Customers are set to reap the benefits of an impending price war among major airlines this winter, with Ryanair the latest to make bullish statements of its intention to emerge on top.
The airline yesterday threw down the gauntlet to rivals, including Aer Lingus, by insisting it was ready for the increased competition and would not be beaten on price.
The lower fares bonanza could be sparked by “irrational pricing” by some airlines as they line up to pass on fuel savings to customers, according to Ryanair chief marketing officer Kenny Jacobs. He said it was likely to be a “great winter for customers”.
“We and other airlines will have a bigger benefit on fuel that can be passed on in the form of lower fares,” said Mr Jacobs. “We will certainly pass it on... as we always do but you could see some irrational pricing by some competitors.
“Some people are calling that a price war in the second half of the year.
“If there is, obviously Ryanair won’t be beaten on price so it could be a bit heated in terms of price competition. It’s probably going to be a great winter for low fares for consumers here in Ireland and around Europe, so we’re very cautious on what we’re guiding in terms of sales.”
Domestically, Aer Lingus looks to be in a better position than ever to challenge Ryanair on short haul routes with the backing of IAG likely to crank up the pressure on the Michael O’Leary-run carrier.
The impending completion of IAG’s €1.36bn takeover of Aer Lingus, after months of wrangling, has given the airline a shot in the arm, with IAG’s marketing budget alone likely to help it compete with low-fare airlines such as Ryanair and EasyJet.
Although increased competition from Aer Lingus is likely to deliver benefits for customers here, Mr Jacobs said Irish holidaymakers could see the fruits of a much wider price war to a far greater degree.
“IAG buying Aer Lingus isn’t going to mean cheaper fares for Irish consumers,” said Mr Jacobs. “A price war or very low prices will be a pan-European thing. If anything, we would see [increased price competition] in other markets more than we would see it from other competitors here in Ireland.”
The marketing chief made the claim that the airline was ready to outgun its competitor, no matter what fare reductions they offer, on the back of its latest set of financial results which show it to be in rude health.
Its market-leading position was reaffirmed by news of rising revenues, profits and passenger numbers in the three months to the end of June.
The airline’s after-tax profits climbed 25% to €245m on the back of carrying 28m passengers, falling costs and reducing the number of empty seats on its flights.
“We are pleased to report strong growth in traffic and profits in Q1,” said Ryanair chief executive Michael O’Leary. “Our mix of lower fares, best on-time performance and enhanced customer support experience under our ‘Always Getting Better’ (AGB) programme, continue to attract new customers.”
The airline added that it continues to be “inundated with growth offers” from primary and secondary airports.
With 40 aircraft set to be added to its fleet before the year’s out, the airline is eyeing expansion across a range of European hubs, with Berlin among the cities being added to its roster.
A battle is also raging among Aer Lingus and Ryanair for a larger slice of the lucrative business market with the latter’s Business Plus offering allowing it to compete more aggressively in what has traditionally been an area of strength for Aer Lingus.
“Business Plus is very important. It’s one of several key ingredients to Ryanair increasing our market share of business travellers,” Mr Jacobs said.
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