On Tuesday November 29th I had the opportunity to join a Eurocontrol presentation with Ryanair management to gain an insight as to how the business operates.
Eurocontrol are an international organisation operating to provide safe air traffic management across Europe, with 41 member countries they work tirelessly to provide safe Air Traffic Control (ATC) across Europe.
This particular session was hosted by Andrew Charlton and featured Michael O’Leary (Group CEO), Eddie Wilson (Airline CEO) and Neal McMahon (Chief Operating Officer).
Before I discuss the presentation I will provide a brief history of Ryanair and how the brand has evolved since it was founded.
About Ryanair
Ryanair was founded in 1984 by Irish business man Tony Ryan, with the airlines first route between Waterford and Gatwick.
In 1990 after struggling to compete with Aer Lingus and other European airlines then CEO Michael O’Leary rebranded the airline as “Europe’s first low fares airline”, this meant the free drinks and meals onboard stopped. Furthermore he streamlined the airlines operations with high frequency service on a single aircraft type, this was inspired by US airline Southwest.
In 1992 the EU deregulated the airline industry, giving airlines much more control over where they fly and when. This allowed them to enter new markets and increase brand awareness on the continent.
In 1998 the airline invested $2 billion on 45 new Boeing 737-800 aircraft.
In 2000 the airline launched their website, which quickly gained a reputation for being slow, clunky and not user friendly. This did not matter to the airline as having the opportunity to sell directly to customers allowed them to lower costs by avoiding travel agents. By 2001 75% of bookings were made online.
In 2001, an order for 155 new Boeing aircraft was placed.
In 2006 Ryanair attempted to buy fellow Irish airline Aer Lingus, this bid was blocked by competition regulators. They tried again in 2008 and were unsuccessful. In 2009 they walked away from trying to buy the airline, but tried again in 2010 and were blocked by UK competition regulators. Michael O’Leary tried again in 2012, but was blocked by the European Commission.
In 2010 the airline expanded into Bulgaria for the first time with operations from Plovdiv to London.
In 2018 the airline launched a Polish subsidiary called Ryanair Sun, this was rebranded to Buzz at a later date. Furthermore the airline acquired the Austrian airline Laudamotion which they rebranded to Lauda.
In 2019 a Maltese subsidiary was created called Malta Air taking over operations to and from Malta. In 2019 Ryanair UK began operations despite being founded in 1985.
Today Ryanair have 88 bases and serve over 230 airports in over 40 countries.
Eurocontrol Presentation
Lets move on to the reason why you are here, below are the main talking points from the presentation. You can use the list below to read a specific section if you wish.
- Europe’s Aviation Recovery
- How does Ryanair run its day to day operations?
- Is there a limit to what Ryanair can achieve?
- The Environment
- Recession, is it a worry?
- Is Low Cost Travel a bubble that will soon burst?
- Heathrow Expansion?
- Expanding outside of Europe
- Aircraft Delays
- Market Consolidation
- What attracts Ryanair to airports?
Europe’s Aviation Recovery
Passenger numbers dropped by 60% globally as a result of the Covid Pandemic.
As recovery has continued across Europe the route network share has changed. Currently 72% of the European aviation network consists of routes served by both legacy carriers and low cost carriers. 15% is served by low cost carriers only, with the remaining 13% being served by legacy carriers only.
Ryanair is now carrying 9.5% more passengers than in 2019, despite reduced traffic in January caused by the omicron variant.
In the period Jan 1st – Nov 28th of this year Ryanair average 2,585 daily flights, an increase of 10% on 2019 and more than 1,200 ahead of second place airline easyJet.
| Airline | Average Daily Flight | % on 2019 |
| Ryanair Group | 2,585 | +10 |
| easyJet | 1,361 | -20 |
| Turkish Airlines | 1,257 | -7 |
| Lufthansa Group | 1,070 | -29 |
| Air France Group | 957 | -21 |
| KLM Group | 715 | -18 |
| Wizz Air Group | 671 | +13 |
| British Airways Group | 643 | -30 |
| Vueling | 551 | -10 |
| SAS Group | 538 | -35 |
| Eurowings Group | 429 | -36 |
| Pegasus | 427 | -10 |
| TUI Group | 372 | -15 |
| Norwegian Group | 351 | -44 |
| SWISS Group | 340 | -28 |
| Iberia Group | 337 | -10 |
| Wideroe | 330 | +1 |
| TAP Group | 298 | -21 |
| AEGEAN Group | 288 | -13 |
| Jet2.com | 270 | +11 |
The Czech Republic has the slowest aviation recovery in Europe with traffic down 33% on 2019 [this can be attributed to no flights to Russia, Ukraine and South Korea].
