Who would have thought a year ago that British Airways would now have its hands on BMI, Virgin Atlantic be preparing to launch a short-haul shuttle rather than a space shuttle, and Ryanair contemplating a bid for Stansted while dealing with claims it skimped on fuel?
Well, perhaps not all are so surprising. The aviation landscape is changing fast under pressure from the twin pressures of a high oil price and demand across Europe squeezed by crisis in the euro zone and recession in Britain.
BA must feel it played a blinder in getting hold of BMI. In one bound it was free of slot constraints at Heathrow and a long-time competitor.
Virgin is left in a pickle and has to respond.
EasyJet goes its merry way, extending its network, adding features of appeal to corporate travellers and selling holidays. (Stelios remains its biggest problem.)
But what of Ryanair, which has thus far ridden out every crisis in a two-fingered style all its own?
The carrier has ridden out investigations before, though the Spanish fuel inquiry could prove damaging if it turns out pilots were pressured to take liberties.
At the same time the European Competition Commissioner is some way into an examination of “state aid” to Ryanair via “public support granted to mostly regional airports” across Europe and “arrangements involving Ryanair i.e rebates and marketing agreements”.
Ryanair arrangements with Beauvais airport were the latest to be confirmed as the subject of investigation in May. The inquiry extends to six other French airports, six German airports and airports in Austria, Belgium, Denmark, Finland, Italy and Sweden.
This is not unconnected to the fact that authorities in a growing number of destinations are finding they cannot meet Ryanair’s demands for “marketing support” and zero airport charges amid government debt crisis and austerity.
Kos, Rhodes, Morocco, the Canary Islands and Finland have all seen Ryanair pick up its ball and walk off in recent months.
The Ryanair model is based on growth - gang-busting growth. So the carrier's interest in Stansted makes sense. However, Ryanair's endlessly repeated claim that Stansted traffic has fallen for five years because of the airport’s landing charges is debatable.
Ryanair has cut its operations at Stansted, but it’s the state of the economy that has hit demand at the airport and at Ryanair’s end of the market.
The attraction of Stansted is clear. In the words of Ryanair chief financial officer Howard Millar in July: “Stansted is the only place in London where another runway can be built. It is the only place with capacity and we want a 25% stake.”
However, restoring traffic at the airport may not be straightforward. Big-four auditor PwC noted, also in July: “The speed of passenger growth at airports hinges on the pace of economic recovery.
“It is unlikely numbers will revert to their historical trend before 2022-24, reflecting the fact that the fall in traffic since 2007 has been markedly sharper than in previous recessions.
“It may even be the case that traffic never returns to the historical long-term trend.”
Ryanair sits on a huge cash pile - €3.8 billion (£3 billion) at the last count. Yet it reported a 29% fall in profits year on year for the most-recent quarter.
Analyst Diogenis Papiomytis of Frost and Sullivan noted: “The company highlighted the EU recession and high fuel prices as the main drivers for its underperformance . . . What fails to make the headlines is Ryanair’s apparent lack of a future growth engine.”
The carrier is due to take delivery of another 11 aircraft this year, taking its fleet above 300. These aircraft need to be in the air as close to all the time as Ryanair pilots can keep them.
Ryanair’s network of regional airports extends from islands off the coast of Africa to the shores of the eastern Med, all served pretty much within a two-hour radius of its many bases.
At some point it must reach the limits of growth in Europe. Papiomytis argues that time has come: “Further growth can only come from acquisition.”
Yet Ryanair has confirmed it is back in talks on a massive aircraft order - believed to be with Boeing, believed to be for 300 aircraft.
In 2002, off the back of 9/11 and a collapse in aircraft orders, Ryanair drove Boeing to give it the bargain of the century on its current fleet.
Now Boeing is booming with orders from Middle East, Asian and, latterly, US carriers. Ryanair has courted China’s Comac and will flirt with Airbus, but it won’t buck an iron law of low-cost life and operate a mixed fleet.
Every way you look at it, Ryanair’s costs must rise. The question is, can it continue to grow?
This is a community-moderated forum.
All post are the individual views of the respective commenter and are not the expressed views of Travel Weekly.
By posting your comments you agree to accept our Terms & Conditions.