Ryanair - 6
I had imagined routes in July + August from Dublin to Oporto, Biarritz, Carcassonne, Malaga and Rome would be doing quite well and that other routes would have been cut / reduced instead, but in the absence of any figures, I guess someone at FR HQ has better information than me.
Thinking laterally, would it be valid to read between the lines here and view this as a sign of deeper issues ?
Thinking laterally, would it be valid to read between the lines here and view this as a sign of deeper issues ?
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He's cutting back Dublin??? Why not just gift it to Aer Lingus? Surely one would have thought that their home base was worth fighting for or is it not worth the candle any more?
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Ryanair are going into self destruct mode. Any increase in tax or charges is being used as reasion to ground planes. How can they double pax in 5 years when they keep cutting routes.
Is there something going on that we do not know? Does MOL have something to do with 30 planes? Are they realy in a bad way and having to cut capacity?
Is there something going on that we do not know? Does MOL have something to do with 30 planes? Are they realy in a bad way and having to cut capacity?
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They operate to such small margins per passenger that they need to make every penny they can.
BA fly approx. 2.5 million on average a month and were making (before the crunch) £700m a quarter (ish) while FR would fly 5m and make much less (not sure what it was but nothing per passenger that BA were).
You may argue that this includes F/J passengers but they still must be included when comparing as there is no special dispensation on these taxes for premium passengers, in fact they are mostly higher although F/J passengers are more of an inelastic market.
BA fly approx. 2.5 million on average a month and were making (before the crunch) £700m a quarter (ish) while FR would fly 5m and make much less (not sure what it was but nothing per passenger that BA were).
You may argue that this includes F/J passengers but they still must be included when comparing as there is no special dispensation on these taxes for premium passengers, in fact they are mostly higher although F/J passengers are more of an inelastic market.
Any increase in tax or charges is being used as reasion to ground planes. How can they double pax in 5 years when they keep cutting routes.
Well they introduce new routes first and given the number introduced already this year V one cuts they still way ahead with new routes.
Dublin route cuts are sending clear message to Irish Govt re passenger numbers that if you continue pumping up increases in tax and allowing DAA add more increases for a €1 Billion terminal there is a price to pay.
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Dublin cuts
I'm sure Aer Lingus will be very happy to hear:
Basel: axed (Zurich should benefit, Geneva may benefit)
Carcassonne: reduced (Toulouse may benefit)
East Midlands: reduced (Birmingham may benefit)
Malaga: reduced (yields to Malaga will improve)
Rome: reduced (yields / load factor to Rome will improve)
Basel: axed (Zurich should benefit, Geneva may benefit)
Carcassonne: reduced (Toulouse may benefit)
East Midlands: reduced (Birmingham may benefit)
Malaga: reduced (yields to Malaga will improve)
Rome: reduced (yields / load factor to Rome will improve)
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So whilst Ryanair sends a message to the Irish goverment - Aer Lingus throws all of its cards up into the aer and hopes that it will pay off; it wont.
The Irish goverment, will have to stand down on the €10 tourist tax. As how many passengers does RYR bring in? A lot.
I think Ryanair are being very clever, Aer Lingus thinks they are getting the upper hand; when it reality. They are going down.
MOL is not stupid, so this has been done for a reason - he couldn't get Aer Lingus; so he'll kill them off.
Nikolai.
The Irish goverment, will have to stand down on the €10 tourist tax. As how many passengers does RYR bring in? A lot.
I think Ryanair are being very clever, Aer Lingus thinks they are getting the upper hand; when it reality. They are going down.
MOL is not stupid, so this has been done for a reason - he couldn't get Aer Lingus; so he'll kill them off.
Nikolai.
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Why will the irish government have to backdown? The big loser from ryanair flying less will be ryanair. The extra tax income will make up for the other lost income and it is only those on a very tight budget who would stop flying due to the tax. In the UK the departure tax took just a percent or two of the numbers flying. The big hit is from the world wide meltdown.
I think Ryanair was very clever a few years ago but has lost the plot. If goverments just ignore them what will they do? The vested intrests are not in keeping Ryanair strong.
I think Ryanair was very clever a few years ago but has lost the plot. If goverments just ignore them what will they do? The vested intrests are not in keeping Ryanair strong.
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This isn't really about people flying out of Ireland, mainly those flying in.
What is going to hurt them more? No one going to Ireland - or Ryanair bringing in the pax?
Ryanair will always be strong, regardless of where. The UK goverment wouldn't dare put a tax on travelling like that - as if they did it would be suicidal.
€10 tax - will finish Irish tourism, and that is fact.
Ryanair haven't lost the plot - May I remind you 60 million people flew with them in 2008. That's more than any other European airline.
