Ryanair – still a lo-co airline?

I have created a quick graph to try and illustrate my point above with regards to how the low fares and traditional carriers price discriminate.

Grey Area makes a very fair point, that is to say, the original concept of ‘Low Cost Airlines’ referred to exactly that, their costs, which in theory allowed them to offer low fares because their unit costs were lower, and to some extent they operate on the basis of the Contestable Market Theory, in that you HAVE to maintain the lowest costs and respective fares you can so as not to be undercut, i.e you cannot make a super-normal profit. Collectively, these airlines have tended to move away from the title Low Cost because they think it implies cost-cutting at the expense of safety or operational minimums, which it doesn’t, so they tend to now prefer being referred to as Low Fares Carriers.

The fact that sometimes such an airline charges more than a traditional incumbent carrier is because they also undertake price-discrimination. So in order to offer their most price sensitive (or often stimulated) passengers a fare of 1p, they need to sell fares at a high price to their least price-sensitive passengers, typically business travellers who book late because they often don’t know their needs to travel far enough ahead to get good deals, but MUST pay the price, because it is necessary for them to conduct business (and also harshly it affects those who have to make last minute travel for personal reasons, such as if there has been a death in the family you have to pay more, but don’t be fooled, BA charge in this way too, as do bmi). Price-discrimination like this, therefore delivers an average fare across all the passengers on the plane, all airlines work like this, including BA and bmi, it is called yield management, and traditional carriers work heavily on this basis because they are driven by the average yield, this is not necessarily the case for a low fares carrier who wants to combine maximising the yield with maximising the load factor because this is important because volume of passengers delivers auxillary revenues. The low fares carriers therefore have a much broader level of price discrimination ranging from 1p to (perhaps) £400 rather than from £80 to £400.

So, if you’re booking a long way out, then typically it is possible to get cheaper seats with RYR than an incumbent carrier, because the latter has a lower load factor target at a higher average fare. But close to the time, RYR fares are often comparable to the incumbent’s on a competed route because that is what the market will bear. Sometimes they are higher because the airline may already have achieved its load factor and yield target and is just hoping to make as much as possible from any ‘excess’ passengers. Similarly the fare on BA or bmi may be lower on the same day because they may not have sold enough seats (because whilst they are mainly yield driven, the load factor is an issue depending on the yield) and so they recognise that they need to discount in order to keep selling seats.

Anyone confused yet? 😮

Finally I would also add that you have to consider the effect these carriers have had on the BA/bmi fare. Prior to RYR on a given route, a last minute fare may have been £400+ with the other carrier(s), who were making a super-normal profit, or at least had a cost structure which was out of control because they didn’t come under threat from another carrier. BUT the introduction of low fares carriers into the market has meant they have had to reduce their costs and pass the benefits on to passengers, for threat that an airline with lower costs could come on and undercut them and steal all their passengers. So you may think RYR looked expensive against the bmi fare, but in truth the bmi fare is actually lower because of the existence of RYR’s service.

I know there is a lot of Ryanair bashing goes on and trust me half of me hates them whilst half of me loves them! I think that being on a low income as a student I have no choice but to use them to travel down to see my relatives in Tenerife. Even FlyGlobespan (RIP) were about twice as dear as Ryanair are nowadays. I just feel that their average fares are slowly increasing up towards the price that the likes of TOM and TCX might charge. I actually looked at flights EDI-TFS during the school holiday season and on some dates they were charging as much as £50 more per ticket than TOM were charging for departures from Glasgow.

I just feel that if Michael O’Leary is still going to get victims through the cabin door his prices must stay considerably lower than the competition, otherwise people are quickly going to get fed up paying as much as they would on other airlines with better service like BA, BMI, TOM or even EZY. I for one only travel Ryanair due to their very low prices and if they keep raising their average prices I may consider what other options I have to go to where I need to be!

I don’t recall saying that there was anything wrong with it. :confused:

My apologies, you were quite right, you didn’t say that.

It was just that I was expecting the usual Ryanair bashing response and I jumped the gun!

Sorry about that.

I don’t recall saying that there was anything wrong with it. :confused:

Some people seem to be under the impression that “lo-cost” means “low cost to the paying punter”.

