It is not particularly important whether Aer Lingus is State-owned orprivately owned. What matters hugely is that an Irish-based carriercontinues to provide a transatlantic service, writes Tadgh Kearney
If, as now appears likely, today's strike by Aer Lingus pilots is part of an ongoing series of disruptions, the negative impact on the economy and on Ireland's reputation as a location for overseas investments will be serious.
As an open, island economy with a huge dependence on overseas investment, it is impossible to overstate the critical importance of reliable air access to our prosperity.
Unreliable air services, combined with the effects of belt tightening and rationalisation by many multinationals, could put thousands of Irish jobs at risk in industry, tourism and financial services. It is therefore imperative that this dispute is concluded speedily.
Traditionally, pilots wield great power in airlines because of their unique position in determining whether an airline can operate or not. They are an elite group with high rates of pay and enjoy some of the best terms and conditions of any section of the Irish workforce. Most people do not realise that the maximum allowable flight time for a commercial pilot is on average 18 hours per week.
Many Irish workers must have smiled wryly to themselves this week at the comments of some pilot spokesmen saying that pilots were quite willing to work many of the new work practices on a voluntary basis, but resisting the attempts of their employers actually to require them to work the revised arrangements.
Aer Lingus workers, with the conspicuous exception of the pilots, have agreed to the radical restructuring necessary for the survival of Aer Lingus.
They have accepted savage cutbacks in workforce numbers as well as, in some cases, significant changes to their terms and conditions of employment. Many of them have no guarantee of easily finding future employment and some older employees will find it particularly difficult. It would be understandable if they felt aggrieved that the most privileged members of the Aer Lingus workforce appeared unwilling to share their part of the burden.
The bottom line for Aer Lingus comes down to costs. The benchmark for operational efficiency for airlines such as Aer Lingus is the likes of Ryanair and Easyjet and the other low-cost airlines.
The reality is that if airlines cannot achieve something approaching those cost levels, there is no commercial future given the expectation of today's customers for low fares.
To achieve this, Aer Lingus needs at the very least the kind of cost base envisaged in their survival plan. In fact, it probably needs a great deal more.
The pilots' dispute is but one of a number of challenges facing Aer Lingus. These include the privatisation of the airline either by flotation or, as now appears more likely, a trade sale. It is likely that the shareholder, i.e. the Government, will start to move this process forward sooner rather than later.
How can this best be managed in the strategic interests of the economy.It is not particularly important whether Aer Lingus is State-owned or privately owned; but it is hugely important that an Irish-based carrier continues to provide a broad range of services out of Ireland, especially on the Atlantic. Currently, that role falls naturally to Aer Lingus.
Competition will ensure that we will continue to have a broad range of eastbound services to the UK, Europe etc., which will be provided by both low-cost and full-service carriers.
However, there is no such guarantee on the Atlantic. Despite the fact that air services on the Atlantic into Ireland can be profitable, they account for only a tiny percentage of overall transatlantic EU-US traffic. Major international carriers can afford to ignore Ireland as a small market if it does not fit into their macro planning.
Experience has shown, particularly post-September 11th, that when major carriers begin to cut back and consolidate their services, they will abruptly close down smaller and marginal services and consolidate their home base. In other words, the home country suffers least and last.
If Aer Lingus went out of business, or was absorbed into a mega-carrier like British Airways, it is possible that in a very short time and in adverse economic conditions, we could have no transatlantic services out of Ireland being provided by an Irish based carrier.This would have huge structural implications for the Irish economy.
SHOULD Aer Lingus be sold, the priority must not be the financial return to the Exchequer but the underpinning of the airline's future as an Irish-based carrier, either as an independent entity or as part of a larger aviation group.
Many of our biggest multinationals would not be here if we did not have daily scheduled services to a variety of North American destinations: any revenue to the Government from the sale of Aer Lingus would be dwarfed by the loss to the economy if we could not guarantee at least the current level of services on the Atlantic.
The underpinning of industrial development and tourism must be the first priority for the Government in deciding the future of a privatised Aer Lingus.
This brings us neatly to the next challenge facing Aer Lingus: that of "Open Skies". The recent Advocate General's draft decision to the European Court of Justice states that existing Open Skies agreements between individual EU countries and the US are contrary to Community law. This is likely to be confirmed by the European Court of Justice later this year.
This will open the door to the negotiations of a single Open Skies agreement between the EU and the US, creating the largest single international aviation market in the world with a combined population of over six hundred million people.
Rather than creating more choice for consumers, it is possible that Open Skies may lead to massive consolidation in the aviation industry, leaving us with a handful of mega international carriers and less choice for consumers.
It is too early to tell how this will impact on Ireland and, in particular, Aer Lingus.
However, it is important to emphasise that Open Skies can also present opportunities. We in Ireland must ensure that our national interests and those of other peripheral regions in Europe are not forgotten when the Open Skies agreement is being negotiated.
There is a real danger that the interests of a small number of mega carriers and access to a few major European hub airports such as Heathrow, Charles de Gaulle and Frankfurt will dominate the negotiations and that the interests of the smaller, peripheral countries will be all but ignored.
Our national interest dictates that we in Ireland must put aside our regional differences and establish a nationally agreed strategy enabling Ireland to maximise the benefits of Open Skies and minimise the risks.
If the EU is to drive forward an Open Skies agreement it must convince peripheral countries such as Finland, Scotland, Ireland, Portugal and Greece that it will bring benefit to them. In other words the EU must represent the interest of all 15 member-states and not just the interest of a few.
The future economic prosperity of Ireland is dependant on this.
Tadhg Kearney is chairman of the Air Transport Users Council of the Chambers of Commerce of Ireland.