Ireland's Shannon Airport Director Martin Moroney stated the airport plans to take legal action against Ryanair for breach of contract (RTE News, 06-Oct-2010). According to Mr Moroney, the carrier “failed miserably” to meet passenger targets at the airport and failed to meet its commitments under a five-year agreement as a result. Ryanair claims one of the reasons it is cutting services at Shannon is due to the airport’s plans to increase passenger charges. However, Mr Moroney argued the LCC was cutting operations after failing to reach its targets. The Director also commented that although the airport is fighting for survival following the global financial downturn, it is “not in terminal decline” and he is confident there is a future for the airport. He added a number of airlines have expressed interest in launching routes to Shannon.
Shannon Airport to take legal action against Ryanair
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Ryanair and Stansted. Brexit may have increased the LCC's bargaining power over its biggest airport
Ryanair's plans for nine new routes and increased frequency on 13 routes at London Stansted Airport in summer 2017 mark a further chapter in the relationship between the two. Stansted is Ryanair's biggest airport and Ryanair is Stansted's biggest airline customer. However, Ryanair dominates Stansted, while Stansted's importance to Ryanair is diminishing.
When Ryanair took exception to what it considered to be excessive airport charge increases it severely cut its capacity at Stansted, severely denting the airport's traffic base between 2007 and 2012. The subsequent growth in passenger numbers following Stansted's acquisition by Manchester Airports Group in 2013 is the direct result of a deal with Ryanair over reduced airport charges. In 2016, Stansted's traffic recovery was complete and it handled more passengers than at its 2007 peak.
Ryanair's summer 2017 expansion plans at Stansted point to further growth in the airport's passenger numbers. However, Ryanair has reduced its growth in the UK as a result of Brexit uncertainty, and this is likely to mean slower growth for Stansted. Ryanair is even modestly cutting its capacity at the airport this winter. Ryanair has consistently been a critic of Brexit, but it may have further increased its bargaining power over its biggest airport.
Ryanair, easyJet, Norwegian, Wizz Air, Pegasus Airlines: Europe's top LCCs' collective margin drops
CAPA's previous analysis of the 3Q2016 results of Europe's big three legacy airline groups highlighted a fall in their collective operating margin, after growth in 1H2016. This report shows that Europe's five leading LCCs, in aggregate, also suffered a fall in profit and margin in the quarter.
Three of the five – Ryanair, Norwegian and Wizz Air – improved their profit margin in the quarter, but easyJet's drop in margin was heavy enough to bring down the collective result. Pegasus' margin also declined.
Nevertheless, the LCC five remain collectively far more profitable than the legacy three. Moreover Europe's two most profitable airlines, Ryanair and Wizz Air, look set to increase their margin lead this year. Even easyJet, which has had a bad year by its standards, achieved a higher margin for calendar 9M2016 than the most profitable of the big three legacy groups, which was IAG.
The divergence of results in the European sector suggest that not all airlines are following the same cycle. However the collective margin decline for the continent's leading LCCs, and its major legacy airline groups, at least gives reason to question whether or not the cyclical upswing may have run its course.