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CalTex
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O'Leary: Cutbacks, Consolidations Ahead For Europe

Fri Oct 31, 2014 9:16 pm

Article: http://seattletimes.com/html/travel/...9919_europeairlinesryanairxml.html

Michael O'Leary, who just extended his Ryanair contract through 2019, believes that short-haul aviation in Europe faces an "endgame" in the next five years. Smaller carriers (SK, AZ, AB, TP, OA, IB, EI) will face "cutbacks and consolidations", while any survivors will be forced to shrink their short-haul operations. During that same 5-year period, FR expects to increase its annual passenger count from 81 million to 120 million.

He also said that there is "no realistic possibility" of Ryanair starting trans-Atlantic flights in the next 4-5 years due to the lack of available aircraft (e.g., 787).

What do you think of his predictions? Blunt but accurate? Exaggerated rhetoric just to grab our attention?
 
32andBelow
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Fri Oct 31, 2014 9:20 pm

So is he saying FR will take all passengers forcing other carriers to shut down? As far as trans Atlantic goes, I'm sure he could acquire 757/767 within a year if he really wanted to.
 
PHX Flyer
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Fri Oct 31, 2014 9:26 pm

I would think that in Europe - just like in the U.S. - CEOs of publicly traded companies are legally mandated to make realistic forecasts about future growth of their company. So, more likely than not, he's got it right.
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fcogafa
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Fri Oct 31, 2014 10:13 pm

O'leary has predicted the demise of many loco operations in the past and very few of the predictions have come true. Not a person to take seriously.
 
StTim
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Fri Oct 31, 2014 10:22 pm

One can only hope that it is RyanAir that is the one that will struggle.
 
steve6666
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 12:52 am

Quoting PHX Flyer (Reply 2):
I would think that in Europe - just like in the U.S. - CEOs of publicly traded companies are legally mandated to make realistic forecasts about future growth of their company. So, more likely than not, he's got it right.

Everyone knows that a forecast about the state of the world in 5 years time is completely speculative and most likely going to be wildly inaccurate.

Maybe he'd like to tell me this week's lottery numbers as well while he's at it?
A306, A318, A319, A320, A321, A332, A333, A343, A346, A388, B722, B732, B733, B734, B735, B73G, B738, B742, B744, B752, B753, B762, B763, B764, B772, B773, B77W, B787-8, BAe-146, Cessna Something, DC-10, E175, E195, ERJ145, MD-11, MD-80, PA Something
 
MaverickM11
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 1:01 am

Talk about stating the obvious. The EU has too many network carriers with too many hubs and it will only get uglier until some major consolidation and/or failures.
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VCEflyboy
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 1:29 am

Actually it's quite the opposite! Ryanair is not doing too well. Otherwise there is no reason why they would run to full-service airports and tour operators on their knees and change their strategy 180 degrees.

On the other hand, with HOP!, Jump, Transavia, Vueling and the like, legacy airlines are likely to fare better.
 
captainmeeerkat
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 8:42 am

Quoting StTim (Reply 7):
One can only hope that it is RyanAir that is the one that will struggle.

One can only hope that people might spell it properly without double capital letters

Spelling aside,

Quoting VCEflyboy (Reply 10):
Actually it's quite the opposite! Ryanair is not doing too well

Markets and consumer values change. It's better to see FR changing their strategy rather than digging in their heels. Look at the European majors scrambling to start their low-cost branches - ten years too late!

As the legacy carriers move down a step from full service, low-costs who have already been in the market segment for over a decade, will continue their growth there.
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Byrdluvs747
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 9:03 am

Quoting CalTex (Thread starter):
maller carriers (SK, AZ, AB, TP, OA, IB, EI) will face "cutbacks and consolidations",

Apparently he fails to realize that IB has already been consolidated into IAG. I would love to see the same happen to AB, and EI.
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tommy1808
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 9:19 am

Quoting captainmeeerkat (Reply 11):
As the legacy carriers move down a step from full service, low-costs who have already been in the market segment for over a decade, will continue their growth there.

thats long past, recently they have been stepping their service back up.

Quoting VCEflyboy (Reply 10):
Actually it's quite the opposite! Ryanair is not doing too well.

  
Ryanair with its modern and young fleet, low pay, outsourcing everything, grabbing subsidies left and right, some of them turning out to be illegal, and having a monopoly situation on large parts of its network is even growing slower than the dinosaur Lufthansa with his expensive staff, old fleet, strikes and fierce ME3/TK competition to the east and "walk away free of your debts" post CH11 US carriers to the west.
And at the same time legacies manage to match Ryanair on price more and more.....

best regards
Thomas
Well, there is prophecy in the bible after all: 2 Timothy 3:1-6
 
nuckleuz
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 9:59 am

I always wonder why there is so much Ryanair-hating, while there fly so many people with Ryanair. Can we keep it a bit on topic and not turn it in yet another Ryanair bashing topic? Just like every other Ryanair topic on this forum.

