I can’t remember the first time we heard Ryanair chief Michael O’Leary talk about wanting to fly Transatlantic but it’s been something he’s talked about for years. And now, the board has officially voted to make it happen… in the next 5 years. The Atlantic is littered with graves of failed low cost efforts, but if anyone is going to figure out how to make this work, Ryanair is a good candidate.
The problem with low-cost, long-haul flying is that the longer the flight, the fewer chances there are to cut costs. On longer flights, fuel eats up a greater percentage of total cost than on shorter flights. And there is no low cost fuel (not that you’d want to use, anyway). Sure, there are airplanes that are more fuel efficient, but the tradeoff is a very high capital expense to acquire those aircraft. Just ask Norwegian. It spent a bunch of money on buying those expensive 787s to fly to the US, and it’s still trying to figure out how to make money with them.
There’s also a problem of demand. On longer haul flights, the low fare, leisure demand is much more cyclical than on shorter domestic flights. With Ryanair, people in the UK think nothing of hopping off to Spain for a weekend in the middle of winter. But a longer trip to the US? That’s usually saved for longer breaks often centered around school holidays. During the rest of the year, business demand is stronger but that’s more often in the premium cabin, something that most low cost carriers don’t try to tackle.
But Michael O’Leary is a smart man and he knows all of this to be the case. That’s why he hasn’t started flying Transatlantic yet. He hasn’t been able to make it work on paper, so he has to wait for conditions to be right.
The announcement of board approval mentions that the airline is in talks with the aircraft manufacturers. The problem for Ryanair is finding an airplane that’s fuel efficient enough without having to break the bank to buy the thing. That eliminates the gas-guzzling A340 on the used market. Ryanair is a much bigger fan of buying new and direct anyway. Could the A330neo be a good option? It sure could be. Or maybe the 787 or A350 is a good option. But Ryanair has to wait for demand to die down and the manufacturers to become hungrier. I’m sure the airline has a number in mind and it will wait until it can hit it, however long it may take.
The airplane you choose is one thing, but how you outfit it is equally important (if not more so). In the past, low cost carriers have tried to pack them in. Look at Cebu Pacific which puts 430+ seats on an A330. Some have tried a premium cabin but they’re not very good. Norwegian has a premium economy-style premium cabin on its 787s, but that’s not going to attract anyone with money to spend. It’s also a small percentage of the airplane. That’s really for the coach traveler who wants a bargain on something a bit better. It’s still the leisure traveler that’s the target market.
Air Asia X started moving in the right direction. It has angled flat beds on its A330s. This isn’t world class but with a price difference versus traditional competitors, it’s worth considering. But there are only 12 of these on the entire airplane. It’s insignificant.
Ryanair knows there’s great money to be made up front. Back in 2008, O’Leary gave his famous quote about the ideal premium cabin product… beds and blowjobs. And he wants a bigger percentage of premium cabin seats on each airplane to help generate enough revenue, even with fares being so low compared to competitors in each cabin.
With a product like that at a lower price, Ryanair can attract more business travelers, which helps offset the big demand shifts. And since Ryanair has a huge presence in Europe with an increasingly business-oriented clientele, it can make inroads into a Transatlantic market better than some random upstart like La Compagnie.
In terms of routes, Ryanair wants to serve 12 to 14 cities on both sides of the Pond and then connect those dots. I would assume that the airline would try to leverage its existing passenger base and fly from its strong positions in Europe to larger cities in the US. That’s been confirmed with Ryanair showing interest in places like London/Stansted and Berlin. But I’ve also seen mention of Berlin and Cologne. Those are much newer cities for the airline, but they are cities that Ryanair believes will provide growth within Europe. When flights start several years down the line, you can imagine these will be well-developed.
It will be interesting to see which cities get served in the US. Will Ryanair go toward bigger airports in popular places? There is a higher cost, but again, on longer flights that’s a smaller percentage of the pie than on short haul. And people in Cologne want to go to New York, not Newburgh (or whatever airport it might want to consider). That doesn’t mean it can’t serve smaller airports, but with bigger airplanes on longer routes, it will need as much help as it can get to fill those seats.
Does this mean Ryanair will be successful? I wouldn’t say that. But if anyone is going to crack this nut, there’s a good chance it’ll be Ryanair.