Ryanair at Brussels Airport

[Established02]

"Brussels Airlines, Vueling and EasyJet have reacted firmly to Ryanair’s start: they all have increased the number of flights"

Did easyJet react? Did easyJet increase their number of flights? Not that I'm aware of.

"Today’s load factor equal to Ryanair’s general load factor. Not bad, but not spectacular either.”

He's basing his judgement on a general average, rather than on having seen any specific load factor of today's flights.

Today is not a regular day, as most of the FR flights will depend mostly on the BRU market. Therefore today and during the upcoming days the inbound flights may have have a lower load factor than the outbound flights. I expect their "general load factors" will build up further in the upcoming weeks.

[Crosswind]

What a nightmare... Hope they will leave asap from this place or, even better, to live long enough to see their business falling in hell, burning amongst flames.. No respect, always at the edge, pure wild system.

Damn, what a world...

[Shuttie]

Thanks for that great contribution Crosswind....(yes that was sarcastic)
The majority of comments on this site are based on facts or sound opinions.... it is a shame we get your kind of comments that really should be on facebook or twitter... not in this forum.

[RoMax]

Did easyJet react? Did easyJet increase their number of flights? Not that I'm aware of.

EasyJet will add quite some capacity this summer (with new routes to Gatwick and Bordeaux), but not to/from the destinations that FR serves to/from BRU this summer.

[Crosswind]

I will not start a complex discussion on Ryanair and his business plan right now because it will take pages and pages without any concretet result. Simply because their system is poisonous at all level on my opinion. As far as I know by personnal relations working for them, poor social life, bad contracts, you are a piece on the chess plate. They were sentenced, lots of people are fed up to pay for them at a regional level and, yes, I will be very, very, very happy the day this company goes bankrupt.

[Passenger]

"Quote from the newspaper article: Today’s load factor equal to Ryanair’s general load factor. Not bad, but not spectacular either.”
He's basing his judgement on a general average, rather than on having seen any specific load factor of today's flights.

They (= the aviation journalist and the economist) did mention some specific load factors. But because the article in Het Nieuwsblad is for subscribers only, I didn't copy/paste the whole article (because of copyright rules).

Brussels-Rome 162 pax
Brussels-Barcelona 148 pax
Brussels-Barcelona 158 pax
Brussels-Barcelona 156 pax
Brussels-Treviso 146 pax
seems one of the Barcelona-Brussels flights had 30 pax

[Flanker2]

Wow that's not bad for day one.
What SN wasn't able to achieve in 13 years, FR does it from day one... it says enough about how this will play out.

Sure FR is attracting pax by pricing their tickets below cost, but they can afford it for months if they have to, as they have billions on their account. Every pax that they fly while loosing money is aso a direct loss on the competition, and it's free advertisement for Ryanair while they can make up for some of it by selling on-board and by attracting new passengers.
The passengers have to take advantage of it and in no time, most of FR's flights will be flying full.
189 pax each load. By SN's standards that's 2 A319's worth of pax at their typical load factors.

In a few months when FR starts to make money, I see them growing aggressive by going after SN's UK market.

[Established02]

EasyJet will add quite some capacity this summer (with new routes to Gatwick and Bordeaux).

But that was decided well before VY and then FR announced their expansion plans and thus easyJet did not react specifically to that (yet).

Vueling and EasyJet have reacted firmly to Ryanair’s start

Vueling did not react to Ryanair's start either. It's Ryanair who reacted after Vueling.

[Established02]

Brussels-Rome 162 pax
Brussels-Barcelona 148 pax
Brussels-Barcelona 158 pax
Brussels-Barcelona 156 pax
Brussels-Treviso 146 pax
seems one of the Barcelona-Brussels flights had 30 pax

How can anyone call this "not spectacular" load factors?
Those 150+ outbound pax will soon appear on the inbound flights as well.

[teddybAIR]

Hi Established,

they are indeed spectacular load factors, but they are making a loss on those flights for sure. What they are currently doing is pricing everybody out of the market based on the overall profitability of the entire company. That is their full right off course, but at the conditions of today, those flights are simply loss making for ryanair. I quoted a number of costs mentionned by ryanair in its FY2013 annual report in another topic and will only repeat the essence here, but in 2013, the ex-fuel costs of ryanair were as follows:

> staff: 5€
> airport & handling: 8€
> Route charges: 6€
> Ownership & maintenance: 2€
> Other: 2€

That is a total of 23€ for the ex-fuel costs, and the airport handling fees for flights out of BRU will easily triple (airport charge alone already has this effect, exclusive handling), meaning the total unit cost ex fuel would be 39€. The destinations flown out of BRU (Alicante, Barcelona, Ibiza, Lisbon, Malaga, Palma, Porto, Rome, Valencia, Venice) are easily 1h30 from BRU. A B737-800 burns about 2 tons of fuel per hour so assuming 1,5hrs flight, that's another 3 tons of fuel (3750 litres) at 1,31$ per liter that's a 4.900$ or 3500€ fuel bill. Assuming a 90% load factor on a 189 pax aircraft, the unit fuel cost amounts: 20€.