In fact, it refers to a business model that keeps operating costs for the airline to an absolute minimum in order to maximise profits and dividends to shareholders.

Low fares are often, but by no means always, a by-product of this model.

Nothing wrong with minimising costs and maximising profits, it’s not run as a charity after all!

Some people seem to be under the impression that “lo-cost” means “low cost to the paying punter”.

In fact, it refers to a business model that keeps operating costs for the airline to an absolute minimum in order to maximise profits and dividends to shareholders.

Low fares are often, but by no means always, a by-product of this model.

Well put and no disrespect to EGPH at all, but I wonder how many people out there are under the same impression?

Some people seem to be under the impression that “lo-cost” means “low cost to the paying punter”.

In fact, it refers to a business model that keeps operating costs for the airline to an absolute minimum in order to maximise profits and dividends to shareholders.

Low fares are often, but by no means always, a by-product of this model.

Thanks for the clarification!! I always assumed that a ‘low-cost’ airline was one that sold its flights cheaply, or certainly at a cheaper rate than flag carriers and the like.

Some people seem to be under the impression that “lo-cost” means “low cost to the paying punter”.

In fact, it refers to a business model that keeps operating costs for the airline to an absolute minimum in order to maximise profits and dividends to shareholders.

Low fares are often, but by no means always, a by-product of this model.

I have seen people throw cabin baggage from the isle to reserve a seat 3 rows ahead and relay passing kids to get them there quicker to reserve seats. :rolleyes:

Please give me allocated seating everytime. Despite priority boarding with Ryanair it is totally disgusting to see other passengers rushing to get on/off the plane. As we landed at Malta they were unbuckled and trying to get their belongings as we were taxiing off the main runway. The cabin crew had to make an annoucement to sit down. :rolleyes:

And at the same time they are the only airline that will offer you 1p flights. :rolleyes: You don’t have to put up with ryanairs prices. 😉

Ah if only it was a 1p flight;) Last year 4 of us travelled to MAD, 2 of us flew with Iberia and the other 2 with Ryanair. What was amusing, well for us, was that our fare on the full service carrier was £50 cheaper rtn than theirs was. OK I know that we had to ‘suffer’ the benefits of a full breakfast plus a free newspaper, assigned seating etc and we could take a little more than a clean pair of briefs and a toothbrush for no extra charge. Still our 2 friends did manage to make a shared fizzy drink last the Ryanair flight.

Indeed we don’t have to put up with Ryanairs prices….so I don’t. Shop around for good fares on those ‘nasty’ old full service carriers and you WILL find them:)

Remember that you can’t consume your own alcoholic beverages onboard. The main reason is that it allows the cabin crew to monitor individual passenger consumption during the flight, as alcohol has an increased effect at the reduced pressure in the cabin.

And at the same time they are the only airline that will offer you 1p flights. :rolleyes: Yes of course they’re a lo-co.
And by the way T-21 (not the slingsby glider by any chance?), yes airport security will confiscate any food and drink, but anything bought in the departure lounge is fair game. You don’t have to put up with ryanairs prices. 😉

You have to watch Ryanair. Been to Malta with them only 15Kg baggage allowance per bag in hold,Air Malta give 20 Kg. They charge you 20 euro for every kilo that you are over,not much room for shopping and gifts and you really have to think about reducing clothes to take. Prices on flight too expensive 4.50 euro for a small beer Air Malta give you a meal. I should have paid the £20 supplement and gone Air Malta from Birmingham. Yes Ryanair were on time and easier to get to Luton,but wish food/drink cheaper on a 3 hour flight. Any drink you take thru Security is confiscated so you are stuck in a Catch 22 situation.

Exactly, at the end of last year I paid £250 for a Ryanair flight between Belfast and East Midlands. I only paid £220 for the bmi Business Class ticket from London that same day!

Yes, Ryanair are a lo-co airline. Their costs are low. They may not always pass it on to their customer, but that’s up to them.

It’s always the case that some of the passengers pay low fares, some pay medium fares and some pay very high fares. This case you where the one paying a bit more. next time it will be the guy sitting next to you.