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Has The Ryanair Bubble Begun To Burst?  
User currently offlineBestwestern From Hong Kong, joined Sep 2000, 7115 posts, RR: 57
Posted (11 years 1 month 1 week 3 days 9 hours ago) and read 4503 times:

Ryanair have recently released every seat every flight fares, starting at 35p one way, excluding taxes. Nothing new about this, but for the first time ever - this promotion runs in August.

This simply does not make sense in the period of high loads and high yields. Except that average per flight loads are falling.

Ryanair, simply have over expanded their operation and have way too much capacity on multi frequency routes from London into Holland, Belgium and Germany. STNCRL is now three years operating, and still has to show a respectable return – easily witnessed by these latest offers. Amazingly they have to add 12 more 738’s in 2003 – that’s a lot of additional capacity.

The shareholders are getting nervous – Recently Ryanair was cut to neutral by JP Morgan – “Irish discount airline was cut to neutral by JPMorgan. The broker said the airline has excessively expanded. "Although its business model is far from broken, a disappointing EPS growth rate in single figures this year would, we believe, hold the stock back against the sector,' it said”

http://cbs.marketwatch.com/news/story.asp?siteid=ft&dist=ft&guid=%7B9B9C5121%2D979D%2D42CA%2D952B%2D9E31C61602FF%7D Morgan Stanley also cut back their growth projections for the company.

So – is the bubble bursting, or is this just a hiccup on the way to being the worlds largest carrier?



The world is really getting smaller these days
13 replies: All unread, jump to last
 
User currently offlineTeahan From Germany, joined Nov 1999, 5293 posts, RR: 61
Reply 1, posted (11 years 1 month 1 week 3 days 8 hours ago) and read 4349 times:

Well I am wondering how their two newest bases - Stockholm and Milan - are doing? There is a pretty strong Frankfurt Hahn following which almost goes as far as calculating seat load factors on every flight  Big grin so things seem to be going excellent there but I haven't heard anything about the others.

Jeremiah



Goodbye SR-LX MD-11 / 6th of March 1991 to the 31st of October 2004
User currently offlineDoorsToManual From , joined Dec 1969, posts, RR:
Reply 2, posted (11 years 1 month 1 week 3 days 7 hours ago) and read 4340 times:

I would say it's a hiccup (and I'm not sure it is a hiccup at all). I'm willing to bet 100 pounds (theoretically of course, as I'm adverse to gambling  Big grin ) that their future in Europe is secure. As for shareholders, some of them don't know how the aviation industry works. The dip in load factors was surprising perhaps, but I doubt it spells the end of the airline! I only really pay attention to Chris Tarry, and he's convinced FR have an extremely robust model. So do Boeing, who analysed the airline's operating model as part of the aircraft ordering process. In the very worst case scenario that they could model, FR still broke even.

I guess while their operating costs are so low, they can take quite a severe beating. I'm not seeing any let up in pax at STN (where I work). The check-in desks are still as busy as ever. As for the offers in August, I don't think that necessarily means anything really...Ryanair are always offering deals. I guess in this instance the offers are limited to certain routes where the aircraft are still running on spare capacity.

Anyway, let's see how it goes. I for one am not yet convinced that the model is breaking.



User currently offlineGodbless From Sweden, joined Apr 2000, 2752 posts, RR: 16
Reply 3, posted (11 years 1 month 1 week 3 days 7 hours ago) and read 4300 times:

Well this is not representative but my last flight with Ryanair (STN-NYO) was packed...
But besides that I do also think that Ryanair should cool down a little now as they are flooding the market with too much new capacity which they are not able to sell.
But I guess they have to go through this as they were the ones pushing Boeing to deliver their planes at a higher rate.
In a way it would be funny to see the first real lowcost (Southwest is nowhere as lowcost as FR can be) go under so shortly after they revolutionised the european aviation market. But I guess they will reconsider a few things and than keep on expanding to their middle-of-nowhere destinations.

Max


User currently offlineLBA From United Kingdom, joined Nov 2000, 494 posts, RR: 0
Reply 4, posted (11 years 1 month 1 week 3 days 5 hours ago) and read 4160 times:

Just been to Salzburg with them - occupancy 90%+ both ways. I'm off with them to Dublin next week so I'll see how busy those flights are.

User currently offlineBestwestern From Hong Kong, joined Sep 2000, 7115 posts, RR: 57
Reply 5, posted (11 years 1 month 1 week 3 days 5 hours ago) and read 4137 times:

Its not just the loads that I'm concerned about -that coupled with ongoing free seat offers.

Hundreds of thousands of free flights on emptier planes in June and July are what I'm concerned about.

In August - any airline can fill aircraft seats, but if FR are having difficulties now... imagine how it will be in darkest November. Perhaps they will have to start giving away seats to fill aircraft.








