Director of route development, Ray Kelliher, explained why, although Ryanair continues to innovate, there’s a sturdy core which remains at its heart.
Eight AOCs, but only one colour printer within group HQ. How many airlines could boast such a statistic – and why the latter part? Coming from Ryanair where costs are cut at every viable opportunity, it seems barely surprising.
Ray Kelliher, director of route development at Ryanair, revealed this information as he discussed the airline group and its current state at CONNECT 2022. He began by explaining Ryanair’s infrastructure because, as noted, it is now a group of companies with five airlines. Alongside Ryanair DAC, the main carrier, are Malta Air and another Maltese AOC, Lauda Europe (for the Airbus fleet), Ryanair UK and Buzz, the Polish AOC which also leads charter work.
“Let’s be clear, Ryanair [DAC] is still the primary driver. That’s the one that sets the fares, the one that’s doing the deals. We’re still the same group with a plan to be carrying 225 million passengers in 2026,” Kelliher remarked. “We still have the same high level of discipline that we had 20 years ago, having a balance sheet with a net zero figure, because [group CEO] Michael [O’Leary] hates debt. He was always anticipating the day of Covid-type events, where we lost over €1 billion and we’ll probably lose up €40-50 million this year. And it’s because we have a balance sheet the way we do is why we can still raise debt in this current climate.
“It’s that balance sheet you need to buy an aircraft, it’s that balance sheet that you need rigid to be able to secure long deals with airports, because airports know you’re signing up with a partner that’s going to be here in 10 years, 20 years, you know, nuclear fallout or otherwise in the production run here and in this book. So, we are still the same. Pre-pandemic we recorded 150 million passengers and, as I said, we are going to go to 225 million. That’s 75 million incremental passengers we have to find in less than four years.”
Other than when it was legally not allowed to fly, Ryanair kept flying through the pandemic, operating practically all the fleet and keeping as many pilots active, but at a cost. The airline believed it was worth it because it would have been more painful not to do it.
“That was a huge decision at the time. It was a close vote, but ultimately, we decided to keep the fleet current,” Kelliher noted. “A huge part of it was that we have so many pilots working for us that if we’d cut off that schedule and disassociated employment with them, we could have lost them. They’d go off and do other things. So it was keeping aircraft flying and keeping our own people in their jobs. It was a pretty good decision.”
Ryanair has close to 20 simulators across three sites, which have been invaluable as more capacity has been put back into the market. They also show their worth as the airline receives its Boeing 737 MAX 8200s. It will operate just over 60 in summer 2022. “But we’ll be taking two aircraft a week, every week, for 13 weeks, for the next four years,” Kelliher added. “You need your own simulators, your own facilities for that.”
The airline maintains its strategy of load factor active revenue paths, getting as many seats filled as possible, almost at any cost. “Why do we do that? Because empty seats don’t buy coffee and sandwiches. We are the only airline in the world that doesn’t have a yield department. It just doesn’t exist. We have a load department and their job is to make sure that we get average levels in normal times of 94%-95%,” Kelliher explained. “That’s why we’re in such a good position with airports relationship wise, because it’s great having an airline who’s flying to an airport, but even better having one which says I’m flying this 95% full.”
Route choices obviously help in this area, but Ryanair also has a reputation as a market creator. There has always been some mixing of airport sizes but that has not mattered if Ryanair saw an opportunity. “There’s no religious thing of having to fly to secondaries or primaries. It always comes back to fundamentals. It’s purely, ‘Where do we think we can create a market?’ or ‘Where can we secure a long term deal?’ and I suppose that works for folks in the airports,” said Kelliher.
Making this all flow is the digitalisation of the airlines. The route development director highlighted that Ryanair Group actually owns four IT companies in Ireland, Poland, Spain and Portugal. “We have our own little Dell,” he commented. That’s the type of backing required when you get 1billion clicks on your website a year and have around 90 million customers signed up for your app.