Ryanair is constantly hitting the headlines for one reason or another. However, the airline attracts plenty of positive publicity for its cheap fares across Europe, North Africa and the Middle East. The one question that is often asked is how the airline can make a profit on seats sold for as little as £9.99.
Background
Flights aren’t free to operate. In fact, most of the time, Ryanair makes a loss on its super cheap fares. It’s not uncommon to find a Ryanair one-way fare for between £10-12. This is all the more remarkable given the fact that, in the UK, airlines are charged a fee called Air Passenger Duty by the government.
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This is a tax applied to each passenger on each flight – for most of Ryanair’s network, this is priced at £13 per passenger, so the airline is clearly losing revenue by selling these fares. So how exactly does it continue to stay afloat whilst offering such dirt-cheap airfares?
Ancillary revenue
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 £13 for an extra legroom seat with the airline on its shortest routes, and up to £30 on its longest.
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Priority boarding will set you back at least £6 and up to £35, although you get an extra cabin bag for your money. If you want to check a bag, 10kg will cost at least £12 – of course, prices double if you do any of this while at the airport. It doesn’t cost the airline anything to allocate you a seat, or let you board the aircraft first, meaning that all the money from these extras goes straight back to Ryanair. Other things, like snacks and water, will also cost you during the flight, and are of course priced a lot higher than supermarket prices.
Crazy Fees
While the seat may have been cheap, the costs that could come with it are not. If you don’t check in online, the airline will charge you £55 at the airport to do that for you. In addition, if you want to change your flight, you are probably better off checking how much a new flight costs to book, as a flight change costs from £45-£60 per person. Many of the cheap fares offered by Ryanair fall way short of this.
The airline recently made headlines for the wrong reasons after an elderly couple were charged £110 after they mistakenly downloaded their return flight boarding passes, rather than the outbound passes. However, it’s charges like this that help the airline make up for its low fares.
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 with their company paying, while other people have no choice but to travel.
Obscure Airports
While the airline does fly to some main airports, the majority of its flights operate to and from cheaper secondary airports. These airports charge a lot less for things like slots, parking and airport fees, so Ryanair can afford to offer low fares on these routes.
At these smaller airports, and most larger airports it services, the airline also 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. Instead, the airline usually opts to use remote stands and a bus service from the terminal, significantly cheaper than parking at the terminal as they are considered far less attractive.
Single Aircraft Type
Ryanair only operates the Boeing 737, which it has over 500 across its fleet. By maintaining only a single aircraft type, 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 aircraft type. The airline is the world’s largest operator of the B737-800, and often receives a significant discount from Boeing by ordering in bulk.
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The airline even worked with Boeing to create a Boeing 737 MAX variant – the Boeing 737 MAX 8200 – that fits in extra passengers by removing two toilets, thus helping the airline maximize revenue on its routes.
Operating a single aircraft type also means that the pilots 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.
Free Publicity
Ryanair deliberately does things to cause controversy, particularly its outspoken Group CEO Michael O’Leary. While you may think 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.
Ryanair’s Twitter account is also , engaging in banter with customers and showing them they are not always right. All of this exposure means that the advertising budget for the airline is fairly low.
How long will cheap fares be around?
Ryanair CEO O’Leary has previously stated he does not believe airlines will continue to offer incredibly low fares in the future. Along with rising fuel costs, airlines are bound to meet sustainability targets which will inevitably raise operating costs under current technology.
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During the summer of 2023, average Ryanair fares had risen by around 15%, driven by a lack of capacity across Europe. While demand for flights has returned to pre-COVID levels, not all airlines have been able to ramp up capacity.
How often do you fly with Ryanair? Do you care about which airline you fly with, or are you looking for the cheapest fares around? Let us know in the comments.
