Ryanair - 6

[davidjohnson6]

This is just my theory - if you think it's a load of b*ll*cks, please be nice !

My understanding (possibly incorrect) is that FR currently has rather too many spare airframes, and is not sure how to use them.

Once an aircraft is purchased or a capital (not operating) lease signed, the money has been spent, whether it spends 12 hours per day in the air, or just sits all day on the ground. Thus the cost of operating the aircraft cease to include any capital / lease payments. This implies that the breakeven cost to the airline of a route (as opposed to parking in the desert) is much lower than it would be when considering a future aircraft purchase. This is similiar to NorthWest operating DC-9s even today - but better because a 737-800 is far more fuel efficient than a DC-9. Of course, one can think about selling airframes, but demand right now is pretty weak.

With a much lower effective breakeven cost for aircraft, many more routes become worthwhile considering. A possible strategy is to then think about flooding the market with your product - aka dumping (the EU doesn't like this, but it's difficult to prove conclusively and in FR's case might possibly be considered a valid business approach) in the hope of killing off some of your competitors or claim some of their markets as your own.

What therefore prevents Ryanair from:
1) Copying Southwest's approach in Denver to kill of Frontier, by expanding heavily in Bratislava to kill off a weakened SkyEurope and claim BTS as its own
2) Expand at Wroclaw, and not simply to the UK / Ireland
3) Seville expansion and maybe also open in Bilbao to make life difficult for Vueling / clickair
4) Start flying to Salerno as a proxy for Naples
5) Open a base in Greece (take advantage of the weakened Olympic) - possibly at Thessaloniki
6) Open up in Zagreb and make life difficult for Croatia Airlines
7) Open up in Turku and siphon off some of AY / SK's traffic
8) Expand at Kaunas now that flyLAL is no more and KD Avia remains weak, and also start flying to Tallinn to compete with a troubled Estonian Air
9) Further expand at Gothenburg, now that SAS is retrenching, and possibly also at Aarhus. Copenhagen can wait until 2010 when the new terminal opens.
10) Consider flying to Bordeaux which is underserved by LCCs
11) Expand Leipzig, or open at Dresden - only real competition is Air Berlin / Condor offering beach routes in the Med
12) Expand at Bergamo and maybe also Treviso and Bari to make life difficult for the rather weak MyAir

Note - I have not considered eu01's idea of making HHN a connection hub as I think it's too much of a change in business model requiring bigger changes in internal process and controls that do not yet exist, and opens FR up too much to potential EU compensation payouts for missed connections

I'm almost certainly being over-bullish given the state of Europe's economy, but I'd be interested to see if other armchair CEOs have better ideas as to what MOL should do next... !

... ducks for cover while the incoming missiles begin to arrive ...