Thursday, 25 August 2011

Ryanair: Why the Cork and Kerry routes closed? ©

Ryanair announced on the 23rd of August that it is closing it’s two domestic routes from Cork and Kerry to Dublin, citing improvements on the Dublin to Cork Motorway M8 reducing journey times and the negative impact of the €3 Air Travel Tax and the Cork Airport charges, also the decision of the government to designate the Kerry route as an PSO route.  

The Cork Airport Authority was fast off the mark issuing a statement ‘Cork Airport has invested in co-operative advertising and marketing support with Ryanair in an effort to stimulate additional demand for this route and also separately funded targeted market research into consumer behavior relating to the route.’

The reality is there is factual evidence to back up this statement, as Ryanair announced on the 17th of November 2010 it was cutting a total of 48 flights from it’s Dublin Base from January 2010, citing the impact of air travel tax and high airport charges, with the loss of 380,000 passengers with the Cork route to be cut from two to one daily flight.

The effect of the cut announced in November on the Cork route became apparent when booking flights after the 17th of January 2011, as the flexibility with the schedule on the route was now effectively destroyed, with the Cork Based now departing Cork to Dublin before continuing to Liverpool and then back to the Cork Base, on a ‘W-Routing’.

The carrier later in the evening would operate the return sector in reverse via Liverpool, effecting allowing one of the Dublin and Liverpool based aircraft to be re-deployed to other sectors, while the carrier could earn higher ancillary revenue and yields with the Cork Based aircraft.

The carrier spilt the single return flight to Dublin into two single legs, with the early morning departure from Cork and evening departure from Dublin. 

The single carry-on bag rule adopted by the airline would been an disincentive to passengers, using the route to commute, as alternatives are non-baggage restricted.

The net effect of this revised schedule was the Cork-Dublin route increasingly became dependent on the Cork market segment from a market population of 518,000 people; effectively the carrier could not tap the market potential of 1.8 million in the Greater Dublin Region, effectively passengers could no longer do day return trips to Cork or Dublin, which where viable prior to the schedule change.

This would have no doubt have significantly impacted demand on the route, as the market which used the route to commute between the two cities, was now forced to switch to road or rail based transport, with the flexibility lost to connect to other flights at Dublin Airport including Ryanair itself.

The carrier had a total of five daily flights on the route at the peak of the Celtic Tiger in 2008, with four flights operated by a Cork based aircraft and one operated by a Dublin based aircraft, while the economic conditions changed and transport improved the carrier progressively reduced frequency to two daily flights, which was optimum for day trips from either city on the route.

The Cork Chamber of Commerce CEO Conor Healy stated “We believe that a Cork-Dublin air connection is necessary and an alternative carrier needs to be secured without delay. This carrier must be capable of providing more flexible capacity and a long-term solution on the route, appropriate to the changing needs of the market”.

The carrier has interesting background to the decision to close the Kerry to Dublin route from the 7th of November, with the carrier having initially established a base in Kerry in 2008 on being awarded the Kerry to Dublin PSO route, which was to be operated three times daily from the 22nd of July. This enabled the carrier to task the aircraft to operate Frankfurt Hahn and London Stansted sectors from the base, which the carrier quietly built through the hiring of cabin crew through Crewlink, which identified Kerry as a new base.

However in 2010 the carrier’s tensions with the Department of Transport increased over a combination of rising costs on the route due to the Air Travel Tax, DAA charges and IAA charges, with the carrier announcing in response it would cut frequency on the route from three to one daily flight, with effect from the 31st of October 2010.

This announcement effectively sealed the closure of  the Kerry base, which the carrier never officially announced as an base, but identified on its route network map on its website as an base. The Kerry based aircraft was now re-deployed to an unidentified EU base, with the operation of the Kerry flights transferred to a Frankfurt Hahn and London Stansted based aircraft.

These Frankfurt Hahn and London Stansted based aircraft again operated ‘W-Routings’ on alternative days of the week, leaving the Dublin with an 1215 arrival and 1545 departure to Kerry, effectively rendering the route unattractive to business and leisure traffic, where their would be demand for day return trips, flight connections from Dublin Airport.

The revised schedule from Kerry would have no value for the business traffic on the route with the timings, being totally unattractive to enable a full working day, thus no doubt would have impacted the market demand on the route.

The value of these domestic routes for the business and leisure market segments is vital for connectivity, the Department of Transport yesterday announced that Aer Arann has been awarded the Kerry PSO route to operate twice daily, with effect from the 3rd of November, while the Cork Authority is engaging with airlines with a view to re-launching the Dublin route in time for the winter schedule.

The Ryanair annoucement comes as no surprise as the carrier tatically deploys capacity to drive competitiors out of the market, as has been the case on these two routes, where Aer Arann had a significant presence.

In the peak Aer Arann operated 12 daily Dublin to Cork flights, which then progessively reduced as Ryanair launched services on the route, until the carrier pulled off the route in August 2010.

Ryanair's market power as demsonstrated with these two routes closures is a reminder that the government should countinue to apply the two airline policy with Aer Lingus and Ryanair, that the airline policy of the country should not be left in the hands of a single carrier.

After widespread media focus on the route closures the carrier did a U-Turn stating it would reinstate the routes subject to getting low airport costs. Ryanair had originally filed the void on the Cork route after Aer Lingus axed the route in 2001, funny how it has now come full circle, the question now to be asked, is who will fill the void of Ryanair???

One of the most famous attractions in Cork City The English Market

Irish Aviation Research Institute © 25th August 2011 All Rights Reserved.