Published on December 5th, 2016 | by Jim Lee0
Ryanair launches it latest innovation – ‘Ryanair Holidays’ as growth continues
On 1st December, Ryanair announced the launch of a new package holiday service, ‘Ryanair Holidays’, offering its 119 million customers flights, accommodation and transfer packages. Ryanair has partnered with Spain-based tour operator, Logitravel, and accommodation provider, World2Meet, to create this latest innovation, which is being launched on the Ryanair.com website in the UK, Ireland and Germany initially, with other markets to follow in 2017.
‘Ryanair Holidays’ follows the successful launch of Ryanair Car Hire and Ryanair Rooms and is the latest digital product delivered by Ryanair Labs, under the ‘Always Getting Better’ programme, which includes a personalised website, and dynamic mobile app.
In London, Ryanair’s Kenny Jacobs its Chief Marketing Officer said:
“Ryanair’s low fares transformed air travel in Europe and now we’re going to transform the package holiday market with the launch of ‘Ryanair Holidays’, offering our customers the unbeatable combination of Ryanair’s low fares, a wide range of accommodation options and transfers – all on the Ryanair.com website and all at the lowest prices.
Consumers have been paying too much for package holidays for years and more and more want to put their own packages together themselves. Ryanair customers already enjoy the biggest route network in Europe and with ‘Ryanair Holidays’ can choose from a fantastic range of 3, 4 and 5 star hotels throughout the Mediterranean and Europe’s capital cities, ideal for last minute getaways, summer family holidays, winter sun or city breaks.
Following the launch of Ryanair Car Hire and Ryanair Rooms, even more customers are coming to Ryanair for services and products other than flights, and this is another significant step on our journey to becoming the Amazon of air travel. ‘Ryanair Holidays’ offers full consumer protection is fully ATOL bonded and insured, and won’t be beaten on price. So before you go on holiday, you only have to visit one place – Ryanair.com.”
Logitravel is a Tour Operator and Travel Agency Group which provides the holiday arrangements for over three million customers each year. Logitravel operates several brands, the Online Travel Agency Logitravel, the Tour Operator Traveltino and its own global bed bank Smyrooms. Logitravel’s bespoke technology allows each customer to tailor-make their own holiday packages to suit their individual needs. In a comment Tomeu Bennasar of Logitravel said:
“Our team has worked hard to develop the package holidays application for Ryanair and we are very satisfied with the result – a usable interface with a wide range of hotels and vacation products to be booked seamlessly with the flight, under one price and which is 100% customisable by each customer. Without a doubt, this will be a new Ryanair service that its clients will enjoy using.”
World2Meet Chief Commercial Officer, Mark Nueschen, said:
“For us, the partnership agreement is excellent news. We are convinced that our extensive experience in destination assistance and hotel contracting will be a fundamental part of the success of this project.“
Ryanair continues to invest heavily in Ryanair Labs, which is transforming its digital platform, to make it easier for customers to interact with Ryanair and book fares and ancillary services. Ryanair.com has overtaken Southwest Airlines to become the world’s largest airline website and its mobile app was the 8th largest UK travel app (by usage), in September 2016, well ahead of its UK airline competitors. easyJet for example was rated at number 20, while British Airways was placed. 37th.
Ryanair Labs has delivered a significant upward shift in web visits, app bookings, as well as ancillary services, by boosting the sales of reserved seats, Business/Leisure Plus products and fast track services, which customers can buy at discounted rates, during the booking process. As a direct result of this increased customer demand for travel related services, Ryanair confidently raised it’s medium term guidance for ancillary sales over the next four years to March 2020, from 20% to 30% of revenues.
‘My Ryanair’ offers customers even faster access to the airline’s fares, allowing members to create their own personal profile, securely store payment and passport details and set their travel preferences, ensuring what Ryanair describes as, “a personalised Ryanair.com experience”.
However, from 1st November, all customers using the Irish Ryanair.com website and Irish mobile app are required to auto sign-up to the ‘My Ryanair’ programme, before completing flight bookings. If you try to book a flight on the website or app, you will be asked to provide an email and password for auto sign-up, at the payment stage. You are not able to complete the booking without doing so. Prior to this 93% of all Ryanair customers were booking directly on Ryanair.com and now they expect membership of ‘My Ryanair’ to significantly increase from 15 million in September to over 25 million by the end of 2017.
