Perusing the much respected Airline of the Year awards given by air transport research company and occasional government consultants Skytrax over the last decade, I'm slightly at a loss. Singapore, Cathay Pacific, Emirates, Asiana (20 May 2010) even British Airways (2006), but not the airline Mr Michael O'Leary claims is the "world's favourite", Ryanair. Surely an omission and not simply hyperbole on Mr O'Leary's part as the Skytrax Airline of the Year Award is known the world over in the industry as "the Passenger's Choice".
Unfair? Going down the list of Awards for Best Low-Cost Airline, we find Air Berlin as the only winner from Europe this year. On Skytrax's star-rating list there are no five star low-cost airlines, only a couple of four star and more than two dozen with three stars including Easyjet. Unfortunately, Ryanair is awarded only two stars.
The outspoken, thick-skinned, and sometimes controversial Ryanair CEO, Michael O'Leary, won't be caring about any award missed especially as his airline has bounced right back into a healthy profit for the financial year ending on 31 March 2010. Despite revenue only increasing two per cent to 2,988 million euros, adjusted profit rose from 114 million euros in 2009 to 319 million euros. Against a backdrop of heavy industry losses, falling passenger numbers, recession throughout the EU, strikes ongoing or called both sides of the Atlantic and volcanic ash clouds, this was a most robust and commendable achievement. Shareholders, not least Mr O'Leary himself (four per cent shareholding) can look forward to adjusted Earnings per Share rising from 7.10 euros to 21.59 euros, an increase of 204 per cent.
Staying with the 2010 Balance Sheet figures, the number of passengers rose from 58.6 million to 66.5 million, up 14 per cent. Revenue per passenger therefore fell during the year from 50.2 euros to 44.9 euros. The fall could be explained as just the growing pains of an airline that continues to add new bases (eight) and new routes. The drop in revenue per passenger is mostly due to the number of "bargain" fare offers and the duration of such promotions during the recession. The company admits that fares fell by 13 per cent overall in the year, thus causing Scheduled Revenues to fall from 2,344 million euros at year end 2009, to 2,325 million euros, year end 2010.
In 2008-2009, 20 per cent of Ryanair's revenue was generated by non-ticket charges and sales which the company refers to as Ancillary Revenue. Rising to 22 per cent during 2009-2010, Ancillary Revenue accounted for allof the rise in the company's Total Revenue figure. Ryanair predicts that airfares will rise by between five and ten per cent this year, so addressing the balance. It appears to be comfortable with a 20 per cent figure.
Although there was a fall in revenue per passenger for the 2010 year end, there was a rise in the adjusted profit per passenger from 1.79 euros in 2009 to 4.8 euros in 2010, the result of "rigorous cost control" and lower fuel charges. It's these lower fuel charges, saving 363.2 million euros, which have really turned the bottom line figure around from an unadjusted loss of 169.2 million euros in 2009.
The company also possesses a cash or near cash cushion of 2.8 billion euros and having pulled out of talks on new aircraft purchases with Boeing late last year, the Board will propose at their AGM in Dublin, this September, a one-off, 500 million euro dividend.
All aircraft purchases (34) are fully financed to January 2011; their forward fuel costs are well hedged until Q2, 2012 and their long term dollar hedging extends to the end of 2011. The industry must be green with envy!
On 03 June, Ryanair announced that their passenger numbers for May 2009 at 5.51 million, had risen to 6.44 million for May 2010, a 17 per cent increase but with an unchanged load factor of 81 per cent for both months. For the 12 months to May 2010, the airline carried 68.3 million passengers on a load factor of 82 per cent.
Qualifying the good news, the company issued a statement: "May 2010 figures include up to 250,000 passengers who were booked to fly on flights which were cancelled due to the unnecessary closures of parts of EU airspace following the volcanic eruptions in Iceland"
This is just one of Ryanair's pet hates and not just the ash cloud but the compensation they must pay to passengers under EU Regulation 261. What does this Regulation say the passenger is entitled to?
(a) Full Refund on the unused part of the airfare. (This ceases if the passenger starts making his own arrangements). Or:
(b) Re-routing, on the next available flight to final destination. Or:
(c) Re-routing, on a future flight, to the final destination at a later date of the passenger's choice.
If (b) is selected, the airline is required to provide:
1. Meals and refreshments in reasonable relation to the waiting time.
2. Two telephone calls, telex or fax messages or e-mails.
3. Reasonable hotel accommodation in cases where a stay of one or more nights becomes necessary.
4. Reasonable transport between the airport and place of accommodation.
Ryanair estimate the cost of all this to be about 50 million euros (they have already been fined three million euros for non-compliance) and although resigned to paying most claims, are fighting in the courts (successfully in Sweden) where the claims are exaggerated and will be making representation to various government authorities for a change to be made in EU261's interpretation.
Although I have a lot of sympathy with them, and all the other airlines, on this issue, few would rush to offer Mr O'Leary and many of his executive colleagues a shoulder to cry on; Ryanair is a company that elicits little sympathy. A reputation of being ruthless to competitors might be pardonable, bullying and threatening tactics when not getting ones way, less so.
Cork Airport had ambitions to develop "key services, enhanced to the highest international standards" with air bridges an integral element of the terminal design. Only one air bridge has been built because it was made plain to the Airport management by a major low cost user that the air bridges were not wanted, would not be used and would not be paid for. Apparently the charge is higher to park at the air bridge than on a hardstand.
On 02 June 2010, Ryanair announced that it had won its appeal in the Irish courts against the imposition of higher charges at Dublin Airport to pay for the new Terminal 2 on the grounds that the airline would never use the new terminal and the airport has a regional monopoly. This will force the Dublin Airport Authority to introduce differential pricing.
Ryanair will always fight its corner to maintain its position as a low cost carrier, it knows what it wants and it knows its market. I have flown Ryanair. Knowing the airline is a point to point carrier, I allowed plenty of time for my connection and as the journey was short haul, a flying bus was perfectly adequate. Would I want to fly long haul with the carrier, definitely not, but that's not Ryanair's comfort zone.