As a result of revenue deterioration (plus slower future growth profile), Ryanair is planning to increase fares for the first time in four years. CFO Howard Millar stated the LCC is likely to raise fares from April 1, adding, “We’ve had a lot of discounting of fares as we’ve grown the business. We expect to increase profits by the combination of reducing costs and we think average fares will probably rise”.
If Ryanair is seeing its revenues plateau then what can this mean for its competitors? Just as Southwest grew to be the biggest US domestic carrier, and therefore had a huge influence on fares, Ryanair is now the biggest airline in the EU and has the same level of influence. Having this much critical mass means treading more deliberately because growth cannot come from the same places. MOL frequently speaks about more airlines going out of business. He hopes so because that is where the next growth spurts will have to come from.
Consequently Ryanair has to do the logical thing - push up fares. Now conveniently forgotten are MOL's words about flying for free with revenues coming from advertising and other non-traditional sources.
In other news:
- F-35 fantasy stymies Boeing's F-18 stop gap idea
- CSeries opportunities coming
- Republic makes fleet move
- BA's monstrous loss
Subscribe to over 4,700 (and growing) analysis and opinion posts behind the headlines at Blackprogram
No comments:
Post a Comment