Saturday 1 October 2016

O'Leary predicts three carriers to control skies

Paul O'Donoghue

Published 14/11/2015 | 02:30

Michael O'Leary
Michael O'Leary

Ryanair chief executive Michael O'Leary has predicted that three major airlines, one each in the Gulf, Europe and the US, will dominate the future of long haul travel.

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However, he insisted that Ryanair is not concerned at such a development, and said that the Irish carrier will continue to focus on growing its short haul business across Europe for the foreseeable future.

In a wide-ranging talk at the 28th annual Carmichael lecture in the Royal College of Surgeons in Dublin yesterday Mr O'Leary said he expects there will be "radical" change in the airline industry in the next five years.

"The three big legacy carriers in Europe, BA (British Airways), Lufthansa and Air France [who are] partnered up with three big US majors are fighting three big Gulf carriers, trying to keep them out," he said.

"Ultimately I think Gulf carriers will buy large minority stakes in BA, Air France and Lufthansa."

He pointed out that Qatar Airways has already bought a large stake in BA, acquiring a 10pc of the shares in the UK carrier at the start of the year.

Mr O'Leary predicted: "What you will see is three big global superpowers consisting of a Gulf carrier, a European major and a US major.

"They will have enormous control and almost limitless deep pockets to fund better aircrafts, better service and lower prices in the economy cabin in long haul and they will connect you all around the world." However, he predicted that the mega-airlines would have "no interest" in short haul travel, saying: "[This] means we will continue to dominate as long as we don't screw up short haul in Europe."

There has been consistent speculation that Ryanair is interested in offering some sort of long haul service.

Reports in March indicated that the airline was planning to launch routes to as many as 14 US cities, with possible destinations including New York and Boston.

Both Ryanair and Aer Lingus have also confirmed that they are in talks about the possibility of a so-called interlining agreement between the two companies. Such an agreement would see Ryanair feed passengers to the Aer Lingus long-haul network.

However, Ryanair appears to have cooled on the idea of offering long haul flights by itself.

At the airline's annual general meeting in September chairman David Bonderman said that the firm has "no interest in flying transatlantic" and in a recent interview with the Irish Independent said he is sceptical about the company's plans to provide connecting flights for long-haul carriers.

Speaking yesterday Mr O'Leary said that the airline is looking to focus on short haul traffic in the coming years, saying that his predicted mega airlines would not be interested.

He said: "I think there is enough to be getting on with over the next five to eight years. If we can grow from 105m to about 180m passengers over the next five or six years that is a far better business plan for us for the immediate future rather than worrying about long haul."

The outspoken CEO also admitted that he was mistaken not to start treating Ryanair's customers better sooner. The airline has recently launched a programme called 'Always Getting Better' (AGB) aimed at providing the airline with a more customer-friendly image.

"If I was that good we would have started AGB about five years earlier, I was the one who said no," he said. "We were losing about 10m or 15m of our customers who were saying...I would rather pay Aer Lingus 20 or 30 quid because they treat me like an individual, so that was my mistake."

Irish Independent

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