easyJet and Ryanair in 5 to 10 years?

[FRatSTN]

I don't think I've ever started a new thread before but purely done so because this is very much about both easyJet and Ryanair so wouldn't know which thread to put it in.

Interesting to see what Kenny Jacobs, Ryanair's Chief Marketing Officer said on Bloomberg and especially the brief part about easyJet.

http://www.bloomberg.com/news/videos/2015-02-26/can-ryanair-succeed-in-attracting-business-flyers-

When asked about Ryanair's competitive position going into primary airports and there becoming an increasing overlap with easyJet, Kenny Jacobs said...

"It's probably something easyJet think about more than Ryanair does. Anytime where we've gone to a base and been more head-to-head with easyJet we've seen them reduce rather than increase the capacity."

"We're very confident when we get to particular bases we'll be taking on any competitor and we don't see many competitors staying with us that often. But over the next number of years all LCCs will do well as the national flag-carriers continue to reduce capacity across Europe."

The question I basically want to ask is how are easyJet going to react over these next few years as Ryanair penetrate into more of their markets?

By all means I think Kenny Jacobs has hit the right nail on the head. I think all LCCs will indeed continue to do well as flag-carriers reduce their short-haul network. But easyJet do have this tendency to reduce capacity when competition intensifies, but surely there's a limit as to how long they can do this?

Personally I no longer see BA, Air France-KLM, Lufthansa etc. as the real competition for easyJet. I think it's fairly easy for them (excuse the pun) by now to come in and price out the full-service carriers and that Ryanair are becoming a bigger overall threat to them. That's surely only going to become more obvious if/when the full-service carriers further reduce capacity within Europe.

Also interesting to see a lot of their new routes this year, especially from the UK are 'thinner' holiday destinations that fly only 2 or 3 days a week. Could this maybe be an area of focus for easyJet?

I'm by no means trying to make this a 'Ryanair is better than easyJet' or vice versa but am genuinely interested in what people think is the way forward for easyJet, or indeed Ryanair in say the next 5 to 10 years...

[EI-BUD]

FRatSTN,

It is often true that easyJet do avoid head to head intenseccompetition. However, they are commercially savy and don't see the point is wasting resource on business that is not fruitful.

Equally, it is fair to say that the two are very much equals on many routes, such as many ex LPL and BRS, incidentally airports where the easyJet operation is lsrgervthan FR.

Easyjet management recognise the carriers that have lower cost bases, and avoid too much battles with these. That said plenty happening v Vueling in Rome... There are much more fruitful markets v legacy carriers from primary airports etc.

[Facelookbovvered]

Tradiditonally FR have always enjoyed a significant cost advantage over all other operators for reason that are well known and don't need repeating, the move to airports where they have to pay rather than be paid will slightly erode this margin but not by much.

Of course bigger airports will have more compertion, but most importantly the customer base changes and becomes more decerning, FR will often operate from gates miles from security that are cheaper in some cases it the bowels of an airport using facilities that have long being bypassed by newer CI desks.

These same customers also want mobile check in, free text updates and increasingly access to wifi for free, in other words we are seeing a change where the Loco is moving closer to the legacy offering but with a much lower cost base.

Managing this cost increase is crucial, Ryanair have moved very quick this last 12 months to in the words of MOL stop pissing people off for no good reason, but all they done is to pick the low hanging fruit so far, cutting the arrival fanfare, easing the sell sell meanality during early/late flights and allowing a little more discretion on hand luggage, but so far as I know they will still charge for a boarding card, hold luggage is still just 15kg, the interior decor is dire

I think the likes of Monarch are at serious risk if FR continue to up their game, but I think it will be some years before they are voted best low cost airline in skytrax or which magazine

[Ian Brooks]

Manchester is another where the two operte together with fleets being of a very similar size yet neither are as large as Jet2 and about the same as Monarch and also quite a large show of legacy carriers.

[Fairdealfrank]

But over the next number of years all LCCs will do well as the national flag-carriers continue to reduce capacity across Europe."


So what happened to the much predicted "bloodbath"?

