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Ryanair storms to top of international pax rankings, Stansted cutbacks a storm in a tea-cup

23-Jul-2009
  • Ryanair storms to top of international passenger rankings, Stansted cuts a storm in a tea cup;
  • But there are various ways to measure size;
  • UK to be punished for maintaining high taxes and charges;
  • Expansion elsewhere remains breathtaking;
  • Who needs a seat?

The International Air Transport Association (IATA) has published worldwide 2008 traffic figures showing that Ryanair is now the world’s leading international passenger carrier – having flown 57.6 million passengers during the course of the year.

Ryanair has no intention of resting on its laurels, and this year expects to grow to over 67 million passengers.

This is no idle boast, as indicated by figures released by Ryanair on its Jun-2009 performance. Passenger numbers were 5.8 million for the month, up 13% year-on-year, with a passenger load factor of 85%, up 1 ppt.

For the 12 months ended 30-Jun-09, passenger numbers reached 60.2 million, at a load factor of 82%.

Size matters – but it really does depends how you measure it

However, to compare airline size only by respective passenger numbers is a less than perfect yardstick. It ignores the distances passengers are carried and the revenue generated by the average passenger. It is therefore generally considered to be fairer to take into account turnover and revenue passenger kilometres (RPKs), which measures the number of fare-paying passengers multiplied by the distance they fly.

Ryanair operates only on point-to-point, short-haul European routes, whereas others operate as network carriers with long-haul networks spanning the world. Not only that, IATA’s international airline statistics do not include major domestic airlines.

When domestic passengers are taken into account, Ryanair falls to eighth place behind Delta (now including Northwest), Southwest, American, Air France-KLM, Lufthansa/Swiss, United and China Southern Airlines.

In terms of turnover, in the year to 31-Mar-09, Delta led with USD34.2 billion, with the Lufthansa/Swiss group at USD35.3 billion, while Ryanair’s turnover in the same period was (a somewhat measly by comparison) USD4.17 billion.

On the basis of passenger traffic measured by RPKs, Delta was the world leader in 2008 generating 285 billion, followed by American at 212 billion and Air France-KLM at 209 billion. On this measurement Ryanair drops to 18th place - at 62 billion.

Based on current market capitalisation, the world leader is Singapore Airlines, at USD10.5 billion, but Ryanair shows its successful profile, being in second place at USD6.7 billion.

UK to be punished for high taxing ways

Michael O’Leary, Ryanair CEO, has again hammered the UK Government for increasing the Air Passenger Duty (APD) when airlines are struggling to attract passengers. Ryanair has announced it intends to cut 670 flights a week, close ten routes and reduce frequency on a further 30 routes in another piece of well-timed media spin.

This will involve a 40% capacity cutback in its London, Stansted, schedule from late Oct-09. Ryanair operated 40 aircraft from Stansted this summer, but will reduce this to 24 aircraft for the winter period - with a 30% reduction in the number of weekly flights and a headline loss of 2.5 million passengers at Stansted between October and March 2010. The LCC has so far not specified which routes are to be affected.

But Stansted Managing Director, Stewart Wingate, remains sanguine concerning the reduction, saying, "it is business as usual here at Stansted. Last winter Ryanair reduced its aircraft fleet here to 28, this year it will be 24. It is common practice for it to reduce frequency to various destinations during the winter season as it has done in previous years. We have factored this potential outcome into our latest passenger forecasts.”

Announcing the 40% winter cutback at Stansted, Michael O’Leary said,
“Sadly UK traffic and tourism continues to collapse while Ryanair continues to grow traffic rapidly in those countries which welcome tourists instead of taxing them. These cutbacks underline the urgent need to break-up the high cost BAA Airport Monopoly, as recommended by the Competition Commission, and to scrap Gordon Brown’s insane and damaging GBP10 tourist tax which has caused UK traffic to collapse”.

“Aircraft are the ultimate mobile assets,” Mr O’Leary said. “I will put them where it’s cheapest.”

