Ryanair’s inauguration of its latest flight out of Malta is in the news today (Malta-Trapani). Also in the news was Ryanair’s increible offer of one million seats at €5. People still question whether this policy of Ryanair’s is reasonable (not sure there). They also wonder whether Ryanair should be more clear about the fact that €5 does not include taxes and whatsnot (they should). Commenting on an online newspaper someone also commented:
By no stretch of the imagination can the € 5 cover all the Government and Airport Taxes. This goes to show that Ryanair is being aided and abetted to act in breach of competition laws and being given an unfair advantage over legacy carriers like Air Malta who have to collect and pay Government and Airport taxes making their air fares artificially inflated.
The usual rant you would say. His is not the full picture though. Ryanair’s is a commercial gamble – it has not got much to do with breach of competition of laws as it has with the defiance of costs, supply and demand. To an ignoramus like me the reason Ryanair can afford cheap flights is precisely because it cannot. Nobody can really. They are underpriced because Ryanair is gambling on slicing into huge parts of the market. It tries to get customers dependent on the “cheap” idea then runs up the ‘collateral damage’ – or extra costs.
There’s the amount of luggage, the weight of the luggage, the price of food on board, the transport to and from the airports of choice and more. Contrary to popular perception, Ryanair is not “doing well”. Rather it’s recent losses inspired newspaper titles such as “Ryanair got it wrong”. Their Shannon base in Ireland is about to have 400 jobs cut off in order to minimise losses.
The latest setback for Ryanair was during negotiations to order 400 new planes. It tried the usual tactic of bullying with numbers trying to provoke a price war between Airbus and Boeing. Airbus’ answer was simply:
We are not in discussions with Ryanair about aircraft. That is on the record. We don’t have plans to enter a sales campaign with Ryanair, which would be very expensive and very time-consuming.
Clearly Airbus sees this as nothing more than a ploy to negotiate with Boeing, and acknowledging Ryanair was likely never going to place an order with the company. The outlook is not so bad for the airline of the Harp. Despite gross incompetence over the past year with regard to hedging contracts for the price of fuel Ryanair is expected to recover though their plan for transatlantic flights might have to be shelved for now.
Next time you are on a Ryanair flight with your knees rammed firmly into the neck of the passenger seated in front of you do bear in mind that your “cheap” trip is a result of a gambit that relies on numbers, numbers and more numbers. When you realise that the costs for your flight plus collaterals cost you much more than that €5 ad you saw don’t complain… just go “baaaaa”
After all the choice is yours… and that’s what matters really.
