Why Ryanair is withdrawing more and more from the German market | DW News

one of the eu's top airlines budget carrier Ryanair is continuing with its dispute it's excuse me it's continuing its dispute with Germany over what it says our excessive airport levies the airline releasing a lengthy statement on Monday blasting plans to raise Securities to security fees again in January saying that Germany's overall fee structure is in fact reducing the competitive competitiveness of smaller players like Ryanair which then plays into the hands of flag carrier Lufthansa and in turn reduces consumer choice you know both Ryanair and EasyJet have reduced their presence in Germany despite expanding elsewhere in Europe Eddie Wilson is CEO of Ryanair he joins me in studio for more on this topic Eddie thank you for coming in thanks for talking to us um let's start with what's going right for Ryanair in the past quarter passengers numbers were up very nicely profit was up even more nicely perhaps um Ryanair has surged over the post-pandemic comp is that fair to say yeah I mean we were the best recovered Airline coming out of covert we kept all of our people employed and we kept their licenses current because we knew this had to be over at some stage so we've recovered to almost 130 percent of pre-covered capacity and we've been able to expand throughout Europe but sadly not in the way we would want to in Germany let's talk about that um Germany has not fully recovered from uh for Ryanair business that is it hasn't been a full uh recovery to pre-pandemic times is that correct well Germany hasn't recovered like period like in in aviation um Germany has recovered to 77 the worst performing uh Aviation Market in Europe okay right across capacity not just Ryanair for everybody as a matter of fact Ryanair has marginally grown in that period but the overall market for Aviation seats in Germany has contracted okay Ryanair points to fees as making its business in Germany much more difficult how important for low-cost carrier are these kind of fees that you're seeing at airports right now in Germany well I think it's important that consumers who have bailed out your National carrier here to the tune of 11 billion euros um and what has happened is they haven't recovered they're the largest carrier in the market they have constrained capacity which has put fares through the roof like Germans at the moment are paying saying some sometimes in the order of 800 Euros for one-way fares but what is happening now is that security taxes are rising which goes on to the fair ultimately and the German system is hopelessly inefficient compared to to other countries in Europe and it is in in the medium to long term here German consumers are in for a long period of sustained High pricing because there's there's no competition and chart the charging structure at German airport is now effectively a barrier to entry the German government would say that those security fees which they've been raising uh consistently have to be paid the point perhaps to the airports the way that they've suffered during the pandemic not all of them have great finances and the argument could be made that uh the states that is taxpayers will have to pay those fees if the airlines don't is that a hard sell to make those it's not a correct analysis for example Madrid Airport had no cues this summer and it was four Euros for for an aviation tax and in Germany there's a cap of 10 some airports are actually charging 12 euros there is less processing time if you go to Frankfurt airport and these figures are freely available they do 80 passengers per hour through Elaine Gabby airport does 263. it is a system that means that it's passed on for consumers if I was to tell you when you went to Frankfurt main airport if you had to pay the airport charges it would cost you as a consumer 52 Euros to walk through the terminal 52 years to walk through a terminal I mean like their scanning baggage and it is a fraction of that elsewhere in Europe once costs go up they're passed on to fares the only airlines that actually make something out of that are the incumbent carriers who couldn't care less if they've got less seats the prices are higher no competition sustained high prices for consumers and that's the thanks they got for bailing out this Airline for 11 billion euros which they made money on we should mention uh at the end of the day it was also illegal right according to the European Union um and what has happened is that is a dysfunctional like while we had to do Extraordinary Measures during covert let's just leave that behind us this is about German consumers today and their ability to have choice if the German government put up the cap today the regional airports are going to be hit hardest because it's a higher proportion of their costs there will be less capacity and that will mean even higher airfares the simple question has to be asked having bailed out the airline to 11 billion euros why haven't they recovered to over 100 is it because it doesn't suit them is it difficult for governments who have a stake in these airports to find the right fee structure when they oftentimes only have one major airport these aren't secondary Regional airports when you look at major areas like Berlin like Frankfurt for the most part like Munich for example where Ryanair has done really well in these secondary and Regional airports if they're trying to find a common fee structure isn't that then difficult knowing where to put it but everyone else doesn't like whether the system is broken Ryanair is the largest airline in Berlin this is the capital city of the largest economy in Europe and we're going to our our traffic will fall by 25 percent and guess what our market share will go up by three percent EasyJet have abandoned almost 50 percent of their base aircraft here in Berlin because what has happened is that all the traffic has been funneled into Frankfurt and Munich and that suits the incumbent Airline where no competition can take place and where places that things should take place why shouldn't people in Nuremberg are bad and Baden or Regional airports like that have direct connections and if you you increase the taxes there that means it's harder for Ryanair to to turn a profit there and because we have aircraft and not factories those aircraft can migrate to more efficient economies elsewhere so choices are lower prices are higher um do you have any kind of consumer groups or Advocates that are working with you here in Germany saying this is a problem middle term long term right now already I think like for consumers I mean consumers only consumers are always at the pointy end um if they don't have the choice they can't they can't um they can't take action it's up to a government to look at