Blog: Brexit, Wizz Air, Inflation & Tax: Ryanair CEO Navigates How His … – Simple Flying

On Tuesday, we reported that Ryanair announced the ramp-up of its London network to over 180 new routes amid the addition of 6 launches this summer. This revelation came at a time when the airline saw a record number of bookings over a single weekend at two million. While there was cause to celebrate, the ultra-low-cost carrier’s CEO Michael O’Leary, took some time to talk about the difficulties of the industry.

Part of the puzzle

While the recovery period is offering a strong glimmer of hope for the future of aviation, O’Leary is cautious as ever. He noted that every time there is an opportunity for growth within Europe, there is another roadblock. The pandemic, the war in Ukraine, fuel prices, strikes, and congestion are all issues that the market is dealing with.

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As O’Leary put it, “s**t always happens in this industry.”

Inflation and recession are the two issues that are often posed to Ryanair amid the concerns that people are not spending money. Still, O’Leary hinted that there are no signs of it affecting travel at the moment. He declared that there is a lot of spending happening.

“Hotels are full, restaurants are full, and people do seem, at least at this point in time, to be booking for Easter and summer. We’ve gone through two weeks of record bookings over the last two weeks and a very strong recovery before Christmas.”

Photo: InsectWorld/Shutterstock

Keeping an eye on the competition

O’Leary added that Ryanair remains the UK’s most reliable airline while many of its competitors are cutting capacity. Across the airline’s route map, Italy is offering significant potential for growth. The Mediterranean country has been the carrier’s most-served nation since 2013. It added 30 Boeing 737s to be based in the country last summer and expects to continue adding many more.

Ryanair and low-cost rival Wizz Air both benefited from the demise of Alitalia, competing to gain traction across Italy. Still, O’Leary highlighted that Wizz is cutting numerous domestic routes and reducing frequencies on others while shutting down its Bari and Palermo bases. Ryanair’s leadership feels that its competitor has been forced to concentrate on growth elsewhere amid the strong presence of the Irish carrier.

The executive stated:

“[Wizz Air] is in retreat out of Italy. I think they have very cleverly realized that they can’t compete with Ryanair. If they go head-to-head with Ryanair, they lose because we have lower costs. We have lower fares, and generally, a much bigger market footprint in a market that easily we’re up to 40% market share. I think what they’ve said is where can we find a market where we don’t have to compete with Ryanair, and that is the Middle East and I think it’s a sensible development from Wizz’ point of view.”

Photo: Sumit Singh | Simple Flying

Government requests

Speaking of Wizz Air, Ryanair also goes head-to-head with the carrier across the UK, especially at London Luton and London Gatwick. Ryanair has six aircraft at Luton operating 27 routes. It will also carry two million passengers from the site in the 2024 financial year. It also has a robust holding at Gatwick, with four routes, 140 weekly flights, and 1.2 million passengers.

Regardless of the strong momentum in the UK, there is plenty of room for growth, according to O’Leary. However, he is frustrated about the country’s high Air Passenger Duty (APD). He affirmed the urgency for revising the high APD rate and has called on authorities to back aviation recovery by scrapping the tax.

Reducing APD on domestic flights fby 50% from April 23 has allowed the company to place more domestic routes to its UK schedule this summer. However, Ryanair emphasized that if it is to continue developing and driving the UK tourism recovery, Prime Minister Rishi Sunak should scrap APD for all travel and offer incentives for carriers to stimulate progress.

While speaking about government policy concerns, O’Leary cited the damage that Brexit is doing to the UK’s travel industry, especially when it comes to staffing.

He said:

“Brexit continues to damage UK jobs, traffic, tourism, and the economy. We continue to call the UK government to agree some kind of sensible trade deal with the European Union, which is the only way out of the mess of Brexit at the moment.”

Photo: Bradley Caslin/Shutterstock

Looking ahead

O’Leary concluded that despite the challenges, Ryanair is the biggest airline in most European markets with its low fares. Yet, the firm has to keep growing and keep the prices down as it is the only way it can make it difficult for its competitors, which is exactly what it wants to do.

Altogether, Ryanair is ensuring that its livery can be seen all across the continents with its low ticket prices. It now has 90 bases across its network, flying on 2,400 routes across 37 countries with its 517 jets. It anticipates 225 million passengers by FY26, keen to overcome the industry woes.

What are your thoughts about Ryanair’s plans for 2023 and beyond? What do you make of the airline’s approach to the industry? Let us know what you think of the carrier and its prospects in the comment section.

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