Quick Links Complete exit from Bordeaux in November Warsaw Modlin frustration Ryanair reliance Is this the end of ultra-low-cost airlines in Europe? Summary Ryanair pulling out of Bordeaux & cutting flights in Warsaw shows its power over smaller airports. Some airports rely heavily on the airline, making them vulnerable to fee negotiations & flight cuts. Rising costs & regulations may signal the beginning of the end for low-cost carriers in Europe.
Ryanair recently announced that it would be cutting services completely out of Bordeaux-Merignac Airport (BOD) and slashing its number of flights in half at Warsaw’s secondary Modlin Airport (WMI) . This will affect the airports’ operations, which are to a differing degree dependent on the low-cost carrier. This reflects a phenomenon in Europe whereby low-cost airlines, and in particular, Ryanair, have smaller airports in a chokehold in terms of airport fees and other demands.
Simple Flying spoke to Wouter Dewulf, Professor of Air Transport Management at the University of Antwerp, and Marcin Walkow, an aviation journalist at Polish financial portal money.pl , to examine the dynamics of this influence given these cuts both in Warsaw and elsewhere . Complete exit from Bordeaux in November In May, Ryanair announced that it would be leaving BOD altogether after the two parties failed to reach an agreement on airport fees.
Bordeaux, which planned to increase fees as of November 2024, will lose three Ryanair-based aircraft and 90 jobs across pilot and cabin crew positions. Ryanair’s departure will mean a $300 million loss in investment, the airline argues. The carrier's Commercial Director, Jason McGuinness, spoke about closing its base at BOD.
“We are disappointed that Bordeaux airport has not agreed to the extension of our low-cost base from November 2024. Due to rising costs, we have no financial alternative but to close our Bordeaux base in November and relocate these aircraft and jobs to cheaper bases elsewhere in the Ryanair group's vast network of airports across Europe.” While one airport lost a base, another gained more jobs and routes.
What often happens when Ryanair closes a base at a certain airport is that it continues to fly there with aircraft stationed elsewhere in Europe. However, Bordeaux will leave the Ryanair network completely, according to aviation data and analytics firm Cirium . The below infographic shows the carrier’s BOD network, flights, and seats in December 2023 for comparison.
Warsaw Modlin frustration Earlier this week, Ryanair took a dig at WMI, which is served primarily by the airline and other low-cost airlines. The carrier announced that it would be cutting capacity at the airport by 50% as of this winter, removing one aircraft based at the airport. The move will result in 50 job losses and yet again, follows a dispute related to airport fees, which WMI will raise.
Ryanair will continue operating as normal out of Warsaw’s primary aviation gateway, Chopin Airport (WAW). This coming winter season, six connections will be offered. How realistic is a complete departure of Ryanair from WMI? We posed the question to Walkow.
“I don't think Ryanair will completely give up on Warsaw-Modlin airport. Maybe at a really small airport with 50 or 100,000 passengers checking in, he can afford to take his toys to another sandbox. But three million passengers a year? Ryanair has a dominant position in Modlin.
[The main] Chopin Airport is going to be expanded, but not with Ryanair in mind, but to create more opportunities for the development of transit traffic for LOT Polish Airlines. This is to be an interim step before the transfer of commercial traffic to the Central Airport (CPK) in Baranów, planned for around 2032.” He explains that a ten-year agreement with Ryanair limited WMI's ability to adjust prices and attract other airlines, making it “reliant on one carrier.
” “Whoever would like to enter Modlin today will start from a much lower level of traffic and, consequently, a much higher level of airport charges (which decrease with the increase in the number of passengers checked in there). This gives a cost advantage to Ryanair.” Cirium data shows that January of this year, Ryanair offered a total of 224 two-way flights across 15 destinations.
In November this year, only 116 two-way flights will be operated across 8 destinations. Ryanair reliance Some airports, typically smaller ones, have found themselves almost entirely reliant on Ryanair or other low-cost airlines. The reasons for this are threefold: connectivity, employment and reputation.
