The head of Irish discount airline Ryanair says he expects some seats on the company’s flights will soon be free as airports and carriers share revenue from concessions sold in flight and on the ground.
Michael O’Leary said in a speech to the Airport Operators Association conference in London on Tuesday that by 2026, he expects his airline to sell some tickets on its flights with a $0 base fare.
“I have this vision that in the next five to 10 years that the air fares on Ryanair will be free,” The Guardian quoted him as saying, “in which case the flights will be full, and we will be making our money out of sharing the airport revenues — of all the people who will be running through airports, and getting a share of the shopping and the retail revenues at airports.”
CBC News has requested a copy of O’Leary’s speech.
Although it sounds farfetched, O’Leary was quoted by the Guardian and other British press as saying that the ground work has already been laid in the form of some of the deals his company has been pitched from smaller regional airports to start offering flights there in exchange for drastically reduced landing fees.
“I think it will happen,” he said, “it … won’t happen at Heathrow or those big hub airports but most of the other airports who are looking for big traffic growth, that process is already starting to happen, lowering airport fees and some of the charges.”
In the U.K. as in many other places, local authorities charge airlines a fee for using airports. In the U.K., it’s called an air passenger duty or APD, and since 2012 it has been £13 per passenger — about $21 Cdn
There are calls to lower or eliminate that, especially as the country seeks to maintain its trading clout in the post-Brexit reality. Ireland abolished its APD in 2014, and Scotland plans to halve it soon. Meanwhile, when Norway recently announced plans to increase its version of the APD, Ryanair decided to stop flying there.
According to Ryanair’s most recent earnings numbers, the airline’s average ticket price is £46.67, but the carrier is known for its promotional tickets well below that.
A move to lower or eliminate the APD could move many Ryanair’s flights from the “discount” category into being effectively free. O’Leary says at current levels at some airports, Ryanair is paying more than £20 per passenger in various fees.
“If I start getting that back, why not?” O’Leary said. “I’m doing seat sales this week at £4 and I’m paying the £13 APD — I’m paying you to fly with me,” O’Leary said. “Instead of promotional tickets being £9 or £5 they will be free.”
CBC News Business
Michael O’Leary says he hopes to offer zero fares – with the airline making money from sharing revenues with airports.
Many seats on Ryanair flights could be free in a decade’s time, the airline’s chief executive has said.
Michael O’Leary said his ambition was to offer zero fares – with the airline making its money from sharing revenues with airports where it had attracted passengers.
Speaking at the Airport Operators Association conference in London, he said the increasingly attractive deals being offered to his airline by European airports, as well as the possible reduction or abolition of taxes such as air passenger duty (APD), would eventually allow his airline to give away flights.
He said: “The challenge for us in the future is to keep driving air fares down. I have this vision that in the next five to 10 years that the air fares on Ryanair will be free, in which case the flights will be full, and we will be making our money out of sharing the airport revenues; of all the people who will be running through airports, and getting a share of the shopping and the retail revenues at airports.”
The Irish airline expects to carry 119m passengers this year and is growing its aircraft fleet rapidly, with capacity to pass 200m by 2024. Most of that growth, O’Leary said, would come from “taking price sensitive passengers off incumbents like Air Berlin in Germany, Lot in Poland and Alitalia in Italy”.
He added: “I think it will happen. It just won’t happen at Heathrow or those big hub airports. But most of the other airports who are looking for big traffic growth, that process is already starting to happen, lowering airport fees and some of the charges.”
O’Leary said: “If [air passenger duty] is gone: at many airports I’m paying more than £20 already with APD and fees, if I start getting that back, why not? I’m doing seat sales this week at £4 and I’m paying the £13 APD – I’m paying you to fly with me.
“Instead of promotional tickets being £9 or £5 they will be free.”
Average fares on Ryanair last year were €46 (£39), including one checked bag, and Ryanair has said they will fall by 10% to 15% this year. About a quarter of the airlines’s income is from add-ons such as car hire and inflight sales.
The Guardian
Free Ryanair flight within the next decade?
