Low Cost - Ryanair hit by air fare battle

[Guest]

Ryanair hit by air fare battle and Brexit uncertainty

• https://www.bbc.com/news/business-49149151

Ryanair has reported a sharp fall in quarterly profits as it reduced fares to drive up passenger numbers.

Profits fell 21% to €243m (£219m) for the three months to the end of June, as the average ticket price fell 6%.

The airline was also hit by higher costs for fuel and staff.

Chief executive Michael O'Leary said the two weakest markets were Germany, where Ryanair faced fierce competition on price, and the UK, where there were Brexit uncertainties.

Mr O'Leary said that in Germany, "Lufthansa was allowed to buy Air Berlin and is selling this excess capacity at below cost prices".

Meanwhile in the UK, "Brexit concerns weigh negatively on consumer confidence and spending".

He added that "the current weak fare environment has continued into the second quarter and we expect [first half] fares to be down approximately 6%".

• Ryanair to cut flights after 737 Max delays
• Ryanair expects to win in airline 'fare wars'

Ryanair said the drop in fares had been partially offset by 14% higher ancillary revenue, such as from baggage, food and other fees.

"The June quarter results were not quite as bad as feared," Liberum analyst Gerald Khoo said in a note, adding that ticket revenue was "slightly light" compared with forecasts but that revenue from optional extras was "better than anticipated".

 

Strike worries

Earlier this month, the carrier said it was adjusting its schedules due to the grounding of the Boeing 737 Max family of jets.

It confirmed on Monday that it expected to have 30 new Max jets in time for next summer.

The forecast for profits after tax for the year remains unchanged at between €750m and €950m (£675m-£850m).

In recent weeks the airline has been hit by the threat of strike action by pilots in the UK and Ireland and cabin crew in Portugal.

Chief financial officer Niall Sorohan has said the airline is open to talks with staff.

[Guest]

Ryanair CEO: Long-Haul Low-Cost Doesn’t Work

• byJoanna Bailey
• November 16, 2020
•  

With the impending arrival of the Boeing 737 MAX 8-200, Ryanair has the option to begin flying further than ever before. These aircraft could feasibly make it across the Atlantic, or east into Asia and elsewhere. However, CEO Michael O’Leary has made it clear that this is not in the game plan, and that he believes that the long-haul low-cost model is fundamentally flawed.

 

Ryanair won’t be going long-haul

Speaking at an interview for World Travel Market, CEO of Ryanair Michael O’Leary was confident that, as a model, Ryanair is unchallenged in Europe. He believes the €9.99 fare airline will remain unchallenged for a decade or more, as any competitor will struggle to match its slender business model and low cost-per-seat operations.

With so much confidence in his business, does O’Leary see the potential to move out of Europe and start offering some low-cost long-haul routes? After all, the airline is expecting delivery of its Boeing 737 MAX aircraft soon, which could easily make the hop across the Atlantic from either the UK or Ireland.

 

The short answer to this question is no. O’Leary stated that there is a world of difference between operating short-haul, low fare services and trying to translate that into longer flights. He said,

“Ultimately long haul is a different business.  Short-haul is commoditized, as long as it’s safe and it’s punctual and it’s on time, it works. The lowest cost will win. Whereas long-haul is a different model and I don’t think long-haul, low-cost works.”

What’s the problem with the long-haul low-cost model?

There are numerous airlines who have attempted to crack the proverbial low-cost long-haul nut over the years. Europeans will remember Primera Air, which was doing quite well in Europe before it started to fly transatlantic. Then there was WOW, whose model of flying one stop hops between Europe and the USA via Iceland worked well on narrowbodies but seemed to sink them into a pit of debt when they started using widebody aircraft.s

These are just two examples, both of which were coping with other external influences, such as fuel price rises, economic problems and more. However, O’Leary thinks that the issue with long-haul low-cost runs deeper than any of that, and that it’s a fundamentally flawed model. He said,

“Fundamentally, I’ve never been a believer in long-haul, low-cost. The problem is that, on long-haul, it is a different business. There will always be 15 or 20% of the population who will pay ridiculous premiums, eight, 10, 20 times the costs of production, for first class and business class.

