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?
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.