The pandemic has changed a lot at Ryanair. The Irish airline, leader in Spain in number of flights, has managed to break its own records for passengers transported in January and February throughout Europe, and aspires to reach the figure of 168 million travelers by the end of 2023. But the thing is not Boeing 737 with which it hopes to reach 225 million customers in 2026, some of which will go to its bases in Spanish airports.
Eddie Wilson, CEO of the airline, in an interview with La Información after signing the first collective agreement that improves the working conditions of its pilots and announcing that before the end of the year he will sign the one that affects cabin crew (TCP), he explains how rising costs, especially those related to kerosene, will inevitably affect Ryanair’s commercial policy: “there is a natural tendency for tariffs to rise, for power and for capacity, but it is not the end of low prices “, statement.
Because the ‘perfect storm’ of factors that have conditioned the main European economies continues to worsen, despite the fact that some issues are beginning to relax. This is the case, for example, of the price of energy, which for an airline is part of one of its great financial challenges. Wilson explains that Ryanair has covered 80% of its fuel at a fixed price of $65 until April 1, when the new coverages will set a price of $90 and be reduced to 60% of the volume.
“This is almost a 30% increase, and that will have to be reflected in some cases with higher rates.” In addition to energy inflation, we must add the inflationary dynamics of the rest of the costs, the slow recovery of air activity and the capacity problems linked to the strikes by air traffic controllers in France.
Asked if these conditions mean the end of ‘low cost’ flights, Wilson categorically denies that they are going to disappear. “When there’s less of something, it usually costs more. There will be fewer €9.99 fees, but since we’re the lowest-cost operator, it won’t be a big change for customers,” he says.
The executive points to the air traffic control capacity as another great challenge this year for the sector. “We had a lot of strikes last year and we need to get it fixed. Control is the biggest contributing factor to the lack of capacity. If there is a strike in France and a plane comes from England to France, it cannot cross French airspace. That has to be fixed.”
The average rate will rise and there will be fewer promotions
Before the pandemic, Ryanair’s average fare was around 40 euros. “If that increases by 5 euros in the next three or four years, it means that there will be less promotional fares, but also that more people will travel with us, because our competitors’ prices have gone up even more.” Wilson considers that the rapid recovery of air activity after the pandemic has changed the way in which the different governments in Spain looked at the company.
“We were a bit invisible. We were hidden in plain sight. We were the number one airline in Spain, but they realized that we are the ones who provide the connectivity. Not only for traditional tourism, which is important, but also in the because we bring people all year round. Tourists are starting to go to places beyond the big cities, which are also important from a business connectivity standpoint.”
Air tourism, key to the Spanish economy
For these reasons, he considers that Ryanair is playing “a vital role in the Spanish economy”, to which it contributes the equivalent of 1.1% of GDP, according to his calculations. After defining his relationship with the different Spanish governments as “very good”, he figures at 1,000 daily flights that will arrive this summer on the peninsula and the archipelagos on planes from his airline, “and what is more important, we are putting regions , something that really helps Spain to have a diverse tourism product throughout the year.”
Asked about the proposal to eliminate short flights that have the train as an alternative, from which the Spanish government has distanced itself for the moment, he considers that it is a mistake, since “people are not going to take a train from Amsterdam to Madrid for business” and that would especially affect the economies of Spain, Portugal or Greece. “14% of Spanish GDP is generated by tourism, and that is an industry in itself. The fact that Germany does not have a tourism industry suggests that the measure is discretionary. Why don’t they stop manufacturing cars?” .
“The planes perform an essential service, they move people, they do what we are supposed to do in the European Union, which promotes the free movement of people by making labor markets work. Look at the Spanish, people now travel all over the world. Europe to work, and they return home without having to move for six months or a year.