Grt,
Erik
 
kl911
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 10:17 am

Quoting nuckleuz (Reply 14):
I always wonder why there is so much Ryanair-hating, while there fly so many people with Ryanair. Can we keep it a bit on topic and not turn it in yet another Ryanair bashing topic? Just like every other Ryanair topic on this forum.

Thank you!


He does have a point though. Most legacy airlines are losing money on shorthaul, and now after U2 also FR will operate from main airports and offer a kind of corporate product I can see airlines scale back on p2p and only offer feeder flights to their longhaul network.
 
Andy33
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 10:19 am

Quoting Byrdluvs747 (Reply 12):
Quoting CalTex (Thread starter):
maller carriers (SK, AZ, AB, TP, OA, IB, EI) will face "cutbacks and consolidations",

Apparently he fails to realize that IB has already been consolidated into IAG. I would love to see the same happen to AB, and EI.

Also fails to realise that the consolidation and cutbacks involving OA have already happened and it is now a subsidiary of A3.
 
eicvd
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 10:48 am

Quoting nuckleuz (Reply 14):

Well said.

Quoting StTim (Reply 7):

Why?
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downtown273
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 11:20 am

Alternatively, we could de-unionize the main legacy carriers and keep the airlines flying and competing in the market.

No need for cutbacks.
 
r2rho
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 12:22 pm

He may be right or wrong about the details, but one thing is for certain, and that is that EU short haul flying will look different in 5 years from what it is now. All of the legacies bleed money on them, and the long-haul profits that used to make up for it are gone due to the ME3. So the legacies must somehow find a way to make their short-haul operation profitable in itself.
 
MaverickM11
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 12:45 pm

Quoting VCEflyboy (Reply 10):
Actually it's quite the opposite! Ryanair is not doing too well. Otherwise there is no reason why they would run to full-service airports and tour operators on their knees and change their strategy 180 degrees.

No. EU legacies are in difficult straits and it's only going to get more competitive, regardless of what FR is or isn't doing. And I wouldn't be so sanguine about FR moving from far afield airports to primary ones. It's the same thing many other LCCs have been doing for years.

Quoting andy33 (Reply 16):
Also fails to realise that the consolidation and cutbacks involving OA have already happened and it is now a subsidiary of A3.

That's a drop in the bucket.

Quoting r2rho (Reply 19):
He may be right or wrong about the details, but one thing is for certain, and that is that EU short haul flying will look different in 5 years from what it is now. All of the legacies bleed money on them, and the long-haul profits that used to make up for it are gone due to the ME3. So the legacies must somehow find a way to make their short-haul operation profitable in itself.

  

Quoting tommy1808 (Reply 13):
Ryanair with its modern and young fleet, low pay, outsourcing everything, grabbing subsidies left and right, some of them turning out to be illegal, and having a monopoly situation on large parts of its network is even growing slower than the dinosaur Lufthansa

I wouldn't worry about FR. They had almost a 15% operating margin in FY13. What year is AF/KL's turnaround plan on?
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par13del
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 12:51 pm

Quoting downtown273 (Reply 18):
Alternatively, we could de-unionize the main legacy carriers and keep the airlines flying and competing in the market.

No need for cutbacks.

So you are going to de-unionize and pay the staff the same wages and benefits and lower the cost out of the share holders profits, or is cut-backs in staff cost not counted 
 
Delta777Jet
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 12:57 pm

Quoting VCEflyboy (Reply 10):
Actually it's quite the opposite! Ryanair is not doing too well. Otherwise there is no reason why they would run to full-service airports and tour operators on their knees and change their strategy 180 degrees

I think it is a really well run company. They are not changing their strategy 180 degrees, but they are going now to take all of the major legacy business away. Yes they are cutting unprofitable routes here and there and optimizing in favor of major airports, but that's all part of their strategy. They have a huge fleet, everyone in Europe knows Ryanair and to be honest, I prefer flying with them than with for example Germanwings. I know that I have a reasonable price, I can now take more hand luggage than for example on Wizz Air and most of the flights running much on time.

They are the only one besides Easyjet who know what they are doing.

