Ryanair Tipped to Grow Further During Recession

Photo Credit: Adrian Olstad/AviationSource
Photo Credit: Adrian Olstad/AviationSource

LONDON – Earlier this month the Bank of England warned that the UK is headed for a winter recession that may continue on throughout 2023.

Good news this may seem, for shrewd airline CEO Michael O’Leary. The Ryanair boss has indicated that his low-cost carrier could see good growth throughout the coming months if the aforementioned recession does arrive.

Earlier this week, Ryanair announced a record winter schedule in and out of the United Kingdom.

In light of fellow airline British Airways cutting back their flights as a result of staff shortages at the airline and its Heathrow hub, this looks like O’Leary is looking to take advantage of others’ poor decision-making.

The low-cost carrier made good strategic decisions throughout the Covid pandemic, such as not laying off too many staff and securing a favourable fuel hedge position, and is now in a position to ramp up as air travel begins to get back to a level of normality. 

In an interview with the BBC O’Leary said: “A deep recession in the UK or an energy crisis will certainly affect overall demand, but within that – as has happened in the last four or five recessions – you see people trading down from high-fare airlines like BA and Easyjet, to low-fare airlines like Ryanair.”  

Whilst also making a comparison to that of a change in grocery shopping from Sainsbury’s to Aldi, to ensure value for money throughout harder financial times.

Although committed to keeping fares lower, Ryanair has been clear in letting travellers know that ten euro fares will not be around for the foreseeable, due to the current price of oil.

This is despite a favourable fuel hedge position where they will be paying 40% lower than current prices per barrel until March 2023. 

Rising costs of fuel is forecast to slowly push the average Ryanair fare up from forty to fifty euros over the next five years.

A strategy that separated the Dublin-based carrier from a lot of other airlines during Covid was their staff retention. Instead of laying hundreds and thousands of people off, they introduced pay cuts and made the call to train staff during the downtime brought on by mass aircraft groundings.

Staff may now be in line to see their pay increase back up to pre-Covid levels with management moving aggressively towards talks regarding pay rises.

However, this is dependent on market recovery throughout a busy winter period and the ongoing war in Ukraine.

One thing still on O’Leary’s to-do list is to lobby the government and the incoming new Prime Minister to abolish Air Passenger Duty (APD). An excise duty that every airline pays for the carriage of passengers that depart the UK. 

Also urging the government to bring in a free trade deal with the European Union, saying: 

“What can and should be reversed is the stupidity of having a hard Brexit and no free-trade deal with the UK’s largest trading partner – the EU,” 

“The sooner hard Brexit is reversed and we have a reasonable free trade agreement between the UK and Europe, the better will be for UK and EU companies.”

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