AR1300 From Argentina, joined Feb 2005, 1740 posts, RR: 3 Posted (6 years 8 months 4 days 20 hours ago) and read 10392 times:
I understend how WN, GOL, B6, etc make money.
New fuel eficcient fleet, same type of ac, etc.
But how the heck does FR to make money charging 2,99 BP for a trip, say, of 1 and a half hours??
Just doesnt make any sense to me.Please feel free to elighten me.
Ncfc99 From United Kingdom, joined May 2005, 581 posts, RR: 0 Reply 1, posted (6 years 8 months 4 days 20 hours ago) and read 10362 times:
I asked a similar question a while ago. They sell the first few seats on each flight at below cost as a loss leader. Then they sell some seats at a price to fill up most of the plane and cover the costs. Then the last few seats are sold at a high price and they make alot of money on these seats. As FR planes have a high load facter genrally, the last few expensive seats usually sell aswell.
Then there is all the other services ofered on the FR website (car hire, hotels etc.), All these companys pay FR a fee when someone books through the site, which if you ask me is almost profit for no work (the best way to make money). The link below has more details about FR financial activities (page 4+6) http://www.ryanair.com/site/about/in...st/docs/analyst/goodbody_apr05.pdf
Bassie2010 From United Kingdom, joined Mar 2005, 63 posts, RR: 0 Reply 2, posted (6 years 8 months 4 days 19 hours ago) and read 10350 times:
Quoting AR1300 (Thread starter): I understend how WN, GOL, B6, etc make money.
New fuel eficcient fleet, same type of ac, etc.
But how the heck does FR to make money charging 2,99 BP for a trip, say, of 1 and a half hours??
Just doesnt make any sense to me.Please feel free to elighten me.
Mike
It's yield management and cost management. FR's operates at extreme low cost (best in the business, even better than WN). Also ,the average fare lies around 40 euros (still low of course). The prices you mention is only for the first to book.
Egmcman From United Kingdom, joined Jun 2005, 898 posts, RR: 11 Reply 3, posted (6 years 8 months 4 days 18 hours ago) and read 10295 times:
Quoting AR1300 (Thread starter): I understand how WN, GOL, B6, etc make money.
New fuel efficient fleet, same type of ac, etc.
But how the heck does FR to make money charging 2,99 BP for a trip, say, of 1 and a half hours??
Just doesn't make any sense to me.Please feel free to enlighten me
The price of snacks and drinks they sell on flights should be added to this.
Beaucaire From Syria, joined Sep 2003, 5252 posts, RR: 33 Reply 4, posted (6 years 8 months 4 days 18 hours ago) and read 10230 times:
They make their money not from the flight-operations but on the auxillary revenues.
Carental agreements ( great revenue generator !!!) - hotel-bookings -booking-fees for E-Tickets,excess-baggage,-sponsor-revenues from Chamber of commerce budgets,sodas and sandwiches..
Vfw614 From Germany, joined Dec 2001, 3340 posts, RR: 6 Reply 5, posted (6 years 8 months 4 days 15 hours ago) and read 10110 times:
1/3 of the revenue is generated through non-used tickets - not so much the fare itself, but fees and taxes no-shows do not reclaim either because they don't know they have right to do so or they find the whole procedure (Ryanair tries to make it as difficult as possible) too painful. The number is, by the way, from a recent interview MOL has given.
Another major source of income are, of course, subsidies paid by local authorities for having the privilege of being connected to the outside world with a Ryanair flight. If no more subsidies are piad, Ryanair withdraws the route. Recent example is the cancellation of services from Klagenfurt in Austria.
Other income:
- Approx. 16m EUR p.a. in charging an obscure "wheelchair levy" of 50ct per pax..
- Horrendous credit card fees for paying online
- Horrendous telefon charges for calling their hotline
etc. etc.
In short, Ryanair earns very little from their fares, but a lot from ancillary revenues.
Bassie2010 From United Kingdom, joined Mar 2005, 63 posts, RR: 0 Reply 6, posted (6 years 8 months 4 days 14 hours ago) and read 10050 times:
Quoting Vfw614 (Reply 5): In short, Ryanair earns very little from their fares, but a lot from ancillary revenues
Ryanair 2004:
Revenue from tickets: EUR 924.6 million
Ancillary revenue: EUR 149.7 million
Operating profit: EUR 270.7 million
Profit before tax: EUR 250.4 million
Proft after tax: EUR 206.6 million
Operating profit is EUR 120 million higher than ancillary revenue. So even if acillary revenue has a 100% margin (Ryanair doesn't publish seperate profit margins unfortunately), there is still a large gap. So, I agree, ancillary revenue is probably profitable, but Ryanair's flying business is also very profitable.
Airport cost is where Ryanair's saves indeed a lot. But their marketing / sales expenses are also very low (they have 'Big Mouth' O'Leary to do that and have you seen their website.. it looks like **** but it works) and they have bought their planes cheap (as been discussed on a.net extensively)
Of, and just to add one more thing to why Ryanair makes huge profits: corporate tax in Ireland is only 15%. A nice bonus.
