The teacher who has turned into a high flyer

Sunday August 05 2007

It’s not often that my notes are made even more illegible by occasional turbulence during an interview, but there’s a first time for everything. Owner of Aer Arann Padraig O Ceidigh is a former teacher, and if he’s dismayed at my handwriting, then he’s keeping it to himself as we take off from Dublin on one of his airline’s 48-seater turbo-prop planes. 

Two girls from Los Angeles are sitting in front of us on the 45-minute flight to Galway and at first they don’t believe me when I point out our fellow passenger is actually the owner of the airline. “I try to chat to my passengers whenever I get the chance,” says O Ceidigh with a cheeky smile as he helpfully recommends what to see and do on their visit. 

On the bus across the runway to the plane, O Ceidigh has been chatting with various airport staff as well as regular passengers, two year-old Rory and his mother, who attend Dublin’s Temple Street Children’s Hospital for treatment for a heart and kidney condition.

“Over the past five years I’ve helped to raise €1m for the hospital,” says O Ceidigh, before asking me if I’d like to run a half-marathon in the Aran Islands for the latest fundraiser he’s helping to organise.

After training as a chartered accountant with KPMG came an 11-year stint as a teacher, which he decided wasn’t for him. “It was like being in a strait jacket and the curriculum is quite rigid and only tests a small part of a person’s intellect. There were more issues in the staffroom than the classroom,” he says.

The same thing happened again when he tried his hand at another frustrating, largely desk-bound job as a solicitor. Nonetheless, the legal practice grew steadily and led to his meeting a local business acquaintance, Eugene O’Kelly, from whom he bought Aer Arann — with the proceeds from selling the law practice. Back then, in 1994, it had just two small planes which served the Aran Islands.

Press reports that the airline will float on the stock market next year are not true, says O Ceidigh. “But we’ve been approached on several occasions by various investment houses or large firms of accountants. Usually we don’t know who’s behind these approaches and we haven’t yet got into serious talks with anyone,” he says.

UK regional airline FlyBe would perhaps be the most obvious buyer, I point out. “We haven’t got the company in the shop window at the moment, but it doesn’t stop buyers approaching us,” he adds. “When I bought it we had 8,000 passengers a year and turned over €250,000. Now we fly over 1.2m passengers a year, with a turnover of €100m and we’re the second largest regional airline in the British Isles,” he says.

Aer Arann’s key markets for growth are the UK and France, but it takes a big marketing effort and at the moment the focus is on “doing what we’re doing better and better.” Is O Ceidigh about to cash in any of his shares? “It would benefit the company as well as me personally and it’s something I’d look at seriously. I’d have to run it past my board of directors, because I run the airline as if it was a public company,” he admits.

Is the airline still heavily dependent on subsidies from Public Service Obligation (PSO) routes here? “Four years ago, 85 per cent of our income came from them, but it’s now about 12 per cent. It’s still important though, and we’ll bid for them when they’re out to tender again.,How is the airline doing on its Dublin to Cork route where it’s competing with Ryanair? “They’ve been competing with us now for two years and targeted us with negative advertising campaigns, which is par for the course, but our load factors (the percentage of seats occupied by paying passengers) are around 60 per cent, whereas I hear theirs is 40 per cent. It doesn’t make sense to fly 737s with 180 seats on that route.

“It’s a David and Goliath battle, but we’ve got a lot of the Cork business community behind us, thanks to the Cork Chamber of Commerce for example. No other airline has competed on a route with Ryanair for two years, and a lot of people in Cork are supportive of us — the David in the battle — because of that.,Did he have an airline mogul or a business tycoon as a role model when he was younger? “No, genuinely I didn’t. I never saw myself as a businessman and I had no real plans to run an airline. It does nothing for me whatsoever; it’s just a great big bus with wings and it flies. It’s a tough, uncompromising business where small mistakes can be fatal. You can’t be complacent or take anything for granted. It’s about the relentless pursuit of excellence, but you’ll never get there. We’re successful because our staff are passionate about the company and their jobs. They’re supported and helped to learn to be entrepreneurs in their own way.,One thing every airline can’t be complacent about is the oil price. Is he worried by Goldman Sachs recent report that it could hit $95 a barrel before the end of the year? “We hedge our oil requirements, but to some degree it’s only a short-term benefit. The key is having enough passengers paying enough to cover the costs of running an efficient, safe and well-run airline.

Has Aer Arann tried to copy Ryanair at all on any of its routes, by negotiating financial incentives such as marketing support or discounted landing fees and passenger charges? “No, we work with airports as a partner, so that every passenger is looked after on the ground and in the air. Anything like that doesn’t feature in our business process. Airports have to make money and I don’t believe in screwing people, like Michael O’Leary.,As we’re somewhere over the midlands on our Galway-bound flight, O Ceidigh somewhat unexpectedly adds : “I’d like to write about Aer Arann from a personal and a business perspective.

“I’d like to write the history of it, because you can only join the dots going back and not going forward. I’d be able to reflect on the decisions I’ve made and why I took them. At the moment I’m not sure what I’ll be doing in the next few months, let alone the next few years.,It sounds as if O Ceidigh is getting restless again. Perhaps he’s had enough of the daily commute between Dublin and Galway on his planes. Does he fly overseas very often? “At least once a fortnight for routine meetings about aircraft leases, maintenance, supplies and what have you. I’m also vice-president of the European Regions Airline Association.,With airlines coming under fire, particularly in Britain for their environmental impact, Aer Arann’s “green” or fuel-efficient planes don’t seem to be foremost on the green lobby’s radar when compared to the gas-guzzling jets of most other airlines. What are O Ceidigh’s thoughts on climate change’s rising importance on the political agenda? “It’s a serious issue and although the widely-quoted figure from the British Treasury’s Stern Report is that aviation is responsible for about three per cent of the world’s carbon emissions. We all have to take responsibility and we’re never doing enough. Some airlines aren’t doing more about it because it would cost them money.” he adds.

O Ceidigh has a 25 per cent stake in Mayo-based Surface Power, a company which supplies and develops wind turbines and solar panels for the Irish domestic and commercial market. Perhaps the former teacher from Spiddal could give Michael O’Leary some lessons in being green.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.