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onsolidation of the European low cost carriers market defi- Official Media Partner of
nitely hits the headlines this month. German and Irish mar-
kets (p. 9 & 11) are leading the trend, but soon other markets these LCCs events
should follow. During the World Low Cost Airlines Congress 2006
(p. 4), many speakers mentioned their vision of consolidation. De-
bates also considered viability of mixed models (legacy and LCCs),
like Clickair (p. 8). Sure similar questions would have certainly risen
about Ryanair takeover bid for Aer Lingus. Sky Full of Possibilities
Bratislava, 26 May 2006
With this bid, Ryanair is looking for a critical mass in order to re-
duce its operating costs which are threatened by terrorism (p. 10).
Another mean to reduce costs is outsourcing. Ryanair’s policy is
quite interesting, as the Irish carrier is outsourcing towards its own
passengers. For instance, to reduce cost of airport taxes, Ryanair is The Low Cost Air Transport Summit
cutting on check-in desk charges. Charging for checked luggage is London, 12-13 June 2006
lucrative in many ways: the company gains extra money, saves time
at the check-in desks and during boarding (fewer luggages to load
means less time grounded). Passengers are asked to print their tic-
kets and carry their luggage. In September, with the demo in Spain,
Ryanair tried to use a mob of potential passengers for its commu- The World Low Cost Airlines Congress
nication. The deal is quite simple: “remunerate” potential passengers London, 11-13 September 2006
with free tickets in exchange for promotional campaign (p. 3). The
concept is not defined yet as the stunt almost turned into a riot, but
the idea will surely make good…
Air Scoop: Could you please present SkyEurope to our readers? What are
your specificities compared to other European LCCs? What do you do better
than your competitors?
Ryanair’s Promotional Campaign red as a crowd manipulation and propaganda of old times
by some communication experts, didn’t go off as planned.
Turning into a Near Riot Indeed, Ryanair’s members had 500 vouchers to offer, but
hundreds more people unexpected arrived at the meeting,
Ryanair’s marketing strategy is definitely aggressive. This
and they quickly ran out of tickets. Ulled, Ryanair’s Spa-
aggressiveness is a whole part of the culture of the Irish
nish PR company, tried to appease the crowd with photo-
carrier, and Michael O’Leary, its CEO, has always been
copies of tickets. But it appeared to be even worse as these
the first one to show the way. Indeed, Mr O’Leary is well
tickets turned out to be unusable.
known throughout the world of airlines for his frankness
Mrs Sinead Finn, Head of Sales and Marketing for Eu-
and offensive declarations. Many times, Ryanair has cons-
rope, who was in charge of the promotion, has been quic-
cientiously published advertisings to shock opinion, and
kly surrounded by an impressive and furious mob there to
few times it backfired on the airlines (Ryanair was fined
get their free tickets. The situation was so tensed that Mrs
last June in France and in Denmark for misleading adver-
Finn had to be protected and escorted by armed police to
tising, Sweden’s Prime Minister sued the company last
the nearest police station.
April…).
Witnesses affirmed that the promotion would have tur-
This time Ryanair went one step further. The objecti-
ned into a riot if police weren’t there. Some of the angry
ve was to organize a promotional campaign in Barcelona
participants rewrote their placards changing them to anti-
against the Spanish national carrier, Iberia, and indirectly
Ryanair messages. A police source declared they were very
hit Clickair (Iberia’s LCC) which has just been launched.
surprised to find out that this entire situation was just ge-
The principle was simple: potential passengers were told to
nerated by a campaign of Ryanair against a competitor.
gather at Plaza de Cataluña with placards criticizing Iberia
Consumer associations have opened an investigation after
or supporting Ryanair if they wanted to get free travel
receiving about 150 complaints. Ryanair realised the dif-
vouchers from them. This stunt, which has been conside-
ficulty to set up a «non spontaneous» and indirectly paid
The Congress lasted three days divided in two phases: Workshops and Conferences. Themes of workshops were really
close to current LCCS concerns: Best Practice Revenue Management, Airport Deal-Making, Low Cost Technology, In
Flight Revenues, but also Impact of Terrorist Threat on Low Cost Carriers.
During the two days conference, many interesting questions were raised by attendees. Among them… “Low cost carriers”:
Marketing or cost differentiation?, LCCs: Cooperation or Coopetition (cooperation and competition)?, Part of ancillary
revenues per passenger?, Consolidation of the European LCCs Market?, Shortage of Pilots and Maintenance Personnel?,
Increase of capacities: Impact on price fares?...
