For those believing Michael O'Leary's much talked-of interest in launching a transatlantic operation is just another headline-grabbing move by the publicity-hungry Ryanair boss, developments over the last two weeks will have given them more ammunition.
Just days after a fresh round of media stories about the long-haul project – prompted largely by the carrier's own comments to the UK's Financial Times – the airline was forced to clarify formally that it was not launching a transatlantic carrier. Via a brief stock market statement, Ryanair explained that its board had neither considered nor approved any transatlantic project, and had no intention of doing so.
But these latest developments, while seeming to draw a line under the project, actually return everything to square one.
Ryanair will not operate a long-haul transatlantic carrier. But from the outset - O'Leary first mentioned the concept in an interview with Flight International in April 2007 - he has made clear that any transatlantic venture would be separate to Ryanair. In that sense, it remains an option; all that has been ruled out is that Ryanair would be the operator.
"I've got to be very careful here, as we have had a bit of a PR boo-boo this week," said O'Leary at The Economist's Future of Travel conference in Madrid two days ago. "We do have a business plan: it won't be Ryanair but a sister company to do a long-haul, transatlantic, low-fares airline.
"We have a strategy that would operate from 10 or 15 of the big European cities to 10 or 12 of the big US cities. We have said, though, consistently that (a) it will be a separate company, and (b) it can't happen until we can find a fleet of low-cost, long-haul aircraft."
O'Leary and other Ryanair executives have indeed consistently said such a project hinges on securing a low-cost fleet. Explaining his vision for the long-haul carrier in October 2007, O'Leary said: "You only set up a low-cost carrier in a deep recession, where you can get cheap aircraft, and pilots are available. Now is absolutely not the time. It will be whenever there is another downturn in the industry and aircraft values collapse."
Back in the present, O'Leary reiterates that the project remains four to five years away, as the opportunity to secure cheap long-haul aircraft has failed to materialise, despite a deeper recession than he could have imagined.
"One of the big difficulties we have is that, for the last five or six years, the long-haul aircraft market has been incredibly hot, partly because the Gulf carriers will order almost all of the spare capacity. They buy more long-haul aircraft, as fast as they are made, than they do Premiership football clubs – certainly spend more money on it," he told the Madrid conference.
"Historically, there was always a five-year cycle of boom-bust in long-haul aircraft values. Every five or six years there would be a bundle of them sitting in the desert in Mojave. That hasn't happened now for 10 years. It doesn't look like happening for another four or five years.
"So while the plan is real and the $10 fare is real, until we can secure a low-cost fleet it can't happen. So it's about four or five years away."
In essence, nothing has changed. Even O'Leary told the Financial Times he was surprised the story had grown "such legs" this time. The key element of the latest coverage was the suggestion, initially coming from Ryanair, that board approval for such a plan had been given. Ryanair scotched this idea. But then it would not be the carrier approving the plan anyway.
While it was O'Leary who began the media circus around a transatlantic operation many years ago, the media has played its part in keeping it in the public eye. O'Leary and Ryanair executives have been asked about the project frequently since it was first floated, and no doubt will continue to be asked for the years to come. The reason why is clear: there is a fascination over whether Europe's most-vaunted low-cost pioneer can repeat the trick in the more more challenge long-haul market.
Has anything changed to make a transatlantic move more likely in the next five years than in the previous eight?
MARKET CHANGES
Undoubtedly Ryanair is, or at least is determined to become, a different animal. It has toned down its aggressive rhetoric and dropped its punitive booking restrictions, and is flying to more primary airports and proactively seeking business traffic.
While the extent to which it has gone down that route is debatable – plans to this winter become the first scheduled airline operating to Valencia's Castellon-Costa Azahar airport show it still has an eye for unloved airports – the intent to better appeal to business traffic is clear.
Though Ryanair would not operate a transatlantic venture itself, it would surely be a partner to any such venture. The Ryanair brand is well-known across Europe and, in five years' time, its evolution in customer service and network could make it look altogether different, and more attractive to long-haul passengers.
Linking with a transatlantic offering, which O'Leary always envisaged as including a premium-class product, is far less at odds with Ryanair's philosophy. Its growing presence on business routes at a number of key airports, like London Stansted, would provide a network of onward routes to a transatlantic venture even if passengers self-connect.
In September 2013, when unveiling a 10-year commercial deal with Stansted's new owners, Manchester Airports Group, O'Leary said Ryanair had agreed to help attract long-haul airlines. "We will be working in any way we can to encourage those carriers to fly to Stansted," he said, adding that he was "open to the idea" of formal codesharing. This suggested that Ryanair's had dropped its rejection of all things network-carrier on the grounds of dogma and ideology.
Interestingly for a European short-haul operator with no codeshare partners, Ryanair launched a new website aimed at US customers booking flights with the Irish budget carrier as part of European itineraries. The airline lists London, Dublin, Barcelona, Rome and Paris as the top five destinations for its US customers who, it says, number in the "thousands" annually.
Since O'Leary floated the concept, one European airline, Norwegian, has launched long-haul low-cost over the transatlantic. The jury remains out on Norwegian's efforts, not least because of its stalled start. The fuel-efficient Boeing 787s intended to operate the flights were delayed, arriving only after Norwegian began its transatlantic operations. US approval of an Irish subsidiary, to operate the service at much lower cost, has become a dragged-out affair, and remains mired in an battle over whether such a plan is in line with open-skies rules.
Norwegian posted losses in 2014, although the airline cited additional costs incurred because of the delays to its long-haul operation.Thus far there is no ringing endorsement yet for the financial sustainability of the model.
The other Norwegian carrier that investigated long-haul low-cost flights, Feel Air, never took to the sky.
KEY HURDLE
But, most crucially, the biggest obstacle in 2007 has remained in place: there is little immediate sign of an opportunity to secure the necessary aircraft cheaply.
O'Leary has previously indicated that the Boeing 787 is a front-running candidate for a potential transatlantic operation, but the budget carrier’s single-aisle loyalty to the US airframer would not necessarily extend to an order for long-haul jets.
Ryanair executives have suggested that, if a long-haul venture was pursued, the operation would commit heavily – acquiring a large fleet, possibly more than 40 aircraft, within a relatively short period of time.
Early slot availability on the 787 and Airbus’s A350 remains limited. Ryanair has leaned away from leasing aircraft for its own short-haul operation – it owns some 80-85% of its Boeing 737s.
Airbus has been struggling to bridge a 2015-17 production gap with the A330, which could offer a potential pool of aircraft, although the suggested timeframe for a transatlantic venture opens the possibility of a A330neo fleet. The European manufacturer has been pushing the A330neo as a less-costly alternative to the 787-9.
Boeing is also facing an end-of-line situation with the transition from the 777-300ER to the 777X in 2019, although O'Leary has not indicated that it would look at an aircraft of such size.
US FAA regulators limit the 787-9 to 420 seats, while the European Aviation Safety Agency cleared the A350-900 and A330-300 with an exit limit of 440.
Additional reporting by Oliver Clark and David Kaminski-Morrow
Source: Cirium Dashboard
