Ryanair

Ryanair is the European counterpart of Southwest Airlines. It was the first European low-cost carrier and it was able to survive price wars and limit the influence of soaring oil prices. Its CEO Michael O’Leary is famous for his swashbuckling entrepreneurial spirit.

Factors that contributed to the company’s profitability

1. Cut-price deals

Tickets are often sold for only 1 euro but this only a long time in advance. Passengers pay tax and duties on top of this which can amount to 30 – 40 euro. Tickets are non-refundable and the low price of the tickets leads to a very high no show rate because some people buy several tickets even though they plan to use only one, this in order to gain flexibility . Hence, the average revenue per ticket is much higher than the one euro because tax and duties account for revenue when the customer doesn’t complete the flight.

2. Fly point to point

Unprofitable flight routes are cut from the schedule very quickly.

Ryanair doesn’t sell connecting flights and thus it cannot be held liable in case of delay and missed connections. Moreover, the risk of lost baggage is reduced.

3. Fly to secondary airports

Airlines are able to negotiate dramatically lower landing and facility charges with secondary airports because the number of passengers they bring through these airports enables the airports to increase the rents for concessions stands and other retailers.

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