The one who is changing 180 degrees is for example the Lufthansa Group. They will need to fear their existence in the coming 10 years. Germanwings cost base is still not low enough and they can't get their pilots under control. All the service cut backs, dismissal of frequent flyer benefits will make people run away because there is simply no difference to a Ryanair anymore. When you go today to a Lufthansa ticket counter, they working there with 2 sets of computers to manage reservations on Germanwings and Lufthansa. It's a complete mess when there are rebookings because of flight interruptions.

Latest thing what they are doing now is to have same level of services along the different brands like Swiss, Austrian etc. so basically just changing the seat cover colors. So who doesn't like Lufthansa will now then also not fly Swiss or Austrian. It's comparable to that Accor Hotel would change that Sofitel has same service as Ibis.

With Ryanair you know what you paying for and you can decide for yourself.
I still miss Trans World Airlines and the L-1011
 
abba
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 1:06 pm

Quoting PHX Flyer (Reply 2):
I would think that in Europe - just like in the U.S. - CEOs of publicly traded companies are legally mandated to make realistic forecasts about future growth of their company. So, more likely than not, he's got it right.

Then the question is what "realistic" means in forecasts that extend five years into the unknown future...

Quoting MaverickM11 (Reply 9):
The EU has too many network carriers with too many hubs and it will only get uglier until some major consolidation and/or failures.

No doubt. It all goes back to the era where each nation should have their very own flag carrier. Many of the legacies in the EU, therefore, has the name of the nation (or region as in the case of SAS) as part of their name.

Quoting tommy1808 (Reply 13):
And at the same time legacies manage to match Ryanair on price more and more.....

I have experienced them actually beating them quit significantly at the very moment a bag is added.

Quoting MaverickM11 (Reply 20):
That's a drop in the bucket.

Perhaps. However, the more creative ways they now use to keep costs low such as rather creative ways of employing people is something that for certain will not last long. In particular not when they start to move more of their operations to the major airports. This will not only be because of the unions but also because of the majors that will demand - and no doubt also get - a level playing field.
 
kl911
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 1:23 pm

Legacy carriers need to drastically cut costs, something we see already with Lufthansa and Germanwings and AF/KL and Transavia.
 
captainmeeerkat
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 2:28 pm

Quoting tommy1808 (Reply 13):
Ryanair with its modern and young fleet, low pay, outsourcing everything, grabbing subsidies left and right, some of them turning out to be illegal, and having a monopoly situation on large parts of its network is even growing slower than the dinosaur Lufthansa with his expensive staff, old fleet, strikes and fierce ME3/TK competition to the east and "walk away free of your debts" post CH11 US carriers to the west.
And at the same time legacies manage to match Ryanair on price more and more.....

The same old bad FR crap.

Low pay - yet no shortage of qualified workers who haven't been on strike for..let me see..well ever. Yes they have no union but so what - look at what that achieves in European aviation (pilot, ground handlers, ATC - strikes when their parents need to try and compete with better companies.

Outsourcing - logical business decision that almost all airlines do somewhere

Subsidies - available to take, why wouldn't they?

Monopoly - like other airlines have never been in that situation..

Slow growth - still the busiest airline on Europe in terms of passenger numbers

As for LH - trying to cut costs to match the more efficient and profitable airlines....and strikes galore! Has the German govt. fighting the ME3/TK through restrictive flights into Germany.

Quoting delta777jet (Reply 22):
think it is a really well run company. They are not changing their strategy 180 degrees, but they are going now to take all of the major legacy business away. Yes they are cutting unprofitable routes here and there and optimizing in favor of major airports, but that's all part of their strategy. They have a huge fleet, everyone in Europe knows Ryanair and to be honest, I prefer flying with them than with for example Germanwings. I know that I have a reasonable price, I can now take more hand luggage than for example on Wizz Air and most of the flights running much on time.

They are the only one besides Easyjet who know what they are doing.

The one who is changing 180 degrees is for example the Lufthansa Group. They will need to fear their existence in the coming 10 years. Germanwings cost base is still not low enough and they can't get their pilots under control. All the service cut backs, dismissal of frequent flyer benefits will make people run away because there is simply no difference to a Ryanair anymore. When you go today to a Lufthansa ticket counter, they working there with 2 sets of computers to manage reservations on Germanwings and Lufthansa. It's a complete mess when there are rebookings because of flight interruptions.

        
my luggage is better travelled than me!
 
bobdino
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 2:36 pm

Quoting delta777jet (Reply 22):
They are the only one besides Easyjet who know what they are doing.

