MANCHESTER - 7
Pilot of the Airwaves
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Per Travelmole:
A Manchester Airport spokesperson said: “Not withstanding all of our investment in Manchester Airport including during the current recession, we don’t believe that charges as low as £3 per passenger are unreasonable. Clearly, Ryanair do and that’s regrettable.
“We’ve consistently cut our charges for the last 15 years even when faced with increased costs such as security.
“Passengers will still be able to travel directly to the majority of the destinations affected by choosing other airlines."
“We’ve consistently cut our charges for the last 15 years even when faced with increased costs such as security.
“Passengers will still be able to travel directly to the majority of the destinations affected by choosing other airlines."
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Hi AndyH52,
You are right to suggest that the loss of these Ryanair passengers will leave a fair size hole in MAN's budget. But maybe not so big. Clearly, Ryanair sought a deal in which their direct financial contribution to MAN would have been zero (see the comments by Andrew Cornish at 'Crain's Manchester Business'). Looking at Ryanair's indirect contribution to MAN's profitability, note that the airline's customers are so restricted in terms of baggage allowance that they are inclined to avoid shopping, and the company's presence will (soon) not bring in revenue for use of check-in desks. The opportunity for ancillary revenues from Ryanair customers is somewhat limited to put it mildly.
But most importantly, if MAG permits one carrier to use MAN's facilities for free, then they must be prepared to offer the same deal to all other airline customers (or face a much more damaging backlash). The business model would require a complete re-design. Then we can really talk about a fair size hole in MAN's budget. From the point of view of running a business, MAG is to be commended for defending its revenue streams. Ultimately for MAG it is the bottom line (profit) which matters, not the number of passengers through the door. If Ryanair's presence at MAN subtracts from the bottom line - no direct financial contribution and eroding potential income from other carriers - then it is best to wish them goodbye and good luck.
Andrew Cornish and his team have made a brave decision by turning down Ryanair's "offer which we could refuse". No doubt they will be publicly slated for it as passenger numbers fall (alongside their counterparts at STN and DUB who also stood up to Ryanair). But MAN will be left with a core group of business partners who pay a fair price for the services which they use, and these are the partners with whom the business needs to develop in the future. It will be interesting to watch developments at LBA now. If Ryanair are there virtually for free, have Jet2 been offered similar terms? If not, I'm sure they will be quick to demand parity or adjust their commitment to LBA accordingly. So LBA faces the high fixed costs of running its infrastructure, and an anorexic income stream to finance that. It may be a good deal for local pride, but maybe not for future financial viability. We will see.
Ryanair are using the opportunity to slag off MAG in the media as per their usual formula, but even journalists are becoming wise to these tricks now. So 44 flights per week by non-based aircraft equates to 600 jobs, eh? A service provider who will not offer his product for free is fair game for denunciation in the press ... hmmm. Readers of some red-tops may be taken in by this patter, but the serious players in the aviation industry see through the bluster. MAG's principled stance will send a message to the industry that MAN will not allow a sweetheart deal with a predatory player to undermine the viability of its established customers' position. Taking the moral high ground will carry a painful price-tag in the short term but will pay dividends (financially, if not in passenger numbers) in the future.
And if MAG will pay a price for this decision, be assured that Ryanair will too. Note recent statements: Ryanair *wanted* in at MAN. The airport was notably mentioned amongst talk of expansion freezes as one of the few where further growth was planned. By leaving in a huff and issuing an accusatory press release, Ryanair has saved face. But that face now has a big hole where the nose has been bitten off. Ryanair will have a hole in its budget too.
Finally, I would like to conclude by offering an AMAZING OPPORTUNITY to all retailers out there. If you are prepared to offer me your products completely free of charge for the long term (no introductory deals), and deliver them to me gratis, I will agree to do business with you! I am sure none of your other customers will demand equal treatment! And just think of all the jobs my custom will be helping to create - your local economy will boom. By the way, if you turn me down I will issue a press release informing the media that you are a rip-off merchant who has spurned an amazing opportunity - you are clearly greedy and incompetent. And I will mention that your rejection of my custom will cost FIFTY local jobs (using a bizarre formula which I just made up) - nobody will check the numbers anyway! The decision is yours!
SHED.
You are right to suggest that the loss of these Ryanair passengers will leave a fair size hole in MAN's budget. But maybe not so big. Clearly, Ryanair sought a deal in which their direct financial contribution to MAN would have been zero (see the comments by Andrew Cornish at 'Crain's Manchester Business'). Looking at Ryanair's indirect contribution to MAN's profitability, note that the airline's customers are so restricted in terms of baggage allowance that they are inclined to avoid shopping, and the company's presence will (soon) not bring in revenue for use of check-in desks. The opportunity for ancillary revenues from Ryanair customers is somewhat limited to put it mildly.
