Why Ryanair will NEVER fly to America

two times a week a boeing 737 operated by buzz airlines takes off from warsaw's modeling airport it's headed towards tenerife south full of polish tourists eager to reach the warm sunny shores of the cannery islands now you might not know this but buzz is a ryanair subsidiary meaning this twice weekly flight represents the longest one in all of ryanair's network the journey has a scheduled flight time of nearly six hours pushing the limits of the boeing 737 that flies it but do you know what also takes about six hours a journey from reiner's home base in dublin to either new york or boston and yet ryanair has never once tried to compete on these routes that might seem odd ryanair has proved time and time again that its business model can induce demand and deliver profits on pretty much any route it touches so it begs the question why doesn't ryanair fly transatlantic why doesn't ryanair fly to america let me explain real quick guys my goal for 2022 is to hit 100 000 subscribers i'm getting close but there's definitely still a ways to go so whether you watch all of my videos and just haven't gotten around to subscribing yet or you're new to the channel and just love great aviation content it would mean the world to me if you went ahead and subscribed thanks now i know most of you probably already know how ryanair works but i think it's important that we quickly dissect their operating model the word ryanair might as well be a synonym for cheap fares the average ticket price for a reiner flight in 2019 was just 37 euros it doesn't matter what time of year you're flying where you're flying or when you decide to book low fares remain their modus operandi their fares are always cheap but despite this they remain incredibly profitable again ryanair's average ticket price was 37 euros prior to kovit but that was far from their only revenue source ryanair has its passengers subsidize these low fares by paying for pretty much everything else on board snacks carry-ons etc and this generates an additional 17 euros per passenger when you consider its average operating cost per passenger is 47 euros you can quickly determine the airline turns a 7 euro profit per passenger equating to about a 13 profit margin for the aviation industry that's a really good number now the mastermind behind this whole operation is a man named michael o'leary he's been their ceo for 27 years and is very respected inside the company pretty much whatever he says goes and he's gotten away with saying and doing some pretty outlandish stuff that if i repeated might just get me demonetized so an economy it'd be very cheap fair say 10 euros and in business class it'll be beds and blue jobs but despite the respect that he commands a 2018 biography revealed that ryanair's board outright dismissed his calls to fly to america even though he did so with much enthusiasm and vigor rarely ever does the board refuse his ideas or directives let alone doing so in a public forum so there must be a good reason why they chose to do so here well we can start to find answers in a statement that mr o'leary made back in 2017. in an interview with aviation international news he said unless you're going to serve both the east coast and the west coast with a low-cost model you don't have the scale or ability to penetrate that market properly you see the sheer scale of ryanair's operations the extent of its root network the number of planes it flies and the size of its employee base has been instrumental in keeping its costs low and if they hope to replicate that kind of scale in the american market they need to serve a lot of major cities but there are really only two locations that they can feasibly fly to with their current aircraft new york and boston while these cities do see a lot of transatlantic demand they're also slot restricted and extremely competitive as such it's unlikely that ryanair could achieve sufficient scale if they only flew to these two destinations but hold on a second didn't goal fly 737 max between brasilia and miami back in 2018 and isn't that an eight-hour journey with that kind of range ryanair should be able to push much deeper into american territory serving cities like philadelphia dc and detroit so what gives well simply put reiner 737s are not like most 737s they're deads with the irish carrier packing in as many seats as regulators will allow and they're only getting denser while a typical 737 max 8 holds about 170 passengers ryanair's new 737 max 8200 which are the same size as the max 8 will seat about 200 each on top of that ryanair sure has a knack of keeping these aircraft full in 2019 they achieved an average load factor of 96 which led the industry while these extra seats have a positive impact on ryanair's bottom line they have a negative impact on the distance the planes can fly heavier planes burn fuel more quickly meaning those aforementioned cities can't be reached so if ryanair wants to push deeper into the american market they're gonna have to do one of two things option one they could look outside the 737 family for longer range jets this is exactly what norwegian did when they broke into the long-haul low-cost space by picking up a handful of 787s and this strategy actually worked fairly well for them before kovin 19 hit but ryanair isn't likely to pursue this option you see michael o'leary has proven a master negotiator snatching up aircraft for cheap this innate skill helps the carrier maintain low fixed costs and it's notable that they ordered many of their 737 maxes during the plane's grounding helping them secure a great deal but o'leary has lamented that the gulf carriers and their quote record lunatic orders prevent similar tactics when purchasing wide bodies and even if they could secure efficient wide bodies for cheap they'd probably still refrain fleet commonality has proven a very important tool for ryanair and buying wide bodies would disrupt that ryanair's second option includes taking a subset of their incoming 737 maxes and just removing a whole bunch of seats like i just mentioned the calculus is simple make your planes lighter and they can fly further but this too would be disruptive ryanair's existing planes all have roughly the same capacity meaning they're interchangeable able to fly any route at any time throwing lower density planes in the mix could complicate route planning now ryanair could try to combat this by only flying these planes to america but since long-haul international fights don't typically operate on short turnarounds these jets would spend a lot more time on the ground decreasing their utility now these are certainly big obstacles and one might even say that they're insurmountable but here's the thing ryanair has done the impossible more than once in the past a lot of it thanks to their leader michael o'leary o'leary is one shrewd dude and if you listen to him speak he's always thinking 10 steps ahead he has a gift of being able to look at the aviation market from a million different angles so yes as it stands today it doesn't seem ryanair has a path towards american dominance but should we see another big shock to the industry much like what happened during kovid don't be surprised if ryanair makes a move and don't be surprised if o'leary goes around telling everybody that he told you so seriously guys as a huge aviation fan listening to michael o'leary is almost spellbinding i highly highly recommend that you go check out some of his recent interviews and let me know down in the comments if you would want me to do a video specifically on him and maybe some other aviation legends like herb keller and david nielman thank you so much to my patrons for making this video possible if you want to join the patreon community and help this channel to grow go ahead and check out this link right here and as always if you learned something new today leave a like and subscribe to keep learning and until i see you again don't 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Channel: Coby Explanes

Views: 146,363

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Id: XwqMlf-n5xE

Length: 9min 44sec (584 seconds)

Published: Fri Jan 14 2022