I read a fascinating pair of articles that suggest that it's Easyjet's success that triggered Ryanair's change of heart, and that the original purpose for buying Aer Lingus was to create an Easyjet competitor:

http://www.independent.ie/business/i...-millar-outgoing-cfo-30667619.html
http://www.independent.ie/business/i...-with-aer-lingus-buy-30667596.html
 
tommy1808
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 3:17 pm

Quoting captainmeeerkat (Reply 25):
The same old bad FR crap.

Pawlov much? I didn´t critizize how Ryanair does his business, i just pointed out, factual and correct, that despite all these advantages Ryanair has in its business modell, they are outgrown by a legacy dinosor like Lufthansa by quite a margin.
And while the legacies are in the process of cutting costs, saving money and becomming more efficient, Ryanair is increasing costs across the board:

- Crew gains more seniority (higher cost)
- Ryanair is losing subsidies left and right and has to pay back some (higher cost)
- Ryanair is turning towards more major airports with higher fees (higher cost)
- Those force longer turn around times (higher cost)
- Those are also more prone to delays (higher cost)

And Ryanairs answer? A business fare that is next to useless given the 3/7 and 4/7 frequencies that dominate the network and a less agressive yellow in the cabin. That looks much like the Lufthansa yellow.

In short: Ryanair is becoming more expensive, airlines that already outgrew them in the past become cheaper. So Ryanair should be worried to be consolidated into another airline just as much as the small legacies have to.

best regards
Thomas
Well, there is prophecy in the bible after all: 2 Timothy 3:1-6
 
EI320
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 3:32 pm

With a competitive cost base and a reasonable product, legacy airlines are more than capable of competing with FR on intra-European short-haul services.

Aer Lingus is a prime example: its transformation from a bloated, inefficient, high-cost carrier to a much nimbler and efficient one has yielded five consecutive years of profitability despite facing FR HQ in its own backyard and exceptionally challenging economic conditions. The transformation has necessitated drastic headcount reductions, sweeping changes to work practices, vast product changes, and above all, a huge shift in mindset - but it has clearly worked. AF, KL, and LH should take note.

Aer Lingus was two weeks from bankruptcy in 2001, other European legacies will find themselves in a similar position (not tomorrow or next week, but in time) if similar actions are not taken.
 
captainmeeerkat
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 3:37 pm

Last year:

FR carried 81 million passengers on ~300 planes
LH carried 104 million on ~600 planes

Who is growing more efficiently? As FR continue to increase their fleet size and expand to primary airports, their growth will continue at the expense of the larger legacy carriers who need to focus on their longhaul side against the ME3/TK as you pointed out

Quoting tommy1808 (Reply 27):
I didn´t critizize how Ryanair does his business

I'm sorry, I must have misunderstood 'fact' for criticism.

Quoting tommy1808 (Reply 27):
And while the legacies are in the process of cutting costs, saving money and becomming more efficient, Ryanair is increasing costs across the board:

Why are they cutting costs? Because they finally realise that passengers want to go from A to B at the lowest cost in the most convenient of ways. Something that low cost airlines realised twenty years ago.

Costs are too high in many of the European legacies and they are reducing out of necessity to survive.
my luggage is better travelled than me!
 
OO-VEG
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 3:39 pm

Seeing Ryanairs move from local airports, to main airports, shows that they are switching strategies. That will offer more direct competition and it can very well be a legacy airline will be able to offer a better product than Ryanair does. However, it's not strange to think that in a couple of years we will go back to just a few airlines (IAG / AF-KL / LH Group), big question is if they will rebrand or keep a diversity of brands.

If someone will break Ryanair, I will put my money on LH. They have a LCC operation that is able to offer everything the long-haul / business traveler needs (connections / extra service) and if they integrate that further in their own fleet, LH could offer low-cost & full service through their airline. Ryanair is just starting to figure out, and many companies will fly Ryanair simply to save on costs.. but then again, they are not necesarily the cheapest.
 
Delta777Jet
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 3:44 pm

Absolutely right EI320, some airlines will be able to cut cost, some too late. But it's also about vendor agreements, frequent flyers etc. which need to be taken care of. I could imagine that Ryanair is may be paying same rates at the major airports, but got though negotiated ground handling deals in place.

Quoting tommy1808 (Reply 27):
- Crew gains more seniority (higher cost)
- Ryanair is losing subsidies left and right and has to pay back some (higher cost)
- Ryanair is turning towards more major airports with higher fees (higher cost)
- Those force longer turn around times (higher cost)
- Those are also more prone to delays (higher cost)

Don't worry if the pilots get too senior they can swap for cheaper ones. But bear in mind, more senior people are needed to support a growing fleet. All your statements are correct BUT you forget to assume that the revenues they are getting will be also significantly better on the major airports than on the small far away fields.