what's the economic uh impact of this If This Were telephone roaming charges or if it were if it were internet charges or if it were electricity charges then people would be would be on this because they can see exactly what they're what they're being charged but there's no opportunity here for competition in the way that it should be we're the largest airline in Europe we are the one that is growing the fastest we do 185 million passengers this year but why are we not putting that into to Germany the largest economy in in Europe because charges are too high and it's easier for us to to have a profitable business elsewhere and the only people who win is Lufthansa and those who lose are German consumers what leverage does Ryanair have is it willing to pull out of uh Berlin like I pulled out of Frankfurt it's not a question of pulling out it's a question of look does a regulatory framework here if you allow if the government today decide we are going to increase the cap for security charges from 10 euros to they're speculating up to 28 Euros in 2020 that will have an eight and a half billion impact on the German economy I'm not saying it's what an independent report says today it says that there will be 16 million less passengers and 90 95 less routes Germans normal ordinary Germans are saying at the moment is where have all the roots gone like the roots have gone because they have contracted Roots the main players the number one and number two carriers in this market are constraining demand artificially to drive up prices and the government instead of putting up prices even further should find a way of being more efficient like other European countries because when this economy gets back to normal GDP growth like Airline traffic isn't all about going on your holidays it's about connectivity for business visiting friends and relatives seeing kids in college Etc medical appointments and if that if you don't have the the cost structure in there it won't grow with GDP and what will happen is that airfares will Skyrocket in the years to come is that politically though a harder sell in Europe right now look at what happened in Italy for example uh last week this announcement that they're going to cap airfares from the islands to the mainland you had some very um sharp words to say about that and how you solve that is it not uh are we not going to see this more often that governments in a kind of a populist economics they're really going to try and put more on the companies and say look we're going to put more less on the taxpayers is that not something that you're facing off against more and more no I think what you're saying that you're not comparing like with light there initially they're trying to implement the price cap on the last two or three seats like there's a under European law you're an outside your own prices and the market is the market and governments I mean the Italians like have been trying we're running Alitalia for the last 70 years with respect they're the last people you should be talking about pricing on on airlines given the track record there but look that's against European law today is within the Ambit of the German government who are going to make a vital piece of infrastructure regardless of who feels that whether it's Lufthansa Euro Wings Ryanair EasyJet we you need a functioning Airline and Airport System to support your economy and there are structural things happening at the moment post covert that are going to hamper the growth of the aviation sector in them in Germany over the next number of years and there doesn't seem to be any obvious solution here except that the incumbent area lines will make more money on a per passenger basis and our oblivious couldn't care less about the charging structure because they'll just pass it on this is something that has to happen then on a federal level I imagine most these airports would love to be able to reduce their fees to some extent to be able to bring in low-cost routes things like that is that where the problem is is on the federal level or even on the EU level well once well once what you do is that even that if you leave a federal level aside airports should be allowed to set their own prices um and should be able to because other European countries can do that because all your costs ultimately go into the price for the airline and they make the decision as to what Fair they can put in to get a reasonable return at the moment that is not comparable with the rest of Europe as a matter of fact it's completely out of kilter and if this goes through and we've written to boat ministers today to say if you put this true it's going to be detrimental never mind to Ryanair but generally to the economy you won't be able to support GDP growth when it comes back you're going to lose jobs you're going to lose eight and a half billion the Direct Hit to GDP in this economy and you are going to you're going to go back to the bad old days of funneling into just Munich and Frankfurt and if you don't live near there then German consumers are going to be uh are going to be disadvantaged from them is that still I go back to this question is that a harder argument to make right now in this just in this German political atmosphere right now when we talk about essentially providing more choice for domestic flights people understand that on one level but at the same time there's been this discussion of reducing domestic flights in General trying to move things more to rail is it just getting harder to make this argument even if technically you're right you're reducing Choice you're raising prices but this is a hard fight to win when people in the back of their minds maybe here in Germany especially may say well we're not supposed to be flying as much domestically is there something changing well I'm I'm not trying to uh I'm not trying to make the argument for domestic flying what I am trying to say is that if you if Lufthansa put all their aircraft International connections through Frankfurt and Muni you're gonna have to drive there or find some other way of getting there so leave domestic flights out what you're saying is that International connections how can the largest the the the capital city of 25 less flights here in Berlin because charges are going up it's uncompetitive and nobody's going to fill the Gap and lufthans isn't going to fill it in Berlin they left years ago all right that's Eddie Wilson CEO of Ryanair thank you very much for your time appreciate it thanks a lot

Channel: DW News

Views: 494,253

Keywords: DW News, ryanair, easyjet, germany, german airports, airport fees, tax, CEO, ryanair ceo, lufthansa, airport levies, airport, berlin, BER, munich, frankfurt, europe, madrid

Id: wDuSrJttgCc

Length: 12min 6sec (726 seconds)

Published: Mon Aug 14 2023