[Una Due Tfc]

EZY stole a march on RYR when they moved to primary airports and became "nicer" to their customers. Suddenly a significant number of businessmen and women started using their services, pax who generally spend more. To be fair to RYR they noticed this fairly quickly and modified their own business model to more closely resemble that of EZY by flying to the likes of BRU,FCO,AMS etc. i think people were starting to realise that flying to places like Hahn or Rotterdam and getting the train to the city they thought they were going to ended up as expensive or more than if they had flown with a legacy or EZY to the primary airport. Still waiting for them to stop pretending Beauvais is in Paris though.

[EI-BUD]

EasyJet will continue to bring in enhancements to the their model to offer something more than the LOCO's, they will seek out competitive advantage and in my view, move more towards full service carriers in some ways, e.g. offering interlining, while it is convention that LOCO's don't do interlining, easyJet will need to differentiate and they cannot lead on cost.

Long haul will eventually work on LOCO and easyJet would seem like the natural carriers for that in time. But that will require changes to the landscape.

All that said, a serious accident taking place with a LOCO could mean that the industry could go into a new direction and take the focus off LOCO, something like Valujet in the US. That said safety is a top priority for carriers, so hopefully we will never witness such an event.

[RAT 5]

In Europe my local national carrier is often cheaper than the rival LoCo, if you can be flexible with dates & times. And therein lies an advantage: the national flies every day and usually 3-4 times. The Loco often flies less than everyday and usually only twice at not very convenient times. It will then depend on how much luggage you take as to the bottom price. The true price is also 'door to door'. So include the cost of travel to/from and any car parking. At a major airport public transport can be cheaper than car parking. Cheap public transport at destination instead of taxi from middle of now where can be cheaper. There's more to it than simple ticket price. To say LoCo is always cheaper than national carrier is a sweeping statement.

[Flitefone]

The advance of both RYR and EZY will continue, their size relative the the European legacy carriers will increase.

Both the LCC have a massive aircraft order backlog and better costs than their legacy rivals and better costs than air berlin and Norwegian.

Where EZY and Ryanair go toe to toe , the larger carrier will win partly due lack of slots. So five years from now, my prediction is that EZY will have largely disappeared from STN, but will be bigger at LGW, to the cost of BA

RYR will be huge at STN and still be insignificant at LGW.

For other European markets, I expect Scandinavia to go to RYR, Ezy have already backed down at LGW to competition from Norwegian - but ultimately Norwegian will lose out to RYR. SAS will struggle in the fight and shrink dramatically.

Begium will be dominated by RYR, France by EZY - Air France will lose out. SN Brussels will shrink dramatically.

EZY will win in Amsterdam but at the cost to KLM.

Switzerland will stay EZY, Italy will be a bloodbath that Alitalia will still lose. RYR and EZY will share the spoils with Vueling but with RYR the larger of the three in the Italian market in the end.

Spain and Portugal more difficult to call, but I don't see a future for TAP

Five years from now RYR will be bigger than EZY in Germany but both will grow immensely at cost to Lufthansa, German wings and air berlin, the latter may even all but disappear.

The difficult call is UK regions, why? Keeping aircraft with almost 200 seats busy 365 days a year is not the bread and butter of most UK Regional airports.

So EZY with their smaller A319 fleet are better placed and likely to end up stronger away from London while increasing A320 use at gatwick. Although I do expect easy to withdraw from domestic trunk routes from STN. FlyBe, not RYR or EZY, may yet have the real answer for most of the regional airports in UK.

Expect to see more of Flybe feeding hubs that help to prop up air france, KLM, SAS. It will be interesting to see how any ownership change of Aer Lingus impacts RYR.

So in the end both RYR & EZY will be much bigger and are likely to each polarise particular markets, but will not be toe to toe with a large number of flights each at any one significant hub. So Mancheser for example will remain diverse with multiple short haul operators.

FF

[kcockayne]

Flitefone

Can't see much to argue with your forecast. Although, you can never be sure exactly how things work out.
I think that if RYR really are determined to go for EZY's jugular (& I'm not suggesting that they are), then there could be big changes to EZY in the future -OR, maybe RYR will bite off more than they can chew !

[racedo]

All that said, a serious accident taking place with a LOCO could mean that the industry could go into a new direction and take the focus off LOCO, something like Valujet in the US.

I keep hearing this yet when the legacy carriers lose Aircraft with people it doesn't mean their business is destroyed.

