Michael
O’Leary is scheduled to appear this afternoon in front of the UK Parliament Transport
Select Committee as part of their study of UK Aviation Strategy. This extract from my recent book Fly and be Damned provided some background they should be digging into.
‘Ryanair’s
business approach goes beyond adding capacity to match demand. Ryanair builds
capacity and then generates demand to fill it. When a new European city enters
the Ryanair network it draws in new tourists providing uplift to the local
economy. Ryanair understands the value of the new cheap air route to the local
municipality so negotiates very hard before opening a new route, or deciding to
retain an existing one. The airline requires a runway and a terminal building,
that might be little more than space in a cargo building. It also expects to
pay very little for the use of the facilities. The pressure for the best deal
goes further; Ryanair often seeks, or is offered, ‘marketing support’ from the
local area to bring in paying tourists. Ryanair is doing nothing illegal,
running a successful business within the letter of the rules.
Creating
capacity that stimulates demand, particularly in the creative and hard-nosed
manner of Ryanair, is good business for the airline but creating demand also
creates environmental stress. Sustainable policy would start with seeking to
control demand through reducing the need to fly. Generating demand to fill
capacity is the complete reverse of sustainable policy for aviation.’
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