Ryanair is to use a discounting strategy to drive up customer numbers this winter, as the airline seeks to consolidate competitive advantages it developed during the pandemic.
The company is also introducing new customer experience features suggested by a customer advisory panel, first convened in September, to make life easier for travellers. These include the introduction of a day of travel feature in the Ryanair app to assist customers through their journey.
In addition, CEO Michael O’Leary told investors today (1 November) at the company’s half-year results announcement that the airline has ambitious plans to improve its environmental performance.
“Ryanair was one of very few airlines to use the Covid-19 crisis to place a very significant aircraft order in December of 2020, with Boeing,” said O’Leary. The company increased its order of Gamechanger planes – which offer improved efficiency over older models – from 135 to 210 units, while other airlines were struggling during the pandemic.
The Gamechanger aircraft offer 4% more seats, while reducing fuel consumption by 16%. According to Ryanair, this efficiency will both improve its advantage over rivals and help it to cut CO2 emissions by up to 50% per passenger. Overall, the airline plans to cut CO2 to just 60g per passenger km by 2030.
The lower operating costs of the new aircraft, and its better environmental performance, are making Ryanair a more attractive operator for many airports, said O’Leary. A range of new bases, and more than 560 new routes, have been added to Ryanair’s itinerary as a result.
“We see huge growth opportunities, not just in new bases, but also in working with large airports across Europe to replace capacity that has been lost by their incumbent airlines,” said the Ryanair boss. “Airports recognise that they need to recover quickly, they recognise that Ryanair is the only airline in Europe that can drive that recovery.”
Pushing for growth
Ryanair reported reduced losses for the six months to September. After tax the company lost €48m (£40m), compared to €411m (£347m) for the same period last year. The airline predicts losses of between €100-200m (£84m-169m) for the full year, but says more accurate predictions are difficult due to changing costs and the risk of Covid upsets.
The company has reduced its debt from €2.28bn (£1.9bn) to €1.5bn (£1.3bn), and has a strong balance sheet after raising cash by issuing a bond earlier this year.
Marketing spend at the company has increased during over the half year period. Ryanair reports marketing, distribution and other costs are up 58% to €168.3m (£142m) for the first half. While the company did not detail the spend, it has invested in new features – such as a live app for travellers that provides real-time flight information and live communication of any flight delays or disruptions.
Airports recognise that they need to recover quickly, they recognise that Ryanair is the only airline in Europe that can drive that recovery.
Michael O’Leary, Ryanair
Along with a Ryanair Wallet, which enables refunds to be processed in 24 hours, the new features will let customers perform more self-service functions for a more seamless experience, said O’Leary.
Customers have been returning to travel with Ryanair in increasing numbers, especially during the recent school holidays. The airline carried 39.1 million passengers in the six months to September, 54% down on the same period in 2019. However, it has lifted its targets with an aggressive five year growth plan to carry 225 million passengers a year by 2026 – up from its previous target of 200 million.
Ryanair has also increased the value of its ancillary sales, which now average around €22.50 (£19) per customer. These include customers who pay for priority boarding or reserved seats, as well as a new revenue stream that has evolved since the UK completed its withdrawal from the EU.
“There is certainly a growing income stream now coming from the sale of duty-free products, mainly alcohol and cigarettes, on flights to and from the UK,” O’Leary added.