Ryanair has announced plans to create an airline group of low cost carriers similar to IAG. But, how is Ryanair planning on doing it?
International Airlines Group (IAG)
First of all, let’s take a quick look at IAG. IAG is a multinational airline holding company and one of the largest airline groups in the world. It is the parent company of British Airways, Aer Lingus, Iberia, Vueling, and LEVEL. The group operates over 540 aircraft and serves over 275 destinations around the globe.
According to IAG, the group enables the airlines “to enhance their presence in the aviation market while retaining their individual brands and current operations.” In addition to the airlines, the passengers benefit from this structure as well. They have access to a larger route network as well as improved services and new products.
Michael O’Leary, Ryanair’s CEO, announced last month that Ryanair had plans to change its structure to a group structure kind of like the one of IAG. Ryanair Holdings, the new holding company, will initially have four subsidiaries: Laudamotion, Ryanair, Ryanair Sun, and Ryanair UK. These are currently the four operating units of Ryanair.
Each of the subsidiaries will be run by its own CEO; however, Michael O’Leary will no longer serve as the CEO of Ryanair. Nonetheless, all the CEOs will report to him in his new role as the overall chief executive of the group. In the beginning, the holding company will have a small senior management team that will oversee the individual airlines until things are up and running. O’Leary is expected to remain with the company until at least 2024.
Eventually, some of the support functions, for example marketing, will be shared across the subsidiaries, while others will be the responsibility of the individual airlines.
Advantages of the new operating structure
The new operating structure provides several advantages. FlightGlobal reported that the airlines will be encouraged “to compete actively for capital and aircraft.” Accordingly, if an airline proves that it can be successful, it will get the support and money it needs from Ryanair Holdings. Furthermore, the new structure will make it easier for Ryanair to acquire additional subsidiaries, especially smaller airlines. Additionally, the entire management structure will be more formalized.
Ultimately, Ryanair Holdings will allow its subsidiaries to realize cost savings and become more efficient. Moreover, passengers are expected to benefit from the new operating structure as well.
Even though the group will originally only have four subsidiaries, O’Leary has mentioned that there is a possibility that at least one more airline will join Ryanair Holdings in the next five years, according to the Aviation Week Network. As a matter of fact, he would like to see an Airbus operator become a part of Ryanair Holdings.
What do you think of Ryanair’s plans to create an airline group of low cost carriers similar to IAG?