Monday, February 25, 2008

All is Not Rosy With the Low Cost Carrier Flight Plan

From tomorrow Ryanair have announced one of their famous 1p a flight seat sales - which includes taxes and charges. Although this means that there offering all in fares of £10 per flight to many of their destinations. Five million seats to be precise. Ryanair’s online booking system and call centre was closed for part of the weekend in order to comply with the Office of Fair Trading’s directive to include taxes and other charges in the headline price for flights.

Of course this has nothing to do with their load factor being squeezed downwards, which is the driver of profitability. In January it slipped below 70% to 69% - the first time this has happened in five years. Natural no one in the press seemed to pick this up as they were all too busy commenting on their saucy ads (that includes you! - Ed). This is not good news for the boys from over the water. I wonder if Michael O'Leary the charismatic Chief executive of Ryanair is still thinking of giving it all up in 2008?

Not that it's just Ryanair that are seeing load factors dip. easyJet's PLF dropped to 72% in January from 74.9% a year ago. Overall the passengers flying through the BAAs UK airports dropped by 2%, with traffic at Stansted off by over 9%.

It's not good.....


Zsuzsa Kekesi said...

Hi Richard,

and what about their profitability? A drop in load factor doesn't necessarily mean a drop in income.

Richard Havers said...

You're correct Zsuzsa in part but their passenger numbers are increasing, so is there number of flights which means in the low cost airline model when load factor goes down it's not the best thing to happen. Both carriers introduced ancillary charging a while back but the advantages of that have largely washed through their system. it's only going to get harder from here on in.

If, as the rumour mill says, Ryanair did not buy their fuel at a good forward price then things really are going to be tough.

Zsuzsa Kekesi said...

Well, I don't agree by all means, but let's leave revenue management for another moment of life. :)

Another question regarding Ryanair: did you manage to test their new booking engine? I tried it several times, but I ran into errors.

Richard Havers said...

To disagree is healthy :)

No I've not tried booking with Ryanair lately. I've usually tried to avoid them.

Zsuzsa Kekesi said...

I managed to test it this morning, but apparently othing changed. I got fares excluding taxes and I could learn about the full price only on the following page.
I tried to find a media contact on their website, but apparently it doesn't exist.


Richard Havers said...

If there was a media contact on the Ryanair site it would probably be overwhelmed and cause the site to crash!

Zsuzsa Kekesi said...

LOL :) True.