The IAG takeover of Aer Lingus moves a step closer

Whilst I was away last week, the Irish Government finally agreed to sell its stake in Aer Lingus to the parent company of British Airways, IAG.

The only obstacle to a deal is now Ryanair which holds a 29% stake.  As Ryanair has already been ordered by the competition watchdog to sell down to 5%, a decision it is trying to reverse, it seems that a deal will be done.  Etihad has reportedly agreed to sell its 5% stake and that should give IAG enough to acquire via compulsory purchase the shares of small investors.

According to the Irish press, IAG has committed to retaining the core Aer Lingus schedule for at least seven years.  It has not committed to keeping the existing BA schedule, of course, so aircraft could be released from the Dublin route for redeployment.  There are also promises, although not legally binding commitments, to launch four new long-haul routes to North America.

With the deal now looking certain to go ahead, it is worth repeating the question I originally asked in March – how can I benefit from the takeover of Aer Lingus and the conversion of Gold Circle Club points into Avios?

Aer Lingus 350

When British Airways bought bmi British Midland, there were some fantastic arbitrage opportunities – especially for BA flyers who had never previously bothered with the bmi credit cards and their big sign-up bonuses. That will not happen with Aer Lingus under their current scheme:

Gold Circle has no car rental partners.

Gold Circle has no hotel partners.

Gold Circle has no credit card partner.

Gold Circle has only three airline partners apart from BA and two of those are already partners with British Airways (Cathay Pacific and Japan Airlines)

The one exception is United Airlines of the US. Flights on United will earn you Gold Circle Club points as you can see here.

If you taking a United Airlines flight in the future and do not have an active Star Alliance account, you may want to consider crediting it to Aer Lingus Gold Circle. Those points are highly likely to be turned into Avios if Aer Lingus is eventually acquired and your points will not expire for three years.

Even if the deal does not happen, a small amount of miles are no worse off in Gold Circle than they would be in United MileagePlus or any other Star Alliance scheme.

If you are flying Aer Lingus, you may want to credit your flight to Gold Circle rather than crediting it to British Airways Executive Club.  You generally receive a pathetically small number of Avios points and you may be better off taking Gold Circle points and waiting for them to become convertible.

What will happen to the low tax redemptions to the US after the takeover?

They will disappear, I’m afraid.

At the moment, Aer Lingus offers some astonishing bargains to North America.  This is because there are no fuel surcharges and no Air Passenger Duty.  Even in Business Class – which will soon be fully flat across the fleet – you won’t pay more than £75 in extras.

That compares to £500+ in ‘extras’ for a British Airways Club World redemption.

This will change after the takeover.  Aer Lingus will join the transatlantic revenue sharing joint venture with BA, AA, Iberia and Finnair.  On redemptions, BA charges the same fuel surcharge on all of these partners.   British Airways already adds fuel surcharges to American Airlines redemptions even though American does not even have fuel surcharges!  (Where does the money go?  BA pockets it.)

Once the deal is completed, the £75 tax figure will become something nearer £375.   It will still be slightly cheaper than a departure from Heathrow because of the lack of Air Passenger Duty.

There is another quirk which will remain.  Because Dublin to Boston is under 3,000 miles, it falls into the cheaper Avios pricing zone.  Business Class is just 75,000 Avios compared to (from London, which is over 3,000 miles) 120,000 Avios on a BA peak-date or 100,000 Avios off-peak.

(Want to earn more Avios?  Click here to see our latest articles on earning and spending your points and click here to see our list of current Avios promotions.)

Etihad Guest announces a HUGE devaluation from July 8th
12,000 United MileagePlus miles bonus with their free UK credit card
About Head for Points

We help business and leisure travellers maximise their Avios, frequent flyer miles and hotel loyalty points. Visit every day for three new articles or sign up for our FREE emails via this page or the box to your right.

Comments

  1. Just booked for April two tickets to Boston from April, 25,000 avoid and £105 (two economy seats – both quite short :)). Superb use of miles.

    Internal use of avios in the U.S. seems good too as the charges are super low (around £3 a seat).

    • From Dublin even

    • Hang on: are you saying that 25,000 avios and £100 gets two return flights from Dublin to Boston?!? How do you book this?

    • AlanYoung says:

      Likewise, please can you enlighten me how this done. I am interested to do the same.

