Saturday, 21 July 2012

Ryanair Relentless Cost reduction ©

                                                   


The recent announcements by Ryanair to cut capacity at Barcelona & Madrid (20th July), the Canary Islands (19th July), Greek Islands (18th May), Morocco (28th June) demonstrates the airline management laser beam focus on continuous unit cost reduction, thus being able to flex it's assets to where they can be re-deployed at a lower cost (existing bases or new bases) or parked as has been the case the last two winters 80 + aircraft.

The announcements by Ryanair will see the carrier cut the frequency on the Dublin-Barcelona route also the carrier will close routes from Fuertaventura to Ireland West Knock Airport, Las Palmas to Shannon and Tenerife South to Cork Airport, although Aer Lingus serves these routes from it's Cork & Dublin Bases.
The airline operates no routes from it's Irish bases to the Greek Islands or Morocco.

On the 26th of June the Ryanair CEO Michael O'Leary stated the airline planned to announce the opening of four new bases of operation in Europe in the summer 2013. "Currently, seven airports are in competition. we will announce the decision probably by October or November 2012" (RTBF.Be).

However as usual Ryanair took everyone by surprise with the announcement of  it's 51st European Base in Maastricht  in early July with a single Boeing 737-800 operating three new routes from the 1st of December and four new routes from it's Birmingham base to commence in November. These announcements shows the flexibility to move capacity into new markets/routes where it can seize new opportunities as they arise 

The airline is in a buyer's market as opportunities continue to open up across Europe as a result of on-going consolidation (Malev Airlines/Spanair) and the gradual extension of EU Open Skies Agreements.

The changing regulatory environment in Europe is creating a new competitive landscape. In the UK the BAA has sold Edinburgh & London Gatwick airports & the re-birth of London Southend is proving new competition to London Stansted. In France airports are segmenting to cater for LCC's (Bordeaux, Lyon, Marseilles) and on the Iberian Peninsula are airports are being sold to reduce government debt, thus creating a more competitive airport environment.

Irish Aviation Research Institute © 21st July 2012