Aer Lingus 2012 Annual Report Download - page 12

Download and view the complete annual report

Please find page 12 of the 2012 Aer Lingus annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 124

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124

OPERATING REVIEW AND KEY PERFORMANCE HIGHLIGHTS Aer Lingus Group Plc
ANNUAL REPORT 2012
10
2012 2011 2010
Growth vs.
prior year %
Growth vs.
prior year %
Growth vs.
prior year %
12,464 12,509 12,188(0.4%) 2.6% (7.8%)
6,221
18,685
6,084
18,593
6,081
18,269
2.3%
0.5%
0.0%
1.8%
(24.1%)
(13.9%)
Network performance – Capacity
(as measured by ASKs)
Short haul (million)
Long haul (million)
Total network (million)
2012 2011 2010
Growth vs.
prior year pts
Growth vs.
prior year pts
Growth vs.
prior year pts
75.4% 74.6% 74.9%0.8 pts (0.3 pts) (0.5 pts)
82.5%
77.7%
77.6%
75.6%
78.4%
76.1%
4.9 pts
2.1 pts
(0.8 pts)
(0.5 pts)
5.3 pts
1.6 pts
Network performance – Load Factor
Short haul
Long haul
Total network
As noted earlier, our Irish and UK markets remained relatively weak in 2012 and on this basis, we sought to generate additional passenger traffic by focusing
marketing efforts on the inbound segments of routes to Ireland across both long and short haul services. Approximately 47% of bookings are now sourced
from outside Ireland and approximately 60% of long haul bookings are now made from the U.S. These trends have served to protect our traffic, yields and
load factor and helped to increase profitability.
2013 priority: 2013 short haul capacity deployment on our mainline operations is expected to be lower than 2012 as a result of the introduction of two
further A319 aircraft to replace two A320 aircraft. However, long haul capacity will increase by approximately 11% in order to serve increased demand in
the transatlantic market which performed strongly in 2012. We intend to add additional frequencies to the Boston and Chicago services in Summer 2013
and will deploy the long haul A330 aircraft which is returning to the mainline Aer Lingus long haul fleet following its previous deployment on the enhanced
codeshare agreement with United Airlines.
Optimising fare revenue per seat
2012 priority: Continue to increase average fare revenue per seat as a cornerstone of our commercial strategy while acknowledging both the uncertain
consumer markets in which we operate and that our principal competitor is Europe’s largest low cost / low fares airline.
Progress achieved in 2012 and relevant performance indicators: Total average fare revenue per seat for 2012 was €88.70 which is 7.8% higher than 2011
and 12.8% higher than 2010. Our ability to increase both components of fare revenue per seat (i.e. average passenger yield and load factor) has been a
critical factor in mitigating inflationary pressure on non-controllable costs such as fuel and airport charges and therefore to protect and grow profitability.
Fare revenue per seat (€) 2012 Growth vs.
prior year % 2011 Growth vs.
prior year % 2010 Growth vs.
prior year %
Short haul 68.67 3.9% 66.09 5.5% 62.63 9.9%
Long haul 289.12 16.6% 248.03 4.0% 238.61 27.4%
Total network 88.70 7.8% 82.31 4.7% 78.62 11.4%
2013 priority: We expect that the current soft demand conditions noted earlier will continue to apply, particularly on short haul. Nonetheless, we continue
to focus on growth in revenue per seat as a fundamental driver of our commercial strategy. We intend to pursue this growth through a combination of
measures including:
• Continuation of the existing pricing, distribution and marketing strategies designed to stimulate inbound traffic on transatlantic services and also
business traffic from core European destinations (e.g. Benelux countries, Germany, etc.).
• Continue to optimise revenue per seat by remaining competitive for leisure passengers through active pricing and promotion; more active yield
premium management from closer in bookings and business travellers and increased “Flex” fare family penetration across our short haul network. We
will exploit the opportunity afforded by unsold seats to improve load factor where we can.
Following three years of increases in passenger yields, our ability to increase yields, particularly on short services, will be limited in 2013 primarily as a
result of weak economic conditions in our key Irish and UK markets and also due to expected increases in airport taxes and charges on ticket prices for
customers. These increased charges will feed through in higher travel costs for passengers and therefore we recognise that our ability to grow that portion
of the ticket price that we retain in the face of this inflationary pressure on travel costs may be limited.