The first speaker of the Congress was Andrew Harrison (CEO of easyJet). Oil price has a deep impact
on activity, so easyJet has decided to smooth edging policy with short-term predictability. But contrary
to what Ryanair has declared about difficulties for this coming winter, easyJet is confident: there will
be no change. Mr Harrison expressed his concerns about UK Government’ security measures in airports
following Augusts’ terrorism threats. “Government needs to tailor police help to control airports. At ea-
syJet, we engaged an intelligent and constructive discussion with the government. But for the moment,
it’s not really encouraging. Current security checks are not sustainable”, he declared.
Vincenc Marti, Chief Commercial Officer of Vueling, the Spanish LCC, talked about Vueling future and LCC compe-
tition in Spain.
- What are your projects for the near future? “We will first celebrate our 5th million passenger this week. Then we will
remain on continental and south market, but still exploring costs of new exploiting routes. We will also possibly open a
3rd base to face competition. It will be hard, but interesting. We have the spirit of competition!”
Most important choice criteria by the decision-makers (Travel Managers, Finance ) and the travelers (employees).
Mike Rutter (Director of Flybe) believes in a strong consolidation within 5 to 7 years with stronger
entities. “Ryanair will still be there, followed by “value carriers” driven by prices, and legacy carriers
organized around their hubs”.
- What are your plans and strategy? “Gambling, in-flight calls, charging for check-in at the airport desk.
Ancillary revenues are at the core of LCCs model!”
Daniel Skjeldam (Director Network and Revenue of Norwegian) declared that “most of our traffic
comes from business travelers, so we need frequencies to be competitive on those markets. For our
leisure travelers, we first create traffic and as the volume increases, we add frequencies. We have to
build the market to make routes sustainable, and sustain our growth.”
- What is your Norwegian’ situation about pilots and maintenance personnel shortage? “This shortage
will make it more difficult in the next years.”
- Will the increase of capacities have an impact on price fares? “If you miscalculate your growth, you
can affect your load factor and price average.”
Bernard Berger (Director New Route Development of Ryanair) answered these following ques-
tions:
- Will Ryanair change its business model because flights now last 3 hours? How far will Ryanair
go? “Over the years, the average time has increased. For instance, a flight from Dublin to Malta lasts
around 4 hours. Our objective is to maintain short time flights with some long time on specific rou-
tes, as we may fly from Germany to Cyprus.”
Chris Mandl (CEO of SkyEurope) explained its strategy: “First modernize the fleet (fuel efficiency,
leather seats, pre-booking on website, winglets…). Then, we are still looking after emerging markets,
such as Russia and Ukraine. To back our growth, we have raised 56.3 million euros. Our aircrafts are
tuned to flight for 2 hours. As long as we have 2 hours routes, we will try to focus on these routes.”
- How strong is the competition between LCCs? “We are also in competition for money. The best
company will also be the best funded one.”
For further details, read our exclusive interview page 2.
Jozsef Varadi (CEO of Wizz Air) described Wizz Air’s market in Central Europe: “Wizz Air has 36%
of LCCs’ market in Poland, 27% in Hungary and 54% in Bulgaria.”
- What are the key factors to success? “Unit cost, aircraft (A320 with narrow body aircraft), secondary
airports, distribution through the Internet, latest technology, efficiency… Through the Internet, we sell
tickets, but also additional services.”
At last, but not least, Maciej Kwiatkowski (President of the board of CentralWings) expressed some concerns about the
shortage of pilots: “We start to have a problem with pilots.”
As always, Terrapin Team has been very efficient to prepare this incredible Congress. A lot of professionalism mixed
with a relaxed atmosphere, like the paper plane contest on Tuesday evening.
«Take Control of Booking a Cheap Airline Ticket» can be read onscreen or on paper. The onscreen version is a PDF file
with hot links to the Web sites mentioned, making it easy for readers to quickly access recommended sites. Although
Take Control’s onscreen book design has won over many who previously believed they would never read a book on a
computer, a paper version is available for those who prefer to read a bound volume.
Written by airline industry blogger Sam Sellers (http://www.airlinebulletin.com), «Take Control of Booking a Cheap
Airline Ticket» joins more than 40 titles in the Take Control library, all written by long-standing technology experts.
Book Details
«Take Control of Booking a Cheap Airline Ticket» by Sam Sellers
Ebook price: $10 / Printing cost: $13 (Readers must first purchase the eBook)
More info: http://www.takecontrolbooks.com/airline-ticket.html
LCC EVENT
The next French Connect will be held the 23rd-27th of April 2007 in Nantes La Baule.
For further information, please check www.frenchconnect.net
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