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.....
Showing posts with label Low cost carriers. Show all posts
Showing posts with label Low cost carriers. Show all posts
Monday, February 25, 2008
Saturday, August 25, 2007
Ryanair Run A Better Business - For Now....
According to an article in the Guardian this morning Ryanair will begin charging passengers £4 a return flight to check in at airport desks. The new charge, which will be introduced on September 20, comes on top of the £10 it costs to put a single bag in the hold. The paper claims that this is all part of its latest ruse for slashing costs – as if slashing costs is something dreadful
The Air Transport Users' Council (AUC) warned that the low-cost strategy of hitting passengers with extra charges had reached its limit. James Fremantle, AUC industry affairs manager, said “check-in charges could drive away some of the 42.5 million people who use Ryanair every year.” Meanwhile Ryanair denied suggestions that it was fleecing passengers with its new levy, saying the charge had been brought in to limit queues and lighten plane loads.
I just love industry watchdogs and experts who claim that airlines are doing things that somehow harm passengers in an underhand way. Clearly Ryanair must believe that this makes sense, and indeed it does if it drives down costs. Of course the big question is will it? Will it give them cost savings that are not outweighed by a drop in passenger load factors.?
Ryanair have been attacked by just about everyone, including MPs who recently criticized Michael Mary O’Leary for refusing to give evidence before them saying. "We can only conclude that this is because he has nothing positive to say."
The simple fact is Mr O’L has run a brilliant business and is the envy of many in the industry. Of course it’s easy to take swipes at them and the more passengers they carry the more swipes there are – although in percentage terms they seem to be operating below the curve. I’m reminded of the old adage. “If we don’t run a better business then we won’t have a better business to run.” Time will tell if, when M.M.O’L steps down they maintain what he has created. That’s going to be the testing time. In the meantime – rock on.
The Air Transport Users' Council (AUC) warned that the low-cost strategy of hitting passengers with extra charges had reached its limit. James Fremantle, AUC industry affairs manager, said “check-in charges could drive away some of the 42.5 million people who use Ryanair every year.” Meanwhile Ryanair denied suggestions that it was fleecing passengers with its new levy, saying the charge had been brought in to limit queues and lighten plane loads.
I just love industry watchdogs and experts who claim that airlines are doing things that somehow harm passengers in an underhand way. Clearly Ryanair must believe that this makes sense, and indeed it does if it drives down costs. Of course the big question is will it? Will it give them cost savings that are not outweighed by a drop in passenger load factors.?
Ryanair have been attacked by just about everyone, including MPs who recently criticized Michael Mary O’Leary for refusing to give evidence before them saying. "We can only conclude that this is because he has nothing positive to say."
The simple fact is Mr O’L has run a brilliant business and is the envy of many in the industry. Of course it’s easy to take swipes at them and the more passengers they carry the more swipes there are – although in percentage terms they seem to be operating below the curve. I’m reminded of the old adage. “If we don’t run a better business then we won’t have a better business to run.” Time will tell if, when M.M.O’L steps down they maintain what he has created. That’s going to be the testing time. In the meantime – rock on.
Tuesday, August 21, 2007
Bags We Have the Cheapest Insurance
We just love Ryanair’s ability to make a news story out of just about everything and anything; it must irritate the proverbial out of British Airways. Their latest PR stunt is to write to the Association of British Insurers to urge them to introduce risk assessed consumer travel insurance policies based on airline performance. As their spokesman points out. “The statistics prove that airlines are far from equal, yet insurers do not differentiate. Not only does Ryanair offer the lowest fares. It also delivers the most punctual flights, the fewest delays and the lowest number of cancellations".
This week travel insurance companies confirmed that the number of claims made for bag losses in the first half of 2007 rose dramatically yet the number of bags lost by Ryanair declined from 0.5 per 1,000 last year to 0.4 this year. Meanwhile the situation at British Airways has gone from bad to badder, from 21 bags per 1,000 last year to 28 per 1,000 this year.
This week travel insurance companies confirmed that the number of claims made for bag losses in the first half of 2007 rose dramatically yet the number of bags lost by Ryanair declined from 0.5 per 1,000 last year to 0.4 this year. Meanwhile the situation at British Airways has gone from bad to badder, from 21 bags per 1,000 last year to 28 per 1,000 this year.
Saturday, August 11, 2007
The Cycle Turning Down
According the Financial Times this morning budget airlines face a crackdown in Britain over their potentially misleading advertising. Competition watchdogs want to stop them advertising flights for pennies when the true cost is many pounds. The Office of Fair Trading has ordered 13 airlines - including Ryanair, AerLingus and easyJet -to change their advertisements and website prices to include fixed, non-optional costs, such as taxes.
All this bodes badly for the coming winter season for the low-cost carriers. The need to make air travel appear to be inexpensive has never been greater with ballooning capacity and tightening consumer belts. The cycle is turning down.
All this bodes badly for the coming winter season for the low-cost carriers. The need to make air travel appear to be inexpensive has never been greater with ballooning capacity and tightening consumer belts. The cycle is turning down.
Wednesday, July 18, 2007
Bottoms-up or Bottom Line
Flybe, Europe’s largest regional airline (according to a press release this week), has secured an exclusive arrangement with Wines4Business, one of the top online retailers of wine and Champagne in the UK. drum roll if you please.
“This is another industry first for Flybe,” said Simon Lilley their director of marketing. “In the same way that we have pioneered and innovated in other areas, this deal with Wines4Business will mark the UK’s first ever low cost airline wine club."
Even as we speak there's feverish activity over at Ryanair and easyJet in an effort to innovate. Probably one of them will do a deal with Tesco so that you can order your shopping onboard for delivery to your home before you arrive back from that business trip.
Two things occur. British Airways used to have a wine club, so the innovation is that they're the first 'low cost airline' to do it. It will no generate them a single extra passenger and while I'm sure the costs of setting it up are minimal to Flybe it is doubtful that it will put any significant revenue on the bottom line.
UPDATE.
BA still do have a wine club.
“This is another industry first for Flybe,” said Simon Lilley their director of marketing. “In the same way that we have pioneered and innovated in other areas, this deal with Wines4Business will mark the UK’s first ever low cost airline wine club."
Even as we speak there's feverish activity over at Ryanair and easyJet in an effort to innovate. Probably one of them will do a deal with Tesco so that you can order your shopping onboard for delivery to your home before you arrive back from that business trip.
Two things occur. British Airways used to have a wine club, so the innovation is that they're the first 'low cost airline' to do it. It will no generate them a single extra passenger and while I'm sure the costs of setting it up are minimal to Flybe it is doubtful that it will put any significant revenue on the bottom line.
UPDATE.
BA still do have a wine club.
Saturday, July 14, 2007
Offers Galore
There's actually, for once, nothing funny about what's happening in the airline industry. The news today that Airport operators and airlines are getting worried about the cost of security is not just about this one area of their operations. The fact is with rising interest rates again last week, the third this year, means that air travel as a discretionary purchase is under increasing threat. Watch out for some interesting developments from the low cost boys and girls - it will be offers galore this winter.
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