1.On the unpredictability of airline fares..”This is an airline! (?) We’re not making f*+#*ng dog food where you know you can fill a thousand cans and sell them for $1.25 this year, $1.27 in two years and $1.29 in in four”.
And therein is one of his problems. Almost any busines can project what they anticipate to charge for their product months in advance – they may not always get it quite right, and in the case of airlines no doubt fuel plays a significant part in the variability of the projections, but non the less if he’s running a proper business he SHOULD be able to tell you what he’s planning to charge. But of course, MOL has to shout and be arrogant and rude, because its the only way he can continue to gain publicity in a world where he’s very slowly starting to loose the battle.
He has a fundamental challenge in that he’s said he isn’t going to apply fuel surcharges. No doubt this is a publicity stunt to lure yet more niave travellers to his airline. BA, BMI and most reasonable carriers have been upfront and applied a fuel surcharge to their PUBLISHED fares. Ryanair doesn’t, of course, publish fares. So its fairly easy for them, in their yield management system, to just adjust the fares they charge to compensate for the increased fuel charge within the base far – no one will be any the wiser as they just pay what they see on the website, and the fact that some (many) of these fares will be a little higher for the same circumstances as they were in the past will be written off by the average punter as variations in demand. He can therefore apply a surcharge by stealth to all but his very lowest fares, which of course he can restrict as much as he wants to make sure he doesn’t loose.
Its taken some time, but the full service airlines have got Ryanair’s measure now, and they’re striking back, as witnessed by BA’s increasing profitability and load factors – they will ever increasingly challenge Ryanair. As Ryanair fares rise (which they WILL do, despite what he says, because he isn’t going to bust the bottom line just to keep the average passenger fare as low as it has been with his increased costs), and as his airline alienates more and more people with its “doesn’t give a toss about the passenger” service, so more and more people are slowly discovering that they can use better airlines (and I include EasyJet in this bunch) for no more or little more money.
Of course, there will always be the European equivalent of the proverbial American “trailer trash” who will accept whatever Ryanair chooses to inflict on them with for the minimum fare which means Ryanair won’t disappear (and there’s always new routes where he can have his successes until the customers become savvy), but for the majority a slow and gradual move back to more reasonable airlines is almost inevitable. Ryanair will be here for a long time to come, but its going to be going slowly down hill in many of its existing markets over the next few years, so its loud-mount CEO has little choice but to jump on any bandwagon he can. Ryanair has its niche and always will, but the future belongs to those strong full-service airlines who have ALREADY proven that they can adapt fight back.
Andy
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