Ryanair and EasyJet: Low-Cost Airlines Profit Champions

Ryanair and EasyJet Low-Cost Airlines Profit Champions

The annual results are going up sharply, as announced on Tuesday, November 18. At the end of its fiscal year, completed in late September, easyJet reported a 13.1% increase in net profit, which stood at 450 million pounds (564 million euros) against 398 million declared a year ago.

In the knife fight being waged by EasyJet and Ryanair for the title of the most profitable company in Europe, the Irish carrier should, after having lost one year, regain its scepter in 2014. At occasion of the publication of its interim results in early November, Ryanair announced a record profit of 795 million euros, up 32%.

François Bacchetta, EasyJet CEO France, believes the recipes for success are intangible. “The key factors for growth have not changed. We act on a number of levers.” And those were no small profits. EasyJet has not hesitated to invest 30 million pounds to accelerate the maintenance of its fleet. Now the inspection of aircraft is carried out by drones.

Frenzied use of the aircraft

The low-cost airline reported that it had increased its revenue per seat up 1.2% year on year. In the same movement, EasyJet continues to cut costs, especially with “migration of its fleet.” The company swapped its old Airbus A319 with a capacity of 156 seats against the brand new A320 capable of carrying 180 passengers. A first step before the company receives its first A320 Neo to more fuel-efficient engines, 15% of average economy. In June 2013, EasyJet has placed a huge order of 135 A320 with a hundred of Neo models.

With a full renewal of fleet, low-cost airline wants to carry more passengers. Last year EasyJet carried 7% more to 14.7 million passengers, or 15% share of the French market. According to François Bacchetta, EasyJet wins “a point of market share every year.” The other factor of the British company’s success is the frenzied use of its aircraft. “11 h 30 a day on average,” admits the director general. He added: “We are the European leader in the use of the fleet.” The frequency of flights is attracting more and more business customers. It represents almost a quarter (24%) of the total passengers last year. As for the mass of customers, EasyJet’s business customers also increase by one point each year.

However, in the future, EasyJet will have to make a tough opponent. The competition will be heightened. After having long preferred secondary airports for reasons of economy, Ryanair began to reposition itself on the most important airport hubs. “We made the strategic choice of airports to attract more and more passengers,” said Bacchetta. According to him, “repositioning Ryanair is still quite concerning.” Almost negligible. “With Ryanair we compete only 5% of our network.”

Competition ahead of Transavia

Transavia France, low cost subsidiary of Air France, is not afraid of EasyJet threat either. Like in case with Air France, “low-cost airlines will replace their premium brand, Air France, Lufthansa and British Airways, a low cost brand, Transavia, Germanwings and Vueling. There is therefore see no increase in capacity but only the transfer. This is defensive!” Mocks the CEO. Nevertheless, EasyJet wants its advantage. In 2014-2015, it plans to open 11 new lines in France alone.

Now that the strike by Air France pilots ended, Antoine Pussiau, CEO of Transavia France is in the starting blocks. He does not want free flight slots for the competition. By 2019, the fleet of his company is expected to increase from 14 to 37 aircraft. Not fast enough for him. “We want to develop as soon as possible our capabilities at a rate of 30% per year.” But the boss of Transavia France does not exclude to push the fires: “If the pilots are with us, we can grow faster than expected.” It is on track.

The National Union of Airline Pilots (SNPL) majority organization among the pilots of Air France, “approved on Thursday, November 6, launching a referendum on the draft agreement,” negotiated with management for development at Transavia France. The result of the consultation is expected in early December.

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  • Anna

    As a frequent flyer, I’d posit on flying with a company whose aircraft are newer.
    You can never be too safe, but you obviously can be too sorry for putting too
    much trust with a company that saves on updating their aircraft.