Some Ryanair tickets will be free within a decade, CEO says
Revenue sharing with airports will make 'vision' a reality, Irish discount airline predicts
The head of Irish discount airline Ryanair says he expects some seats on the company's flights will soon be free as airports and carriers share revenue from concessions sold in flight and on the ground.
Michael O'Leary said in a speech to the Airport Operators Association conference in London on Tuesday that by 2026, he expects his airline to sell some tickets on its flights with a $0 base fare.
"I have this vision that in the next five to 10 years that the air fares on Ryanair will be free," The Guardian quoted him as saying, "in which case the flights will be full, and we will be making our money out of sharing the airport revenues — of all the people who will be running through airports, and getting a share of the shopping and the retail revenues at airports."
CBC News has requested a copy of O'Leary's speech.
Although it sounds farfetched, O'Leary was quoted by the Guardian and other British press as saying that the ground work has already been laid in the form of some of the deals his company has been pitched from smaller regional airports to start offering flights there in exchange for drastically reduced landing fees.
"I think it will happen," he said, "it ... won't happen at Heathrow or those big hub airports but most of the other airports who are looking for big traffic growth, that process is already starting to happen, lowering airport fees and some of the charges."
Pace of growth of Ryanair could be dramatic if Scottish Govt cuts APD by 50% and airports remain competitive as now - O'Leary <a href="https://twitter.com/hashtag/AOAConf16?src=hash">#AOAConf16</a>—@AOA_UK
In the U.K. as in many other places, local authorities charge airlines a fee for using airports. In the U.K., it's called an air passenger duty or APD, and since 2012 it has been £13 per passenger — about $21 Cdn
There are calls to lower or eliminate that, especially as the country seeks to maintain its trading clout in the post-Brexit reality. Ireland abolished its APD in 2014, and Scotland plans to halve it soon. Meanwhile, when Norway recently announced plans to increase its version of the APD, Ryanair decided to stop flying there.
According to Ryanair's most recent earnings numbers, the airline's average ticket price is £46.67, but the carrier is known for its promotional tickets well below that.
Rest of Europe is more competitive than UK, hence Ryanair focus. APD at £13 on average fare of £30 is not competitive - O'Leary <a href="https://twitter.com/hashtag/AOAConf16?src=hash">#AOAConf16</a>—@AOA_UK
A move to lower or eliminate the APD could move many Ryanair's flights from the "discount" category into being effectively free. O'Leary says at current levels at some airports, Ryanair is paying more than £20 per passenger in various fees.
"If I start getting that back, why not?" O'Leary said. "I'm doing seat sales this week at £4 and I'm paying the £13 APD — I'm paying you to fly with me," O'Leary said. "Instead of promotional tickets being £9 or £5 they will be free."