COMMENT: It”s Good Publicity
The so-called budget carriers spend a massive amount on direct advertising and put in a proper pro-active PR effort at a tiny cost. It all pays off with enormous media coverage ” good, bad and indifferent. The old adage that there is no such thing as bad publicity certainly works for them. But they should be warned. It is possible to get it wrong. Who can forget Mr Ratner calling his product ”c-r-a-p”.
Ryanair continue with the spiel, proudly. The airline announced last week that passenger traffic for the quarter grew by 46% to 3.9m and average load factor jumped from 79% to 86%. This includes double selling seats that have been cancelled (the airport tax is kept by the airline ” Ryanair could become the first airline to achieve more than 100% load factor!) Profits were up by 50% to E42.3m. Once again no dividend was posted. With the share price standing at 425p, down from a recent peak of 525p, but doing better than most, they are an interesting investment. There are no perks either. The airline also ordered some new Boeings, but amongst the hype it proved difficult to work out how many,
Besides its much criticised ethics there are two big differences between Ryanair and the traditional airlines. Firstly Ryanair carries no baggage ” the baggage of history that its rivals have in extremes. It creates no baggage either and is extremely efficient. The fact that it did not take part in the Business Travel Show (see below) is typical, although boss man Michael O”Leary has participated in the seminars in the past. Ryanair does not belong to any industry group efforts. But the other big difference is the way it trades. It gives no credit. Just the opposite in fact. The day you book is the day it gets its money. That can be six months ahead. Wonderful for cash flow. The mainline carriers are, for the main part, conventional in the way they do business. You have flown but your money would not have reached the carrier until your ticket voucher was ”cleared” and the funds transferred. This could be up to one month after the flight. To be fair some major airlines have, at last, recognised this anomaly.
On another front the travel industry's reaction to Ryanair's takeover of Buzz has been mixed, with some commentators predicting that the deal could lead to higher air fares for consumers. Instead of the four large budget airlines that were around this time last year, we now only have two. A recipe for an increase in ticket prices? While Ryanair has pledged to introduce new routes and "significantly lower fares", it has also conceded that it will be closing some "high-cost, unprofitable routes". Bournemouth has gone. Bearing in mind that the original Buzz BOH announcement was greeted with scepticism by the industry, by stopping the south coast expansion now it has probably reduced the hurt that would have come later. However Ryanair has still gone ahead with its Bournemouth service from Prestwick, which started last week (amidst some pretty torrid local face-to-face criticism of O”Leary), whilst down the coast at Southampton FlyBe will clearly be relieved at the failure of possible opposition.
Buzz currently operates 23 routes in Europe. Ryanair is remaining tight-lipped over which could be axed. Clearly Amsterdam, Geneva and Paris routes could be for the chop. Buzz has historically used the main airports; something Ryanair has generally avoided. It has been reported that the Consumers” Association has expressed concern over the deal. Nothing from the OFT, but is Ryanair English, Irish, or a multinational?
One must wonder what Lord King, and his hatchet man David Burnside, would make of all this. Would they have strangled Ryanair Mark 3 at birth.? One thing for sure, passengers have voted with their feet. http://www.ryanair.com