COMMENT:
The decision last week of the Nancy Court of Appeals, which rejected Ryanair's application for a stay on the decision of the Administrative Tribunal in Strasbourg, was not unexpected. The Tribunal required the Strasbourg Chamber of Commerce to terminate its commercial agreement with Ryanair on 24 September following a legal action brought by Air France's subsidiary Brit Air.
Ryanair was forced to announce on 24 August that it would have to suspend its services on the route pending the outcome of the appeal. Ryanair says it will go to a higher court and has the support of the Strasbourg Chamber of Commerce.
ABTN supports Ryanair in many of its activities but not some of its ethics. With typical arrogance the airline has never paid a dividend to its shareholders. However, it has been a breath of fresh air into the European airline scene, sweeping away many archaic practices and demonstrating that focussed quality marketing can add passengers and profit to routes.
What must be worrying for Ryanair is that Strasbourg might be the tip of the iceberg. If that airport is forced to remove its subsidy (disguised or otherwise) what about the other airports it flies into who help the carrier in some way. ABTN believes that small airports are part of the community and are an integral ingredient of the inward investment and tourism in any given area. By making an airport attractive for a carrier the whole of the local economy is boosted.
A worrying point has been highlighted at Newquay, Cornwall, where British Airways were unable to attract any assistance in its operation from Gatwick and is pulling out. Its replacement, Air Southwest, says that it cannot afford to pay anything like the same landing fees and the annual loss facing the airport is far more than the councils that run it can afford. Newquay Airport is funded by the local borough council, Restormel, and the county council. It has also had help from the Regional Development Agency. There is a balance to be achieved. In this case the airport is also RAF St Mawgan, which further complicates matters.
The real point about Ryanair is that help must be transparent and open to every airline. For many years airports have attracted new carriers with incentives. The rules have generally been that these are for new routes and for a limited period until the operation is established. Perhaps two or three years. The assistance may have been in the way of reduced landing fees, perhaps advertising support or even free accommodation and handling. Ryanair has just been better than anyone else at winning this sort of help. The argument that Ryanair is expanding the total market does not necessarily stand up to scrutiny. The actual total growth still continues at much the same traditional rate (in spite of wars and epidemics). What the carrier has done is dissipate the passengers, spreading them over a much wider range of airports.
The real proof of the pudding is in the eating. If Ryanair pulls off a route and another carrier replaces it in theory the market should be the same. In other words Strasbourg should have the same number of passengers if Brit Air/Air France were to come back. If it does not get the same numbers then it is down to marketing. And that is where Ryanair scores. Time and time again it has proved more nimble, aggressive and in the end, successful, than its competitors. And more profitable too. We are in for interesting times.