Business

null
Press Association/AP
Ryanair chief executive Michael O'Leary

Ryanair to Add US Destinations

November 03, 2008 03:53 PM
by Sarah Amandolare
European budget airline Ryanair will soon serve U.S. destinations, but how does this no-frills company continue growing despite harsh economic times?

Transatlantic Flights for Less

facebook
The BBC reports that low-fare airline Ryanair plans to add transatlantic flights to its budget arsenal, possibly by the end of 2009. Flights will likely go to Boston, New York, Florida, San Francisco and Los Angeles, and are expected to cost just 10 euros. The plan hinges on Ryanair’s purchase of “planes from struggling rivals.” Putting a damper on the announcement, however, is the expectation that Ryanair will suffer a significant drop in quarterly profits.

According to aviation industry Web site Flight Global, Ryanair chief executive Michael O’Leary will officially announce the plans in next week’s issue of Flight International magazine.

Flights to the United States will cost as little as $12, and will arrive at “secondary airports such as Baltimore, Providence in Rhode Island and New York Long Island Islip” from 23 European locations, reports Flight Global. The new airline, which will have a different name and be entirely independent of Ryanair, will also have a high-end service called “premium class.” Ryanair is counting on in-flight sales of extras, such as food and entertainment, to bring in a good deal of revenue to the budget flights.

O’Leary said the expansion has been possible because of Open Skies, a recent agreement permitting U.S. and Europe-based airlines “to fly across the Atlantic between any two airports in each region,” according to The New York Times.

Background: How Ryanair survives

Despite a “77 percent fall in first-half profits,” Ryanair’s shares rose on Nov. 3, according to RealClearMarkets. Ryanair was able to keep planes stocked with customers by cutting fares in the wake of high fuel costs. The company expects to recover fully, as long as oil prices stay below $80 a barrel in 2009.

“We will continue to respond with lower fares and aggressive price promotions to keep Europe flying and to maintain our market-leading load factors,” even during the recession, said Michael O’Leary.

Furthermore, in September, Ryanair revived its bid of more than one billion dollars to buy rival Irish carrier Aer Lingus. A similar attempt was blocked by the European Commission in 2007, but Ryanair has said that current economic conditions and surging fuel prices “could force European competition regulators to adopt a more flexible attitude towards mergers,” reported the Times of London. Nearly 20 percent of Aer Lingus is already owned by Ryanair.

Related Topic: Unfriendly skies?

In Oct. 2007, The Good Experience blog commented on an article in The Economist, which reviled Ryan Air for its “appalling customer service, misleading advertising claims and jeering rudeness towards anyone or anything that gets in its way.”

The Good Experience blogger writes, “Customer-hostile companies aren’t supposed to do well in the long term. But in Ryanair’s market, enough people—customers—want low fares badly enough that Ryanair now provides the desired customer experience: a low fare.”

Reference: Budget Travel Guide

facebook

Most Recent Beyond The Headlines