I could imagine Ryanair will take on the entire Germany leisure market, the market where Air Berlin was growing years ago to serve all the holiday destinations from Germany. Further, they will go head on head on all major business point to point routes. It will become a split between Easyjet and Ryanair with not much left.
I still miss Trans World Airlines and the L-1011
 
tommy1808
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 3:58 pm

Quoting captainmeeerkat (Reply 29):
FR carried 81 million passengers on ~300 planes
LH carried 104 million on ~600 planes

Lufthansa Group 2009: 73 Million Pax
Lufthansa Group 2013: 105 Million
= +44%

Ryanair 2009: 59 Million
Ryanair 2013: 79 Million
= +34%

and that is bookings, not passengers. ..

Quoting captainmeeerkat (Reply 29):
Who is growing more efficiently?

Lufthansa obviously. They also generate about 4 times the revenue per passenger. .. obviously they provide a much better product. And these days they often provide it for the same price. For a shareholder Ryanair is better, from a passenger perspective ... less and less.

Best regards
Thomas

[Edited 2014-11-01 09:02:15]
Well, there is prophecy in the bible after all: 2 Timothy 3:1-6
 
A340600
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 4:05 pm

I do think that we will see quite possibly the most interesting period of change in short haul operations in the next 5-10 years, quite how is anyone's guess. I would predict that connections between the low cost operators and the full service airlines are somewhat inevitable and would benefit both sides but this would obviously be a very difficult negotiation for service, etc.

There's a new middle ground which some LCCs (EZY, Norgwegian) are moving rapidly upwards toward, while some full service airlines (LH, BA) are moving ever closer down to this new middle that seems to have been created between the traditional minimal and all singing, all dancing offering. There will be a geniuine brand identity crisis when the flying public can no longer differentiate between LCC and legacy and how airlines deal with this, particularly the flag carriers, will be highly interesting.
Despite the name I am a Boeing man through and through!
 
evomutant
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 4:06 pm

Do Legacies offer a better product?

I flew Wizzair LTN to GDN and back this week and the customer experience, from booking to airport to onboorard lost absolutely nothing to any legacy I have flown on on a route that is perfect for my needs and that no legacy would ever dream of operating, for less than £50 all in. Even the BoB was cheaper than EI for example.

I think a lot of the people who blithely claim that LCC's offer an inferioir product probably haven;t flown on them.
 
captainmeeerkat
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 4:26 pm

Quoting tommy1808 (Reply 32):
Lufthansa obviously. They also generate about 4 times the revenue per passenger. .. obviously they provide a much better product. And these days they often provide it for the same price. For a shareholder Ryanair is better, from a passenger perspective ... less and less.

Ok, LH carried more passengers but with twice the costs and twice the equipment. Which doesn't work anymore, they are trying to reduce costs to COMPETE with FR and U2 etc.

Quoting tommy1808 (Reply 32):
Lufthansa Group 2009: 73 Million Pax
Lufthansa Group 2013: 105 Million
= +44%

Ryanair 2009: 59 Million
Ryanair 2013: 79 Million
= +34%

and that is bookings, not passengers. ..

LH 2005 51 million
LH 2013 104 million

Growth 103%

FR 2005 33 million
FR 2013 81 million

Growth 155%

Either way, we will have different perspectives on this
my luggage is better travelled than me!
 
bobdino
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 4:52 pm

Quoting tommy1808 (Reply 27):
Ryanair is increasing costs across the board:

- Crew gains more seniority (higher cost)
- Ryanair is losing subsidies left and right and has to pay back some (higher cost)
- Ryanair is turning towards more major airports with higher fees (higher cost)
- Those force longer turn around times (higher cost)
- Those are also more prone to delays (higher cost)

The Ryanair 2014 full year result [1] said "Excluding fuel, sector length adjusted unit costs fell by 3%." The Q1 2015 result [2] said: "Unit costs fell by 2%, excluding fuel they rose by 1%."

Now that's not to say that the costs won't rise in the future, but it strongly suggests that, to-date, FR have been able to handle cost increases in some areas of the business by taking costs out of other areas of the business.


[1] http://corporate.ryanair.com/docs/co...investor/2014/full_year_result.pdf
[2] http://corporate.ryanair.com/docs/corp/investor/2015/q1_2015_doc.pdf
 
tommy1808
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 4:52 pm

Quoting captainmeeerkat (Reply 35):
LH 2005 51 million
LH 2013 104 million

Growth 103%

FR 2005 33 million
FR 2013 81 million

which is exactly my point, Ryanair's business model is hitting the wall, growth is slowing down drastically, even legacies can grow significantly faster now.
And now they increase their costs. ... be prepared to see Ryanair losing market share, because they can't compete with the legacies on the service side, nor with LCC'S with a cheaper cost base on the other side.

