Ryanair’s (profitable) crisis

Over the past few weeks, my e-mail inbox has been inundated with e-mails from Ryanair: ‘Flash Sales’, ‘Midweek Madness’ and ‘Last Minute Winter Getaways’. With Ryanair’s recent limelight in the media, these deals go against common intuition.

Ryanair is boasting an 8% increase in passenger’s year-on-year…

The Irish airline giant has seen a turbulent couple of weeks. Cancelling flights from September of this year through to March of 2018 left 715,000 (making up 0.5% of their annual customer base) stranded passengers having to look elsewhere for flights. Officially, this was attributed to a difficulty in the organisation of the pilots’ schedules, which then escalated into a wage and working conditions dispute. The crisis has set Ryanair back €100m in pay packages for staff and could cost up to €50m in compensation claims for the cancellations.

Given the scale and press nightmare this has induced, why is it that Ryanair CEO Michael O’Leary is storming ahead with attractive deals and promises? The answer lies in the foundation of the company, as a cheap European airline carrier. In this modern age of travel, it is low fares that tend to attract passengers. It is for this reason that Ryanair is boasting an 8% increase in passenger’s year-on-year and profits of €1.29bn (an 11% increase over the past 6 months to October). Taking advantage of Monarch’s file for bankruptcy in September and Air Berlin’s in October, Ryanair is soaring ahead of the competition, cutting its fares by 4-6% for the full year to soak up as much of the European market as possible. This means great news for students who are willing to make the ‘Ryanair gamble’: an extremely cheap winter holiday fare, albeit with a slither of unreliability.

“We want to be the Amazon of travel”…

The Irish airline is optimistic about its future. The new COO, Peter Bellew, promises a ‘significant transformation’ in the company’s relationship with their pilots, a fleet of up to 600 aircraft and 14 new routes in total by Summer 2018, and has set the bar high for the coming quarters. Speaking at the Web Summit earlier this month, Ryanair’s CMO, Kenny Jacobs, was quoted saying “we want to be the Amazon of travel”. Ryanair Tickets, a ticket-selling website for events, and Ryanair Rooms, an accommodation service provider, are indicative of the company’s push to achieve this ambitious goal. However, with Brexit being a well-recorded inconvenience to Ryanair and the travel industry as a whole, the airline’s expansion might not seem as certain as CEO O’Leary likes to make it sound.