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by competition: that no more passengers would fly, but that the existing pool of passengers would just be divided up between more players at lower prices, causing every operator to lose money. While the airline was confident that it could squeeze out local competitors on the Dublin to Britain routes – Avair’s speedy collapse into bankruptcy had convinced Aer Lingus’s executives that they knew how to kill local upstarts – what it feared most of all was a transatlantic raid on its lucrative routes to the United States.
    Aer Lingus’s policy, and the policy of Ireland’s department of transport, was unremittingly hostile to increased competition on the transatlantic market. The airline argued that competitors would simply cherry-pick the most profitable summer months, leaving the state airline to bear the burden and costs of an all-year service. It was determined to fight tooth and nail to protect its position: local competitors could be crushed by classic predatory pricing, and international carpetbaggers would be fought through the courts, through the Dáil and by a rule that forced transatlantic flights to stop at Shannon airport on their way to Dublin.
    Irish consumers, who owned the airline, were never high on the Aer Lingus list of priorities. Its responsibilities were to its workers, who were heavily unionized, and not to its customers. The sheer size of the airline – it employed nearly 10,000 people in 1984 – gave it significant political power, but its near-monopoly status did not guarantee that it made profits.
    Its patchy financial performance was used to demonstrate not that the airline was poorly run, but that the market could not sustain competition. Indeed the poverty of Aer Lingus’s performance actually had government approval. Jim Mitchell, the minister responsible for Aer Lingus, told the Dáil in 1984 that ‘for the first time since 1979/80 Aer Lingus have returned to profitability. The company are hopeful of making a net profit of £3 million in the year ending 31 March 1984 after taking into account an exchequer cost alleviation payment of £4 million to help the airline during a period of particular difficulty on the North Atlantic.’
    In other words, Aer Lingus would make a profit of £3 million after receiving a cash injection of £4 million. It was, however, an improvement, as Mitchell explained. ‘Compared with net losses of £13.6 million in 1980/81, £9.2 million in 1981/82 and £2.5 million in 1982/83 [the latter figure took account of an exchequer “cost alleviation payment” of £5 million], the company’s expected results for 1983/84 represent a significant improvement, particularly against the background of the very difficult trading conditions which continue to prevail.’ The government and Aer Lingus might have been fooling themselves, but the reality of the airline’s poorperformance was difficult to hide. Because, apart from the cost alleviation payments the Irish government had also pumped in £15 million in 1983 and was about to pump in another £15 million in 1984.
    Aer Lingus had embarked on an expansion strategy that had seen it invest in a host of non-airline businesses, like hotels, recruitment, travel agencies, robotics and maintenance. Its senior management team, headed by David Kennedy, then CEO, believed that the cyclical airline industry was simply too risky and that the company needed to diversify to safeguard its earnings. It was a credible strategy for the time, but it meant, says one former senior executive, ‘that the core airline business was starved of investment and the better managers were moving into the newer businesses, because that’s where the profit was. The fleet was getting older and that was becoming a major problem.’
    In reality, Aer Lingus’s airline business was a sitting duck, waiting to be shot by a competitor, but that competitor would need