But most importantly, if MAG permits one carrier to use MAN's facilities for free, then they must be prepared to offer the same deal to all other airline customers (or face a much more damaging backlash). The business model would require a complete re-design. Then we can really talk about a fair size hole in MAN's budget. From the point of view of running a business, MAG is to be commended for defending its revenue streams. Ultimately for MAG it is the bottom line (profit) which matters, not the number of passengers through the door. If Ryanair's presence at MAN subtracts from the bottom line - no direct financial contribution and eroding potential income from other carriers - then it is best to wish them goodbye and good luck.
Andrew Cornish and his team have made a brave decision by turning down Ryanair's "offer which we could refuse". No doubt they will be publicly slated for it as passenger numbers fall (alongside their counterparts at STN and DUB who also stood up to Ryanair). But MAN will be left with a core group of business partners who pay a fair price for the services which they use, and these are the partners with whom the business needs to develop in the future. It will be interesting to watch developments at LBA now. If Ryanair are there virtually for free, have Jet2 been offered similar terms? If not, I'm sure they will be quick to demand parity or adjust their commitment to LBA accordingly. So LBA faces the high fixed costs of running its infrastructure, and an anorexic income stream to finance that. It may be a good deal for local pride, but maybe not for future financial viability. We will see.
Ryanair are using the opportunity to slag off MAG in the media as per their usual formula, but even journalists are becoming wise to these tricks now. So 44 flights per week by non-based aircraft equates to 600 jobs, eh? A service provider who will not offer his product for free is fair game for denunciation in the press ... hmmm. Readers of some red-tops may be taken in by this patter, but the serious players in the aviation industry see through the bluster. MAG's principled stance will send a message to the industry that MAN will not allow a sweetheart deal with a predatory player to undermine the viability of its established customers' position. Taking the moral high ground will carry a painful price-tag in the short term but will pay dividends (financially, if not in passenger numbers) in the future.
And if MAG will pay a price for this decision, be assured that Ryanair will too. Note recent statements: Ryanair *wanted* in at MAN. The airport was notably mentioned amongst talk of expansion freezes as one of the few where further growth was planned. By leaving in a huff and issuing an accusatory press release, Ryanair has saved face. But that face now has a big hole where the nose has been bitten off. Ryanair will have a hole in its budget too.
Finally, I would like to conclude by offering an AMAZING OPPORTUNITY to all retailers out there. If you are prepared to offer me your products completely free of charge for the long term (no introductory deals), and deliver them to me gratis, I will agree to do business with you! I am sure none of your other customers will demand equal treatment! And just think of all the jobs my custom will be helping to create - your local economy will boom. By the way, if you turn me down I will issue a press release informing the media that you are a rip-off merchant who has spurned an amazing opportunity - you are clearly greedy and incompetent. And I will mention that your rejection of my custom will cost FIFTY local jobs (using a bizarre formula which I just made up) - nobody will check the numbers anyway! The decision is yours!
SHED.
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FR
Before the original airport article (see msg 1466 by betablocker) falls off the bottom of the Crain's link as their newsboard is updated, here is the story that started it all
Manchester Airport turned down approaches from Ryanair to launch more routes at the airport after it effectively asked to fly from the airport for free, it has emerged.
Airport managing director Andrew Cornish told industry magazine Travel Trade Gazette that the airport was not prepared to “prostitute” itself to the demands of the low cost giant and accept terms that would “trash the market”.
His comments come days after Ryanair announced it would set up a new base at Leeds Bradford airport, where it is introducing 14 new routes from March 2010. It's unclear what kind of terms the airport offered Ryanair to increase services from the Yorkshire airport.
Cornish told the magazine: “Ryanair made us an offer we could refuse. We are not prepared to prostitute ourselves to have the market trashed.
“Whatever Leeds has done, it has done. We said no to Ryanair and that could have consequences for us for the winter, but if they want to withdraw services then other people will fill them.”
Cornish said the market had recently been “littered” with boom and bust routes that were unsustainable in the long term. He added: “Routes have to be viable and make money.”.
Trash_Hauler
There used to be an accepted aviation industry standard that for every million passengers passing through an airport, 1000 jobs were supported both directly at the airport and in the surrounding economy. Jobs in the surrounding economy came from suppliers to the companies on the airport and the airlines at that airport plus the economic impact of people who were employed at the airport in the area spending in their local economy, supporting jobs in shops etc.
This model worked quite well as a rule of thumb although an airport with a big based carrier eg LHR would have more than 1000 jobs/million pax and others with no based carrier would be under this. I think MAN used these 1000jobs/1 million pax figures at the R2 enquiry?