    • Hugh R says:

      My daughter is about to book a flight to Boston for August. It doesn’t look as though there is any availability with Avios, not too much of a surprise as August must be peak time, although there does look to be availability with Avios from LHR at 20,000 miles.

      Interestingly though we searched for availability through the United web site. On the dates that do show up as having availability it looks to be 30,000 miles. Is a United mile valued differently to an Avios point? Is it worth ringing BA anyway and getting them to check availability from Dublin?

      • No harm in ringing, you can’t book Aer Lingus flights via the BA website and the availability they have can be different to what United sees. The number of miles United are asking for is irrelevant as it’s a totally different programme :)

  2. Main thing for me is how the regional connections to Dublin will be dealt with, free like BA long haul or priced separately.

    • Calchas says:

      If they are in the TATL joint venture the entire journey is priced from end to end. How you get there and which planes you use are not important, except for some airport taxes.

      • Brendan says:

        I think he maybe means using Avios. The way the domestic segment to LHR is free when booking long haul

        • Yes I did mean the free domestic connections using avios to LHR. Only worth me using aer lingus over BA if they did the same thing on the connections to DUB.

  3. Feenster says:

    The only reason for my 3/4 flights from Belfast to London each month was to collect enough avois to take the brood to Boston each summer. I wonder how long until the ridiculous avios surcharge comes into play with the dub bos route.

    Now that IAG are buying Aer Lingus its highly probable the Belfast routes will be cut (current BA not IE), my silver status will expire (and avois earning ability diminish) anyhow with the new avios rules. AlsoI will drop lounge access in 12 months. Why do I fly BA now? Cornflakes in the morning and 2 Heineken on the way home.

    I have 250K avios to burn – but need to work a new strategy.
    Bring back British Midland

    • Calchas says:

      Why do you think BHD will be axed?

      • Feenster says:

        I understand there is a 7 year agreement to maintain the aer lingus flights as is. No mention of what they do with the BA metal. Flew this morning on a flight less than 50% full – so my guess is that this capacity will be moved to other more lucrative routes and the combined service from Belfast will suffer.

    • The only reason you flew Belfast-London was to earn avios? Seems like a rather expensive way to do it..

    • Lady London says:

      If you do work out a strategy please let us know.

  4. Daftboy says:

    I’d flag a note of caution about crediting to Gold Circle – you only earn points on higher economy fares and above – W, Z, A, U, T are excluded, which in my experience covers most of the lead-in economy fares. “Plus” fares (which include a check bag) earn GC points, but I think you need to email in to get them credited retrospectively. All business class fares would earn, so if doing paid business to the US you would get 1000 points each way.

    Until you reach the threshold within a year to be a Gold Circle elite member (2400 points for “Gold”, the base level – UK to IE is 100 each way) you are an “Applicant” and can’t really do anything with your account; certainly until recently you couldn’t even log in and see your balance, and you don’t receive the monthly member emails that tracks your balance.

    To be fair to Aer Lingus management, they have obviously recognised how outdated the scheme is and had flagged that they intended to relaunch it this year. I expect that is now on hold pending the outcome of the IAG acquisition.

    Also note that higher economy fares already earn a handful of Avios in BA Exec Club (I got 75 for a recent R fare from ORK to BRS, post 28 April), which may be less hassle than trying to get to grips with GC!

    • I knew that when EI went low-cost they made GC hard to acquire … didn’t realise it was that hard.

      Just as long as IAG don’t take the lead from EI and make BAEC similarly hard to join !

  5. “British Airways already adds fuel surcharges to American Airlines redemptions even though American does not even have fuel surcharges! ”

    This is not correct. AA does have fuel surcharges, they just don’t apply them on AAdvantage award tickets.

    An AA LHR-JFK fare includes the following:
    AA YR surcharge (YR) £91.50

  6. In theory, the could also offer off peak pricing for Aer Lingus flights, as they have with BA and Iberia. DUB-BOS might get cheap avios wise off peak. Also, wouldn’t this route qualify for RFS taxes?

    • *they *cheaper

      Terrible typing, my bad.

      • Nevermind, RFS is only for routes up to band 3. This is a band 4 route. Also Iberia do not offer RFS so Aer Lingus probably won’t either.