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Aer Lingus has decided to accept IAG’s takeover bid, which would mean that one company would own the flag carriers of the United Kingdom, Spain, and Ireland, since IAG already owns British Airways and Iberia.

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The deal is far from done because the Irish government owns a 25% stake in Aer Lingus and governments always seem to fear losing control of their home airline. Ryanair even owns 30%, though presumably they’d be happy to sell for the right price.

The BBC has some trenchant analysis of the deal:

For Ryanair, any takeover of Aer Lingus by IAG is about the money, for BA it is about the landing slots at Heathrow airport, and for the Irish government it is all about jeopardising the main transport link into an island economy.

From a purely business point of view it makes sense for the deal to proceed once a decent price has been agreed.

But it will really struggle to get political blessing in Dublin – especially a year out from a general election.

If the deal happens, what will it mean for you?

There are two things that could possibly happen that would have a big impact on your miles.

  1. Aer Lingus could join oneworld. This would be good. You’d have another option with your American Airlines miles. This would probably be offset by losing United as a partner.
  2. IAG could add much larger fuel surcharges to Aer Lingus flights to match British Airways’. This is terrible because it would take the value out of booking Aer Lingus flights.

Aer Lingus to oneworld

If Aer Lingus is part of the same company as British Airways and Iberia, it would make sense to join their oneworld alliance (again since it actually was a member until 2007.)

Currently Aer Lingus is not a member of any alliance and has one-off partnerships with British Airways, United, and more. You can use British Airways and United miles to book Aer Lingus award flights.

The big deal about joining oneworld is that it would give another option with American Airlines miles to and within Europe.

This would be nice, but it would most likely be offset by Aer Lingus needing to cut ties with United, a member of the Star Alliance.

So overall, for me, Aer Lingus joinging oneworld would be a wash.

Bigger Fuel Surcharges on Aer Lingus

Right now Aer Lingus adds tiny fuel surcharges to award flights between the United States and Ireland–under $100 per roundtrip.

That’s fantastic because it means there is another cost-effective way to redeem Avios to Europe. (The only other Avios partner without huge fuel surcharges to Europe is airberlin, which has none.) Famously, Boston to Dublin is 12,500 Avios one way in economy and 25,000 in Business Class plus these tiny fuel surcharges.

But British Airways charges over $800 roundtrip in fuel surcharges between the United States and Europe.

While fuel surcharges do not matter for paid flights–because the base fare can be lowered to get the total fare where the airline wants it–they matter a ton for awards on which you have to pay them. If IAG decided that the smartest way to run an airline was to have $800 fuel surcharges to Europe, and it added them to Aer Lingus flights, there would no longer be good value redemptions on Aer Lingus flights.

This would sting doubly if Aer Lingus cut ties with United, which never collects fuel surcharges on award tickets.

Bottom Line

I’m sure consolidation makes sense in the European airline industry. I’m not sure IAG will be allowed to buy Aer Lingus because governments are always very nationalistic with their airlines. I don’t want IAG to buy Aer Lingus, purely because I think my miles will get less valuable.

I don’t think Aer Lingus being bought by IAG would add useful partners on net. Aer Lingus would probably join oneworld, meaning it added American Airlines but lost United as a partner.

Aer Lingus would probably jack up fuel surcharges, meaning that it became much less valuable to redeem Avios on the airline.

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