Arrival punctuality for this year is 72% (a decrease of 6.1% on 2019).
Departure punctuality for this year is 66.2% (decrease of 6.4% on 2019)
Currently global passengers are down 16%, passenger numbers in Europe are down by 14%, and recovery is not expected until 2024.
European airlines flying to China and Asia are currently at a competitive disadvantage as Russian airspace is closed to European airlines, but not those from Asia.
There is potential for the new EU entry/exit system to create queues in airports.
How does Ryanair run it’s day to day operations?
The first question put to Ryanair is about how they are able to get 500+ aircraft into the skies everyday.
AC: “you (N) get around 500 aircraft out a day, how the hell do you do that?”
N: “with great difficulty that is under appreciated and under loved by the two people beside me”
Neal McMahon then goes on to explain that the teams on the ground do the same task every day.
“10,000 cabin crew, 5,000 pilots, engineers and ground ops all doing the same processes to get the aircraft out”
Furthermore, the airline has a group call at 9am to discuss how the first departures and arrivals have performed and identify any potential disruption for aircraft.
Is there a limit to Ryanair and what they can achieve every day?
The next question is asked to Michael O’Leary and tries to ascertain if there is a limit or breaking point for Ryanair.
MoL: “No”
He does go on to expand this answer, essentially, there is no limit to what Ryanair can do, but, operations will be limited by Air Traffic Control (ATC) efficiency.
MoL “It infuriates me that after 21 years of Single European Skies project no progress has been made what so ever”
“Two simple reforms we would like to see is during national strikes you protect overflights…this would reduce disruption when our French Friends have recreational strikes every Tuesday and Friday in the summer peak”
But what does this actually mean?
Currently each European country provides its own ATC services. Single Skies would mean that one organisation is responsible for all ATC across Europe.
Furthermore, when strikes occur, flights flying over a country are disrupted. An example of this is French ATC strikes cancel flights between the UK and Spain as they cannot access French air space. Giving Eurocontrol the control of overflight airspace would mean that flights can overfly France even during strike days.
MoL also believes in the event of ATC delays there should be an option to recover costs from the airspace provider.
The Environment
This was always going to be interesting, however, some fair points were raised.
When talking about Environmental Taxation, Michael O’Leary said the following;
“We are all going to have to pay our fair share, it is a scandal and a disgrace that EU exempts long haul flights from paying their fair share of environmental taxes, they account for 6% of flights and 55% of emissions.”
“it is also a scandal the the Dutch exempt transfer passengers from paying environmental taxes”
Essentially, Michael O’Leary believes taxation is a fair way to raise money for environmental schemes, however, the entire system needs redesigned to make it fairer.
Ryanair believes asking short haul passengers who are more price sensitive to pay taxes is unfair when rich passengers flying long haul who have more disposable income are completely exempt.
Later in the panel the question of Ryanair offering connection flights is raised e.g. would Ryanair ever offer Rome-Bergamo-Charleroi in the future. The idea is immediately dismissed by Eddie Wilson and Michael O’Leary.
O’Leary points out that offering one flight is more environmentally friendly than two and that airlines should be increasing point to point traffic and reducing hub connections as a way to lower emissions.
Is the recession a worry?
As Europe faces a recession Eddie Wilson is asked if it will curb Ryanair’s growth plan, he replies with the following,
“this recession is different because we have relatively full employment and people have savings.”
He proceeds to expand upon this view by saying people “migrate” to the lowest cost option, which is Ryanair in aviation. People will not go back to paying full price again after flying with Ryanair.
Essentially, Wilson believes Ryanair is in a strong position as people want to continue flying having suffered two years of lockdowns and they will look for the cheapest option, which is Ryanair. He also believes that once people try Ryanair for the first time they will not go back to any airline, thus building brand loyalty for Ryanair.
Is Low Cost Travel a bubble that will soon burst?
This next question quotes United Airlines CEO Scott Kirby who says budget airlines are a “ponzi scheme” [attract investors and pay them with money from new investors as you don’t actually make money].
