Ryanair - 8
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However, always remember that the term "low-cost" in this instance refers to the cost base achieved and reported on the company balance sheet. It is a common misconception amongst the traveling public that the term refers to the tariffs they pay for tickets. Not so. There is no direct link.
The short haul market is massively commodotised and price sensitive. O'Leary ends every investor presentation with the phrase 'LOWEST COST ALWAYS WINS' for good reason (they do use the capital letters too). The cheaper his costs, the cheaper his fares and the more seats he sells.
The phrases 'lowest fares' or 'low fares airline' are still commonly used in press and PR including news releases relating to Baden Baden and Wroclow just this week
The cost base drives the ticket price which drives the demand and the competitive advantage.
If cost was the sole determining factor in setting ticket prices then how could airlines ever lose money ?
Lowest cost give a competitve advantage but it cannot, nor will ever be the determinant in whether a business is successful.
You need to deliver a consistent service and that includes being ontime, less lost luggage etc etc. People bitch about booking tickets but people remember a delayed flight more with the luggage lost than how they booked it.
Being able to define what the customer wants, rather than what the headline writers on the tabloids tell you, is more a determinant of success and returning customers.
Knowing when you see your plane land it will take off with you on board in 25 minutes beats seeing it land and taking of in 90 minutes when you wondering why it takes so long. Yup reasons for it but you are talking of SLF's looking to fly and rationality may not be strongest point.
Walmart gets slated in the US by the media all the time and its the one they love to hate but 2 million people worldwide get paid by them every month and its the biggest company by Sales in the wold.
The short haul market is massively commodotised and price sensitive. O'Leary ends every investor presentation with the phrase 'LOWEST COST ALWAYS WINS' for good reason (they do use the capital letters too). The cheaper his costs, the cheaper his fares and the more seats he sells.
The phrases 'lowest fares' or 'low fares airline' are still commonly used in press and PR including news releases relating to Baden Baden and Wroclow just this week
The phrases 'lowest fares' or 'low fares airline' are still commonly used in press and PR including news releases relating to Baden Baden and Wroclow just this week
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No Direct Link ...
Hi North West -
I am not in disagreement with you to the extent that a low cost base delivers a company (such as Ryanair) the means to sustain lower prices for its product than a competitor burdened with higher costs. That is a key advantage for a company engaged in a price war, for example. They will win a war of attrition with a competitor when exceptional circumstances demand this.
The point upon which I do disagree with you centres on the implication that simply because a company is materially capable of getting by whilst charging lower prices, it will consequently do so in practice as a matter of routine policy. I contend that under normal circumstances, the company will prioritise enhancement of its operating margins to maximise profitablility as demanded by shareholders. The company's first loyalty is to its owners, the shareholders. It is nice for a company to have the wherewithal to sustain low margins when market conditions demand it, but as a rule elevated margins will take precedence in the absence of unusual circumstances. Hence a low cost base *enables* low fares to be sustained, but it is not a given that the airline will routinely choose to offer them. The profit imperative overrides the possibility of an implicit direct link between the ability to offer a very low fare and the motivation to actually do so.
Thus, borrowing an example quoted earlier, the company *could* offer an extremely low fare on MAN-ALC on the first Saturday of schools half-term. Ryanair's low cost base enables this. But we all know that they will not actually do so, because the company exists to make profits ... the more the better. This is why there is no DIRECT link between low costs and low fares. The former enables the latter but does not mandate it.
With regards to Ryanair's publicity pronouncements, I am the first to acknowledge that the company is run by a PR genius (whether you like him or not). Low fares are Ryanair's USP. But the ability to sell a ticket at just above its (very low) intrinsic cost is not the same thing as routinely doing so in practice. There is no automatic link from cause (low costs) to effect (lowest possible fare being offered at all times) in this case. Very low fares are made available on a tactical basis only.
Anyway, thankyou for your response. This is an interesting discussion. At least I think so!
Regards. SHED.
RACEDO: Thankyou for the interesting points you contribute. Apologies for any element of duplication here. Your posting appeared between the time I read North West's post and completed composition of this one.