Best regards
Thomas
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bobdino
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 4:59 pm

It's worth also reading CAPA's analysis of Ryanair from May this year:

http://centreforaviation.com/analysi...and-goes-in-search-of-yield-168868

Their conclusion, as I read it:

- Ryanair costs will increase, but will stay the lowest in Europe.
- The recent slowing in growth was caused by a lull in new aircraft deliveries.
- Now that new aircraft deliveries have recommenced, growth will resume.

Quote:
Building on its strong market position and low fares, Ryanair announced an order in Mar-2013 for 175 new Boeing 737-800 aircraft, increasing this to 180 in Apr-2014. It will take its first delivery under the new Boeing contract in Sep-2014 and receive 21 aircraft by Jul-2015.

With the additional five aircraft on order, Ryanair has increased its FY2019 passenger target from 110 million to 112 million. It plans 4% growth in passengers in the current year (FY2015), 5% in FY2016 followed by 8% for each of FY2017 to FY2019. This compares with 7% previously planned in the outer years.
 
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Polot
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 5:02 pm

Quoting captainmeeerkat (Reply 35):
LH 2005 51 million
LH 2013 104 million

Growth 103%

FR 2005 33 million
FR 2013 81 million
Quoting tommy1808 (Reply 37):

which is exactly my point, Ryanair's business model is hitting the wall, growth is slowing down drastically, even legacies can grow significantly faster now.
And now they increase their costs. ... be prepared to see Ryanair losing market share, because they can't compete with the legacies on the service side, nor with LCC'S with a cheaper cost base on the other side.

As pointed out before (or maybe on a different thread) that is not a good comparison because LH in 2005 did not include OS. Stick with the 2009 numbers.
 
UALWN
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 5:19 pm

Quoting tommy1808 (Reply 37):
be prepared to see Ryanair losing market share, because they can't compete with the legacies on the service side, nor with LCC'S with a cheaper cost base on the other side.

As far as I know, FR is not competing with any LCC with lower costs. None. The only LCC that comes close to having FR's extremely low costs is AK, with which it obviously does not compete.
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adriaticflight
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 5:21 pm

Quoting evomutant (Reply 34):
I think a lot of the people who blithely claim that LCC's offer an inferioir product probably haven;t flown on them.

Well said! I flew BA twice last month from LCY and the service was OK to poor. I fly Ryanair frequently as it takes me the places i want to go! And they're rarely late. And the serivce is fine for the price one pays. Ryanair Haters are wasting their breath.

Quoting OO-VEG (Reply 30):
If someone will break Ryanair, I will put my money on LH

i don't see how LH can compete in the London market other than flights to their hubs in Germany and the odd Germanwings flight (which seem to chop-and-change all the time). FR and EZY will slowly eat away at LH in my opinion.
 
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 5:23 pm

Quoting adriaticflight (Reply 41):
Ryanair Haters are wasting their breath.

And are lying to themselves whilst luxuriating in a 180 seat all Y Euro network carrier 320}  
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captainmeeerkat
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 5:25 pm

Quoting tommy1808 (Reply 37):
which is exactly my point, Ryanair's business model is hitting the wall, growth is slowing down drastically, even legacies can grow significantly faster now.

Legacies continue to try and reduce their costs and become more low cost themselves - why? For fun? No, because they see that the low cost model has eaten away at their customer base and with U2 and FR now offering the same or near same level of services, they are scrambling to compete.

And tell me how is growth slowing down? Perhaps they don't have as many passengers year on year with LH but they have grown steadily for the last decade - with lower costs, better efficiency, better shareholder value, newer equipment etc etc. LH is an old inefficient dinosaur that is too big and I hope they do trim the fat there and return to one of the greats of Europe.

As for FR, the business model has been and is stil workiing fine. They are moving to new markets where they offer a basic but cheap service with a fantastic customer base that no longer needs a meal for a 3 hour flight or entertainment for a short hop across Europe. People will continue to book with low cost because that is the trend now. Of the top 5 companies in Europe, two of them are classed as low-cost

I don't disagree that they are changing but I think it is perfectly timed and there is a race now among the legacy carriers to stem the loss of customers to low cost airlines.

Quoting Polot (Reply 39):
As pointed out before (or maybe on a different thread) that is not a good comparison because LH in 2005 did not include OS. Stick with the 2009 numbers.

