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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's largest hub is at London Stansted Airport, with its second largest base at Dublin Airport. The carrier operates a comprehensive network of services across Europe, the Mediterranean and North Africa with a fleet of over 300 B737-800 aircraft.
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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Budapest Ferenc Liszt Airport is Hungary’s largest international airport and, after Prague, the second biggest airport in the countries that joined the European Union in 2004. It is also the largest airport to have been privatised in Central and Eastern Europe.
It has been involved in constant skirmishing with neighbouring airports in Central Europe over a period of many years, as they attempt to establish themselves as the pre-eminent gateways to the region, and as collection and distribution hubs. Those other airports comprise Vienna and Prague, both of which lie north of Budapest, possibly Warsaw, and to a lesser degree Belgrade to the south, which although growing rapidly is still some way behind the others. (Bratislava Airport in Slovakia is excluded only because 95% of its passenger capacity is on low cost airlines).
This report looks at present and future growth trends at Budapest, at construction activities, ownership and profitability, and how it matches up to that competition now, across a range of metrics.
When talking of a "low cost airport" (LCA) the temptation is to consider only those that are situated some distance from the city they serve, are used only by budget airlines and general aviation, have few routes and handle relatively small numbers of passengers, usually in the category 0.5 to three million ppa. There are some well known examples where that is certainly not the case, for example KLIA2 in Kuala Lumpur (though that is a terminal, rather than an airport) and Don Mueang in Bangkok for example. The latter has become the leading LCA in the world as judged by passenger numbers. In Europe London’s Stansted Airport vies with it for that title.
But within Europe there are several other LCAs that punch well above their weight, or have the potential to, and which merit examination. Four of them are examined here. While most are thriving now, evolving airline models may threaten their comfort zone.
Ryanair's "bumper summer" delivers 41% operating margin; 2016 target raised. 180 million pax by 2024
Ryanair CEO Michael O'Leary has said that the airline's strong 2Q financial performance was the result of a "bumper summer". Although the major legacy airline groups also reported improved profits for the quarter, Ryanair's operating margin of almost 41% sets it in a class of its own.
Moreover, its improvement was not mainly the result of lower fuel prices: Ryanair managed to increase unit revenue, in spite of double digit passenger growth and in contrast to the legacy airlines. This again demonstrates the success of Ryanair's customer service and network improvements. The airline has now raised its FY2016 traffic and net profit targets, thanks to higher load factors than previously expected.
In spite of the strength of its 2Q results and its positive outlook, Mr O'Leary attempted to inject a note of caution by noting that the revised profit guidance was "heavily dependent" on 4Q bookings, where there is "almost zero visibility". Nevertheless, his underlying confidence in Ryanair's strategic direction was illustrated by an increase in its FY2024 passenger target from 160 million to 180 million, which would represent a more than doubling of traffic over 10 years.
In late Oct-2015, ultra-LCC Wizz Air carried its 100 millionth passenger, just 12 years after its 2003 launch. In a further sign that it has joined the ranks of Europe's well established airlines, this year also saw its Feb-2015 floating of its shares on the London Stock Exchange. Wizz Air's 1H results for FY2016 confirmed the ongoing strength of its performance in its first full financial year after its share listing. Wizz Air's underlying net profit grew by 34% and its operating profit increased by 28%. Revenues grew by 15%, with passenger numbers up 20%, and the operating margin gained 2.6 ppts to reach 25.4%.
Wizz Air's success has been built organically and with a largely stable management team under founding CEO Josef Varadi. In this respect, the recent departure of long-serving CFO Mike Powell creates some uncertainty pending his replacement.
Nevertheless, as CAPA's analysis of Wizz Air's strengths, weaknesses, opportunities and threats highlights, the airline is strongly placed to drive further profit growth, provided that it can continue to live with competition from Ryanair.
As the largest city in Greece and also its commercial centre, Athens' air traffic was badly affected by the global financial crisis. Athens International Airport is now growing rapidly once more, with 2015 looking set to match 2014's passenger growth rate in excess of 20%. In 2014, it was the second fastest growing primary airport in Europe (after Istanbul Ataturk). Overall traffic is still down from pre-GFC levels but catching up.
Athens' recovery has been staged in spite of ongoing political and economic uncertainty. Indeed, in recent years, Greek air traffic and GDP growth have de-coupled in an unprecedented manner. The European regulatory environment, or, more particularly, European deregulation created the opportunity for Athens to achieve this. Without liberalisation Ryanair's entry and rapid growth and Aegean's consolidation of Greece's airline sector would not have happened. The airport's innovative pricing structure has also played a part.
Brussels Airport: Ryanair tests itself against Vueling and Gulf airlines offer long haul connections
Brussels Airport's passenger traffic was badly hit in the global financial crisis. Although it recovered in 2011, it was only when two leading LCCs established bases at the airport in 2014 that traffic growth really took off. Ryanair's battle with Vueling at Brussels, also played out in a number of airports across Europe, provides the Irish LCC with a meaningful calibration of its attempts to improve customer service and its appeal to business passengers. It also seems to have stimulated the airport's leading airline Brussels Airlines into its own European route expansion.
Although there has been an increase in traffic to intercontinental destinations over the past decade, this rapid growth of LCCs has further sharpened the airport's already high focus on European traffic. Long haul accounts for fewer than one in five seats at Brussels and is mainly centred on North America and Africa. Destinations in Asia Pacific are reached mainly via other airports (principally Frankfurt and other Lufthansa Group hubs). The growth of Gulf airlines at Brussels provides competition to these hubs in providing long haul connectivity to the Belgian capital.