Michael O'Leary jokes: 10 EUR / segment between Europe and the United States
These days, Michael O'Leary, Ryanair CEO, threw a sensational "pill" into the market and said that Ryanair could sell 10 EUR / segment (7.5 EUR / return segment) tickets for flights between 12 -14 destinations in Europe and as many in the United States.
All the press wrote about this and how wonderful it would be to travel low-cost between the two continents, but many elements were lost in view. I'll try to dismantle Mr. Michael O'Leary's statement.
1. Michael O'Leary said that this will not be possible earlier than 4-5 years ago, during which time Ryanair should buy long-haul aircraft. If he were to place a firm order this year, he would probably be in possession of the first aircraft in 5 years, but it is not guaranteed. Michael O'Leary also said that he would need a fleet of 50 long-haul aircraft to honor these flights and be profitable.
In my opinion, for the moment Ryanair will not order large planes and will focus more on what it knows to do better, ie low cost flights to Europe and maybe a little to North Africa and the Arab countries. Currently, Ryanair is in command of 175 Boeing 737-800 units, and they would be delivered during the 2014-2018 period.
2. Michael O'Leary said that not all places will cost 10 EUR / segment. This means that there will be very few places at this rate. I'd bet on 2-3, let's 5 seats at this rate. Michael O'Leary also said that the profit would make it from the places sold at Business Class and First Class. So he relies heavily on these two classes. But I would not bet because the people from business and first are demanding and want quality service. Will Ryanair be able to satisfy their desires at decent low-cost costs?
3. For Ryanair, 10 EUR / segment would mean the insured profit. Michael O'Leary said that the tariff does not include other services. Any additional service that you wish will have to be paid separately and here we mention luggage, catering on board (meals, drinks), seats on the plane, etc. Transatlantic flights are quite long (starting at about 7-8 hours), during which time you have to eat at least two meals and stay hydrated, and the low-cost costs are not low.
I flew low-cost to Europe. For example on a flight Bucharest - Madrid operated with Blue Air, flying for about 3.5 hours, I paid 4 EUR for a bottle of water and a chocolate stick.
4. What Michael O'Leary didn't say, but it's understandable, is that The fare does not include airport taxes. I did some simulations at full-service companies (Air France, Lufthansa, KLM etc) and the airport charges are around 370-400 EUR. Often, airport charges are about 70-75% of the ticket price.
At the simulation done on the route Bucharest - New York via Amsterdam, flights operated by KLM, resulted in a ticket cost of 157 EUR round trip + airport taxes worth 382.13 EUR.
At this rate, KLM provides you with on-board catering, the right to hold baggage, more comfort and the advantage of operating flights from the main airports. You can benefit from more services if you are a Flying Blue member.
Ok! I take into account the fact that Ryanair could operate flights from low-cost airports, and airport charges could be lower. But even so, there are other expenses for passengers and other headaches. So here's how low-cost flights are no longer so low-cost, not for Romania. Let's not forget that Laker Airways, the only low-cost airline that operated transatlantic flights, went bankrupt after 2 years of low-cost flights.
Michael O'Leary is not at the first "shock" statement. He often does so to gain free publicity and fame. It's hard to believe anything Michael O'Leary said until it was officially released with trumpets and trumpets.