Faced with EasyJet, Transavia or Wizz Air, the low cost company Ryanair has just announced the end of banknotes at less than 10 euros. Short-haul flights in Europe will no longer benefit from this price (at a loss) that the company offered, in particular in 2019 and 2021. The first price now stands at 40 or even 50 eurosdue to rising kerosene prices.
It was during an interview with the BBC that the CEO of the Irish company announced it. A change of direction which reflects above all the need for profitability at the end of the pandemic and the return of air traffic, remaining however hampered by a shortage of personnel on the ground and on board aircraft. For many airlines, particularly in France, this change is a victory as Ryanair’s strategy was seen as unfair competition.
Different social and fiscal rules for Ryanair
Based in Ireland, its fleet “does not have the same social and fiscal rules as us”criticized last year Luc Bereni, head of the French company Air Corsica. “How can a plane ticket be offered on the market for €10 when departing from an airport, the addition of taxes alone generally exceeds €30 for a one-way trip?”he added.
The price war hasn’t just seen loss-making practices like this. Another process, particularly criticized by travellers, concerns the display of ticket prices without the suitcases (on board like luggage in the hold). “We had to make the decision to offer entry-level prices that did not include luggage. In the field we are followers I must admit, it was not us who brought this innovation to the market”added Luc Bereni.
Return of profits
At 40 or 50 euros minimum, the call price is still very aggressive. The boss of Ryanair did not hide his feeling that in view of inflation, travelers will continue to prefer low cost airlines all the more. The end of the 10 euro tickets would therefore not have such a significant effect on sales, and would allow Ryanair to avoid further deepening its losses.
The economic situation of the company is indeed worrying. During the first financial year at the start of the pandemic, Ryanair was 80% behind in its turnover. Last year, its net losses reached 273 million euros. For the first quarter of 2022, it returned to profit, posting a positive result of 170 million euros after tax. Meanwhile, air traffic has increased fivefold, to 45.5 million passengers transported in Europe.