I fly around Europe for €30-€100 per return flight without a checked bag. Yet Ryanair are one of the most profitable airlines in the world yet charging such cheap prices. Are other airlines just not as efficient as low cost airlines?
In: Economics
In really simple terms: It’s expensive to own an airplane for 1 day, and that cost doesn’t change if it’s flown more or less. Ryanair flies more trips per day (by reducing turnaround time) to spread the 1 day cost more thinly.
Ryanair also:
– Charges extra for everything, so even if the price of a flight is low they know the avg passenger will pay them much more.
– Charges a lot for last minute flights
– Reduces advertising costs with guerrilla marketing — eg, by offering a few flights for 1 cent… which creates buzz and promotional value. And by the CEO saying outlandish things to get media attention.
– Reduces airport costs by landing at cheap, obscure airports while claiming a flight is to a city that may be 80+ km from that airport.
– Is better insulated from recessions. If passengers have less money they may cut back on $2,000 holidays, but they may still buy a cheap Ryanair flight as a way to make up for the loss of premium travel.
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