unprecedented demand for Ryanairâs Dublin to Luton service, and bearing in mind the EECâs attitudes to competition in air travel within Europe and in particular the recent European Court ruling on air fares, it makes obvious sense to consider the extension of Ryanairâs low-fare concept to other parts of Ireland and Europe besides Dublin and London; especially now that Ryanair has itself made the commitment to jets and high utilization of this equipment is key to success.
It said its early experiences on the Luton route âvastly exceeded even our most optimistic predictionsâ. In its first week it carried 1,525 passengers (a load factor of 72 per cent), rising to 1,777 passengers and an 80 per cent load factor in week two. âIn week three the load factor was even higher,â it said, without specifying the numbers. It also claimed that WaterfordâLuton had âproved more popular than anticipatedâ.
Price would once again be Ryanairâs weapon of choice, and on the continental routes it had plenty of room to manoeuvre. AerLingusâs return fare to Paris Charles de Gaulle airport was £434 â more than a return flight to New York â and Ryanair said it would charge just £159. It argued that price would stimulate demand and that if granted the new routes it would carry 340,000 extra passengers in the first year.
The applications were a clear signal of intent. Ryanair wanted to evolve quickly from a low-key regional operator into a serious potential competitor for Aer Lingus. Its business plan was consciously predatory â it wanted to identify Aer Lingusâs most profitable routes and then challenge the national airline on each one, undercutting its fares and stealing its passengers. But Ryan knew too, from his study of the effects of US deregulation on the domestic market, that low fares stimulated air travel and encouraged people to fly. Ryanair would steal passengers from Aer Lingus, but it would also start to introduce a new generation of customers to the airline business.
Ryan was confident that the government would grant permission for the new routes, but Aer Lingus, already stung by Ryanairâs success in attracting passengers to its DublinâLuton route, was on full alert. The national airline now believed that Ryanair posed a serious threat, and after years of operating in the comfort zone of a stagnant but profitable market did not believe that the market would grow. Instead, it argued to government and to officials in the department of transport, Ryanair would simply cannibalize Aer Lingusâs market and rob it of profits. The upstart, it decided, had to be stopped in its tracks.
At the time Irelandâs department of transport was known as Aer Lingusâs downtown office; the relationship between the department and the airline it owned was seamless. Aer Lingus executives were routinely asked to provide information for the department and allowed, in effect, to dictate government policy. Ryanâs confidence that the new routes would be granted was entirely misplaced; he understood markets but he had no feel for the politics of the situation. The department of transport sought, and took, Aer Lingusâs advice. The new routes would be refused.
The official reason for the refusal was that Ryanair had yet toprove itself as an airline. The Luton route, however, had quickly established itself. In Waterford early teething problems had also been countered. Poor weather conditions â Waterford airport is prone to fog â caused almost one in five flights to be diverted to other airports, but the introduction of the larger Viscount reduced the diversion rate.
Passenger numbers continued to grow as Ryanair introduced larger jet aircraft from the end of 1986. By early February 1987 the airline had carried its 100,000th passenger on the DublinâLuton route. Ryan and his team were ready to expand further, but the rules of the day were
It said its early experiences on the Luton route âvastly exceeded even our most optimistic predictionsâ. In its first week it carried 1,525 passengers (a load factor of 72 per cent), rising to 1,777 passengers and an 80 per cent load factor in week two. âIn week three the load factor was even higher,â it said, without specifying the numbers. It also claimed that WaterfordâLuton had âproved more popular than anticipatedâ.
Price would once again be Ryanairâs weapon of choice, and on the continental routes it had plenty of room to manoeuvre. AerLingusâs return fare to Paris Charles de Gaulle airport was £434 â more than a return flight to New York â and Ryanair said it would charge just £159. It argued that price would stimulate demand and that if granted the new routes it would carry 340,000 extra passengers in the first year.
The applications were a clear signal of intent. Ryanair wanted to evolve quickly from a low-key regional operator into a serious potential competitor for Aer Lingus. Its business plan was consciously predatory â it wanted to identify Aer Lingusâs most profitable routes and then challenge the national airline on each one, undercutting its fares and stealing its passengers. But Ryan knew too, from his study of the effects of US deregulation on the domestic market, that low fares stimulated air travel and encouraged people to fly. Ryanair would steal passengers from Aer Lingus, but it would also start to introduce a new generation of customers to the airline business.
Ryan was confident that the government would grant permission for the new routes, but Aer Lingus, already stung by Ryanairâs success in attracting passengers to its DublinâLuton route, was on full alert. The national airline now believed that Ryanair posed a serious threat, and after years of operating in the comfort zone of a stagnant but profitable market did not believe that the market would grow. Instead, it argued to government and to officials in the department of transport, Ryanair would simply cannibalize Aer Lingusâs market and rob it of profits. The upstart, it decided, had to be stopped in its tracks.
At the time Irelandâs department of transport was known as Aer Lingusâs downtown office; the relationship between the department and the airline it owned was seamless. Aer Lingus executives were routinely asked to provide information for the department and allowed, in effect, to dictate government policy. Ryanâs confidence that the new routes would be granted was entirely misplaced; he understood markets but he had no feel for the politics of the situation. The department of transport sought, and took, Aer Lingusâs advice. The new routes would be refused.
The official reason for the refusal was that Ryanair had yet toprove itself as an airline. The Luton route, however, had quickly established itself. In Waterford early teething problems had also been countered. Poor weather conditions â Waterford airport is prone to fog â caused almost one in five flights to be diverted to other airports, but the introduction of the larger Viscount reduced the diversion rate.
Passenger numbers continued to grow as Ryanair introduced larger jet aircraft from the end of 1986. By early February 1987 the airline had carried its 100,000th passenger on the DublinâLuton route. Ryan and his team were ready to expand further, but the rules of the day were
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