Nikolai.
What is going to hurt them more? No one going to Ireland - or Ryanair bringing in the pax?
Ryanair will always be strong, regardless of where. The UK goverment wouldn't dare put a tax on travelling like that - as if they did it would be suicidal.
€10 tax - will finish Irish tourism, and that is fact.
Ryanair haven't lost the plot - May I remind you 60 million people flew with them in 2008. That's more than any other European airline.
Nikolai.
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The UK goverment wouldn't dare put a tax on travelling like that - as if they did it would be suicidal.
It is called APD and has been £10 for about the last 2 years in the UK
Also what benefit of EI going under is there to FR? They own a very large chunk of this company and I would imagine FR's shareholders will at somepoint wake up and ask the question 'why are you trying to destroy a company that we own 30% (or whatever it is) of?' Whilst there would be financial gain to FR as they would then have a monopoly there would also be the substantial loss of millions of € if it were to end up bust.
Surely the UK government already have a £10 tax on travel out of the UK. The irish Gov. tax to the UK is less than 10 euro which is payable by the customer not Ryanair, who get to keep it if the passanger does not travel.In reality this is Ryanair not having the courage to admit what people already know. you cannot fill an 189 seater aircraft from Dublin to Basle or Doncaster even for free in this economic climate.Where will they place 5 extra aircraft in addition to their 40+ new aircraft where they will make money ? I dont know and worryingly, neither does Ryanair now that Alitalia have not collapsed.
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Where will they place 5 extra aircraft in addition to their 40+ new aircraft where they will make money ?
Don't worry....there's always the runway extension at BHD errrrrrrrrrr
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The Irish goverment, will have to stand down on the €10 tourist tax. As how many passengers does RYR bring in? A lot.
Downsizing Dublin *WILL* be very interesting to see where the assets are deployed to and whether they have any impact on profits. MOL's got the chance to kill Aer Lingus but seemingly is walking away from the fight?
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The key difference between the UK and Ireland APDs seems to be that FR absorb it in the UK when offering promo fares, but are passing it straight onto the customer in the case of Ireland. So the current £10 promo offer is indeed £10 from the UK, but 10 Euro + 10 Euro tax from all Irish airports. I'm sure FR *could* absorb it like they do in the UK, but are simply making a point here.
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 ...
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 ...
Last edited by davidjohnson6; 16th Mar 2009 at 23:55.
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A lot of possible expansion possibilities there David.
One of the biggest problems with having FR expand or set up shop at your airport is that they want to use everything and pay for nothing or pay as little as possible for it.
Slowly but surely airports are wising up to these practices and with the current climate forecast to continue for the forseeable future airports do not have the funds to practically pay FR to base/fly into. Cork & Blackpool are 2 recent examples of this. It may actually be more profitable for the operator not to have FR use their airport.
The aircraft will go somewhere although at the moment it is anyones guess.
One of the biggest problems with having FR expand or set up shop at your airport is that they want to use everything and pay for nothing or pay as little as possible for it.
Slowly but surely airports are wising up to these practices and with the current climate forecast to continue for the forseeable future airports do not have the funds to practically pay FR to base/fly into. Cork & Blackpool are 2 recent examples of this. It may actually be more profitable for the operator not to have FR use their airport.
The aircraft will go somewhere although at the moment it is anyones guess.
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Airlines, especially point to point locos need numbers. The top 50 European cities by population
