Ryanair cuts boost traveller numbers
Published 01/02/2010 | 16:01
Budget airline Ryanair said it slashed average fares to a record low at the end of last year as it stepped up the battle for recession-hit business.
The decision to cut prices to an average €30 in the last three months of 2009 helped it boost passenger numbers, which grew 14pc to 16 million.
Ryanair increased its annual profit expectations as it posted narrower losses of €10.9m in the third quarter, from €101.5m in the same period a year earlier. Fuel costs were down 37pc in the quarter, while average fares dropped 12pc.
The airline - led by outspoken boss Michael O'Leary - said fares had dropped in the period due to the recession, price promotions and currency fluctuations between the pound and the euro.
Mr O'Leary pledged last year to slash fares in a move to tempt price-conscious passengers and put pressure on competitors in the recession.
Takings from extra products and services - known as ancillary revenues - grew more slowly than passenger numbers, at 6pc, as customers avoided excess baggage costs and the effects of the exchange rate between the pound and euro took their toll.
Ryanair deputy chief executive Michael Cawley said the firm had seen "perhaps some inhibitions" in people over spending money on extras like coffees and teas on board.
He said ancillary revenue rates had increased every year for 14 years, but added this "cannot continue" and having risen to above 20pc of total sales, these were now predicted to steady at around a fifth of turnover.
Over the first nine months of its financial year, the firm said fares were higher than expected - at €34 - and this was driven by better-than-expected demand in some of its continental European markets like Germany, France and Spain, where the firm did not need to reduce prices.
But it said the situation in the UK and Ireland remains weak, with regional airports such as Liverpool, Bristol and those in Scotland particularly suffering and fares heavily discounted to stimulate demand.