As the saying goes, if you can't lick them, join them. That's what Aer Lingus has done. To salvage its faltering airfreight business, which has been hurt by a combination of higher costs, impending deregulation, and increasingly stiffer competition from integrated carriers like Federal Express, Ireland's national carrier has gone into the door-to-door delivery business.
Through its 50-50 joint venture this year with Securicor, a British security company, Aer Lingus hopes to compete with the integrated carriers for the burgeoning European door-to-door parcel market. The new company - Aer Securicor - will use the carrier's fleet of Boeing 737 passenger and freighter aircraft. It marks the first time a scheduled airline and integrated door-to-door operator have joined forces this way.
The advantage Aer Lingus has over larger rivals like Pan American is flexibility. ``We are smaller,'' says John Hartnett, Aer Lingus's cargo manager. ``We have to be ahead of the game. We have to be faster. We have to be more innovative.''
Initially, the company is targeting Europe for the service, but plans to expand outside the Continent as well.
Aer Lingus, headquartered in Dublin, plans to expand its North American operations next year by increasing the frequency of its flights to New York and Boston, by reentering the Chicago market, and by seeking permission to offer flights between Ireland and the West Coast of the United States. The airline also provides service between Ireland and Britain.
Recently, the carrier named Cathal Mullan chief executive, effective Dec. 1, replacing David Kennedy, who announced earlier this year that he would take early retirement.
Mr. Mullan, an Aer Lingus career man, had been chief executive under Mr. Kennedy, and will be in charge of the expansion. The airline had record profits of $60 million for its fiscal year ended March 31.
One reason for the expansion, Mullan said in a telephone interview, is that Northwest Airlines is withdrawing from the Irish market, leaving Aer Lingus to compete with Pan American World Airways, Delta Air Lines, and several charter operators.
Increasingly, the airfreight business is changing. On the European end, the arrival of integrated carriers has resulted in a new service level and pricing structure for the industry, mostly lower-cost and better service. Scheduled airlines, on the other hand, have been slow to respond, and many have not responded at all in terms of lower-cost airfreight service.
For Aer Lingus, the message was clear: ``We had to halt what was a declining base for us,'' Mr. Hartnett said.
The carrier fought back last spring, gaining new European routes. ``The new service will allow Aer Lingus to be competitive in the post-1992 deregulated market in Europe of 320 million people,'' Hartnett said.
``Nobody else has offered a service like this before,'' he added. Aer Lingus has also pumped $5 million into improvements in its on-ground services at cargo terminals at Shannon Airport in Dublin and John F. Kennedy International Airport in New York, with further expansion slated for London and Boston.
The improvements include installation of new cargo handling equipment, new loading docks, pallet building, and weighing and storage facilities to give faster physical handling service to cargo.
``We had to set out and make our standards of service on the ground compatible with the speed of transportation in the air,'' explained Denis O'Sullivan, manager of cargo services.
Aer Lingus's most pressing problem now, Hartnett says, is ``adjusting product and services to meet a rapidly changing and competitive environment.'' Another problem, he says, is finding a replacement for the existing 737-200 series of aircraft. He points to a statement made by former chief executive Kennedy that the carrier's needs would be satisfied if Boeing produced an all-cargo version of its existing range of 737 aircraft.