The world is really getting smaller these days
User currently offlineGKirk From UK - Scotland, joined Jun 2000, 24925 posts, RR: 56
Reply 6, posted (11 years 1 month 1 week 3 days 4 hours ago) and read 4084 times:

Have they raised the prices of their sandwiches?  Laugh out loud



When you hear the noise of the Tartan Army Boys, we'll be coming down the road!
User currently offlineDoorsToManual From , joined Dec 1969, posts, RR:
Reply 7, posted (11 years 1 month 1 week 3 days 4 hours ago) and read 4047 times:

I don't think that's possible! Big grin

I'm still amazed people actually buy anything instead of bringing their own. (I always bring my thermos of Bolivian filter coffee, it's always a hit with my neighbours. (I bring extra paper cups as I'm so considerate...) Makes the Ryanair experience a bit better  Big thumbs up


User currently offlineSk945 From Sweden, joined May 2002, 432 posts, RR: 0
Reply 8, posted (11 years 1 month 1 week 3 days 3 hours ago) and read 3986 times:

This offer with flights for just 35p seams to be on flights just from STN.
The Stockholm (NYO) hub are doing quite well. At least on some routes.
STN would be the best of course.


User currently offlineCapital146 From United Kingdom, joined Jun 2003, 2125 posts, RR: 44
Reply 9, posted (11 years 1 month 1 week 3 days ago) and read 3852 times:

The offer of flights for 35p is only to selected destinations from STN, not all destinations. Ryanair frequently run promotions offering free flights or extremely low fares, this is nothing new for them at all and yet they still turn in huge profits each quarter. I don't think for a minute their bubble is bursting.

Incidentally, yesterday I flew Ryanair Leeds/Bradford-Dublin-Leeds/Bradford and there were fewer than five spare seats on both flights despite there being three 732 flights a day on this 'regional' route.



Like a fine wine, one gets better with age.
User currently offlineAngelairways From United Kingdom, joined Nov 1999, 502 posts, RR: 0
Reply 10, posted (11 years 1 month 1 week 2 days 23 hours ago) and read 3817 times:

dont you worry about ryanair. they are expanding like i wouldn't dare expand but i think they know what they're doing.

the 35p fares are not a desperate attempt to fill seats because they can't be filled. they are there for two reasons:

1) to maintain ryanair's image as an ultra low cost carrier
2) to attract new customers and get them hooked
3) (and this is one of their main goals) To draw holidaymakers away from the package holiday with charter flights and show that tailor made holidays with LCC flights and budget hotels can cost less than package holidays.
Hence the timing of the promotion - August.

besides they have had fares of £1 before and even loads of free flights (just pay airport tax) so why not 35p.


User currently offlineVfw614 From Germany, joined Dec 2001, 3996 posts, RR: 5
Reply 11, posted (11 years 1 month 1 week 1 day 9 hours ago) and read 3655 times:

Ryanair does not have problems load-wise, it is the yield that probably causes problems at the moment. If you give away seats for 0.01 EUR or 0.35 GBP, you will have a plane full of people who have literaly paid nothing (well, except credit card fees, insurance levies, obscure taxes (that for some funny reason seem to change about every day at Ryanair) and who may have called the res centre for 0.62 EUR/minute). They needto earn an average of 45 EUR on each seat, and with ever increasing promotions, seat give-aways etc., I cannot see that happening if they even have to reduce fares during high season to lure people onboard.

User currently offlineBestwestern From Hong Kong, joined Sep 2000, 7115 posts, RR: 57
Reply 12, posted (11 years 1 month 1 week 1 day 9 hours ago) and read 3616 times:

VFW... Ryanairs load factor fell considerably in June - even with considerable free seat offers - hence the double hit of lower yield per passenger, and lower loads per flight.


The world is really getting smaller these days
User currently offlineDoorsToManual From , joined Dec 1969, posts, RR:
Reply 13, posted (11 years 1 month 1 week 1 day 9 hours ago) and read 3581 times:

Guys, you need to be careful what you write. You are tending to distort a couple of results and use them to paint a picture of empty planes and seriously declining yields (with no corresponding look at rapidly falling costs, or last-minute seat prices, which, if you have a look, you will find might compensate handsomely for all those 45 euro (or cents) fares). - I can assure you, flights leaving STN in the last week have been running on full.

The promotions are on-going as ever - that is simply a fundamental part of Ryanair's strategy of getting people on planes - in most cases (including the latest) they are limited to certain days, dates, times and routes.

Try getting a cheap fare to Italy or France (or indeed anywhere else) in the next 2 weeks - you'll find that to the majority of destinations, fares are available, but at considerably more than you might expect (up to 209 pounds one-way on one recent flight!!)

I wasn't at work yesterday, neither will I be today, but a number of colleagues have been called in to deal with numbers - and there are plenty of other sources to beef up the income - pax who have made a mistake in the booking process have to pay up, and there are always plenty of those. About 250 last-minute walk-ons turned up yesterday, and they certainly would NOT have been paying 35cents/pence for the privilage. These are usually the poor souls that have to pay....*ahem*.....over 100 pounds each way for a flight....

Who knows where Ryanair will be in the future, but judging by their current performance, they are not yet in trouble.


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