country manager From Ryanair in Spain. A representative of the Irish low-cost airline came to the company in November 2021. He describes himself as a spokesman. His role is to be the visible face in the country with the second highest passenger volume in the group. In this conversation, he explains the importance of this market and the company’s commitment to the future.
Ryanair is described as one of the airlines with the lowest prices on the market. Do you think flight costs will decrease in the short term?
Ticket prices largely depend on demand and air capacity at any given time. Airlines have had to increase tickets in general because air capacity is less, there are fewer airlines in Europe, there are fewer fleets, fewer seats… These conditions mean that flight costs tend to increase. We must add to this the fluctuations in oil prices, the sociopolitical situation and airport taxes. When you buy a ticket, most of the price goes to taxes and fuel. Before Covid-19, we were charging an average of 37 euros per ticket, now we charge approximately 48 euros. We have always tried to control costs from a consumer perspective, but our operating costs increased by 24% last year due to airport taxes, fuel, reduced air capacity and lower costs per employee. By reaching an agreement with the cabin crew and pilots, we got back the salaries before the pandemic. Salary increases were also approved and employee per aircraft ratios were increased. All this was also reflected in ticket prices.
How did they recover from the incident? Pandemic?
We were one of the sectors most affected. We spent months without being able to work. Here in Spain Rynair has benefited from ertes which prevents us from having to lay off staff in this country. When the worst of covid hit, we were the first to start recovery activities and we were able to do so because in our case all the planes we have are ours, currently 537. Other companies leased them during covid and when they could be used to fly again, they had no resources of their own or capacity to fly again. They saw that it was not. Many companies no longer have the capacity to grow due to the lack of their own devices and the delay in deliveries from Boeing and Airbus manufacturers. We had everything ready, both our aircraft and our crew, so that we could start operating as soon as possible after the pandemic. Additionally, Ryanair always pre-purchases a percentage of the oil to prevent price fluctuations from affecting us; This gives us more control over the operating costs we will have.
While you explain that you plan prices in advance, do you know if these discount offers will come back? ryanair Is 9.99 euro or 19.99 euro very striking bills?
It is becoming increasingly difficult to find flights for 9.99 Euros, we think it is very difficult to offer such services again due to the high costs we experience. From time to time, users may encounter one of these offers, but it is also true that our average price has increased in general. The prices you told me are very low cost [coste muy, muy bajo]. At a time when a plane costs 100 million euros, it is extremely difficult to offer tickets at this price. Even though we cover the oil prices in advance, we cannot forget that the barrel price paid from 65 dollars three years ago is around 90 dollars today, the rise of airport taxes has not stopped, and now we have to face environmental problems. The whole sustainability policy implemented by Brussels… All these factors make it very difficult for us to keep prices this low.
Do you believe that the agreements you have reached with the workers will solve the labor conflict that has been experienced in the company in recent years?
We faced cabin crew strikes. We reached an agreement with CCOO in March 2022 and are working to sign a new collective agreement, which is always a time-consuming task. But we have already improved the salaries of cabin crew and extended their rest days. I think we are an attractive company to work for, which is why many of our employees have been with us for many years. Our employees do not need to spend the night outside because we have no climbs so we always return to our starting point. We also signed an agreement with pilots. We believe that we will not experience a larger labor conflict in the near future.
So why did they have so many conflict problems in the past?
The dispute was not with the workers, but with a particular union. We had problems because when we came to Spain we were following Irish labor legislation and that changed in 2017. We then had to negotiate collective agreements with the unions and it took us five years to achieve this; It was very difficult, there was no way. The union’s demands were exorbitant and impossible for the company to meet, so it was impossible to reach an agreement at that time. The strike occurred because we reached an agreement with the CCOO, although we could not reach an agreement with the USO. They were the ones who called for a strike. These strikes caused a lot of noise in the media, but in reality they had little impact on our operations, with few workers following them. Our aim has always been to make agreements with cabin crews to improve working conditions. We talked to them and currently the conditions of the crew and pilots are better than the average of other companies.
What are your growth plans for Spain?
We will open 5 new routes in Spain, we are on the path to growth. We are currently 15% above pre-covid levels in terms of routes and capacity. Up to 52 million passengers benefited from our services last year [los años fiscales de la compañía se miden de abril a abril] Our forecast is to reach 55 million in the next fiscal year. For us, Spain represents a great opportunity because of the regional routes we can benefit from. Besides Madrid and Barcelona, we also operate in Castellón and Asturias. Our commercial strategy consists precisely in taking advantage of regional connections in regions where other companies do not operate. We have one of the largest capillaries in Europe and have up to 92 bases in the Old Continent. We operate up to 3,500 flights per day. In the case of Spain, we now want to work on deseasonalizing demand. We want demand to increase in summer and everything to decrease in winter. We plan to increase the routes for the winter months.
Do you think there should be mergers between companies? Airlines? Some actors in the industry have pointed in this direction.
Yes, we believe mergers should happen. There was a time when there were too many airlines and that is unrealistic for the market we have. Not all of them can be commercially sustainable. Ultimately, what makes sense is that there will be three or four major groups left in Europe, which could be Air France, KLM, Ryanair and perhaps EasyJet. So there will be four big groups.
¿ryanair Can you shop?
We have no intention of acquiring another company at this time; business combinations are too complex. We have already made some acquisitions with the acquisition of companies such as Austrian Lauda and Icelandic Wuzz. We also have Malta Air. In general, we are open and attentive to what is happening in the market. But our goal is to continue growing on our own. We have now reached 183.5 million passengers on the Ryanair network for this financial year. Our goal is to reach 300 million passengers. And we can only achieve this growth as Ryanair.
How does the geopolitical situation affect them? We now have two clear war scenarios.
We had routes to Ukraine and Israel. Now our operations in these two locations have been stopped. We became the first company in Ukraine with two million passengers. This has affected our revenue, but these are two small markets. We changed the location of the planes. We take them from one place and put them in another to keep growing, so it doesn’t have a big economic impact for us.
Does expanding high-speed connections pose a risk to companies like Ryanair, or do they see them as complementary?
No, I think they are complementary. Anything that improves connectivity for the user is welcomed. At that time, we were operating from Madrid to Barcelona, and this route was later discontinued because both cities were very well connected by rail.
Will you continue to bet on Spain in the coming years?
We are now very committed to continuing to grow in Spain; This is our second market after Italy. The third market is England. We have a huge business volume here and our intention is to continue to grow in this country. We want to continue working on regional connections and also make the routes off-season. We are a large investment, employment company, we currently employ more than 3,000 people in Spain. We currently have a 24 percent market share in this country and we want to reach 40 percent in 10 years.