I was unaware of that, thanks Polot for your insights. I stand corrected on the numbers above.

Quoting tommy1808 (Reply 37):
be prepared to see Ryanair losing market share, because they can't compete with the legacies on the service side, nor with LCC'S with a cheaper cost base on the other side.

FR costs are among the lowest in the industry are have fallen, not increased. Even the expenses of the nicey nicey FR machine will be offset with the growth from primary airports too.

And people need to get over the service aspect, there is no real difference in service between legacy carriers and low cost carriers. Those who say differently haven't travelled that much on either.
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UALWN
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 5:37 pm

Quoting captainmeeerkat (Reply 43):
And people need to get over the service aspect, there is no real difference in service between legacy carriers and low cost carriers. Those who say differently haven't travelled that much on either.

This is just not true. I travel often on VY, U2 and FR on one hand, and LH, LX, and TK on the other. And there are clear differences. Free food and drinks to start with. Leg room (yes, VY's and U2's, in particular, are barely humane). Frequency (although VY is pretty good on this). Connections. Lounges. Miles.
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VCEflyboy
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 5:49 pm

The way Ryanair has been making money traditionally was to charge an arm and a leg in things like printing out boarding passes, having a piece of baggage that exceeds the limit by 1/2 inch, hidden fees like credit card surcharges and the like.

This model has reached the end of the road, because travellers have learned the hard way and read every letter in the fine print, and also many hidden fees Ryanair used to charge have to now be included in the final price by law across Europe.

They are trying every trick in the book to remain profitable (pilots have to pay own accommodation, partnership with tour operators, subsidy-hunting, shift to major airports, etc. Let's see how this works out....
 
StuGLA
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 5:52 pm

Quoting PHX Flyer (Reply 4):
Quoting evomutant (Reply 5):

Ryanair Holdings is a plc, FR is a subsidiary company and is an Ltd.

EDIT: So we're all right!

[Edited 2014-11-01 11:04:31]
 
Delta777Jet
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 6:22 pm

Quoting StuGLA (Reply 46):
Ryanair Holdings is a plc, FR is a subsidiary company and is an Ltd.

Not really, because financially it is a Group and if he makes a public statement about his subsidiary, that would count the same as he would talk about the Ryanair Holding.
I still miss Trans World Airlines and the L-1011
 
musapapaya
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 7:04 pm

Quoting captainmeeerkat (Reply 43):
LH is an old inefficient dinosaur that is too big and I hope they do trim the fat there and return to one of the greats of Europe.

I beg to differ, if they are like an old dinosaur they would not be s strong as it is at the moment.
 
StTim
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 8:34 pm

Quoting eicvd (Reply 17):

Why?

Because I have had the misfortune to fly on them. I nasty experience each time. I have the great misfortune to be flying them again in December. They are moulded in the image of O'leary. I know he is trying to change it as Easyjet have been winning business customers hands down.

Oh and to be honest I don't care how it is spelt.
 
Delta777Jet
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 9:13 pm

Quoting musapapaya (Reply 48):
I beg to differ, if they are like an old dinosaur they would not be s strong as it is at the moment.

Their last figures were not as strong. Look around and listen to their loyal customers and you will hear that most of them are not happy anymore. If you hear that customers are not happy it should be a warning sign for any business.

Lufthansa was standing long time for good, reliable and on time service.
I still miss Trans World Airlines and the L-1011
 
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RyanairGuru
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sat Nov 01, 2014 9:39 pm

Quoting OO-VEG (Reply 30):
If someone will break Ryanair, I will put my money on LH.

I wouldn't. Between the fact that Germanwings cannot compete on cost with FR, and their extreme geographical concentration, Lufthansa Group is nothing more than annoyance to FR. But the again nobody can directly compete with FR because their cost base is (and REMAINS) by far the lowest in the industry, EZY knows that and look at how many routes they overlap on: surprisingly few. I honestly don't think anything can "break" Ryanair, but their biggest threat would IMHO come through a hypothetical Easy-Wizz merger. The combined carrier would still have higher costs, but would have critical mass and economies of scale to really become a pan-European juggernaught.

Quoting tommy1808 (Reply 32):
They also generate about 4 times the revenue per passenger. .. obviously they provide a much better product. And these days they often provide it for the same price

There are three glaring logical fallacies in this "argument". (1) LH fly LONG HAUL and have BUSINESS CLASS. If they were not earning more revenue per passenger than FR then they have a serious problem; (2) You seem to link them earning more revenue per passenger to "obviously they provide a much better product", but completely ignore that it has something to do with the radically different business models and, somewhat bizarrely, you thought that it would help your argument to lump long haul revenue in with short haul; (3) Your last sentence is logically absurd: if LH are competing on price with FR, there is absolutely no way whatsoever that they are earning a premium to FR, remember: profit=revenue-cost.