“I think that stripping it down to 25 minute turnarounds or to the basic add-on philosophy is never going to work on long-haul, because long-haul will always be about the premium cap.

“I don’t think long-haul, low-cost works. Norwegian, well you could argue that Norwegian’s long-haul was never really low-cost, but it hasn’t worked. Even the AirAsia Xs of this world don’t work.

 

For long-haul airlines, those passengers up the front of the plane are incredibly important for the profitability of the flight. They might be in the minority in terms of how many are flown, but the high prices paid often makes the economics work, even if the seats at the back aren’t filled.

In usual O’Leary fashion, he didn’t take himself too seriously. Despite his proclamations of the worries of long-haul, low-cost operations, he was quick to point out that there’s a bigger threat to the industry. He concluded,

“But what we all have to be wary of is Star Trek. Somebody, eventually out there somewhere, is going to find a way of beaming us around, and then we’re all screwed.”

[Guest1]

Wizz Air's UK Cabin Crew See Largest Ever Pay Rise

BY MICHAEL DORANPUBLISHED 10 HOURS AGO

 

Wizz Air needs 100 new cabin crew at four bases in the UK and is hoping it got its sums right with higher pay.

As it embarks on a major boost to its UK operations, Hungary's Wizz Air put the call out in March to attract more than 100 new cabin crew to fly on its Airbus A320 family fleet.

With competition for good people peaking, Wizz Air sweetened the deal by offering what it says is "its biggest ever pay rise for its UK-based cabin crew."

Wizz Air UK Managing Director Marion Geoffroy says the airline is committed to offering cabin crew a clear career path and countless opportunities to develop. She adds,"We are delighted to be offering an industry-leading remuneration package for our colleagues in the UK. We are thrilled that after over two years of challenging times, we are seeing a return to normality, and we continue to offer even more job opportunities for all those who are looking for a really exciting and dynamic career."

What will a new Wizz Air UK cabin attendant earn?

There is no mystery about what the flight attendants will earn as Wizz Air has published the pay scales with it advertisement. The pay scale lists three categories, Junior Cabin Attendant from 0-9 months, Cabin Attendant from 10 months onwards, and Senior Cabin Attendant.

From April 1, the guaranteed annual minimum basic salary will be £18,000, £20,480, and £21,887 respectively, rising up to £23,450, £26,480, and £33,850 respectively if all variable targets are met. For comparison, this means a new attendant, starting from their first day of training, will earn around €21,500 or $23,500. 

Wizz Air expands its UK footprint, adding new routes, aircraft, and cabin crew at Gatwick

In March, Wizz Air announced the launch of 18 new holiday routes, from its Gatwick Airport base, many of which the new flight attendants will be crewing after graduation.

The new routes will be operated with Airbus A320 family aircraft and include destinations such as Milan, Venice, Tel Aviv, Palma de Mallorca, Vienna, and Podgorica.

With a mixture of year-round and seasonal routes, the expansion will see Wizz Air operate a total of 25 routes from Gatwick, expanding its international presence to more than 50 countries.

Wizz Air UK has four bases, London Gatwick, London Luton, Doncaster Sheffield, and Cardiff, with positions available at each base. The airline is holding recruitment events across the UK in March and April with details on its website.

According to planespotters.net, Wizz Air has a fleet of 132 Airbus A320 family aircraft and one Airbus A330-200. In November, as part of an order placed by its parent, Indigo Partners, Wizz Air committed to 102 new aircraft, 75 A321neo and 27 A321XLR, which at that time brought its total backlog, orders and options to 429 Airbus aircraft. Unsurprisingly, Wizz Air is now calling for new pilot applications, covering all phases of experience from ab initio cadets for the Wizz Air Flight Academy to First Officers and Direct Entry Captains, with or without A320 type ratings. By 2030 Wizz Air aims to fly 500 aircraft and carry more than 100 million passengers a year. In 2019 it carried 39.8 million passengers and in 2021 it was 21.7 million passengers, so it has to get a move on to reach its lofty targets.Perhaps now is a great time to jump onboard and enjoy the ride?