Ray Kelliher, director of route development network of Ryanair, told CONNECT delegates some basic truths about delivering traffic growth and how that process is affected by taxes and charges.
“So, for any airport commercial managers who have just landed from another planet, who are now thinking about how to engage with Ryanair for the first time, the message essentially is low cost and cost certainty for the long term?”
That was the basic question put to the airline’s director of route development network, Ray Kelliher, by CONNECT 2024 conference moderator, Patrick Edmond, managing director of Altair Advisory. The response was equally straightforward.
“It’s that simple. There’s no master blueprint. There’s a very crudely written plan on the back of a piece of paper that says lower your costs and make it long term. And then aircraft arrive and they arrive in numbers,” Kelliher confirmed.
“There’s a Ryanair team at CONNECT from the route development side. Over the next six to seven years, we’ll take delivery of more than 350 aircraft. Each person there effectively has 35 aircraft to allocate over those years,” he added, highlighting a major incentive to airports.
Kelliher acknowledged that the airline faces questions regarding airports becoming full. He argued, however, that many markets are severely underutilised. “Everyone looks at European capacity from the outside, or from outside the industry, and goes, ‘Oh, Schiphol is full – these airports are getting full, there’s no capacity in them’. But that’s not the real driver of economic growth for a country. It’s looking at airports – whether they’re in Poland, in Spain or the UK – all at a regional level, and driving low fare access. Once you have lowfare access for consumers, it gets people moving. And when people are moving, that’s ultimately the catalyst and economic engine,” he explained.
“So I think Europe is massively under penetrated. If we ever have an issue in a particular country, I can just shove 12 million passengers into Morocco and that makes up for a year’s growth. That’s why we’re so relentless and ruthless around the unit cost.” That revelation regarding the potential traffic that Ryanair sees in Morocco raised a few eyebrows among delegates.
“We understand both sides of the coin in terms of information. We know how tight margins are at certain airports. That’s why, if you look at Venice in the Veneto region there, they increased the municipal tax by €2.50. A councillor in Venice came out publicly and said, ‘Oh, it’s only €2.50.’ The response was, we get to take an aircraft out of Venice, because that stuff was marginal in terms of operating at that capacity. This is a commodity brokerage business to a degree, we’re selling low margin items, so any kind of variation on the cost makes a huge difference,” Kelliher added.
Beyond airport charges and local taxes, Kelliher was asked about Ryanair’s position on the cost of carbon and SAF (sustainable aviation fuel) and how they affect network development.
“We’ve been very gently reaffirming our stance and position with various members of the government in both Spain and Italy,” he responded in an understated manner. “A big point we’ve been calling out is how ETS and emissions taxes aren’t created equally.
“We have no problem with the principle that there’s an emissions tax put in place. First of all, though, the money should be ring-fenced and used for projects that are actually geared towards driving sustainability. The other issue we have with ETS is … can I say the word? … it’s unfair for low-cost carriers in Europe and maybe legacy carriers. All that is doing is incentivising European low-cost carriers – who are driving economy growth in Europe – to look at other markets.
“That’s why somewhere like Morocco can have a fourth Ryanair base open up this winter in Tangier. We’re going to do about 11 million passengers this year. And we’re also going to start operating domestic routes in summer for the first time ever, the first non-Moroccan carrier to operate domestics in Morocco. All of that growth has partially been funded by Morocco being exempt from the ETS. So it is having an considerable impact on how we’re planning the network,” Kelliher declared.