David Learmont stated many years ago his viewpoint on Maintenance at Ryanair, I doubt he would find Easyjet that different, yet it was BA engineers who couldn't close Engine cowling at LHR.

[Una Due Tfc]

RYR's SOPS and maintenance procedures are as good as anybody else's in the industry, and better than most. I do however think any potential future loss of an aircraft resulting in death may be viewed slightly differently than with a legacy. There would be a totally incorrect perception among many in the public that they were cutting corners to save time or money. Nothing could be further from the truth of course. Also many in the media have an axe to grind with the company and wouldn't hesitate to fan those flames.

[SWBKCB]

A game changer could be when one of the legacies gives up on inter Europe flights to concentrate on long haul, and jumps into bed with a LCC to provide the feed for their long haul hub. It maybe Open Skies in the EU, but bilaterals still have a big influence on long haul, which benefits the legacy incumbents.

Otherwise, agree with others that there will an evolution of current trends.

[PAXboy]

Very good question!

Facelookbovvered
These same customers also want mobile check in, free text updates and increasingly access to wifi for free, in other words we are seeing a change where the Loco is moving closer to the legacy offering but with a much lower cost base.'Twas eve thus .... Any company that rises to greatness usually goes through the curve:


Chirpy newcomer
Stable newcomer
Expands their market
Expands overall market
Established, mainstream company
Income then tends to flatline and they have to do something different to expand
fill in the rest of the list
to
being taken over

I suggest that the European market is nearing saturation and the finances of your average European citizen is not going to return to pre-crash levels. Accordingly a company now has to take over market share from another and it is a 'Zero Sum Game'

The last time we had Chirpy newcomers, the market was heavily slewed in the favour of national carriers - not it's not. So I repeat what I have said before. More legacies close/merge and inter-European border ownership will be permitted - in order to save the lagacies. They will not quite be the Legacies of today, but they will have the jobs 9and possibly names) of the old companies. Much more change to come.

[SealinkBF]

Ryanair are still filling their 'planes, but I know quite a lot of people who, when you mention Ryanair, say 'never again' and roll off a story about their staff. Ryanair's new cuddly image will take time to sink in but in a nutshell, easyJet have played a blinder over the last few years and I think for Ryanair to have SUCH a 'road to Damascus' change, there must have been something that alarmed them.

In the last year, I have flown on easyJet, flyBe, Ryanair, Norwegian, British Airways and Scandinavian. The airlines with the fullest flights? easyJet, Ryanair and BA. I get that a snap shot isn't really scientific, but it looks like in the UK, the low cost airlines have grown the market overall. It helps that we are an island.

Additionally, the three airlines have quite clearly defined markets. You can say that Ryanair is ASDA, easyJet is Tesco and BA is Waitrose and people would understand that.

Five years time? I can see easyJet introducing inflight meals and connecting flights.
Ryanair will buy Norwegian to remove a competitor and get access to US market.

[PAXboy]

FR deserve the highest credit.

They developed a whole new way of doing airline business and when it reached it's financial peak - they changed their tack. That's what a good company should do.

As to the 'never again' pax, bear in mind that there will always be another generation of 17 yr olds being let off the leash for the first time and those on gap years etc for whom low prices and a bus ride in strange territory will be both part of the appeal and necessary! So, whilst there are those who say 'never again' there are many who say 'Yes Please'.

[racedo]

I do however think any potential future loss of an aircraft resulting in death may be viewed slightly differently than with a legacy. There would be a totally incorrect perception among many in the public that they were cutting corners to save time or money.

I don't believe it will make the slightest bit of difference because with News cycles it will be old news in 72 hours.

News media as shown with any Airline incident are very careful whom they allow comment on their screens.

The reason being that IF they make allegations or suggestions of fault without any evidence that damages an Airline they may find themselves paying exemplary damages because they failed to have a duty of care in reporting the facts.

Anybody who thinks its just Ryanair who have a PR team and Lawyers on standby should remember BA and Virgin's battles in the 90's.

