Read Michael O'Leary for Free Online Page B

deep pockets to survive the initial maelstrom that its arrival would inevitably provoke, and would need strong political support within the Irish government if it was going to get the breathing space to survive. As the scale of the airline’s difficulties began to penetrate the minds of Ireland’s public representatives, political support for a more open market began to grow. To tip the balance, a crisis was needed.
    No sooner had Aer Lingus seen off Avair in 1984 than it was embroiled in another turf war, this time across the Atlantic. Competition on the London–New York route had become intense in the late 1970s and early 1980s, and the still tightly regulated Ireland–US market was not immune to the pressure.
    The Irish government controlled the price that airlines could charge on the routes from the US to Ireland and it also controlled the number of charter seats that could be sold in a given year at lower prices. That ought to have been enough to ensure that Aer Lingus was protected from competition and ought to have ensured that Aer Lingus made money, but the Irish government could notcontrol what was happening in other countries, especially in Britain and the US.
    Sir Freddie Laker, the British entrepreneur who had operated cheap charter flights to the US from London’s Gatwick airport in the 1970s, had finally won permission to launch his cut-price Skytrain service from London to New York in 1977. Laker offered fares of less than GB£100 each way, making transatlantic travel possible for people who had never thought they would be able to fly. Laker was a people’s hero, knighted in 1978 by the Queen, but his dream was undone by a combination of forces. Skytrain used McDonnell Douglas DC10s and public confidence in the plane was shattered by a series of fatal crashes which caused all DC10s to be grounded worldwide in 1979. Laker lost millions, but limped on until 1982 when his banks finally pulled the plug.
    His legacy went far deeper than a five-year low-fares adventure. Laker had caught the public’s imagination and made it possible for ordinary people to fly. He had changed the mindset: air travel did not have to be prohibitively expensive and competition could expand, not destroy, a market. The next year People Express launched a cut-price service from Newark to London. There were only a few flights each week, but the fare was a staggeringly low $79 each way, or about GB£100 for a return flight. Aer Lingus’s cheapest fare that year was £399 return, or more than $600.
    Neither Skytrain nor People Express were direct competitors with Aer Lingus, but they showed the travelling public that cheap flights were possible and created a hunger for discounts that the Irish airline refused to cater to. But if Aer Lingus would not discount, the travel agents would. They earned large commissions – up to 15 per cent on transatlantic ticket sales – and had plenty of room to cut prices if they were prepared to slash their own profits. And so the first price war started in the Irish airline business in 1983, under the noses of Aer Lingus and in direct defiance of government policy.
    Neither government nor airline was amused. In April 1983 the Irish government took the unusual step of intervening in the market to prevent Liam Lonergan, the managing director of ClubTravel, selling a return ticket with TransAmerica to America for £299 against the government-approved rate of £399.
    â€˜We were [discounting] for about two years before [Aer Lingus and the government] got uptight about it. They made the usual noise – they threatened TransAmerica and said, “No, you can’t do this.” And that didn’t work and they threatened us and said, “No, you can’t do this.” And we said, it’s within the law – there’s nothing in the legislation which says we have to sell at a certain price. They said, “We believe there is.”’
    Two