Ryanair is constantly hitting the headlines for one reason or another. The airline offers cheap fares across Europe and a few other routes. The one question that is often asked is how the airline can make a profit on seats sold for as little as £7.
A Little Background
Flights aren’t free to operate. In fact, most of the time Ryanair makes a loss on its super cheap fares. I recently flew from Stansted to Frankfurt Hahn (remember that airport for later). The flight cost me a grand total of £6.99. In the UK, airlines are charged a fee called Air Passenger Duty by the government. This is a tax applied to each passenger on each flight. Currently for Ryanair this comes in at £13 per passenger. Now I didn’t give any money to Ryanair for this booking other than the £6.99 fare, so the airline in theory made a loss on my ticket.
The number one way that the airline makes up for this shortfall in fares is to charge for everything, and at a high price. Let’s start with priority boarding and seat reservations. It costs at least £15 for an extra legroom seat with the airline. Priority boarding will set you back at least £6, totalling at least £21 for both services. It doesn’t cost the airline anything to allocate you a seat, or let you board the aircraft first, meaning that all of the money from these extras goes straight back to Ryanair.
I was also offered the choice to preorder Ryanair’s hot breakfast for £10. This includes bacon, white pudding, sausage, hash brown, tomato, bread, orange juice, and a coffee. Now, it doesn’t cost the airline nearly that much to make that breakfast, the price is just inflated for the convenience. They can charge €3 for water, because they know you haven’t got the option of obtaining it anywhere else once you board the plane. In fact, the airline will even charge its own staff for water.
While the seat may have been cheap, the costs that could come with it aren’t. If you don’t check in online, the airline is going to charge you £45 at the airport to do that for you. In addition, if you want to change your flight, check how much the new flight costs to book. A flight change costs £35 per person. Many of the cheap fares offered by Ryanair fall way short of this.
Ryanair also knows its travellers. It knows that people will need to travel at short notice, and as such can massively inflate its flight prices in the days before a flight departs. They do this because they know some passengers are on business and don’t mind because the company is paying, while other people have no choice but to travel.
While the airline does fly to some main airports, the majority of its flights operate to and from cheaper secondary airports. I mentioned Frankfurt Hahn earlier. The airport is really in the middle of nowhere. In a different federal state to Frankfurt, it takes two hours on the bus to reach the city centre. Other examples include flying to Dusseldorf Weeze, and Brussels Charleroi Airport. Both a significant distance from the city whose name it bears.
At these smaller airports, and most larger airports it services, the airline refuses to pay to use the airport’s jet bridges. These are a commodity that the airport usually charges extra for, and hence, Ryanair will avoid them. In the case of Frankfurt International Airport, the airline opts to use remote stands and a bus service from the terminal which takes a good 10 minutes to reach the plane. These stands are significantly cheaper than parking at the terminal as they are considered far less attractive.Ryanair’s CEO Michael O’Leary poses with the CEO of Boeing Commercial Airplanes, Ray Conner, after signing a contract for new aircraft. Photo: Boeing
Single Aircraft Type
Ryanair only operates the B737. By doing so it is able to keep its costs down. The airline’s mechanics only need to be trained on one aircraft. In addition the airline only needs to keep parts in stock for one type of aircraft. The airline is the world’s largest operator of the B737-800, and often receives a significant discount from Boeing by ordering in bulk. Each of the safety cards on the aircraft is stuck to the back of the seat in front. This is another cost saver for the airline, as they don’t need to be replaced nearly as often.
The single aircraft type also means that the crew only need to be trained on one aircraft. Ryanair typically hires entry level crew. These individuals have a lower pay requirement and less bargaining power as they need the experience. Until recently the airline also refused to recognise unions. A change prompted by a number of crew strikes.
Ryanair deliberately does things to cause controversy. Why you may think that bad publicity will damage the aircraft’s brand, they see it as quite the opposite. Any time they appear in a newspaper or on a website (including in this article) they have had free exposure. This means that the advertising budget for the airline is fairly low.
So while it may seem that your Ryanair flight is priced crazily cheap, you can be safe in the knowledge that the airline is still making a profit. However, with the rising cost of fuel, the airline could soon be forced to raise its costs. In fact, the £6.99 flight mentioned in this article now has a cheapest fare of £7.99.