Ryanair is as mercurial as its CEO, Michael O’Leary, and the aviation giant has a bold new theory. O’Leary believes cabin fever is going to create the biggest air travel buzz in years this summer, and that Ryanair’s rock bottom prices will be a driving force in a mass return to the skies.
Will low fares tempt you out of the house, or will the ‘Ryanair’ in your neighborhood?
Michael O’Leary was quoted in exclusive comment to Reuters, stating that his airline is ready to go at a moments notice, and that really, it can’t wait…
“Lots of people across northern Europe have been locked up in apartments, they will all want to go on holiday before the kids go back to school, as long as they can do so in reasonable safety. The minute we’re about to start flying again we’ll start doing seat sales, and so will every other airline.”
In reality, the current European aviation market favors Ryanair’s game. The Irish airline has the strongest balance sheet of any European airline, with cash reserves potentially able to keep the airline in business for up to 18 months, without flying.
Contrast that with legacy airlines already desperate for a cash injection just months into the global health crisis, and Ryanair is in a much stronger position to slash prices ‘until they die’. It makes a lot of sense. Could similar games be afoot in the USA, Asia and beyond?
Ryanair’s strategy is simple: take prices as low as it takes to get butts in seats, knowing they’re more comfortable at those pricing levels than others. If you like Ryanair, it’s fantastic news. If you prefer other airlines, it’s also fantastic news, since airlines typically follow pricing trends to stay relevant.
Competition creates favorable pricing and amenities for consumers.
In the United States, American is the airline currently driving the early price war. The traveling public is largely (and crucially) avoiding travel in the near term, but bookings for later in 2020 and into 2021 are currently possible at staggeringly low fares.
Some transcontinental US flights even plunged below $50 round trip.
For luxury travelers, similar trends are likely to emerge. In-person business meetings and conference gatherings will be largely restricted, which means airlines will have more seats to fill up front. When they do, prices should fall in line.
Ultimately, Ryanair, like all airlines and passengers around the world will be at the mercy of measures put in place by government. If borders aren’t open, the vast majority of European flights simply won’t go ahead. If only some are open, and it’s hard to tell whether they’ll stay open, it’s nothing is likely to move the needle.
Until more is known about exact timing, price seems to only be driving marginal bookings, and mostly for periods further afield than the immediate summer.
With US cases believed to be peaking this week, an initial path forward to easing restrictions could be in place shortly. If the Europe Union were to announce Schengen wide plans for border openings or movement within the region, many more customers might jump on those single digit cheap fares.
One thing that is absolutely true – cabin fever is now setting in, and if people believe travel is safe and borders will remain reliable, the right price could make all the difference. Just watch out for social distancing en route.
Been saying this for awhile since hearing that RyanAir was flying alot of ghost flights. Makes sense from a business side – if they have the cash reserves (and don’t take public money) to keep their aircraft operational and crews certified – then once the bans lift they will be ready to service many destinations while everyone else needs weeks to pull aircraft out of storage, inspect them and recertify pilots.
RyanAir may even win some market share as some who would never travel with them, book simply because they were the only flight available. Those customers may be willing to fly again in the future realizing that the flight isn’t as bad as they had always thought.