1 London* United Kingdom 7,556,900 FR Base STN
2 Berlin* Germany 3,425,000 FR Dest SXF
3 Madrid* Spain 3,213,271 FR Base MAD
4 Rome* Italy 2,718,768 FR Base CIA
5 Paris* France 2,188,500 FR Dest BVA
6 Bucharest* Romania 1,931,838
7 Hamburg Germany 1,773,218 FR Dest LBC
8 Warsaw* Poland 1,706,624
9 Budapest* Hungary 1,702,297 FR Dest BUD
10 Vienna* Austria 1,697,937 FR Dest BTS
11 Barcelona Spain 1,615,908 FR Bases GRO,REU,Dest BCN
12 Sofia* Bulgaria 1,402,597
13 Munich Germany 1,356,594
14 Milan Italy 1,299,633 FR Base BGY
15 Prague* Czech Republic 1,223,368 FR Dest PRG
15 Brussels* Belgium 1,080,790 FR Base CRL
16 Birmingham United Kingdom 1,010,200 FR Base BHX
17 Naples Italy 1,004,500
18 Cologne Germany 995,397 FR Base NRN
19 Turin Italy 900,520 FR Dest TRN
20 Marseille France 839,043 FR Base MRS
21 Stockholm* Sweden 810,120 FR Base NYO, Dest VST
22 Valencia Spain 807,200 FR Base VLC (Summer?)
23 Leeds United Kingdom 761,100 FR Dest LBA
24 Kraków Poland 756,666 FR Dest KRK
25 Łódź Poland 750,125 FR Dest LDZ
26 Amsterdam* Netherlands 752,911
27 Athens* Greece 745,514
28 Riga* Latvia 727,578 FR Dest RIX
29 Seville Spain 699,759 FR Dest SVQ
30 Frankfurt Germany 667,598 FR Base HHN
31 Zaragoza Spain 666,129 FR Dest ZAZ
32 Palermo Italy 665,628 FR Dest / Base(soon) PMO
33 Wrocław Poland 633,950 FR Dest WRO
34 Genoa Italy 614,736 FR Dest GOA
35 Copenhagen* Denmark 613,603 FR Dest ( Negotiating)
36 Stuttgart Germany 595,452
37 Dortmund Germany 587,717 FR Base NRN
38 Rotterdam Netherlands 584,058
39 Essen Germany 583,892 FR Base NRN
40 Glasgow United Kingdom 581,900 FR Base PIK
41 Düsseldorf Germany 577,505 FR Base NRN
42 Málaga Spain 566,447 FR Dest
43 Poznań Poland 564,035 FR Dest PZN
44 Vilnius* Lithuania 553,553
45 Bremen Germany 548,477 FR Base BRE
46 Sheffield United Kingdom 530,300
47 Hannover Germany 517,251
48 Leipzig Germany 510,512
49 Dresden Germany 507,513
50 Dublin* Ireland 505,739 Home Sweet Home
Not that many places left to expand to with at least 500,000 population.
1 London* United Kingdom 7,556,900 FR Base STN
2 Berlin* Germany 3,425,000 FR Dest SXF
3 Madrid* Spain 3,213,271 FR Base MAD
4 Rome* Italy 2,718,768 FR Base CIA
5 Paris* France 2,188,500 FR Dest BVA
6 Bucharest* Romania 1,931,838
7 Hamburg Germany 1,773,218 FR Dest LBC
8 Warsaw* Poland 1,706,624
9 Budapest* Hungary 1,702,297 FR Dest BUD
10 Vienna* Austria 1,697,937 FR Dest BTS
11 Barcelona Spain 1,615,908 FR Bases GRO,REU,Dest BCN
12 Sofia* Bulgaria 1,402,597
13 Munich Germany 1,356,594
14 Milan Italy 1,299,633 FR Base BGY
15 Prague* Czech Republic 1,223,368 FR Dest PRG
15 Brussels* Belgium 1,080,790 FR Base CRL
16 Birmingham United Kingdom 1,010,200 FR Base BHX
17 Naples Italy 1,004,500
18 Cologne Germany 995,397 FR Base NRN
19 Turin Italy 900,520 FR Dest TRN
20 Marseille France 839,043 FR Base MRS
21 Stockholm* Sweden 810,120 FR Base NYO, Dest VST
22 Valencia Spain 807,200 FR Base VLC (Summer?)
23 Leeds United Kingdom 761,100 FR Dest LBA
24 Kraków Poland 756,666 FR Dest KRK
25 Łódź Poland 750,125 FR Dest LDZ
26 Amsterdam* Netherlands 752,911
27 Athens* Greece 745,514
28 Riga* Latvia 727,578 FR Dest RIX
29 Seville Spain 699,759 FR Dest SVQ
30 Frankfurt Germany 667,598 FR Base HHN
31 Zaragoza Spain 666,129 FR Dest ZAZ
32 Palermo Italy 665,628 FR Dest / Base(soon) PMO
33 Wrocław Poland 633,950 FR Dest WRO
34 Genoa Italy 614,736 FR Dest GOA
35 Copenhagen* Denmark 613,603 FR Dest ( Negotiating)
36 Stuttgart Germany 595,452
37 Dortmund Germany 587,717 FR Base NRN
38 Rotterdam Netherlands 584,058
39 Essen Germany 583,892 FR Base NRN
40 Glasgow United Kingdom 581,900 FR Base PIK
41 Düsseldorf Germany 577,505 FR Base NRN
42 Málaga Spain 566,447 FR Dest
43 Poznań Poland 564,035 FR Dest PZN
44 Vilnius* Lithuania 553,553
45 Bremen Germany 548,477 FR Base BRE
46 Sheffield United Kingdom 530,300
47 Hannover Germany 517,251
48 Leipzig Germany 510,512
49 Dresden Germany 507,513
50 Dublin* Ireland 505,739 Home Sweet Home
Not that many places left to expand to with at least 500,000 population.