Aiming for the top
Ryanair created history earlier this year when it placed a record-breaking order with Boeing for 100 737-800s along with 50 options. From chief executive Mike O'Leary's perspective, the timing could not have been better: Not only did it serve to emphasise its current success in rivalling full-service carriers like BMI British Midland and British Airways, which have been laying off capacity rather than adding it after the 11 September US terrorist attacks, but it also enabled the low-cost carrier to beat some serious discounting from Boeing, as the manufacturer strives to keep production lines full amid the US airline crisis.
Ryanair experienced 45% traffic growth in the 12 months to March, carrying over 10 million passengers, firmly establishing it as Europe's largest low-fare airline - a far cry from its origins dating back to 1985 when it launched daily flights with a 15-seat Embraer EMB-110 Bandeirante between Waterford, Ireland and London Gatwick.
By 1990 the airline was flying ATR 42s and BAC One-Elevens, carrying 600,000 passengers a year but still losing money.
Ryanair owners the Ryan family appointed O'Leary to restructure the airline. "I told them: 'This will never make money so shut it down'. But they wanted to keep the airline going and said: 'Lets look at the Southwest strategy'. What we learned was: don't be 10% cheaper, be 80-90% cheaper," O'Leary says.
The airline now serves 75 destinations from five hubs (Dublin, Brussels South Charleroi, Frankfurt Hahn, Glasgow Prestwick and London Stansted) with a fleet of 41 737s (21 130-seat -200 Advs and 20 189-seat-800s). The 108 737-800s it has on firm order will be delivered by 2010, with funding partly provided by a €162.5 million ($142 million) latest share offering unveiled in February.
As well as replacing the 737-200s between 2003 and 2007, the new 737s will underwrite Ryanair's bid to jump from seventh in Europe's short-haul airline rankings to first by 2010, when it expects to be carrying 40 million passengers. The 50 options provide growth to carry 55 million passengers annually.
Ryanair made sure it gained from the airline crisis which followed the US terrorist attacks by adding capacity rather than retrenching. "When many of our high-fare competitors were grounding aircraft and cancelling flights, we did the opposite and put a million tickets on sale at £9 ($13) each - our forward bookings went through the roof," says O'Leary.
Passenger volumes in the third quarter of 2001 grew by 30% and load factor was up two percentage points to 79%, but promotional fares launched after 11 September to keep passengers flying drove yields down during the period by 10%. O'Leary says this was offset by the higher load factors.
Following the launch of its second continental European hub at Frankfurt Hahn last November, Ryanair is considering an expansion of its German domestic network, where it believes Lufthansa's high-fare marketplace to be highly vulnerable. It also continues to evaluate options for further growth elsewhere. Director of sales and marketing Tim Jeans says the airline plans to open one new hub every year from 2003, with Italy and Scandinavia next in its sights.
Source: Flight International
