Monday, 12 March 2012

Ryanair: Managing Demand ©

Ryanair 737s at Cork Airport: Picture Courtsey of Paul Daly

Ryanair has responded to evolving market conditions with speed through the Chief Operating Decision Maker (CODM) modelling to allocate the aircraft in terms of where it will generate the highest yield and revenue to achieve the highest rate of return rather than individual route performance, thus protecting its margins as fuel costs expected to rise by €350 million in FY2012.

Ryanair announced on the 6th of March the airline announced that it was to cease routes from its new Budapest Base to Chania, Palma, Rhodes and Trapani citing weak demand, and replace them with two new routes to Billund and Dusseldorf Weeze and increase frequency on routes to Barcelona London Stansted, Paris Beauvais ( 6th March 2012)

Ryanair announced on the 2nd of March it would not proceed with plans to base an 8th Boeing 737-800 at Faro, with the carrier to terminate three routes to Bergamo, Marseille and Leipzig while frequency will be cut on seven routes (Bournemouth, Beauvais, Bristol, Cork, East Midlands and Maastricht citing “Operational reasons”, although local media report indicate low demand on the routes (Low Cost Portugal 6th March 2012).  

The Ryanair Budapest and Faro Base announcements demonstrate the ability of the carrier respond quickly to market conditions axing underperforming routes and replacing them with new routes, as the Euro Crisis evolves asset allocation will play a key contribution to FY2012 results. In the context of the Irish Market the reduction of the frequency on the Faro to Cork route by one weekly is interesting as Aer Lingus is to increase frequency on the route by one weekly frequency indicating strong outbound summer traffic on the route.

Irish Aviation Research Institute © 12th March 2012 All Rights Reserved.