Ryanair's Strategy

A pair of good commentaries in the Guardian yesterday—one by Gwyn Topham and the other by Larry Elliott—lay out an analysis of possibly tough times ahead for Ryanair. Both pieces look at Ryanair's position following Monday's announcement of disastrously low first-quarter profits, down 85 percent. The most interesting nugget for me was the observation, first in Elliott's commentary and seconded in Topham's, of the falling value of the pound. With the pound's decline, they argue, there are fewer short-term workers from the EU's eastern flank boarding Ryanair and other low-cost carrier planes to find work in the UK. On the other end, the thought of a long weekend in an underexplored Continental spot has become less attractive to many Brits because the pound simply isn't going as far as it did. Topham extends the argument and questions the durability of Ryanair's appeal:

Ryanair's early allure, promising an enjoyable, bargain weekend in a strangely-named destination, already has the feeling of a turn-of-the-millennium fad. A bit like Big Brother: sometimes cheap, sometimes nasty, but losing its appeal fast.

He's on to something, though I can't help but think that Ryanair will continue to fill planes. Route maps can be adjusted; Ryanair recalibrates schedules rapidly in response to demand. And then there's the fact that many other airlines are in trouble and at risk of going bust. Where will their passengers go? Many, I'd guess, will turn to Ryanair.

And how is Ryanair responding to the situation at hand? By announcing a €1/£1 fare sale. These fares include taxes and charges, and are good for travel throughout September. I just did a sample search and found a virtually free London Stansted-Altenburg return flight in September. See for yourself:

Ryanair suggests that this will be the first in a series of massive fare sales over the winter.

Comments

[Miranda]

Am i missing something? The pound is worth like 8x more than any other currency on earth and all the Brits are whinging about taking RYANAIR? I can understand the other part of the argument (workers from the east), but seriously -- our cheapest airline won't even get you anywhere for under $89 bucks, and that's just one way. And it only gets you to, like, Baltimore.

[poetloverrebelspy]

You forgot to click through to the next page, where they charge you 5 more euros to pay for the ticket before tacking on 10 more for your bag. . .

I am mostly a fan of the airline, but you and I both know that first window is less than half of the story.

What about the reverse corollary -- the continent flying to the island, to take advantage of the exchange rate? Or is the RyanAir model too heavily built on flying Brits around?