So even when running these basic (and in my opinion favourable assumptions), the average ticket price would need to be 59€ in order to break-even out of BRU. And that is at a 90% load factor, while I believe they set their target at 85%. I also did not account for the fact that operating out of primary airports will undoubtebly have it's effect on the effective turnaround times.

My conclusion: at an estimated break even unit cost of 59€ and an agressive pricing strategy that is based on ancilarry revenues, Ryanair is well equiped to do some damage at BRU. However, let's not be oblivious to the fundamentals of business: somewhere down the line, those 170 pax (90% LF) need to finance 3 tons of fuel, the depreciation of a 70m$ aircraft and all other ex-fuel costs.
The other airlines at BRU better get their game faces on, but I would not start to panic either as the RYR strategy at BRU has some weaknesses as well. They assume an 85% load factor out of a hub that will have fiercer competition than they are used to at CRL. I 'steek mijn hand in t vuur' for the fact that they are gambling that at least some operators will retreat from the routes they just opened. If they allow themselves to do this in the short term, then it will simply become a self-fulfilling prophecy and they will prove RYR right. But if competitors have sufficient means to maintain the overcapacity for a substantial time frame, then I don't see RYR achieving a 85% LF as the LF's mentionned right by Established02 are hinting at an average 82% LF (excluding the 30 pax BCN flight and rounded up) and that with promo launch prices...

If I were competing on one of RYR's routes I'll simply let them have the first 10 or so pax that book the promo prices on a flight. Yield management will simply not allow them to maintain those rock-bottom prices on all seats and if they do, well then it's a simply cash burning machine. So I'd maintain the frequency but reduce seating capacity on the route and try to show them a good time. But that's not a strategy that any operator out of BRU can maintain. Easyjet and JAF are probably best equiped to compete with them, given their fairly low cost structures. Curious to see what the other carriers will do.

Best regards,
bAIR

[appel]

Sorry Crosswind but in my personal experience the social life whipe working for ryanair is not bad at all. I know when i can do something with friends or familie a long time in advance. I can even say which exact dates i will be working for the next couple of years as long as nothing chages. (like new base or captain upgrade)
It wont be in every base like this when you work 5-3 iso 5-4 in summer and dont have good connections back home. But the people i know in such bases have their social live where they work.

[teddybAIR]

For info, flightlevel mentions that RYR's ambition is an 82% LF for BRU flights and that yesterday's flights attained an average 62% LF: 73% of outbound flights and 52% for inbound flights. While the absolute number is impressive, the question remains whether this will be sustained when reverting to a profitable price level.

[sn26567]

Yesterday I asked Brussels Airport staff about the fees paid by Ryanair: they are not lower at positions 128-136 where there are no jet bridges. The only reasons why Ryanair (and easyJet) are using these positions is for faster turnaround.

[Inquirer]

It seems to me that the 'random' occupancy quotes ryanair shared with the press on their first day of operations from BRU, were in fact carefully selected to give a very favourable impression, something which shouldn't surprise us really, as that's how things are done everywhere, but it should signal us to remain cautious when making predictions for the future as they may be based on facts and figures not really reflecting the full picture and thus match reality.

A 62% occupancy rate isn't bad, but it certainly isn't spectacular either: it's just mediocre and it seems to be in line with what others are doing at BRU too. This reflects the reality that ryanair is not an expection to the rule that when there's overcapacy, everybody sufffers from it and they most probably bet on some competitors pulling out of their routes. The interesting thing is, the opposite seems to be happening.

[teddybAIR]

what is a more standard turnaround time for a european flight?

[sn26567]

Ryanair wants to keep their 25 minutes standard, which is not possible with jet bridges, but feasible at positions 128-136 where the passengers have to do the walking (from gates A28-A33).

However Ryanair has realised that taxiing takes a longer time at BRU than at CRL, and that is taken into account in the timetable.