Nowadays, I suspect the figures overall would be less what with many airports and companies cutting staff fo a while, but at least before this year, passenger volumes still going up. Anyone know whether this general rule has been challenged recently at any planning enquiries?
But anyway, even if this figure is lower, it suits FR to quote the 1000/1million ratio because it deepens the perceived impact of leaving MAN and overeggs the impact of opening new routes/bases.
Now a question. I presume the retention of the DUB route is because it makes money? I seem to remember it once being suggested that they would never drop this route so that they could retain their slots at both ends, but I don't think this would be the case anymore with the recent massive reduction in movements at MAN and less FR aircraft now at DUB?
And what of the gaps in the services? Two slightly different views on the consequences for passengers.
Firstly from Andrew Cornish, MD of MAN
suggesting that other carriers will come in and open up similar routes
and then an Airport Spokesperson on Travelmole as posted by IB4138
suggesting that other carriers already operate similar routes.
Or am I just nickpicking?
Anyway, more interesting times for MAN
Suzeman
Manchester Airport turned down approaches from Ryanair to launch more routes at the airport after it effectively asked to fly from the airport for free, it has emerged.
Airport managing director Andrew Cornish told industry magazine Travel Trade Gazette that the airport was not prepared to “prostitute” itself to the demands of the low cost giant and accept terms that would “trash the market”.
His comments come days after Ryanair announced it would set up a new base at Leeds Bradford airport, where it is introducing 14 new routes from March 2010. It's unclear what kind of terms the airport offered Ryanair to increase services from the Yorkshire airport.
Cornish told the magazine: “Ryanair made us an offer we could refuse. We are not prepared to prostitute ourselves to have the market trashed.
“Whatever Leeds has done, it has done. We said no to Ryanair and that could have consequences for us for the winter, but if they want to withdraw services then other people will fill them.”
Cornish said the market had recently been “littered” with boom and bust routes that were unsustainable in the long term. He added: “Routes have to be viable and make money.”.
Trash_Hauler
I would really likek to know where they are getting these figures of 600 job losses and 400 new jobs from...
There used to be an accepted aviation industry standard that for every million passengers passing through an airport, 1000 jobs were supported both directly at the airport and in the surrounding economy. Jobs in the surrounding economy came from suppliers to the companies on the airport and the airlines at that airport plus the economic impact of people who were employed at the airport in the area spending in their local economy, supporting jobs in shops etc.
This model worked quite well as a rule of thumb although an airport with a big based carrier eg LHR would have more than 1000 jobs/million pax and others with no based carrier would be under this. I think MAN used these 1000jobs/1 million pax figures at the R2 enquiry?
Nowadays, I suspect the figures overall would be less what with many airports and companies cutting staff fo a while, but at least before this year, passenger volumes still going up. Anyone know whether this general rule has been challenged recently at any planning enquiries?
But anyway, even if this figure is lower, it suits FR to quote the 1000/1million ratio because it deepens the perceived impact of leaving MAN and overeggs the impact of opening new routes/bases.
Now a question. I presume the retention of the DUB route is because it makes money? I seem to remember it once being suggested that they would never drop this route so that they could retain their slots at both ends, but I don't think this would be the case anymore with the recent massive reduction in movements at MAN and less FR aircraft now at DUB?
And what of the gaps in the services? Two slightly different views on the consequences for passengers.
Firstly from Andrew Cornish, MD of MAN
but if they want to withdraw services then other people will fill them.”
suggesting that other carriers will come in and open up similar routes
and then an Airport Spokesperson on Travelmole as posted by IB4138
Passengers will still be able to travel directly to the majority of the destinations affected by choosing other airlines."
Or am I just nickpicking?
Anyway, more interesting times for MAN
Suzeman
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Ryanair
I think MAN should be commended for this stance. Despite its recent traffic decline MAN has remained remarkably profitable. The same cannot be said for many regional airports who have, to quote MD Cornish, 'prostituted themselves' in the race for volume. The lo-co market today is operating in a state of economic un-reality, the full extent of which is probably yet to be revealed. Airport infrastructure is very costly and needs to be financed from somewhere. The truth is that in the absence of public funding (which is still available in many parts of the EU but not in the UK), the money has to be raised from revenues. Witness what happens when a small airport, experiencing high wear and tear on infrastructure for the first time in years, needs to spend. They cannot raise the money from the paltry deals they have done with lo-cos and so have to add a development tax or otherwise increase charges. Blackpool, anyone? The likes of FR then throw their teddy out when faced with paying a fair price for this infrastructure.
