Churn or grow in summer 2014?
Hi all,
Racedo, I agree that I would expect Ryanair to have a plan, although it might be a rather hastily assembled one. It's quite likely that the details of the plan (crews, slots, aircraft etc.) will be sorted out shortly. However, MO'L talked in the last couple of investor calls about the likelihood of the need for churn in order to 'finance' new routes. In addition, Ryanair has never before been in this position of needing to find an additional 20+ aircraft for the next season. If they do source more aircraft it will change the short term fleet and revenue projections, so I would expect a stock exchange announcement.
Churning routes (replacing the worst performers with new ones) is a good thing for an airline's financial performance. Easyjet's recent investor presentations have drawn attention to the fact that they have benefitted from it, and Ryanair have traditionally culled around 10% of their routes. But I can't help thinking that replacing poor performers by chasing Vueling around Europe's major airports may not be the best long term strategy.
On the other hand, churn isn't such a great thing for customers that happen to be booked on a route that gets reduced or cut. If Ryanair go down this path then anyone booking a flight at the moment could expect a 7-8% chance of their flight being 'churned'. (I'm being slightly unfair, since routes aren't churned at random: the worst performers are chosen, but customers are unlikely to book on this basis).
A number of summer routes that have been on sale in previous years from the end of March onwards are only on sale from June onwards this year (e.g. Dublin - Tallinn, Girona - Brindisi, Prestwick - Pisa, Palma - Krakow etc). This is new, but I can't see how it helps the problem over the peak summer period.
I'll be interested to see how the plan turns out. MO'L works in mysterious ways...
Hi EI-BUD,
Good point. I thought it strange that Norwegian's Gatwick and Spanish expansion didn't trigger a reaction from Ryanair, but that Vueling's Rome and Brussels plans were immediately attacked.
Last edited by anna_list; 28th Nov 2013 at 10:47.