Ryanair May No Longer Be Europe's Most Frugal Airline
Photo courtesy of Boeing
Ryanair has been wildly successful because it has been able to keep its costs lower than everyone else. Thanks to the Irish carrier’s skillful budgeting and aggressive cost-cutting techniques, other airlines, including its low-cost carrier competitors, have not been able to compete on a level playing field.
No longer the cheapest in Europe?
That could all change in 2016. Ryanair’s title of “most frugal airline in Europe” is in jeopardy according to Wizz Air CEO Jozsef Varadi. He predicts that by the end of the year Wizz Air’s operating costs would be lower than Ryanair’s. He made the prediction right on Ryanair’s home turf during the Airline Economics Conference in Dublin. "Our costs keep coming down, their costs creep up, so I think in the course of the next year or so, the lines will cross.”
The reason for this switch in operating costs, according to Varadi, is that Ryanair is choosing to fly to more primary airports as its grows. This practice leads to higher landing fees, something that Ryanair has always tried to avoid in the past. The airline is also investing money in new features to make itself more customer-friendly. (It has always struggled with this aspect of its image).
Ryanair’s moves to bolster its appeal as a mainstream airline could be defined as the next stage of its evolution, but the added operating costs that come along with this growth could leave it vulnerable when it comes to the ultra-budget market. Nonetheless, it is still a force to be reckoned with. The Irish carrier is planning to open a new base in Eastern Europe. It has chosen Timisoara, Romania as the site for this new hub. That is, more or less, right in Hungary-based Wizz Air’s backyard.
Varadi seemed unfazed by these plans during his trip to Dublin: "Ryanair has been in central and eastern Europe for seven years. Competing with [them] just makes us more formidable as a competing force."
Both airlines are among the most rapidly growing in the world. In 2015, Ryanair added 99 routes, more than any other airline on earth except easyJet, which also launched 99 new routes. Wizz Air was not far behind, adding 85 new routes to its schedule last year.
Every dollar counts as competition heats up
Direct competition is increasing among Europe's LCCs. 231 of Europe’s busiest routes are now served by at least two of the continent’s five major low-cost carriers (easyJet, Norwegian, Ryanair, Vueling and Wizz Air). With ever-rising demand, it seems like there is room for all five of these airlines to exist in Europe. However, the fiercer the competition gets, the more every euro spent (or not spent) could matter.
If Wizz Air can back up its CEO's boasting, Ryanair might actually lose its image as the most-frugal airline on earth. That might be a good thing as the Irish low-cost stalwart attempts to be seen as being more flier-friendly. However, the ratio of profits to operating costs will still matter more than anything else in the budget airline game.
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