AC asks the panel if they agree with Mr Kirby, all three laugh at the question, Michael O’Leary cannot help himself and replies with the following.
“It’s rich coming from a guy who’s airline has been in and out of chapter 11 bankruptcy not once but twice”
As you can probably tell, Ryanair do not agree with the statement, however, they do concede that some low cost airlines will go bust, specifically referencing Norwegian Airlines who “imploded”.
With competition increasing will Ryanair set up a Heathrow base?
As competition becomes an ever increasing competitive tool, will British Airways soon face competition from Ryanair at London Heathrow? Neal McMahon takes this question.
“no, Heathrow is looking to increase charges by 50% which is nuts”
McMahon references the security issues that plagued Heathrow this year and points out that a number of passengers moved cancelled flights to Stansted (Ryanair’s largest base).
McMahon also states that it is one of the few airport Ryanair will never operate from.
A follow up question is asked, trying to identify other airports that are in similar positions.
Paris Charles de Gaulle and Paris Orly are both named due to high costs and long taxi times.
Long taxi times means that more time is required between flights, a 25 minute turn around becomes 65 minutes and suddenly aircraft utilisation falls as aircraft spend more time on the ground and can operate less flights per day.
Basing aircraft outside of Europe
The panel are then asked about expanding and adding based aircraft outside of Europe, Neal McMahon interjects and raises the point that Ryanair have bases in Morocco.
O’Leary takes over and highlights that Ryanair already fly to other Moroccan airports, as well as Israel and Jordan. He then proceeds to say that Ryanair are in discussions with Egyptian & Libyan authorities about services.
Aircraft Delays
Ryanair use this as an opportunity to criticise Boeing for delays in production and delivery of the 737 Max.
Ryanair highlight they are contracted to receive 53 aircraft by the end of March 2023, it is looking likely they will receive 41 by the end of June and this could impact growth plans.
They currently operate a small fleet of Airbus A320 aircraft in the Lauda brand, however, if airbus wanted a Ryanair order they would need to lower prices by at least 30%.
Market Consolidation
As airlines attempt to return to profitability after the coronavirus pandemic group CEO Michael O’Leary believes that aviation is going to see multiple mergers and acquisitions, as well as some airlines going bankrupt.
Below are the changes he believes the market will see “definitely within the next five years”
- TAP (Portugal) – acquired by International Airlines Group within two years
- easyJet – will be bought by either British Airways or Air France
- WIZZ – purchased by Lufthansa
- ITA (Italy) – acquired by either Lufthansa or Air France, whoever is “stupid enough to take over what’s left”
- SAS and Norwegian – “nobody wants them” and they may combine the two “like two drunks walking home from the pub”
However, O’Leary does admit he has “been wrong for ten years” on the subject, so you can interoperate his views on this as you wish.
What attracts Ryanair to open services to a certain airport?
Airline CEO Eddie Wilson is asked what attracts Ryanair to the airports they serve, and if they look for anything in particular.
In his answer Wilson explains Ryanair look for airports that “grow with us” and offer attractive discounts on landing fees and ground services.
Furthermore, the airline believe there are too many “primary secondary” airports that do not offer good incentive packages and have increased prices to try and raise more income.
- A primary airport is the main airport serving a city.
- Secondary airports are smaller airports outside of the city that serve as an alternative (Southend is a secondary airport for London)
- A primary secondary airport is essentially the biggest alternative to the primary airport (Stansted or Luton would be primary secondary airports to London)
Overall Opinions
Ultimately, Ryanair believe that this is a strong time for them to perform and grow. As people look to save money they believe that Ryanair will absorb those travellers looking to save money.
With a fleet of new aircraft coming online they will be able to add more capacity into Europe, however, airports need to offer Ryanair a good package of incentives to encourage growth.
Despite a recession in Europe, tourism is unlikely to be affected as it is the best industry for stimulating economic growth buy getting people to visit a country and generate revenue through tourism. The recession is also likely to accelerate the consolidation of the aviation market within Europe.
I do agree with most points raised throughout the presentation, flying will get slightly more expensive and that new aircraft will help Ryanair continue to grow. However, I do not believe that the market will be consolidated in the way that Michael O’Leary claims. I think his claims particularly about easyJet, are unlikely to be allowed under competition rules, particularly at airports such as London Gatwick or Paris CDG.
George Nugent Travels 