[teddybAIR]

The reason why I ask what the standard turnaround time is, is because if I was running a handling company at a major airport, I would base my pricing on the value for the customer (and my customer is the airline who’s running his extremely efficient business).
Currently, that customer is putting increasing pressure on the pricing model because their own business is on average only marginally profitable. That results in a fact that they don’t ‘value’ the service you are offering. The real value a handler can deliver to an airline is – IMHO – is the productivity gain when an aircraft is turned around faster. Let’s illustrate that with a small example.
An airline operating 3 aircraft 365 days per year who each needing 2 turnarounds a day at your airport would have her aircraft spending a total of 1460 hrs a year at the stand, assuming a 40’ turnaround. If I promise you that I’ll turn around your aircraft in 25’ than I reduce the idle time of your assets to 913hrs, an efficiency gain of 547hrs.
Now, what does that mean to your airline? It means that, assuming an average flight duration of 1h35 and a 25’ turnaround, you can fly an extra 270 flights. If your ambition is a load factor of 85% and you use aircraft with 189 seats and your stated average revenue per pax is 62€ (cfr. Ryanair annual report), then I’ve just enabled you to boost your top line revenues by 2,7m€ using exactly the same assets. Now we’re talking business. Do you want us to enable you to perform 270 extra flights a year, or will you simply buy my standard service ?
The reason why the above does not happen is because BRU has 2 handling agents competing against each other in a blind race for every single contract. Until the moment where they start believing themselves that they offer value to an airline and are not simply a cost driver, this downward spiral will continue as airlines will put relentless pressure on prices in their drive for profitability. However, as a handling agent you have to realize that the customer loyalty of an airline is zip, zero, nihil! When offered a contract that is even a few 100k€ cheaper, they will not hesitate to either churn, or put your sales team under tremendous pressure to reduce your price.

[Crosswind]

My opinion doesn't reflect reality, neither yours. It's only an opinion based on personnal experience, friends return and so on... You are happy at the moment. Right. I'm not. End of the game

[Lysexpat]

The reason why I ask what the standard turnaround time is, is because if I was running a handling company at a major airport, I would base my pricing on the value for the customer (and my customer is the airline who’s running his extremely efficient business).
Currently, that customer is putting increasing pressure on the pricing model because their own business is on average only marginally profitable. That results in a fact that they don’t ‘value’ the service you are offering. The real value a handler can deliver to an airline is – IMHO – is the productivity gain when an aircraft is turned around faster. Let’s illustrate that with a small example.
An airline operating 3 aircraft 365 days per year who each needing 2 turnarounds a day at your airport would have her aircraft spending a total of 1460 hrs a year at the stand, assuming a 40’ turnaround. If I promise you that I’ll turn around your aircraft in 25’ than I reduce the idle time of your assets to 913hrs, an efficiency gain of 547hrs.
Now, what does that mean to your airline? It means that, assuming an average flight duration of 1h35 and a 25’ turnaround, you can fly an extra 270 flights. If your ambition is a load factor of 85% and you use aircraft with 189 seats and your stated average revenue per pax is 62€ (cfr. Ryanair annual report), then I’ve just enabled you to boost your top line revenues by 2,7m€ using exactly the same assets. Now we’re talking business. Do you want us to enable you to perform 270 extra flights a year, or will you simply buy my standard service ?

tbAIR- you are making one big mistake in all your calculations, you make an average and then use this as being the real value for every single occurence.
To make it clear with an example: do you think you will find passengers for your 270 extra flights, when you tell them their flight to BCN will be cut into 6 times 15min and they will have to change six times aircraft before arriving in BCN?

Same with your revenue calculations: you compare the average cost with the revenue of a promotional fare. Do you think the 189th passenger pays 29€ to go to BCN? I still remember in the early days of FR at CRL they were selling tickets at 0,99€ and I did pay off if you see how big they are today at CRL.
Furthermore if FR sells a ticket at 29€ they may be loosing 20€, if your figures were to be correct, but, halve of those passengers will leave an empty seat at a competitor, and that empty seat will make that competitor loose 49€.
Also you quote the fuel price per metric tonne and than use it as price per liter.

[Lysexpat]

It seems to me that the 'random' occupancy quotes ryanair shared with the press on their first day of operations from BRU, were in fact carefully selected to give a very favourable impression, something which shouldn't surprise us really, as that's how things are done everywhere, but it should signal us to remain cautious when making predictions for the future as they may be based on facts and figures not really reflecting the full picture and thus match reality.

A 62% occupancy rate isn't bad, but it certainly isn't spectacular either: it's just mediocre and it seems to be in line with what others are doing at BRU too. This reflects the reality that ryanair is not an expection to the rule that when there's overcapacy, everybody sufffers from it and they most probably bet on some competitors pulling out of their routes. The interesting thing is, the opposite seems to be happening.

It would be nice if we could compare the loadfactors of all ailines competing with FR on their new routes.
Does anybody has access to these numbers?