Ryanair’s eccentric CEO, Michael O’Leary, has announced his ambition to offer free flights for all within ten years, reports Ben Brown.
His plan to justify free flights relies on the adoption of a revenue-share arrangement with airports. He said: “I’ve long held the view that airports are just shopping malls and I’ve, therefore, never understood why we should be charged for delivering people to shopping malls.”
O’Leary’s announcement was delivered to a roomful of airport directors in a direct bid to tap into profits from terminal restaurants, bars, cafes and shops.
He continued: “The flights will be full, and we will be making our money out of sharing the airport revenues, [out] of all the people running through airports, and getting a share of the shopping and the retail revenues.”
O’Leary isn’t one to shy away from a bold or provocative statement. He once said: “I think I’m Jesus. A prophet in his own time.” Is talking about free flights just another media-grabbing statement?
Well, Ryanair is already operating at ultra-low fares, with £2 tickets available on mid-week flights earlier in November. However, O’Leary will have to work hard to make up the expected £15 profit he typically makes from each flyer.
Free flights but you’ll pay for the extras
Ryanair’s plan also involves relying wholesale on an increasingly popular form of profiteering in the travel industry called “ancillary fees”.
Ryanair already charges its passengers additional fees for seat selection, baggage and meals, and O’Leary has even suggested charging a pound for use of airplane bathrooms. This is where Ryanair makes up for the cheap price of a flight ticket.
The company now makes £1.3 billion a year from ancillary charges, and with travelers now willing to spend up to £61 on airline extras to personalise their trip, it’s a potentially lucrative path for Ryanair to explore further.
Are the airports on board?
Getting the likes of Heathrow and Gatwick to share their revenue will be no easy task for the Irish CEO. However, he plans to target smaller hubs first. “I think it will happen,” he explained. “It just won’t happen at Heathrow or those big hub airports.”
Growing airports eager to attract more passenger traffic may be an easier target, and more willing to split revenue in order to open up new routes. As O’Leary explains, “[In] most of the airports who are looking for big traffic growth, that process is already starting to happen, lowering airport fees and some of the charges.”
What About Air Passenger Duty?
Currently, Air Passenger Duty (APD) adds between £13 and £78 to the price of Ryanair tickets. Ryanair would have to swallow that cost significantly if it is to advertise free flights.
In many cases, Ryanair is already absorbing the APD into its ticket price. “I’m doing seat sales this week at £4 and I’m paying the £13 APD,” O’Leary explains. “I’m paying you to fly with me.”
Ultimately, the APD would have to come down or be removed entirely to make O’Leary’s plan achievable. Many have called for the abolishment of APD in order to make Britain more competitive in a post-Brexit world. However, the chancellor, Philip Hammond, failed to reduce or eliminate the tax in last week’s Autumn Statement, so there’s an uphill battle for Ryanair yet.
With global passenger numbers expected to double within the next 20 years, there will certainly be no shortage of demand for O’Leary’s low prices.
As for his grand plan of free travel, Globetrender predicts that Ryanair is likely to strike deals with smaller and emerging hubs, opening up new routes and lowering prices yet further. But will we eventually fly for nothing? We’ll wait and see.