Ryan Air Loss for sure

[transilvana]

Has anyone of you ppruners ever made calculation about how much money does Ryan Air lose on every flight?

so, who is funding Ryan Air? Lets start with operating cost

Reduction of total operating cost of Ryan Air compared with other big companies is only 20% at most.

Leasing, Fuel, crew, route taxes,maintenance, handling, aircraft depreciation, management, publicity... the block hour cost of a B737 is around 3.000 euros flying 3.000 hours per year.

Even of we take out crew type rating courses (still they have to do training) catrering, low airport taxes, not to buy highlighter pens, internet booking..., how can they sell tickets at only 2 euros? 2 x 180 pax is 360 euros per flight from gerona to Dublin, so, where do they get the rest of the money

Sorry guys, i am not pilot, i have several businesses, and as a business man i do not see the numbers, do you?

So,

[Bealzebub]

something called "yield management". They do not sell 180 tickest at 2 euros. They may sell a few at that price ( plus all applicable taxes and charges), but as the load factor for a particular flight increases so does the price. By the time the aircraft is nearly full the ticket price may well seem very un-low cost indeed. The yield for a good load factor will be very good. Add to this the revenues generated by sales on board, ancillary charges for administrative changes and operating subsidies from airport operators, transport companies etc , and you can see where a lot of their income comes from.

[mini]

...don't forget the 50p wheelchair surcharge now added to each ticket...

[PAXboy]

Also that they only allow 15Kg baggage and 5kg (I think) hand. Anything over that is charged extra.

I also understand (from PPRuNe) that applicants for flying posts have to pay a fee to register their cv with the carrier. On more than one occasion (I understand) the airline has wiped their database of people that have applied and if you want to get back on - then you pay a second time.

At the other end of the scale, MoL is on record as encouraging his staff to pick up freebie pens from hotels and other places, so as to save on the stationery costs.

Ryan Air are genuinely profitable. Do not forget that they built it to be cheap from the ground up - the big carriers are trying to reduce and that is very difficult to do.

MoL is fanatical and he will continue to win. The day he can confirm that he has carried more pax in a year than BA, you will see the biggest splurge of advertising and news that you have seen in a long while.

[brabazon]

Their costs are lower per sector than you have calculated as they work their aircraft and crews hard and as has been pointed out not all seats are sold at rock bottom prices, in fact last minute they are as expensive as the "higher fare" airlines. The model's not broke yet as their latest results showed - the level of profit and operating margin are still the highest in the industry.

[Lapsed PPL]

I've got a friend who used to work for Ryanair in a lowly role - Reservations. There's quite a list of ways they make their money:

- commission on car hire and travel insurance etc they sell on their web site and to telephone callers
- high % of internet bookings
- no cargo taken (avoids loading delays)
- excess baggage charge of GBP 4 per kg over 15kg
- no overnights
- fly the planes from 0600 to 2300 with 25 min turnaround times
- extra charge for using credit and debit cards
- on board sales of drinks, snacks, souvenirs, bus and train tickets
- GBP 1.00 per min Internet Booking Helpline and they get a cut of the telephone booking call charge
- use "secondary" airports
- only use 737s (only one type to maintain and crew)
- simple check in procedure
- no refunds, if you're late checking in you have to pay a GBP 40 missed departure fee to go on the next flight
- cabin crew clean the plane during turnrounds
- minimal number of cabin crew
- charge to change bookings
- no child fares
- as mentioned clever "yield management" (it's usually expensive to go at the last minute, the cheapest fares are more easily found on Tuesdays and Wednesdays rather than the weekend)

Sorry if I've forgotten anything.

[Berenger Saunier]

...A businessman, eh?...

i have several businesses

Gosh, they must all be tremendous successes, with that level of naivete. Read the Calder book if you're as seriously in the dark as your post suggests.

[transilvana]

Thanks every body for your answers

So its not so a profitable business, they depend on many daily movements to do a 10GBP profit (only a figure) and how people buy tickets, if the aircraft is only 1/2 full, no luggage extra cost, no internet banners, nobody use onboard catering and so. They depend on a hughe number of variables to reduce ticket price. What will happen if one of these variables fails? strikes, no cleaning the aircraft, delays. in 10 days they are off the business if this happens because they would not be able to support such looses.

Its not a good business, to much money to invest for so low profit.Selling drinks is much more profitable.

[airmen]

Selling drinks is much more profitable but boring and you probably do not like to do that also...
But it is another issue!
For your info the Low-Cost companys must have a 80% filling factor to be viable.
If you want to make money with an airline, you better to start with a lot of money...

Poor world

[RTR]

Tell you what trans' try booking a flight to - wherever - 3 months out. The likelihood is that you will get a price of £5, £8 maybe even lower. Then book the same flight a week before and the price might well be £80 or more. Fact is that Ryanair sell as many low cost seats as they want. THEN they sell them at the price they REALLY want. Get the picture?

End result? They get the aircraft filled, the low cost yield is say 30% of seats available but the other 70% are at market price OR MORE!! They create their own cost to get the profit - and it never fails! Profit just rains on them week in week out. Nice business.

All the rest of the business, drinks, coffee, train tickets etc., etc., etc., is pure bunce, as they say!

[transilvana]

that´s nice, so they sell cheap tickets to catch attention, then they do what ever they want with prices. So they use what big airlines has always done, but they have change the manner on how to attrack attention of buyers.

