Interesting detail in the Ryanair results today illustrating more work needs to be done before the airline's plan to match ancillary revenues with passenger numbers kicks in.
The full year results to March 31 2010 indicated that despite a 14% increase in passengers over the 12-month to 66 million, ancillary revenues jumped at a lower rate of 11% to Euro 663.6 million from Euro 598.1 million.
Ancillaries account for 22% of the company's overall revenues (almost Euro 3 billion, up 2% on the previous period).
Ryanair, like its US counterpart Spirit Airlines, is seen by many as a pioneer of at least one particular type (and the more controversial, as far as passenger groups are concerned) of ancillary revenue - charging for online check-in, hold baggage, etc.
During the reporting year the airline launched its online check-in-only facility for passengers.
Ryanair acknowledges the discrepancy between the growth in ancillary revenue and passenger numbers.
Ancillaries were "lower than the increase in passenger volumes, due to a decline in average spend per passenger primarily due to lower excess baggage revenues, and the negative impact of the movement in euro/sterling exchange rates".
Travelsupermarket's Bob Atkinson has another take:
“With the highest baggage charges, £40 return per bag this July and August, the highest card charges of £10 return irrespective of fare and the worst on board mark ups of food of well over 500 per cent on high street prices, customers are finally learning how to play Ryanair at its own game.
"And with savvy customers set to continue this behaviour, the only way up for Ryanair now is to pack more bums on seats and go for passenger growth through fare promotions to gain higher revenues. And with a load factor of 82 per cent for the full year, that is 18 in every 100 seats still to fill.”
"And with savvy customers set to continue this behaviour, the only way up for Ryanair now is to pack more bums on seats and go for passenger growth through fare promotions to gain higher revenues. And with a load factor of 82 per cent for the full year, that is 18 in every 100 seats still to fill.”
Nevertheless, Ryanair appears to be doing something right - the airline pushed back into profitability after flying into the red this time last year, with profit after tax of Euro 319 million.
The airline says it scaled back its marketing and distribution budget by 5% during the reporting period to Euro 144.8 million, primarily as a result of focusing on "internet-based promotions".