I am not in disagreement with you to the extent that a low cost base delivers a company (such as Ryanair) the means to sustain lower prices for its product than a competitor burdened with higher costs. That is a key advantage for a company engaged in a price war, for example. They will win a war of attrition with a competitor when exceptional circumstances demand this.
The point upon which I do disagree with you centres on the implication that simply because a company is materially capable of getting by whilst charging lower prices, it will consequently do so in practice as a matter of routine policy. I contend that under normal circumstances, the company will prioritise enhancement of its operating margins to maximise profitablility as demanded by shareholders. The company's first loyalty is to its owners, the shareholders. It is nice for a company to have the wherewithal to sustain low margins when market conditions demand it, but as a rule elevated margins will take precedence in the absence of unusual circumstances. Hence a low cost base *enables* low fares to be sustained, but it is not a given that the airline will routinely choose to offer them. The profit imperative overrides the possibility of an implicit direct link between the ability to offer a very low fare and the motivation to actually do so.
Thus, borrowing an example quoted earlier, the company *could* offer an extremely low fare on MAN-ALC on the first Saturday of schools half-term. Ryanair's low cost base enables this. But we all know that they will not actually do so, because the company exists to make profits ... the more the better. This is why there is no DIRECT link between low costs and low fares. The former enables the latter but does not mandate it.
With regards to Ryanair's publicity pronouncements, I am the first to acknowledge that the company is run by a PR genius (whether you like him or not). Low fares are Ryanair's USP. But the ability to sell a ticket at just above its (very low) intrinsic cost is not the same thing as routinely doing so in practice. There is no automatic link from cause (low costs) to effect (lowest possible fare being offered at all times) in this case. Very low fares are made available on a tactical basis only.
Anyway, thankyou for your response. This is an interesting discussion. At least I think so!
Regards. SHED.
RACEDO: Thankyou for the interesting points you contribute. Apologies for any element of duplication here. Your posting appeared between the time I read North West's post and completed composition of this one.
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Canary routes
FR- no flights to FUE for summer 2012 yet from stanstead. East mids. Dublin. and no flights to any canary island as yet from Edinburgh. The first three however have flights bookable to the other three islands. Any idea when or if flights will available to FUE.
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So dose anyone what Michael O'Leary has in store for his press conference tomorrow morning at Leeds/Bradford.
I guess some more new routes and extra based aircraft would do nicely for next summer 2012 season.
I guess some more new routes and extra based aircraft would do nicely for next summer 2012 season.
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I'd just add a few words. I do value Ryanair's "cost discipline", being so stingy and rapacious at the same time apparently pays off. What the carrier misses here is their lack of appreciation for some "small nuances" that really do not cost very much but might be worthwhile things. Customer-friendliness is one of them",
Hm? not sure about this in depth. Employee friendliness is very vital and missing totally. This lack of company team ethics will bite back and IMHO prove that the stingy rapacious culture does not pay off in the long term. Voting with feet is underway.
Hm? not sure about this in depth. Employee friendliness is very vital and missing totally. This lack of company team ethics will bite back and IMHO prove that the stingy rapacious culture does not pay off in the long term. Voting with feet is underway.
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So dose anyone what Michael O'Leary has in store for his press conference tomorrow morning at Leeds/Bradford.
I guess some more new routes and extra based aircraft would do nicely for next summer 2012 season.
I guess some more new routes and extra based aircraft would do nicely for next summer 2012 season.
Oslo base going from 3 to 4 aircraft from March.
FR- no flights to FUE for summer 2012 yet from stanstead. East mids. Dublin. and no flights to any canary island as yet from Edinburgh. The first three however have flights bookable to the other three islands. Any idea when or if flights will available to FUE.
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Not sure what significance that news could possibly have, let's just note it as a curiosity:
Source: Peru this Week
Last month there were reports than an Irish consortium, back by Aergo group, had purchased 65% of Peruvian Airlines.
New reports indicated the consortium also includes low cost airline Ryanair.
Peruvian Airlines owner Caesar Cataño told TNews that the consortium intends to “break the market” and plan on achieving 50% of the market share.
“Aergo told me they are finalizing things to come work with Ryanair, with all the low-cost know how.”
The sale will be completed by mid-November.
New reports indicated the consortium also includes low cost airline Ryanair.
