Ryanair plan to go long haul..

Says it all really,

Long-haul low-cost in Ryanair’s distant future: O’Leary
Aimee Turner, London (20Sep05, 16:56 GMT, 571 words)

Ryanair CEO Michael O’Leary expects the Irish low-cost carrier to add feeder services for a long-haul low-cost operation- but not in the near future.

Speaking to ATI at a press conference in London today, the Ryanair chief said Ryanair’s short-haul consolidation in Europe would eventually lead to the carrier gaining a critical mass where the development of a complementary long-haul operation would represent a “logical extension”.

But he cautions that, although the move would represent a coherent strategy if Ryanair’s predicted growth fulfils current forecasts, a long-haul airline would either need to be created or identified to complement the activities of the existing low-cost operation which would be kept separate.

“It is a logical extension to look to some long-haul low-cost service in the future as we have all the links in Europe – a comprehensive feeder system – but this certainly won’t be as Ryanair itself and certainly not within five years time,” says O’Leary, adding that there are no immediate plans to develop the strategy.

He adds that Ryanair would also need sufficient critical mass for the strategy to work – around 100 million passengers a year, or nearly three times the projected 35 million annual passenger total for 2005.

“We have said all along in our business plan that we want to grow the business to 50 million passengers over the next five years and then we could well go further and attempt to double that to 100 million passengers over the next five-year period until 2015,” says O’Leary. “But we are very busy at the moment. We have our aircraft orders and expansion strategy in place and that is more than enough for us to be going on with. The biggest danger would be getting distracted at this point.”

O’Leary cites as a continuing source of business inspiration the legendary US low-cost operator Southwest Airlines which has served as a model for many low-cost, low-fare operations in the USA and Europe.

“Southwest already has 80 million passengers and they look set to increase that 10% this year. They have also said they want to increase that to 100 million passengers over the next two to three years and it looks highly likely that they’ll be in a position to do that,” he comments.

Hitting out at British Airways (BA) which earlier this month raised its fuel surcharge on long-haul flights to £60 per return trip, O’Leary says Ryanair has no intention of introducing fuel surcharges, or ‘profiteering at passengers’ expense’.

“Ryanair will never apply a fuel surcharge – not now, not ever,” says O’Leary. “BA has recently increased its fuel surcharge for a fifth time despite the fact that back in August it confirmed to its shareholders that it had hedged 75% of its fuel requirements for the rest of this year at $43 a barrel. If BA is not paying the current higher oil prices, why is it still increasing fuel surcharges to passengers? These traditional carriers are hiding the fact that they are simply loss-making.”

He expresses doubts over moves by traditional airlines to cut back on short-haul operations and seek medium-term growth through developing their long-haul networks.

“I personally do not think it will work. And, if our competitors pursue their mad fuel surcharge policies, who knows? In 2010 there may well be very little short-haul presence apart from Ryanair and our projected growth will have come far earlier than we imagined,” says O’Leary.

Source: Air Transport Intelligence news