Tag Archives: Low Cost Carriers

Ryanair. who is more mad, O’leary or his passengers

ryanair_O’Leary

Ryanair the Irish based LCC has grown 323.4% in the last 10 years which is brilliant stuff in any business never mind the airline business, but I want to believe I really do but something really nags me about the Irish Airline, the sheer gall of its CEO elf Michael O’Leary even makes (look at it!..) Richard Branson look amateurish in his stunts and no doubt it works in getting bums on seats.

His latest “crock o crap” is that if passenger would stand up (IATA would have a heart attack) they can fly free?..brilliant PR stuff and an amazing 66% of passengers said they would?…..for 2 hours on a bumpy plane would you stand in the aisle to get to Romania?

Mr O’Leary already has standing passengers anyway in the fact that (one) you have to pay to use his toilet, (two) he has pulled them all out for more seats and left only one to use!, so his standing passengers is really a queue to go to the loo, plus the fact that if you have a aisle seat there is a good chance that standing by your face waiting to use such facility is some older male person with a personal  bladder problem is holding his crotch to stop the dribble going down his legs…I would want to fly free for that view and in a seat please!

besides this ludicrous situation Michael O’Leary charges you for everything except smiling (including the cabin crew) and crying which you do once all the charges are laid out, another latest idea is for you to take all your hand luggage (no checked luggage, so what does he carry in the hold?) and put it in a holding area when you board or collect when you deplane, can you picture a large Indian Family with all their excess baggage carrying it up stairs and carrying it off again including sacks and trunks and “god knows what”, god help us.

Still we haven’t mentioned that you are treated like herded cattle, abused, hustled around and mostly bumped to another flight and for all of this we smile gracefully and pay up and grit our teeth, so why do we put up with it all…because it is a cheap fare……..compared to what…walking, and worse is that other carriers see this as a trendsetter and want to use this despicable model for their own uses.

So for me it just doesn’t add up, I don’t get it, and there are two reasons (one) Michael O’Leary can get away with murder, because (two) his passengers are bloody idiots for putting up with so much for so long and let him get away with murder, yes we complain and get angry at airports because our wallets have been stripped and there is nowhere to sit (except on the cold floor), we are hungry (no food now, remember that), we are late, and tired…and what do we do, “we’ll fly Ryanair again because it won’t be as bad next time”..doh!

But is the penny about to drop as Ryanair’s latest three month net income is 20 million euros lower, you could say that the economic crisis is the cause, however the airline’s strategy is to find niche airports all over Europe and fill them with a service, and to do so at such an alarming rate that passengers take up the service just because it is there and pay such a low price for doing so, the mayors of such destinations will of course welcome the tourists with open arms and give Mr O’Leary a lot of freedom in costs and infrastructure just to put his wheels on their tarmac that even their own established airlines would benefit from more, but the reason other LCC carriers don’t land here is these destinations are a bit obscure and in time a flood becomes a trickle once the gloss wears off, for Mr O’Leary he just does a better special (lower fares) and fills the planes (goats in the hold?), but you can only go down so far and has Ryanair gone to far in its quest for European domination in having too many slight routes going to too many destinations with not having too many load filling routes with good yield, or the opposite were as on any route that is popular to even take out toilets for seats means that the margins are so slight that every seat counts, even the toilet seat.. it has to be a model for problems if the load factors even drop a smidgen.

And to my unease, it feels like a very on the line, week to week survival stuff, but like an Irish magician Micheal O’Leary just creates an illusion of perfection while frantically cutting or finding another way of getting more cash from his customers, its a bit like a Madoff Ponzi scheme for airlines.

But why do people put up with this?

with the economic crisis I am hoping that some reasoning will come back and people will stop thinking that the cheapest fare is the only benchmark for travelling on an airline because it getting ridiculous to the point of stupidity, passengers should reward airlines that give good service, don’t over book them, allow a fair amount of baggage, have fair airport space and seating, are on time and have good equipment (planes), pay a little more and get a better travelling experience, good airlines will breath a sigh of relief too as their margins will be better to give you a better deal and employ a few more staff, that would be a better service, certainly better than Ryanair but until then if the option is there… then take the train, at least you can use the toilet….for free.



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How Long Can This Go On….Low Airfares

Sale Case

The losses are huge, big, enormous and it has hit every corner of the Travel Market and still it hurts, for the airlines it is Judgement day but for how long?

When Singapore Airlines are doing European specials you know life is bad, People will pay a premium to fly the smile high club so what hope is there for anyone else, British Airways have quickly dropped their premium route fare to nothing just to survive with an AUS$1444.00 fare SYD/LON, so Qantas will have to match that and these three airlines have been the big hitters on this route for decades so for them to drop it has to be the very last resort.