Peruvian Airlines owner Caesar Cataño told TNews that the consortium intends to “break the market” and plan on achieving 50% of the market share.
“Aergo told me they are finalizing things to come work with Ryanair, with all the low-cost know how.”
The sale will be completed by mid-November.
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Since when are Ryanair and DAA on good terms??
I see Ryanair adds in Irish newspapers are being suported by the DAA. FR advertising fixed priced flights with no taxes and charges.
I see Ryanair adds in Irish newspapers are being suported by the DAA. FR advertising fixed priced flights with no taxes and charges.
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In talks with MAN to take the total based aircraft to 6 by 2013 and are reporting strong demand on the routes they've started this week (having some some of the pax figures in this 1st week of operations, there is more than a grain of truth in this!). They are also focusing in on MAN and LBA for the time being with LPL being ruled out for growth.
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Ryanair Synopsis by Shed
Post 2221 by Shed makes a good, if long winded, read. He tries, successfully in my opinion, to disabuse Joe Public that the idea of a low cost carrier is most certainly not the same as a low fares airline.
MOL tries to kid people, and in the main he has succeeded, into thinking that Ryan is a low fares airline by eternally banging on about 99p fares to here there and everywhere whereas the truth is a million miles away from that. They wouldn't be turning in profits every year at 99p a seat would they?
Keep up the good work Shed as I think you will need to repeat your message over and over again and even then the penny won't drop with a large percentage of "Joe Public".
MOL tries to kid people, and in the main he has succeeded, into thinking that Ryan is a low fares airline by eternally banging on about 99p fares to here there and everywhere whereas the truth is a million miles away from that. They wouldn't be turning in profits every year at 99p a seat would they?
Keep up the good work Shed as I think you will need to repeat your message over and over again and even then the penny won't drop with a large percentage of "Joe Public".
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Post 2221 by Shed makes a good, if long winded, read. He tries, successfully in my opinion, to disabuse Joe Public that the idea of a low cost carrier is most certainly not the same as a low fares airline.
MOL tries to kid people, and in the main he has succeeded, into thinking that Ryan is a low fares airline by eternally banging on about 99p fares to here there and everywhere whereas the truth is a million miles away from that. They wouldn't be turning in profits every year at 99p a seat would they?
Keep up the good work Shed as I think you will need to repeat your message over and over again and even then the penny won't drop with a large percentage of "Joe Public".
MOL tries to kid people, and in the main he has succeeded, into thinking that Ryan is a low fares airline by eternally banging on about 99p fares to here there and everywhere whereas the truth is a million miles away from that. They wouldn't be turning in profits every year at 99p a seat would they?
Keep up the good work Shed as I think you will need to repeat your message over and over again and even then the penny won't drop with a large percentage of "Joe Public".
I don't think 'the average fare' takes into account 'optional' fees, so in my opinion it's not necessarily an accurate reflection of what each passenger actually pays. Of course, MOL puts a spin on things.
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Im a little shocked on how unprofessional that reporter was with her attitude towards MOL. I dont understand why you would invite someone on if your going to but in everytime MOL tries to answer a question.
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Half Year
RYANAIR HALF YEAR PROFITS RISE 20% TO €544m
TRAFFIC GROWS 12% - FULL YEAR GUIDANCE RAISED 10% TO €440m.
TRAFFIC GROWS 12% - FULL YEAR GUIDANCE RAISED 10% TO €440m.
Ryanair, the world's favourite airline today (Nov 7) announced a 20% increase in half year profits to €544m. Revenues rose 24% to €2.7bn, traffic grew 12% and ave. fares increased 13%. Unit costs rose 13% due mainly to longer sectors and a 37% increase in fuel costs. Excluding fuel, sector length adjusted unit costs did not increase at all.
News | Interactive Investor
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First half results
- Passengers up 12%
- 37% rise in fuel costs
- First half profit after tax up from € 451.9 M to € 543.5 M
- Traffic over the winter to fall by 4%, as previously stated. 10% decline expected in November.
- Full year profit guidance raised from € 400 M to € 440 M, in other words, they expect to lose € 100 M over the winter (compared to a loss of about € 50 M last year).
http://www.ryanair.com/doc/investor/...2_2012_doc.pdf
@FR- sorry, you beat me!