In addition Ryanair has shorted its online check-in deadline, unless passengers pay extra for allocated seating and there is a new requirement for adults travelling with children to buy reserved seats.
According to Ryanair, the changes makes it “faster and simpler” to book services, increase security and make it more difficult for ‘screenscraper’ websites to sell on Ryanair fares – “a rising source of complaints’’, according to Mr. Jacobs.
Ryanair’s auto sign-in feature will be rolled out across all markets and Ryanair.com websites before the end of 2016, and Ryanair pointed that other airlines, such as easyJet and Virgin, have already made it compulsory to have an account, in order to book a flight.
‘Always Getting Better’ programme
Now well into its third year, Ryanair’s ‘Always Getting Better’ programme (often abbreviated to ‘AGB’), has been a demonstrable success, in attracting new customers to Ryanair. In July, it became the first airline ever to carry over 11 million international customers in a calendar month. While Ryanair’s compulsory auto sign-up to the ‘My Ryanair’ programme might cause some difficulties, other aspects of the airline’s ‘AGB’ programme are proving more popular. Obviously its customers still want to enjoy even lower fares, but flying from more primary airports on brand new aircraft, with new Boeing Sky Interiors, offering more leg room and super comfortable seats, is also proving popular. The uptake of its Business Plus and Leisure Plus products is also rising. Ryanair also continues to improve its mobile app, which allows customers to make faster bookings.
In mid-September, Ryanair launched an improved ‘Rate My Flight’ service, which is now available in seven languages. This allows customers to provide real time reviews of their Ryanair flight via the Ryanair mobile app, from the moment they land. The function offers customers the chance to rate their overall experience, boarding, crew friendliness, service on-board and range of food and drink, on a 5-star rating system, ranging from 1 star for very poor, to 5 stars for very good.
According to the most recent figures for October, 94% of surveyed customers were happy with their overall flight experience during that month. Over 17,000 customers used the ‘Rate My Flight’ function during October, which was an increase of 7,000 on September. The airline recorded similar ratings for boarding (87%), crew friendliness (95%), service on-board (93%) and range of food & drink (80%).
The airline is also continuing to record impressive customer service statistics and the figures for October confirm that 89% of over 60,000 flights arrived on-time, which was down slightly due to bad weather. There were less than 1.5 complaints per 1,000 customers and less than 1 bag complaint per 5,000 customers. Over 99% of all complaints were answered within 7 days.
Ryanair continue to report good results
Ryanair continue to report good results and its first half year profits (H1), increased by 7% to €1,168 million. Figures released on 8th November show a 12% traffic growth, to 65 million passengers, with a 2% increase in load factor to 95%. Average fares fell 10% to €50, while H1 unit costs also fell by 10% (ex-fuel down 5%).
Other notable highlights of the half year included:
- Unit costs cut 10%
- 73 new routes and six bases opened
- 7th Share Buyback (€886 million) completed in June
- com became the world’s No. 1 airline website, which aims to become the ‘Amazon of air travel’. selling seats a much wider range of products and services.
In addition, 21 new aircraft were delivered during the period. Overall, Ryanair has taken delivery of 54 aircraft so far this year, with the latest, EI-FTJ, (c/n 44760), being delivered on 29th November. This brought the total in service Boeing 738-8AS (W) fleet, to 364, with an additional three withdrawn from use.
As aircraft numbers grow from 355 to over 500 in the next 5 years, Ryanair announced it expects to hire 2,000 new cabin crew, 1,000 pilots and 250 aircraft engineers, as well as promoting over 300 First Officers on its command upgrade programme, across its 84-base European network. The major recruitment drive comes as the airline expects to take delivery of 50 new aircraft in the next 12 months. A range of new positions will also be created in IT, Sales & Marketing, Digital Experience, Finance and Commercial at Ryanair’s Dublin office, and also at its Travel Labs Poland subsidiary in Wroclaw creating 120 jobs in that region. Ryanair is also planning to open its own Maintenance, Repair and Overhaul (MRO) hangar at Warsaw Modlin, which when operational, will create jobs for 150 personnel. This follows the official opening of its first Italian maintenance hangar at Milan Bergamo Airport in October. This facility will undertake line maintenance on Ryanair’s fleet of Boeing 737-800 aircraft. This new maintenance hangar is creating 50 high-tech positions for licensed engineers, mechanics and support staff.