For Qantas their other Premium route SYD/LAX (los Angeles), has been decimated by V Australia’s close to as possible $1000.00 return fares, with United chopping fares as well for market share its going to be banging heads on the table in the offices at Mascot and not before time.

And suddenly as a break into a new market, Delta has already dealt in a sword in the ground deal of  AUD$982.00 from Syd with Air New Zealand’s counter offer of AUD $889.00 (including taxes) from Coolangatta is near as damn soil cheap as you can get.

This is a snapshot of just one aviation market in Oceania/Asia and it is being repeated though out many other markets in every part of the globe, the good side is that it has leveled fares that were overpriced on monopolised routes, Qantas’s SYD/LAX route fare $2000.00 was quite simply Sheriff of Nottingham territory and to have it halved showed the bonuses that flowed though the doors of the Geoff Dixon era, economic crisis or not that still had to happen.

So we are in the shit, so to speak and the few cashed up travellers are having a boom time, it can’t last and it won’t but it will not be all bad news.

The cheap fares are there because most Airlines are over productive with too many planes and the staff that runs them, as the airlines shred older inefficient aircraft they will create a newer tighter business, staff will go because you are not going to go and pickup and then go back to normal when the economy picks up again, today you need to be lean and efficient, and a good old shake out of the mattress will help the restructuring of almost every aspect of the Aviation Business so you can now throw out the old model and send in with the new as for the first time in its history except with a few bumps aviation is faced without its stunning growth year after year and so like any other business it will have to adapt to the current climate changes.

The cheap fares will last this year  but for the rest it should settle back down again which means many fares will rise as they have too because.

1. Airline restructuring will be completed.

2. Airlines are not public services they have to make money, break even at least.

That is the bad news…the good news is they won’t go nowhere near the old prices or will again, this is the new new for the business so SYD/LON should level out at AUS$1600-$1800 and SYD/LAX about AUS$1200 – $1300 which is still brilliant value, most domestic traffic will not push those AUS$1 a seat deals t0o hard and put on an average of AUS$20 per ticket price per sector, really low LCC (Low Cost Carriers) will have to improve their bottom lines as the likes of Ryanair (I’ll charge you), Easyjet et all, will not find profit in expansive growth anymore and will have to fall to the realities of the a real business model, and this is all in cattle class as even more changes will come in business class, but these prices do still depend on very stable Fuel costs going into 2010, if they rise then so will the fares by another 5% to 10%.

The only growth area will be in the International LCC (Low Cost Carriers), many have already failed in this new dimension to travel, but some pioneers are paving the trail like AirAsia and Jestar International but once the model is proven many others will quickly come abroad but don’t expect really stupid low international fares here, they will be cheaper than normal route fares but these carriers will want to survive and there is a boundary limit to how far down you can go down with fares as international travel is a completely different model to domestic and short haul travel (European) as you need infrastructure and personal at the other end of the route.

Another factor if it comes to pass is that many countries like Australia are being pressured to drop or reduce their heavy outbound and inbound airport taxes to encourage more traffic, and its these expensive government add-ons that can really make a biggest difference to an airfare price,and that is even domestically and should be curtailed as why should be the airlines that always have to shoulder the costs, these little termites are in many countries a bigger cancer than anything in a good tourism market and if the governments are scared of lost revenue then that is not the case as visitors will still spend more in the country if they are not robbed at the entry point.

..At the moment fares are too cheap and unsustainable and how long they will last is not very long, my guess is the Christmas/New Year 09 period and will not be as severely discounted going into 2010 as they were in 2009 and maybe a few excellent specials will still crop up in the traditionally really low periods, say March and Oct/Nov next year, so with an economic crisis or not airlines will not survive unless they do so, there is also a chance they could even rise sooner to stop the bleeding quicker and once one large influential carrier does so the rest will quickly follow, so the real push from next year for your dollar will be in super economy class with more leg room and better service and higher profitable fares for the carrier, the deals will be there but they will expect you to pay more for them so you win and you lose at the same time.

So if your going to fly on the cheap then fly now..and book quickly because fares will rise, but not enough to break your credit card limit…….

Updated 18th Nov 2009…..
I noted in the above issue that the fare to Europe would be AUS$1600.00 – $1800.00, the recent Fares for early 2010 are AUS$1685.00, and will be basically around AUS$1750.00 late 2010, but we are having the problem of very high fares coming  (USA/European Summer) to try to pull back some profit see current issue Airline passengers are back-so lets get back to work, as this is a cash in to pull back profit it won’t work except maybe in the early (May/June 2010) period, but it will scare more away than bring passengers back into their seats….