This is an interesting interview from Michael O' Leary.
However, it's absolutely no surprise that FR fares will have to rise - because the business model is flawed. How is it flawed? - It is a short term model that aims for immediate Revenue and Profit maximisation and requires sustained annualised growth in order to be successful. It relies upon volume revenue generation rather than true yield maximisation.
FR have very limited scope for any further product unbundling. The model is simply unsustainable in the longer term without an increase in fares.
Low fares is their ONE and ONLY true point of differentiation. When that is gone - what airline would you choose?
One with now higher fares and total disregard for it's customers or others with relatively low fares which cares a great deal more about customer service and has several other key points of differentiation? The answer is quite clear and predictable.
That is exactly why FR's recent statement regarding the potential for 300 aircraft is nothing more than a publicity stunt in order to inflate the share price to the maximum possible value before Michael O' Leary eventually departs with FR revenues having reached their peak.
FR has revolutionised aviation without a doubt and is a real commercial success story - but the current exceptionally low fare base cannot be sustained in the long run as growth becomes more limited.
Regards,
EI Premier