Dewulf explains, “This type of symbiosis airports are very often owned by local governments, and they really want to use that to create connectivity, to create employment and to put the region on the map. If you look at Brussels Charleroi (Belgium, CRL), that was clearly for employment. If you look at Carcassonne (France, CCF), it's clearly to develop the local economy.
You can see the house prices went up significantly in Carcassonne because of tourists coming. Ryanair is very good at negotiating. You see what they pay in Charleroi: they barely pay anything but they create quite a few thousand jobs.
And the airport gets some money because of non-aeronautical revenues like parking and food and beverage commissions for example. In the end, everyone is happy. The only problem is that once you have this symbiosis, and Ryanair threatens to pull the plug to put pressure on them, it is like a chicken game.
Who will give in first, resulting in a delicate situation.” The business model allows Ryanair to essentially dictate smaller airports and their fees. This make-or-break situation means many airports run at a loss.
According to The Connexion , several French airports, including Béziers-Cap d’Agde, Nîmes, la Rochelle, Tarbes, Quimper and Perpignan are being criticized by France for relying on loss-making agreements with Ryanair. Walkow says: “Low-cost airlines, such as Ryanair and Wizz Air, know that they are the ones who determine the to be or not to be of smaller airports. Regular carriers only offer single feeder connections from them to their hubs, if any.
If anyone is to build a network of routes there, it is the low-costs. This is why Ryanair is trying to make as much money as it can. Because it knows that every penny down, multiplied by millions of passengers, weighs heavily.
” Larger airports are less vulnerable to Ryanair’s influence. Bordeaux for example has said that it expects a 25% reduction in passenger numbers with Ryanair’s departure. Cyrielle Clément, the airline's Head of Routes Development at Bordeaux-Mérignac told The Connexion: “We had planned to increase the fees for some time, and had envisioned several scenarios.
A complete withdrawal of Ryanair was the worst-case, but not wholly unexpected given the company’s character. It could take some time to make up for the loss. We are looking at two to three years of lower traffic.
But we see this as an opportunity to expand with other airlines, which has been our long-term aim.” Is this the end of ultra-low-cost airlines in Europe? Dynamics within the low-cost airline market in the US have changed. Poor financial results in recent times have led some to believe that the end of the low-fare carrier in the US is near.
Scott Kirby, CEO of United Airlines, said last year at the release of its third-quarter results: “[...
] the lowest margin airlines are the so-called low-cost carriers, and that’s where I think the changes are going to occur. As a result, United is going to emerge in a structurally stronger and sustainable position.” Scott Kirby is confident that low cost carriers will go out of business.
A report by Business Traveler USA reiterated this belief, noting that significant cost increases have had a serious impact on overall financial performance. Similarly, Ryanair suffered in its first quarter results. Profit was down 46% and CEO Michael O’Leary revealed that passengers were no longer willing to pay higher last-minute fares, an important slice of its revenue.
With rising fixed costs including tightening environmental regulation in Europe, Dewulf wonders whether this could also signify the beginning of the end of low-cost carriers in Europe. “I think the biggest problem for Ryanair is the fact that all their operational costs like fuel, maintenance, ATC, pilot pay etc..
. are rising at at least the same pace as full service carriers. In addition, all operational LCC advantages like more seats in an aircraft and short turn around times are already visible in their CASK (Cost per Available Seat Kilometre).
Check out all the latest European aviation news here The problem is, if you're a low-cost, and you add fixed costs on top of that like the impact of ETS and SAF requirements, for them, it has a bigger impact than for full service airlines, proportionally. That's why they're so focused on their costs with the airports, because that's one of the only things they can still have an impact on.” In other words, if regulation forces an additional $25 onto a flight ticket that is already at $150, the increase is less significant than if the fee is placed onto a $15 ticket offered by an airline like Ryanair.
“So if you look at costs they can influence, there's not that much left, apart from airport and ground handling fees. That's the reason why they're so ‘ aggressive ’ when they're talking to airports.”.
