New Aer Lingus boss Christoph Mueller: as he settled into the executive floor at the company's Dublin Airport HQ last week, the airline's long-haul arm was seen as a problem, rather than as an asset or a source of national pride

The long-haul operations of Aer Lingus were once the ultimate symbol and extension of a self-confident, assertive, swaggering Celtic Tiger Ireland. When they weren't using the government jet, politicans used to love jumping on Aer Lingus flights to various destinations all over the US and, for a time, to destinations in the Middle East.

As Ireland's exporters built up a considerable global footprint, Aer Lingus seemed to be trailing not far behind as it added new long-haul routes and increased frequencies on old staples like Dublin-New York.

For a time, the growing Aer Lingus long-haul network seemed to be at the disposal of the aspirant Irish middle-class. The airline ran a service to Florida that was used by those seeking to buy to condos near Orlando; it ran a service to Los Angeles for those who wanted to do star spotting in Hollywood and shopping on Rodeo Drive. The airline also for a time offered a service to Dubai allowing Irish property buyers a chance to snap up a few high-rise apartments or enjoy a weekend in the Jumeirah Beach Hotel.

For years, most Irish travellers had to access the big leisure routes like Los Angeles, Dubai or Orlando via a London connection. The fact that Aer Lingus could now offer the routes direct almost conferred a new sense of confidence on Irish travellers and on the airline itself.

The desire to exploit a new long-haul frontier became so intense in Aer Lingus that, in 2005, then chief executive Willie Walsh found himself having to reject a staff plan suggesting new routes to Bangkok, South Africa and even Australia, even though the airline didn't have aircraft with sufficient range to fly such services.

Last week, as new Aer Lingus boss Christoph Mueller settled into the executive floor at the company's Dublin Airport HQ, the airline's long-haul arm was seen as a problem, rather than as an asset or a source of national pride.

The airline is open to all options in relation to the long-haul operations, briefings from Mueller to various stakeholders have revealed. A third party may even be brought in to run the long-haul routes, the Sunday Tribune has learned. To be fair to the current Aer Lingus management, it has not sought to skirt around the issue of problems in the long-haul segment of the business. For example, the long-haul premium part of its service has effectively collapsed and shows no sign of returning, the executives recently explained. Corporate travellers are either not travelling between the US and Ireland as much as they did, or they are going coach class. Long-haul premium traffic was down by one third in the first six months of this year and the carrier sees no prospect of it returning.

But it's not just those in the front of the aircraft who are staying away when it comes to long-haul. Passenger numbers slumped overall on long-haul by 12% in the first six months, while revenue dropped by a catastrophic 28%. The airline had to keep load factors up by slashing fares and it's now offering an average fare, single trip, at €240, a steal compared to prices out of the UK.

Long-haul, which once provided a third of revenues, is now only providing just over a quarter of revenues. This is a blessing and a curse. Clearly a declining long-haul operation is becoming less of an exposure for the airline in totality, but equally with Ryanair applying a "grow volume at whatever cost" strategy on short-haul, Aer Lingus would have prefered to have long-haul providing an off-setting contribution.

The problem is the airline has been slashing long-haul capacity and it does not reveal in its half-year results the precise profit/loss performance of the long-haul operation, although clearly it is not profitable at this time.

The scale of its long-haul operations, even after deferring aircraft deliveries with Airbus, is not inconsiderable, with eight A330s in the fleet, made up of 2,260 economy seats and 192 premium. Mueller is believed to have said in recent briefings that unless the airline finds a radical cost alternative on long-haul, Aer Lingus may not fly across the Atlantic at all.

Instead it would hand over the service to a low-cost provider who would pay a fee to Aer Lingus out of any profit it could make. That kind of talk is unlikely to curry much favour with the government, which sees air links to the US as piece of national infrastructure, even though several US carriers operate transatlantic routes.

This newspaper recently disclosed that the airline is considering a range of radical proposals to get the long-haul side of the business out of its current rut. Spinning off long-haul is one of the options mentioned by senior management. All the airline will say in public about such ideas is: "We're not getting out of long-haul but we have to make long-haul work."

While the International Air Transport Association (IATA) sees signs of an "upturn" in the number of airline passengers travelling first or business class, these signs of life are not present from an Irish perspective.

There may yet be some way to expand revenues on the long-haul flights by introducing a new class of cabin, allowing corporate travellers to pay a little less for some more legroom and the economy passenger to upgrade to something better than cattle class. It would be known as premium economy and is routinely offered by other long-haul carriers.

But making long-haul work from an Aer Lingus perspective has one central problem. It all revolves around passengers flying to or originating in the recession-hit Republic. While Aer Lingus can make its short-haul operations more flexible by flying out of Gatwick or Belfast, the same options are not, at least to date, available on long-haul.

There is a slight glimmer of hope that some day Aer Lingus will find a way to lessen its long-haul dependence on Ireland. From next March, in quite a radical move, Aer Lingus and United Airlines will start a Washington-Madrid service, without any linkage to Ireland at all. Additional routes, as part of this joint venture, are also on the cards if Madrid-Washington works. The problem is United is in serious financial difficulty and there has even been talk of a Chapter 11 bankruptcy filing.

While that joint venture may not amount to much in those circumstances, Mueller needs to find some way to make long-haul "work" from an Aer Lingus shareholder perspective. One suspects simple crude cost cutting alone won't be sufficient.

How the airlines measure up on fares

Aer Lingus to New York JFK

€289 one way

Continental Airlines to JFK Newark

€318 way.

* Based on a single trip to New York on October 19th, 2009