Video: Ryanair’s recent TV ad
The airline says increased price competition in the European market pushed fares down last year, with profit after tax falling 8 per cent to €523m for the year to 31 March. Revenues were up 3 per cent to €5.04bn and passenger numbers increased to 81.7m, from 79.3m.
Ryanair chief executive Michael O’Leary called the profit drop “disappointing” but said Ryanair has reacted to the changes in the airline industry by reducing its prices still further and launching a customer service offensive. This includes introducing allocated seating and a second carry-on bag, cutting charges and updating its website to make it easier to book flights.
Ryanair plans to continue that focus this year, planning to up its marketing investment by 250 per cent this year to €35m as it launches further TV and outdoor advertising campaigns in major EU markets including the UK. In April, the airline ran its first ever TV ads to highlight its new website and some of the customer service improvements.
O’Leary says: “We will continue to invest to in web and digital improvements over the coming year and improve our digital marketing and CRM services for the benefit of all our customers.
“In April, we began extensive TV and outdoor advertising in major EU markets to promote our new website and recent customer experience improvements. These campaigns will continue through the year.”
The airline warns that will hit its profit margins, with costs rising by 5 per cent reflecting the rise in advertising investment, as well as pay increases and primary airport charges. It is also planning to launch its first family product in June that will allow children to receive discounts on allocated seats and bags and a business service that offers same day flight changes, premium seat allocation and security fast-track.
Despite the increase in costs, Ryanair is forecasting after tax profits of between €580m and €620m for the current fiscal year. It expects passenger numbers to increase by 4 per cent to 84.6m while its load factor (how full flights are) will rise by 2 percentage points to 85 per cent. The airline says summer bookings are already ahead of last year.