Ryanair’s growth has been spread widely across Europe as it opened 73 new routes and six new bases. Over the winter, six more bases are being opened in Bucharest, Bournemouth, Hamburg, Nuremberg, Prague and Vilnius. Its base in Berlin is also growing from five to nine aircraft, while Luxemburg became the 33rd country served in November. The airlines Summer 2017 schedule adds over 80 new routes and a new two aircraft base at Frankfurt am Main airport will open in late March.
The shift in Ryanair’s growth from secondary to primary airports continues, and at the end of 2016 for the first time, Ryanair will operate to a majority of primary (105) rather than secondary (95) airports.
Ryanair has confirmed that the UK’s Brexit vote, will result in it switching some of its planned 2017 growth, away from the UK (which accounts for approximately 26% of revenues), due to weaker Sterling, expected slower GDP growth and market uncertainty. It is planning to reduce planned UK growth from 12% to approximately 5% in 2017. Since the June Brexit vote, Sterling has fallen 18% against the euro. This was primarily responsible for Ryanair reducing its full year guidance by €75 million from a midpoint of €1.4 billion to €1.325 billion. They have also put in place Sterling hedges to the end of March 2017 to protect yields from any further Sterling weakness. Currency hedges also meant lower costs for aircraft as well as cheaper financing.
For H2, 95% of its fuel is hedged at approximately $59 per oil barrel (abbreviated as bbl). In the United States, an oil barrel is defined as 42 US gallons, which is about 159 litres or 35 imperial gallons. Ryanair have also increased their 2018 financial year (FY18) fuel hedge cover to 85%, at approximately $49bbl, which (allowing for volume growth); will deliver further fuel savings of around €140 million in FY18.
Ryanair have said that they hope that the UK will remain a member of Europe’s ‘Open Skies’ system, but until the final outcome of Brexit has been determined, they continue to adapt to the changing circumstances, which is obviously in the best interests of its customers, staff and shareholders.
Finally Ryanair’s balance sheet remains one of the strongest in the airline industry. At the end of September they had net cash of €77 million, despite having spent over €600 million, on Capital expenditure (CAPEX), €200 million on debt repayments and €468 million on share buybacks during the half year, bringing the total returns to shareholders since 2008, to over €4.2 billion. Ryanair is committed to returning surplus funds to shareholders subject to market conditions as long as it remains profitable, cash generative, and can fund CAPEX and other operational requirements. With this in mind, the Board of Ryanair have authorised a further share buyback of up to €550 million, over the four month period, from November 2016 to February 2017.
Passenger numbers continue to grow
Most recent passenger statistics, also for October, show that traffic grew 13% to 10.9 million. This compared to the 9.7 million recorded in October 2015. Rolling annual traffic to October 2016 grew 16% to 114.4 million customers, while load factor rose 1% point to 95%.
In addition, Ryanair revealed that it had received record bookings from American customers on its dedicated USA website, enables flight bookings to be made in dollars. It carried over 1 million US citizens across Europe, during the summer season, a 50% rise on summer 2015.
California residents flew most with Ryanair, followed by citizens of New York, Florida, Illinois and Texas, while the most popular routes booked were Dublin-Edinburgh, Athens-Santorini, Barcelona- Rome, Frankfurt Hahn-London Stansted and Dublin-Amsterdam.
Despite the uncertainty of Brexit, Ryanair believes that it can deliver profitable growth across Europe by controlling costs, lowering airfares, and maximising load factors in a manner that will most benefit its customers, people and shareholders. After a poor start in the first quarter (Q1), due in part to adverse weather and a succession of ATC strikes, its on-time performance improved in the second quarter (Q2), to almost 90%. Ryanair is continuing its campaign to persuade the European Commission to take action to ameliorate the effects of national ATC strikes, by keeping Europe’s skies open, even when national ATC providers are on strike.
They remain cautious in their outlook for the full 2017 financial years. In spite of weaker air fares and Brexit uncertainty they remain confident with a revised full year guidance of €1.30 billion to €1.35 billion and expects to carry just over 119 million customers in FY17. This stronger growth requires them to raise their long term traffic forecast by over 10% from 180 million to over 200 million customers per annum by March 2024 which will be a truly remarkable result by any standards.