The Ryanair Riddle
I’m talking, of course, about the budget carriers. Take Ryanair, an airline many of us love to hate but secretly book because, well, it’s cheap. The Irish carrier recently managed to double its quarterly profits. How? By hiking its average fares by a staggering 21 percent while still cramming 4 percent more passengers onto its planes. This tells me something quite profound about the state of European travel. It suggests that after years of being cooped up, people are so desperate for a week in the sun that they’ll pay almost anything for it.
This isn’t just a fluke. It’s what the people in suits call “pricing power”. It’s the holy grail for any business, the ability to charge more without sending your customers running for the hills. When the biggest player in the market can pull this off, it suggests the entire sector might be enjoying a rather favourable tailwind. It’s a classic case of a rising tide lifting all boats, or in this case, all brightly coloured, no-frills aeroplanes.