EasyJet and Ryanair, who make up 47 per cent of the low cost market in Europe, are expected in the coming days to reveal strong results for the October-December quarter. This is widely viewed to be the result of both airlines’ ability to make flights more appealing to businesspeople. Previously, the two airlines were predominantly used by price-conscious holidaymakers who were happy to sacrifice comfort for price.
EasyJet targeted businesspeople when it reintroduced allocated seating in November 2012 and also introduced add-ons such as airport-lounge access. Ryanair followed this trend in September 2013 when it announced plans to improve customer service. It also introduced “Business Plus” in 2014, which offered the option of paying extra for corporate services such as flexible ticketing and hold-baggage allowance. Furthermore, Ryanair also cancelled certain flights to lesser destinations in an attempt to increase capacity on popular business routes.
However, Douglas McNeill of Macquarie claims that the extent to which these changes have boosted bottom lines is overstated. He suggests that rising margins are more likely the result of falling oil prices. Ryanair’s margins will be lifted further by cheaper oil into 2016. However, this temporary windfall from falling oil prices will soon be passed onto customers as both carriers’ rivals are planning to expand, therefore adding to the downward pressures on fares. The bank RBC forecasts that revenue per passenger will fall by 9 per cent at Ryanair in 2016.