[EI-BUD]

racedo,

For clarity I'm not suggesting that maintenance is lacking at Ryanair or easyJet, or at BA. I'm saying that like in past instances like with Valujet, the loss of an aircraft had a devastating impact on the company and it subsequently rebranded itself etc. Press coverage zoomed in on budget carrier my as cost cutting etc. Legacy carriers have walked away from serious accidents largely unaffected.examples include AF, SAS etc.

[owenc]

To be honest with my experience I would be inclined to go with Ryanair. They have larger planes than Easyjet and their seats are actually more comfortable, Legroom is also another major benefit. Ryanair have also stated their intentions to install wifi and ife on their aircraft this summer.

Ryanair have ordered the 737-MAX, they have said they don't intend to use those planes for transatlantic but I beg to differ.The 737-800 is used frequently on 2,800 mile routes so I am sure they could put in on a 3,200 mile route to NYC. We will see. I can see them expanding further east in Europe and into Africa. Ryanair is expanding rapidly, this week I have looked at flight radar a few times and seen deliveries heading across the atlantic, Infact I believe right now another aircraft is being delivered.

[racedo]

For clarity I'm not suggesting that maintenance is lacking at Ryanair or easyJet, or at BA. I'm saying that like in past instances like with Valujet, the loss of an aircraft had a devastating impact on the company and it subsequently rebranded itself etc. Press coverage zoomed in on budget carrier my as cost cutting etc. Legacy carriers have walked away from serious accidents largely unaffected.examples include AF, SAS etc.

Apologies if I seemed to have suggested that, never figured you were suggesting it.

Valujet were a disaster waiting to happen on maintenance, FAA wanted them grounded because of their serious concerns about how they were running things. Even US military refused to use them and they went for lowest cost.

The news cycle within Europe is 72 hours or less and we both speaking from a UK centric media where I believe the cycle is even less.

I don't know what was lead news on Wednesday and by Tuesday I will not remember todays.

No idea of the stats but what is figure in fatal crashes for Pilot rather than Equipment error ?

[AerRyan]

Ryanair will never use 737's of any sort on T/A. To do that, they would want 20-30 free 737's, all its airports to be on the edge lf western europe and for their to be no Atlantic wind. If 757-200's cant make it westbound at times in the winter, imagine 737's!

Imo, Ryanair will buy Norwegian and a few more 787's. If they dont, it may be a few A350's that will tempt them.

[Fairdealfrank]

Five years time? I can see easyJet introducing inflight meals and connecting flights.


And the long term progression from that.....code share with one or more longhaul carriers, especially if U2 ends up at an expanded Heathrow.

[FRatSTN]

Interesting points regarding code-shares, connecting flights or even in-flight meals. Would that not just essentially make EZY a full-service carrier for short-haul? Not an area most do particularly well at! How would they be able to do code-shares, connecting flights etc. and still maintain their low-cost business model? Maybe loyalty schemes or FFPs?

Would say something more along the lines of what FR have touched on recently about acting as a feeder for long-haul flights be more likely? That would not necessarily involve any co-branding, interlining, code-share agreements etc.

[anothertyke]

But wouldn't that involve some sort of insurance for self-connecting passengers? If people are going to buy a £100 ticket to a hub and a £500 ticket to their long haul destination, surely a fair proportion of them will want some sort of cover for the 1 per cent of occasions when something goes wrong after they have done everything correctly. And that needs to include responsibility for getting the customer to destination, putting them in the same position as an on-line or alliance ticket. The exclusions ( volcanic ash.....) would need to be clear.

Could such an insurance market be successfully developed?

[Fairdealfrank]

Interesting points regarding code-shares, connecting flights or even in-flight meals. Would that not just essentially make EZY a full-service carrier for short-haul?
Was suggesting code-shares as a progression only if U2 does go down the road of connecting flights and in-flight meals.

Code shares can also mean feeder flights for longhaul without the risks of self-connect (as mentioned above by anothertyke).

It probably makes U2 a hybrid, but it never stuck as rigidly to the original WN formula as FR. Nothing wrong with this, the more variations and combinations between pure legacy and pure no-frills the better.


Not an area most do particularly well at!
Starting from a lower cost base would help.


How would they be able to do code-shares, connecting flights etc. and still maintain their low-cost business model? Maybe loyalty schemes or FFPs?
Good question! Maybe this would attract a whole new group of pax, as did the changes made to attract business pax.