The Strategist

Ryanair to introduce free flights

11/23/2016 - 15:17

Many seats on Ryanair’s flights may be free in the next ten years, said Executive Director of the airline.

According to Michael O'Leary, the company aims to nullify tariffs. The airline itself will receive revenue from airports to which Ryanair will bring its customers.

Speaking at the Airport Operators Association conference in London in London, the airline’s spokesman noted that Ryanair is receiving increasingly more offers from European airports, including abolition or reduction of taxes and fees, such as, for example, air passenger duty (APD). Ultimately, this will reduce flight costs for customers to a minimum.

According to O'Leary, the company’s main challenge now is to maintain the trend sliding downward.

"I believe that in the next period of 5 to 10 years, flights of Ryanair will be free. In this case, flights will be full, and we will make money by sharing revenue with airports. Our clients will generate revenue for airports at the expense of retail sales in stores, which are located on territory of airports, "- said the representative of Ryanair.

The Irish airline expects to transport 119 million passengers by the end of this year. In addition, the company continues to increase its fleet to achieve annual passenger traffic of 200 million people by 2024. Ryanair will succeed if the company entice passengers, for whom flight price is important, from a number of other European operators, such as Air Berlin in Germany, Polish Lot and Alitalia in Italy.

However, lower rates and fees will not be available everywhere, O'Leary said. That will not happen at London’s Heathrow and other major airports-hubs. However, most of other airports, which are interested in increasing passenger traffic, have already joined the process of cutting fees.

Average tariffs for the Ryanair last year accounted for about 46 euros (39 pounds), including one bag in the luggage. The company believes that by the end of this year, average tariffs will be reduced by 10-15%. The airline receives about a quarter of revenues from a variety of additional services, such as car rental and sales during the flight.

Previously, Ryanair has raised its forecast for growth in traffic by 10%. It expects growth in passenger traffic to at least 200 million people by March 2024.

This will allow the airline to ensure profit growth across Europe despite consequences of Brexit. At the same time, Ryanair notes that lowering of reduction of tariffs for transportation and uncertainty of Britain’s future policy will have a negative impact on the company's business.

Last month, the airline has reduced its annual profit forecast, and explained this by decline of the pound sterling after the Brexit vote.

The airline’s officials said that future income depends on whether air fares will be reduced during the fourth quarter. In the near future, the operator already expects 13 to 15% fall in price.