Ryanair's O’Leary warns of end to budget air fares
The days of bargain-basement air fares are coming to an end, Ryanair boss Michael O'Leary has warned.
Ryanair's average fare of €40 (£33) will not be sustainable in the future as the company attempts to cut costs and moves to more central airports across Europe, Mr O'Leary added.
Comparing Ryanair with cheap brand-driven supermarkets like Lidl, he said the airline will have to re-focus its emphasis on the quality of its brand, rather than price, over the coming years.
“We have to move away over the next number of years from being obsessed with having the lowest fares in the market,” he said.
“At the moment we just pile it high and sell it cheap. Lidl started off cheap and cheerful but now it is very sophisticated — it is no longer perceived to be cheap and cheerful,” he said.
Like many airlines, Ryanair is facing pressure on costs but, as it moves to add on new customers, it will also have to move operations to more expensive central airports across Europe.
Recently, it has begun running major operations out of Edinburgh and Barcelona El Prat, as it seeks out more upmarket customers. However, the increase in fares is not expected for a number of years.
Mr O'Leary also said he will stay at the helm of Ryanair until the business doubles in size from over 200 aircraft currently, although he did not give a timeframe.
“Then the growth rate slows down to 2% or 3% per year. You will need a different management then. We won't need my dog and pony show, which is about generating publicity. Every company has to move from being the high-growth Robin Hood,” he said in an interview yesterday.
Over the past two weeks, the no-frills airline has pulled out of Belfast City Airport and cut the number of flights from Shannon, arguing that higher costs fuelled the move.
The Shannon move will mean the closure of Ryanair's Paris route from November 1 and a reduction in the frequency of flights to Gatwick and Stansted.
Ryanair carried 7.68m passengers in August, 12% more than in the corresponding month last year, according to the most recent figures. Its load factor, or percentage of seats filled on aircraft, slipped one percent to 89%.
In the 12 months to August 10, the airline carried 70.9m passengers.