MAN has spent big in the past to provide the North of England with a major airport. It now needs to spend lots more on keeping these facilities in good shape - recent disruption to runway and taxiway operations and the poor state of parts of the terminals bear witness to that. They will not raise the cash by letting expensive resources be used for nothing. Good show, MAN, I say.
MAN has spent big in the past to provide the North of England with a major airport. It now needs to spend lots more on keeping these facilities in good shape - recent disruption to runway and taxiway operations and the poor state of parts of the terminals bear witness to that. They will not raise the cash by letting expensive resources be used for nothing. Good show, MAN, I say.
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Business Sense 1 PikeyAir 0
When will a company like Ryanair ever understand the concept of Fair Trade?
Go MOL, go off (I could use another phrase but that is MOL's level) to Leeds with it's lack of CATIII, you'll soon be (diverted) back to Manchester.
Go MOL, go off (I could use another phrase but that is MOL's level) to Leeds with it's lack of CATIII, you'll soon be (diverted) back to Manchester.
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Originally Posted by BC2300
Good news for Ryanair because the underlining business is profitable despite difficult trading conditions.
Originally Posted by BC2300
Armchair analysts, *sighs*
Originally Posted by BNC2300
Well done Ryanair. MANs loss, LPL, LBA, EMAs gain!
Bet you've got the O'Leary bog roll in your loo too, eh...?
I see on another forum, some bright spark reckons a campaign should be launched to have a banner unfurled from Tower Building proclaiming "Bye Bye Ryanair."
I'd rather it say "F**K OFF !!"
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Shed
Thanks for a very rational analysis as usual. I wonder if anyone has taken you up on your amazing opportunity for retailers - it's worth reading if you haven't already.
I'm sure Mr Cornish and his team of analysts have looked at this in great detail and discussed it at great length before coming to this decision. As he admits it "could have consequences for us for the winter" but they will have also looked at the longer term implications too and come to the conclusion that this decison was best for the business overall. And of course what's best for the business and shareholders is not necessarily increasing throughput.
Roverman has also explained that building and maintaining the infrastructure is costly and the funds have to come from somewhere. Infrastructure provision for airports comes with a high risk - R2 opened just before September 11th - no one saw that coming. Airlines can come and go virtually as they please as we see here with other airports used or capacity added or removed with relative ease. So the airport revenues have to be protected but value for money must also be on offer.
Chiglet
This decison will have been made whilst looking at the context of overall MAG strategy - evidenced by the wheeling out of the Group CX for the press today. It will be interesting to se if FR use the same tactics at EMA and BOH.
Speaking of local TV reports, they have been reasonably restrained and balanced - the girlie on Granada News at 1830 questioned the loss of 600 jobs and suggested that the figure on airport would be between 100 and 200. BBC showed Geoff Muirhead questioning the job figures too - he didn't believe them as FR "didn't have a base at MAN".
And then stuff me, this FR news was quite high up in the running on the 2200 BBC National news, but was couched in terms of "that's another 600 jobs gone". No questioning of the figures or suggestions it MIGHT lead to some extra jobs at LBA, EMA or LPL but then the item was only about 15 seconds.
Suzeman
Thanks for a very rational analysis as usual. I wonder if anyone has taken you up on your amazing opportunity for retailers - it's worth reading if you haven't already.
I'm sure Mr Cornish and his team of analysts have looked at this in great detail and discussed it at great length before coming to this decision. As he admits it "could have consequences for us for the winter" but they will have also looked at the longer term implications too and come to the conclusion that this decison was best for the business overall. And of course what's best for the business and shareholders is not necessarily increasing throughput.
Roverman has also explained that building and maintaining the infrastructure is costly and the funds have to come from somewhere. Infrastructure provision for airports comes with a high risk - R2 opened just before September 11th - no one saw that coming. Airlines can come and go virtually as they please as we see here with other airports used or capacity added or removed with relative ease. So the airport revenues have to be protected but value for money must also be on offer.
Chiglet
I wonder what would happen if MAG took the same view as MAN at the rest of the group.... EMA,BOH and HUY.........
This decison will have been made whilst looking at the context of overall MAG strategy - evidenced by the wheeling out of the Group CX for the press today. It will be interesting to se if FR use the same tactics at EMA and BOH.
Speaking of local TV reports, they have been reasonably restrained and balanced - the girlie on Granada News at 1830 questioned the loss of 600 jobs and suggested that the figure on airport would be between 100 and 200. BBC showed Geoff Muirhead questioning the job figures too - he didn't believe them as FR "didn't have a base at MAN".
And then stuff me, this FR news was quite high up in the running on the 2200 BBC National news, but was couched in terms of "that's another 600 jobs gone". No questioning of the figures or suggestions it MIGHT lead to some extra jobs at LBA, EMA or LPL but then the item was only about 15 seconds.
Suzeman