Nice marketing strategy.

[Snowbird]

A friend of mine applied for a cabin crew position & discovered that she had to pay an administration charge before the interview & then, if she was successful, she was expected to pay £1000+ (can't remember the exact figure) for the training course, which was non-refundable, and wait, there's more...her travel & hotel expenses for the training course which could be either at LGW or either of 2 European bases! How does anyone afford to work for Ryanair? You'd need a bank loan just to get a job! Needless to say, she told them where to stick their interview. No wonder they make a profit. Of course this is only hearsay, but from a very reliable source.

[MPH]

Welcome to the world of business. Low cost carriers use a tool called ‘yield management’…got it?

[Kinetic]

Transilvana............seriously are you just having a laugh

Why are you so concerned with Ryanairs profits or "losses for sure"?

[transilvana]

I know what yield management is, my question is that these people are against all respect for employees and clients. IN Spain a business can not make people pay for their training, and for the client everything has to be very clear, if not they can be issued a fine by law.

The Ryan Air business is good for a business man, the risk you take is minimum, but it is good for a short period of time. We will have to see this company or easyjet in 5 or 10 years. At the end they will have to support more costs than the big ones. I have seen it on other companies. Lets see their first pilot strike, and things similar....

All the responses are good and i thank you all.

[Re-Heat]

If you are so convinced that the money is in selling drinks, go and become the bar magnate that you are in your blood, and don't bother trying to sell gospel to the church!

[transilvana]

sorry my dear friend, i just was looking answer, this is the forum for, no?

Anyway, I can sell drinks, aircrafts or whatever, i am good at that. But i like aviation, is my hobby and would like to be in this business. Who knows, may be some day you will have to ask me for a pilot job. so be polite as i have been, pls.

[Wizofoz]

Hi Transilvana,

Ryan air and easyJets models, which you are convinced are short lived, are based on South West Airlines, who have been in business over thirty years, and made a profit evey single year, in spite of gulf wars, 9/11 etc. etc.

I'm sure your drinks business is very good, but has it increased in share value several thousand percent in less than a decade, as both Ryan and easy have?

It is in fact the traditional, full service carriers that are being squeezed out of the short haul market, to the extent that they are virtually all trying to copy the LCC model, with varying degrees of success.

[transilvana]

I read the book about easyjet, and I know how they use the reservation system of southwest, is the best one ever made for an aviation business.

I just wanted to know how ryan air gets their money with so low prices, easyjet had not so cheap tickets are the beginning.

Thanks, if you ever need a drink down here on Spain just give me a hint. Not so much money as ryan air, but nice girls and sun!!!!

thanks you all

[Re-Heat]

I was not being rude, merely making a point.

What Ryanair and EasyJet, and for that matter BA on their new 'low' fares do, is to perfectly price discriminate. They will make their money by advertising low fares - extremely low in the case of Ryanair - but only selling a limited number of those seats to the public. For example when Ryanair have a seat sale, they often state 1/2 million seats on sale: bearing in mind that these will be available on flights over a period of the following 3 months while the sale last only a few days, this will equate perhaps at the most 1 in 30 seats over that 3-month period: around 3%.

Consider that for the most part, the only people who are normally going to purchase those fares will be booking many months in advance anyway - the sale fares of €0.50 one-way are generally only going to be taken up by these same people. This takes the 3% of customers with the lowest 'willingness to pay' who would only have paid €10 per ticket at the maximum. This leaves the remaining 97% who are obliged to pay more as there are of course no remaining cheap tickets, who will generally be looking for tickets closer to departure date and therefore miss the sale prices.

Through increasing the price for flights as the departure date moves closer, they are able to perfectly price discriminate, by ensuring that those who both need a flight at shorter notice, are not prepared to wait and are therefore prepared to pay more. This enables profit to be maximised on the seat sales to a greater extent than a traditional airline would, as the pricing is more fluid due to the electronic, automatic calculation of the most economic prices to charge to fill all seats yet not have any further demand for the seats at the prices available.

Note that perfect price discrimination means matching the price that is charged to the maximum amount that an individual is prepared to pay.

Of course there is certainly an element of marketing strategy in the business model - their adverts that stress the lower fares encourage people to look immediately at Ryanair when they are interested in minimising their ticket costs - however when the market picks up again, people will continue to associate them with low prices and new business will be stimulated through new markets being able to afford to fly, even if the top end of the market moves back to the higher-fare airlines in order to gain the benefits of comfort etc. The business model therefore gains the best of both worlds by entering a new market (rather than the existing one in which BA and bmi operate of top-end business travellers) while also being low-cost. This is a sound management strategy that is very well-established as it has differentiated itself by being low cost.

With regards to minimising costs, I cannot understand how you think that Ryanair can ever have any higher costs than those of a more traditional airline in any circumstances: any airline could have one of those 'variables' fail, however they are minimising the number of costs by ensuring that they do not have catering or cargo for example, which can only put them ahead of BA who have had 2 strikes in the last 6 months (check-in staff) that Ryanair have not. This is since they have outsourced their costs and therefore the responsibilities for ensuring staff are not on strike, as they instead have the power of contract concellation over the subcontractor instead. They couldn't care less if the staff are underpaid and surly as they do not operate on a business model of differentiating themselves by quality of service, but instead by low cost.

As long as people are prepared to pay so little for tickets, there will be a business case for such airlines, in complement to traditional ones.