Ryanair’s Cawley Says Rivals `Very Fragile’ as Oil Rises
Ryanair is set to continue to grow its presence at primary airports across Europe, as another round of European consolidation will create the necessary conditions enabling the carrier grow, as competitors re-structure their route networks, consolidate and increasingly network-centric their structures on global alliances and partnerships, thus will create new openings across Europe for Ryanair.
A common trait for Ryanair and Southwest Airlines as they continue to evolve their business models is operating from primary and secondary airports, where market opportunities arise. This enables them to flex their capacity according to market trends enabling them to operate at very competitive unit costs, at airports where they get the best deals.
Ryanair is now focusing its growth in the Catalan region of Spain
The Ryanair Barcelona El Prat Base growth will put increasing competitive pressure on based carriers Spanair and Vueling Airlines, with Ryanair having already set the goal to overtake Spanair in terms of capacity and market share at El Prat, while Vueling Airlines has deferred plans to announce an A320 fleet replacement till next year.
Ryanair has been very strategic with new base and route announcements doing a U-Turn on an earlier announcement not to open up a new bases or routes this winter, due to a combination of high fuel costs and low yields, Ryanair has taken its competitors by surprise with a spate of new route announcements.
The carrier has been taking a strategic approach with the announcement it will open a new Manchester Base in October 2011 with two Boeing 737-800s operating 17 routes, with the Bmibaby Base closure creating the conditions for the MAG Group to do a deal with the carrier, which will see it compete against Easyjet, Jet2 and Monarch Airlines on a number of routes.
The carrier will put pressure on Air France ’s new short-haul model being rolled out at Bordeaux , with the carrier now extending its operation into the winter, by launching seven routes directly targeting the carrier, including Bergamo , using aircraft from its Dublin
In a surprising move the carrier has announced seven new routes from Eindhoven to points in Eastern Europe and Morocco , no doubt taking advantage of zero air travel tax in Holland
The carrier is identifying specific route opportunities in the market this winter launching Barcelona to London Stansted and Vilnius , London Stanted to Leipzig
The Adria Airways Re-structuring plan has opened up an opportunity in the market for the carrier to new launch new routes into Ljubljana
The European Airline sector will undergo fundamental change this winter as airlines continue to evolve to changes in the market, driven multiple external factors with austerity measures in a number of EU countries, high fuel costs, tightening credit facilities, poor economic growth.
In response to this Ryanair’s competitors will continue to drive costs out of their operation to remain competitive in an increasing hostile marketplace, through applying demand-lead capacity management techniques , outsourcing non-core activities, deepening alliances to yield synergies, driving down unit costs by consolidating bases, the pace of consolidation will rapidly increase, creating more opportunities for Ryanair to grow across Europe.
The signs of new emerging market opportunities are becoming apparent with Air Baltic in a very difficult financial position which will necessitate another round of re-structuring, Air Berlin is now undertaking a fundamental review of its business model with analysts stating the carrier will require much deeper cuts to its fleet and network, Air France is evaluating its options to reduce capacity/costs in the context of ‘economic uncertainty’ after suffering heavy losses of €145 million in Q1.
A number of carriers in Central and Eastern Europe are showing signs of de-stress, Ryanair previously offered to establish bases in Budapest, Helsinki, Prague it will be interesting to see if these proposals now come back into the table, a structural shift in the shape of the European Airline Industry is about to begin as the winter season kicks in.
Irish Aviation Research Institute © 7th September 2011
