Fed up passengers are 'shunning the cost of extras' at an upbeat Ryanair

Published on Monday 1 February 2010 21:27

RYANAIR passengers are increasingly shunning the 'extras' that have helped boost revenues at the budget carriers.

The airline revealed yesterday that passenger numbers rose 14 per cent to 16 million in the three months to December. However, ancillary revenues – such as charges for extra services like excess baggage costs – grew by only 6 per cent.

Bob Atkinson, an air industry analyst with consumer website travelsupermarket.com, said: "As with EasyJet last week, Ryanair is making a large percentage of its operating revenues from 'extras' like baggage charges, compulsory online check-in fees and credit card fees as well as money made on board.

"But passengers are becoming wise to this and are looking for ways to shun the extras. Ancillary revenues account for only 30.36 (26.50p) per person this year versus 32.43 last year, with more and more customers avoiding charges such as checked-in baggage fees of 30 return and on-board catering at 2.10 for tea and coffee."

It came as Ryanair revealed net losses had sharply narrowed to 10.9m in its third quarter compared with a loss of 118.8m in the same quarter of 2008. It was also well below a net loss of 35.1m forecast by its in-house broker, Davy.

Group chief executive Michael O'Leary remained bullish. He said: "The environment out there is, from Ryanair's perspective, great, because it's awful.

"It's really difficult out there. We're doing remarkably well because this is the time when the lowest-cost producer wins."

Revenue rose 1 per cent to 612m and fares fell less than expected, allowing the group to trim a forecast fall in full-year yields – a measure of average fare levels – to closer to 15 per cent than the 20 per cent it had expected.

Ryanair said it was still gaining market share from the continent's leading flag carriers Air France-KLM and British Airways – which have signalled their business is stabilising – and Deutsche Lufthansa.

The City expects BA to report a Q3 loss of about 151m this Friday. Gert Zonneveld, transport analyst at Panmure Gordon, said there was no obvious read-across to BA's results from Ryanair as the pair had such different business models.

"BA is much more about premier and long-haul travel, while Ryanair is short-haul flights. Ryanair has proved to be the more resilient," Zonneveld said.

Analysts say in stock market terms Ryanair is also benefiting from the perceived management turbulence at rival budget airline EasyJet, where chief executive Andy Harrison quit abruptly in December.

Ryanair's shares were trading up nearly 7 per cent at 3.57 late yesterday afternoon.