of the hours flown by a plane. Any well-run airline – like Aer Lingus – would build it into its scheduling. It feels a little like Aer Lingus is trying to make a virtue out of necessity.
The reason for its apparent coyness about the reason for cancelling the flights is the intense competition between the two airlines. There is little brand loyalty and passengers make their decisions primarily on price. Reliability is taken for granted.
Neither would want to blink in a situation like this and publicly cancel flights. Putting up prices is easier to hide given the dynamic pricing model both use. But customers will still put two and two together to conclude that an airline cancelling flights because of the price of fuel is going to be putting up its prices.
Has the fuel protest shown that the loudest lobby generally gets what they want?
In this context O’Leary’s refusal to take the bait raises a more worrying possibility that Ryanair is currently contemplating something similar. Not that hypocrisy has ever got in the way of the Ryanair boss giving his rivals a hard time.
It is hard to see how Ryanair cannot be at least considering cutting flights. The International Energy Agency warned last week Europe had six weeks of jet fuel left and European airlines have already announced flight cancellations directly attributed to the rise in the price of jet fuel and possible shortages due to the conflict in the Gulf.
KLM said it would cut 160 flights next month – about 1 per cent of its total European schedule – because the price of jet fuel meant they were no longer financially viable. Lufthansa cited fuel prices as part of a decision to shut down feeder airline CityLine ahead of schedule.
O’Leary has maintained that Ryanair is better placed than its rivals because of its hedging policy. The company has about 80 per cent of its fuel bought forward until March 2027. This might protect the airline from the spike in prices but a hedging agreement is not much use if the counterparty can’t deliver the fuel.
O’Leary has also warned that if the war went on beyond the middle or end of this month there was a “reasonable risk at some low level – maybe 10 [per cent], 20 [per cent], 25 per cent of our supplies might be at risk through May and June”.
We are now halfway between the middle and the end of April. The war has not ended.
The Minister for Transport’s comments over the weekend that there is very little risk to the supply of jet fuel here because 100 per cent of Ireland’s supplycomes from the US is true but also somewhat misleading in terms of Ryanair.
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The company has around 600 planes and at most only around 150 land in Ireland at some stage on their multi-sector trips around Europe each day. Those planes could in theory fill up each day in Ireland but the rest will have to take their chances at other European airports.
Airlines – such as Ryanair – store their own fuel at the airports which they operate from but the European Union is already talking about sharing and redistributing jet fuels across the member states.
It is coming close to decision time for Ryanair. A further factor the airline must consider is the EU’s so-called two-week rule. This requires airlines to give two weeks’ notice of the cancellation of a flight in order to avoid paying compensation of €250 or more.
This may have had some bearing on Aer Lingus’s unexpected mandatory maintenance announcement. You would have to wonder if Ryanair may be facing some similar maintenance issues of its own shortly.