Ryanair is known the world over for its success with the low-cost carrier model. The airline is able to offer prices as low as £9.99. However, with taxes, wages, and fuel to be considered, how does the airline manage to make a profit? Simple Flying investigates.
While low fares are popular with passengers, they aren’t so popular with airline CEOs. The low fares allow flights to become much more accessible to passengers. However, by offering a flight for as little as £9.99, it takes away the passenger’s realization of the cost of flying. Let us take a look at how. We’ve produced a handy video in case you don’t have time to read the article:
Not the real cost of flying
When operating a flight out of the UK, Ryanair is liable to pay a tax per passenger of £13, known as Air Passenger Duty. On top of this, the airline also has to pay for fuel to operate the flight, and the crew onboard the service, amongst other things.
As such, by showing passengers a flight price of just £9.99, the passenger is not getting an appreciation for the true cost of flying with the airline. It could give passengers the impression that the flight costs just £9.99, with no concept of the extra costs involved.
How can Ryanair sell such cheap fares?
You may wonder why Ryanair is able to sell such cheap fares when it costs £13 just in tax? Maths dictates that Ryanair would lose £3 on the booking before you even consider the other costs of operation.
While Ryanair will always make a loss from some stubborn customers not paying more than the £9.99 fare, a majority of passengers will pay for extras. Things like assigned seating and priority boarding cost Ryanair nothing to provide, meaning that 100% of the costs associated with the service can be put straight into offsetting the losses of a cheap flight.
You may also have noticed that Ryanair has incredibly strict baggage allowances. Without paying for additional services, passengers are only permitted to take a small carry on bag on board. A large number of people would need to take a bigger bag of some sort, and knowing this, Ryanair charges for the privilege.
In addition, the airline will charge a markup on certain things offered onboard the aircraft. This includes food and drink which will cost much more than an identical item might on the ground.
The benefits of Ryanair’s model
Ryanair’s low-fare model comes with several benefits. Firstly, it makes flying much more accessible to customers who otherwise may not be able to afford it. However, secondly, it makes flying much more modular. Passengers only pay for what they want. This, in turn, means that if a passenger doesn’t need bags, they don’t need to pay for bags. This is a concept which other full-service carriers are slowly trying to implement.
What do you think of Ryanair’s low-cost model? Let us know in the comments!