Long haul 'impossible' without business class, says Millar
Published 06/07/2014 | 02:30
Long-haul flights just can't be done without separate business and economy classes, Ryanair's chief financial officer has said, ruling out for good the airline's future in transatlantic flight.
Howard Millar, who this week announced his intention to step down from the world's biggest international carrier, told the Sunday Independent that long haul is not financially feasible using the low-fares, one-class system pioneered on shorter routes by US airline South West and Ryanair. Ryanair will never fly long haul for this and other reasons, he said.
"I have done a number of business models on it and come to the inescapable conclusion that you can't have a long-haul service without including some kind of business or premium-type package," he said.
He used anecdotes from his student days to illustrate. "I have at home a ticket I got in 1981, as a poor impoverished student on the J1 visa. I convinced my old man to give me the money. In 1981, for a USIT charter to New York, my old man paid £350, which is worth €380. And if you go on to their website today, you can still go to New York for €380. So you have to come to the inescapable conclusion - oil at that stage was just under $10 a barrel, oil is now $112 a barrel - and the price of a ticket is still more or less what it was 33 years ago. When you look at the model, it means you have to have some kind of business or premium type offering because that pays for the whole thing, that's the cream on the cake."
Ryanair will never do long-haul, he said, but he, chief executive Michael O'Leary and outgoing chief operating officer Michael Cawley, could one day look at doing it via a separate vehicle.
"It won't be Ryanair, it will be something else. We would look at having a separate vehicle. Ryanair is kind of ring-fenced as short haul, point to point within Europe. Long haul might be 'Millar, O'Leary and Cawley Air' or whatever, but something else. Not within Ryanair."
Norwegian Air's experience in building up a long-haul business shows that staffing would also be an issue, he added. Pilots prefer long-haul flights, putting the short-haul division in jeopardy.
The cost of long-haul aircraft is also prohibitively expensive, he said. Gulf carriers have huge orders already in place with plane manufacturers, meaning there are few available and only at very high prices.
Mr Millar will depart the airline in December after 23 years at Ryanair.
Sunday Indo Business