Sunday, April 15, 2007

Jam Tomorrow

The news that Ryanair proposes absurdly low fares to North America with the coming deregulation of transatlantic air services comes as no surprise. The Ryanair story is all about opportunism by Michael O'Leary, a master showman and PR hound. Ryanair announced that they would be buying between 30 and 50 long-haul jets - either the Boeing 787 or the Airbus A350, These aircraft will cost around $200 million each meaning that Ryanair is proposing to spend Between $6 and $10 billion – roughly the equivalent of the GDP of Belize, St.Lucia, Guyana, Mongolia, Malawi and The Gambia combined. They may well be planning something but I suspect it will not be as adventurous as they suggest. Between making a statement of intent and actually operating is a big gulf - or in this case ocean. There's also the small matter of some very sophisticated US competition, one that knows far more about dog fights over air fares than most of the air carriers in Europe, which were the ones that Ryanair took on to get where they are. Travel patterns on long haul flying are also vastly different to short haul.

In the short term expect little change. In the medium term who knows where the argument over taxing flying is going to take us. Mr O’Leary’s statement is much more about his short haul business today than a possible long haul business tomorrow.

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