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Ryanair is Europe's largest airline, the largest low-cost carrier, and one of the world's largest airlines as measured by international passengers carried. Ryanair has its largest base at largest base at London Stansted Airport, and second-largest base at Dublin Airport. Ryanair currently operates a network covering over 40 bases and 1,100 routes (with over 1,300 daily departures) across 26 countries, connecting some 155 destinations. Ryanair operates a fleet of over 250 B737-800 aircraft, with a large order backlog. Ryanair employs more than 8,000 people and expects traffic to grow to 73.5 million passengers in fiscal year 2011.
Location of Ryanair main hub (London Stansted Airport)
Ryanair share price
LCCs will continue to evolve into hybrids of the original core model. CAPA and OAG consider Ryanair fits the LCC profile and it is included in our reporting on this basis. Please note: when reporting for an airline is changed from or to LCC the historical data is not affected and it can lead to a distortion in the current reported data. Contact us if you have any queries.
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Following Luis Gallego’s promotion in Mar-2013 from CEO of Iberia Express to be CEO of Iberia, changes to Iberia’s management structure had been anticipated. On 10-May-2012, Iberia announced changes aimed at better implementing its Transformation Plan and restoring competitiveness and profitability to the carrier. While it is often worth taking a new hammer to crack an old nut, IAG has simultaneously been squirreling away some tastier new ones.
Based on comments at CAPA’s Airlines in Transition conference by Willie Walsh, CEO of Iberia’s parent IAG, that Iberia Express has ex fuel unit costs 40% lower than Iberia’s, we estimate that its CASK is similar to those of easyJet and Vueling. Mr Walsh also said that it is better to restructure what you have than to start something new. However, given fierce resistance to change at Iberia, he has given himself a good deal more leverage by establishing Iberia Express and also by taking over Vueling. Iberia Express has even helped the group to grow its passenger share in Madrid this year.
It’s a familiar story as we approach the next five-year regulatory period for airport charges at London’s Heathrow, Gatwick and Stansted airports starting from Apr-2014. The airports seek big price increases, while the airlines want them cut and the Civil Aviation Authority (the regulator) tries to make proposals in the middle that displease both sides. A CAA-commissioned study shows that all three airports have significantly increased their realised airport charge yield over the past decade and are above the averages of their comparator airport baskets.
The CAA’s initial proposals were met on 30-Apr-2013 with immediate howls of displeasure from airline chiefs describing the proposed Gatwick price increases as “completely unjustifiable, totally unacceptable”, referring to Stansted’s “absolute pricing power” and calling Heathrow “over-priced, over-rewarded and inefficient”. For their part, the airports complained about “heavy handed regulation”, fearing that the proposals “will put passenger service at risk by not attracting the necessary investment”.
Germany is Europe’s number two aviation market (after the UK) by seats. However, although Ryanair is Germany’s third largest carrier, its share of seats there is only about 6%. It has a 14% share of capacity across all its markets and a significantly higher share in other major countries such as Italy, Spain and the UK. This under-representation in Germany may be about to change.
Although high charges at the main hubs and a well-organised main competitor have hindered Ryanair’s growth in Germany, it has shown at bases such as Duesseldorf Weeze and Frankfurt Hahn that it can build a dominant position.
Now, just as that competitor is focusing inwardly on its own restructuring, Ryanair is opening 47 routes from Germany in 2013, including three new airports. Looking further ahead, it has declared that it is in talks with 20 German airports with a view to adding five or six to its route network. We assess Ryanair’s current position and prospects in Germany, including consideration of which airports might attract it.
Slovakia is seeing growth in the low-cost carrier market with Ryanair expansion and Wizz Air reportedly planning to resume operations. LCCs already account for about 80% of seat capacity in Slovakia, with Norwegian Air Shuttle also operating to the small Eastern European country.
Slovakia is poised to see significant growth in aviation activity in the coming years with Ryanair stating its intention to establish a base at the country’s main international airport, Bratislava Ivanka Airport.
In early Apr-2013 Ryanair announced plans to operate 16 routes from Slovakia's Bratislava Airport in summer 2013 including one new service to Trapani in Sicily, Italy. The airline expects to transport over 800,000 passengers through Bratislava in 2013 and support over 800 associated jobs.
This analysis updates CAPA's previous study of European airlines’ labour productivity ("European airlines’ labour productivity. Oxymoron for some, Vueling and Ryanair excel on costs") to reflect the most recent financial results and adds four carriers not included in the original article (Wizz Air, Aegean Airlines and the two IAG subsidiaries British Airways and Iberia).
The contrasting performance of LCCs and legacy carriers is clear, although there are some notable exceptions to the pattern. BA and Iberia’s different labour cost productivity is significant, while Air France-KLM and SAS are weak performers.
We introduce an overall CAPA European airline labour productivity ranking, revealing the carrier with Europe’s most productive workforce, based on six measures.
Recently reported comments from Germanwings CEO Thomas Winkelmann draw attention to transitional IT issues and its costs relative to competitors. This highlights the challenges in scaling up its operations and redefining its product and pricing in order to become Lufthansa’s vehicle for all non-hub European traffic.
Lufthansa has gained several years of experience in owning a low-cost carrier, even if it was run fairly autonomously for much of that time, and aims to combine this with its expertise in premium travel to return its non-hub short/medium-haul business to profit. But will it have the right combination of product/service quality and low costs?
Our analysis suggests that, while Germanwings’ unit costs are well below those of Lufthansa, the cost gap to other LCCs is even greater. In addition, its unit revenues are further below those of Lufthansa than are its unit costs. It also faces a significant operational challenge in growing from 7-8 million passengers to its 20 million target in 2015, while improving Lufthansa’s short/medium-haul earnings by EUR200 million.
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