KEno From Malaysia, joined Feb 2004, 1841 posts, RR: 35 Reply 7, posted (6 years 8 months 4 days 14 hours ago) and read 10029 times:
Quoting Vfw614 (Reply 5): 1/3 of the revenue is generated through non-used tickets
I'm surprised it's THAT high. I've done that a couple of times, simply buying a 1p flights + taxes = £25 for a trip that I'm not entirely sure that I could even make it. I've got to stop making O'Leary richer and richer too easily.
Sentiasa Melepasi Jangkaan bersama Penerbangan Malaysia
There is a subtle difference between "revenue from tickets" and "revenue from fares".
"Revenue from tickets" includes taxes and fees, "revenue from fares" would only include the "non-inflated" base fare (the famous "0,01 €").
So the number you have quoted does include non-returned fees and taxes. I prefer to call it an ancillary revenue as, legally speaking, it is money that Ryanair pockets in but that does not belong to them (there is no airline in the whole world that could impose taxes - airlines collect taxes on behalf of the government as third-party money).
So if anybody has ever wondered why Ryanair is running their "1 million tickets for free" campaigns all the time, this is the explanation: If you choose to fly, Ryanair has to pass on the taxes / fees (as long as these are not made-up stealth taxes) to the government, airports, security organizations etc. etc. If you choose not to fly, they simply pocket in the money. If you would not have bought like 20 sandwiches onboard, they make more money from those who do not fly than from those who eventually fly - as long as the vast majority does not insist on taxes and fees being paid back.....
BAViscount From United Kingdom, joined Mar 2004, 2325 posts, RR: 4 Reply 9, posted (6 years 8 months 4 days 14 hours ago) and read 9983 times:
Twelve days ago I paid £0.01 for a seat on FR's lunchtime flight LGW-DUB on October 14th. Today, 12 days later, a seat on that very same flight will set you back a whopping £139.99!!
You do the maths!
Ladies & gentlemen this is Captain Tobias Wilcock welcoming you aboard Coconut Airways flight 372 to Bridgetown Barb
Vfw614 From Germany, joined Dec 2001, 3340 posts, RR: 6 Reply 10, posted (6 years 8 months 4 days 13 hours ago) and read 9873 times:
Yes, but those paying GBP 139.99 are a bit more likely to eventually travel than those who book a 0.01 GBP ticket during a promotion because "it's cheap and if I cannot go, it is still cheap".
I have not said that Ryanair does not make money from ticket sales. But they do not sell an awful lot of seats for 150 quid and it is clearly their business concept that most of their revenue does not come from fares..
Pe@rson From United Kingdom, joined Jan 2001, 18323 posts, RR: 56 Reply 13, posted (6 years 8 months 4 days 12 hours ago) and read 9840 times:
Quoting Vfw614 (Reply 10): I have not said that Ryanair does not make money from ticket sales. But they do not sell an awful lot of seats for 150 quid and it is clearly their business concept that most of their revenue does not come from fares..
Yep! In fact, FR have said, more than once, that it'll be carrying far more passengers in the forthcoming years (I have the figures at home) and 1/2 a 738 will be filled with passengers who paid 1p (plus tax and charges) for their flight. Clearly, then, the main revenue either comes from those who pay more for their fares or the extras (both onboard and not, from refreshments and inflight products to car hire, hotels, etc.) or a combination thereof. I suspect it's the latter, with a large majority coming from the extras. However, it'd be foolish to totally discount the value of last-minute customers and those who book on routes which are very popular and relatively expensive continually.
"Everyone writing for the Telegraph knows that the way to grab eyeballs is with Ryanair and/or sex."
Cornish From United Kingdom, joined Feb 2005, 8187 posts, RR: 58 Reply 14, posted (6 years 8 months 4 days 12 hours ago) and read 9814 times:
Quoting Pe@rson (Reply 13): Clearly, then, the main revenue either comes from those who pay more for their fares or the extras (both onboard and not, from refreshments and inflight products to car hire, hotels, etc.) or a combination thereof. I suspect it's the latter, with a large majority coming from the extras.
In the last financial year just over 15% of FR's overall revenue came from "Other" Revenues. This compares to BA's just over 10%. Of course what constitutes "other" revenue will be quite different between the two carriers - BA's will include a lot of maintanance, ground handling, etc. But it gives you an idea of what the reliance is from other revenue streams. Expect FR's proportion to increase dramatically over the next few years though. Three years ago it only accounted for only 9% of their total revenue.
Just when I thought I could see light at the end of the tunnel, it was some B*****d with a torch bringing me more work
Vfw614 From Germany, joined Dec 2001, 3340 posts, RR: 6 Reply 15, posted (6 years 8 months 4 days 12 hours ago) and read 9790 times:
As I said already, it is all a question of definition - because it is included in the process of selling a fare, it appears as if Ryanair does not regard "wheelchair levies", "non-returned fees", "non-returned taxes", "credit card fees", "insurance levies" as ancillary revenues, but as "ticket revenues". They are free to do that as far as I am concerned, but it leads to a somewhat incorrect public perception what they actually earn from their fares. One has to understand that the 40 or 50 GBP Ryanair charges can actually broken down in many different categories of which the fare most often is rather insignificant.
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