The UK Office for National Statistics has announced that tourist visits to the UK had fallen to 31.9 million last year, from 32.8 million in 2007.

BAA, the operator of London’s three airports, has experienced a sharp drop in passenger numbers this year, down 7.5% across the board in the first six months, with Stansted reporting a 14.4% fall in passenger numbers during the period.

The UK APD for one-way, short-haul flights to Europe has doubled to GBP10 since 2006 and will increase to GBP12 by the end of next year, a 140% increase in four years. At the same time landing charges at Stansted have risen from about GBP2.80 per passenger in 2006 to GBP6.53 this year.

In recent months the Belgian, Dutch, Greek and Spanish governments have all scrapped tourist taxes and/or reduced airport charges to stimulate tourism. Ryanair will now switch the 16 aircraft released from Stansted to such European bases.

Growth elsewhere throughout Europe continues unabated

For example, Ryanair has announced that it plans to open seven new routes to/from Oslo (Rygge) Airport, and four new routes (to 20 in total) from Oslo (Torp), in Oct-2009.

The airline plans new routes from Oslo (Rygge) to Alicante, Barcelona (Girona), Brussels (Charleroi), Bremen, London (Stansted), Madrid and Milan (Bergamo), that will deliver over 500,000 passengers per annum. and sustain 500 new jobs in Oslo (Rygge) Airport.

The four new routes from Oslo (Torp) are to Krakow, Lodz, Paris (Beauvais), and Rome (Ciampino) and are to begin in Sep-2009, increasing Ryanair’s traffic at Oslo (Torp) to 1.3 million per annum, sustaining 1,300 local jobs.

The Scandinavian expansion will throw out a further challenge to the financially challenged SA.

Ryanair has not remained idle elsewhere, and earlier this month launched services from Orio al Serio Airport to Pescara, Nantes Tangiers, Malaga, and Figari. The carrier also increased frequency on services from Orio al Serio to Manchester, Fez and to Ibiza.

The LCC has launched services from Castle Donington to Barcelona Reus, Palma and Rimi, increasing the number of destinations served from the airport to 32 and estimates the routes will increase passenger traffic at the airport by approximately 135,000 passengers per annum.

Plans have been announced for Ryanair to open its 33rd base, and first base in Portugal, at Porto, with two based aircraft and four new routes, for a total of 16 routes and 50 daily services. The airline plans to launch the four new routes (to Basel, Eindhoven, St Etienne and Tours) in Sep-2009 and increase Porto-Paris Beauvais frequency from daily to twice daily, increasing Ryanair’s traffic at Porto to an estimated 1.5 million passengers.

Standing room only?

And in another piece of superb public relations, Ryanair this month said it is planning a standing room only section on some of its flights.

Michael O'Leary says it plans to offer free "seats" to people who will fly standing up. O'Leary said passengers would sit on bar stools with a waist-belt - or just stand up for flights lasting less than 90 minutes. He added, “we might take out the last five or six rows and say to passengers 'Do you want to stand up? If you do you can travel for free”.

A spokesman for Ryanair said the airline had already asked Boeing about converting its planes or delivering a new fleet with so-called "vertical seating."

The carrier has, however, stressed that the standing section would require authorisation from the Irish Aviation Authority – which would seem to be drawing a long bow, as proper restraint of passengers and crew during take-offs and landings is a key element of airline safety procedures.

The wide publicity generated from this suggestion follows well-reported earlier announcements by Ryanair that it was planning to charge passengers for using the on-board restrooms and that a "fat tax" should be levied on overweight passengers.

Background information:

• Established in 1985, is Europe's largest LCC;
• Operates services on 800+ routes across 26 European countries;
• Currently operates a fleet of 181 aircraft, which will increase to 262 in the next five years;
• Transported 58.5 million passengers in year ended 31-Mar-09, with plans to increase this to approximately 83 million passengers by 2012, as it aims to boost its share of the European passenger market from 7.0% in 2007 to 11% in 2012.


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