Quoting tommy1808 (Reply 37):
LCC'S with a cheaper cost base on the other side

No such thing exists, at least not in Europe.

Quoting bobdino (Reply 38):
Ryanair costs will increase, but will stay the lowest in Europe.

  

Quoting captainmeeerkat (Reply 43):
Legacies continue to try and reduce their costs and become more low cost themselves - why? For fun? No, because they see that the low cost model has eaten away at their customer base

Precisely.

To be honest I'm not sure why we were even discussing passenger numbers, it is probably the least meaningful airline statistic I can imagine, especially as FR's 15% operating margin speaks for itself. LH can only dream of being so successful.
Worked Hard, Flew Right
 
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MillwallSean
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RE: O'Leary: Cutbacks, Consolidations Ahead For Europe

Sun Nov 02, 2014 7:35 am

Ryanair has reached its point of saturation in the European market. We discuss and compare them with LH, BA and AFKL but the problem is that FR haven't gotten a piece of the corporate travel that these airlines have. Even U2 struggles with this outside their UK bases.
We can also compare utilisation numbers and such but with the average stage-length varying so dramatically such comparisons struggle with its metrics and in my eyes don't allow us to reach valid and reliable conclusions.

Whats interesting is that if we agree that FR had reached its point of saturation and were forced to tweak its model, choosing to look at how U2 managed to increase their yields and the road they took a decade and some years ago and push themselves towards that model, I struggle to see why FR in its new shape will pose a greater threat to the full service carriers than they already face.

Most legacies have survived the onslaught of the lowcost players and learnt to live with them. While the lowcosts stimulated demand and took away segments of the travelling public from the fullservice airlines a decade ago such erosion of segments haven't been seen since. Norwegian, Easyjet, Air Berlin and Niki etc all co-exist rather than compete with full service airlines. They attract different segments. Ryanair and Wizzair have been the bottom feeders, the ones who targeted the lowest prices and got people who were happy to have less frequency and remote airports and valued price above all.
The legacies aren't a big factor anymore when it comes to tourism, VFR etc unless the persons relationship is so strong with the legacy that they will fly with them even though they can save money with a lowcost. BA is rather good with this. They attract enough people who wants to fly BA making what seems to be pure tourist destinations regular stops. These passengers know they can save a few pounds if they fly with FR or U2 but they deliberately chose not to.
And this loyalty bond that the full service carriers have, in an era where everyone knows about lowcosts, are not a bond that lowcosts can cut with just price and promotions or as FR now is trying to do with place. They need more on the product side. At present Ryanair doesn't offer that. Someone mentioned Air Asia, if you see what they offer businesses, the deals they cut with free food, priority seating etc you know that its a different game that competing on just price. Air Asia also offers a loyalty scheme allowing frequent travelers points and work with creditcard companies.
Until FR start tweaking their model even more, offering more to businessmen than a cheap ticket, they will struggle to break into new segments. FR knows this and are tweaking with major airports ie place, being one step, but my guess is that this isn't enough for them to overcome their point of saturation. While major airports will allow them to compete for the same segments that at present flies with Norwegian, Air Berlin and Easyjet and that will put pressure on these carriers yields I dont see them stimulating overall demand in the way they did a decade ago. And I don't see them stealing traffic between London and Frankfurt or having the products that allow them to go after the established full service carriers.

Instead I see the market consolidating in its present form with tweaks to the full service costbase and less differentiating points. I see Easyjet and the likes more and more emulating fullservice players. The European full service carriers needs to address their costbase. Like someone above mentioned, they need to cut a fir bit of what they do inhouse. Not because its done so much better when outsourced (to the contrary) but because labour laws allow them to achieve savings this way but labour laws makes it harder to realise such savings when the business is internal.
Setting up of Germanwings, hops and all this is just another way to reduce costs. They cant do it using for example the Lufthansa name since labour wouldn't accept it. This is a good compromise. BA have two different contracts for flying staff and this is the way forward for all fullservice airlines. BA faced and adapted to the lowcosts earlier than the continental full service carriers.

I actually think that the major fullservice carriers are quite happy that FR is invading the turfs, it will ensure that U2, Norwegian, Air Berlin have to focus on meeting that threat and not on building their capacity to compete with them. I also think that they enjoy to see FR costbase increase.

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