During a Ryanair press briefing in Brussels, CEO Michael O’Leary reviewed key priorities and concerns for the airline in 2018.
Some of the highlights include the IT challenges holding back Ryanair’s feeder network plans with flagship Aer Lingus and others; invest in technology for pilots; and, progress on Ryanair Rooms.
Pilots
The airline plans to invest in technology to get ahead of the number of pilots needed to grow. O’Leary announced that Ryanair will be doubling the number of in-flight simulators which they airline uses to train pilot’s in-house as the airline continues to receive new aircraft.
“At the moment we have six simulators..and we're going double up going to fourteen to train in-house over the next number of years.” “The price of a simulator is between $7-8 million per simulator, we'll order six or seven so it's something about $50 million [investment].”
O’Leary also says negotiations with pilots unions are progressing and that he expects agreements will be settled in Spain by the end of March, though he anticipated that some of the ongoing negotiations may result in a limited disruption of services during peak periods in Easter and summer.
“In the last year, we've hired over 1,300 new pilots. We expect it to be slightly less [this year] because we're taking fewer aircraft deliveries in the winter..but we will recruit something in the order of 900 and 1,000 pilots.” “We've got more than sufficient aircraft to operate the schedule, but pilot numbers will be tight for Ryanair and for all airlines this summer. There is not so much a shortage but there is pressure on pilot numbers across Europe because of the amount of growth delivered by the low-cost carriers in Europe, the Chinese airlines offering very attractive tax-free packages [to pilots]..and the continued recruitment of [pilots by] Middle Eastern carriers..particularly captains.”“We are paying pay increases of 20% which gets us ahead of our competitor Norwegian and others.”
IT integration
O’Leary says that IT issues are delaying the planned feeder partnership with Aer Lingus, announced last year.
“We're still dealing with getting their computer systems to talk to our computer systems and that is because they are like most of the legacy airlines visible on all of the GDS with all of the interline and connectivity, and we're available only on Navitaire which is essentially a low-cost in-house reservations system. We are hopeful that we will be able to iron out all of those IT issues over the next number of months and that sometime this summer you will see us feeding Aer Lingus transatlantic or long-haul flights out of Dublin. Once we've done it once, we will supply significant feed to lots of long-haul airlines at the airports where we operate.”
However, when tnooz asked, O’Leary dismissed the idea of adopting PSS or GDS systems.
“The costs are prohibitive—particularly with our traffic base. If we suddenly launched onto an Amadeus..or..to be fair they have a set cost structure which the long-haul carriers are willing to pay. Given our traffic volumes of 130 million it would be..we would get no benefit of going on those systems. Our load factor is already 95%, so it's not like we're going to generate a lot of traffic by feeding long-haul carriers, but what we can do for long-haul carriers is give them much more feed.”
Brexit
O’Leary also expressed concern over the impact to airlines of ongoing Brexit negotiations.
If it's a hard Brexit in April of 2019 or if, as it appears, the UK and EU are moving towards a transitional agreement until January 2020. I think the situation remains somewhat stark. It appears to me that Europeans certainly at the prompting of the Germans and the French will insist on a strict interpretation of the ownership rules, which means that BA won't be able to own Iberia or Aer Lingus, and easyJet's Austrian AOC will not be effective. It will be grounded.
“We will have about 60-65% of our shareholding that will be non-EU. I think there's two options facing airlines like us: either we restrict a certain proportion of our shareholders from any voting entitlements which brings them below 50%; or we may have to force our non-European shareholders to sell a portion of their shares in April 2019 or December 2020. But we won't know until we get much closer to the date of the eventual Brexit termination.” “I think there's a real prospect, the closer we get to a real Brexit termination, that people in the UK will reconsider the position on Brexit which is still the stupidest idea known to human kind; [it’s] the first time in history people have voted to get poorer, or be less well, off despite the ramblings of the Daily Mail.”
O’Leary suggests that a dramatic event, like mass flight cancellations or having to pay more for their holidays, might change the minds of the average British consumer on the implications of Brexit to their lifestyles.
RareBnB
O’Leary also reported that the recently launched Ryanair Rooms is performing well and dismissed a question from the press on whether Ryanair may partner with AirBnB to offer bookings as impractical, but said the airline wants to add direct listings.
“About 2% of our total passengers have now switched to our Ryanair Rooms and are receiving their travel credits back. They won't choose AirBnB..The whole point of Ryanair rooms will be to allow hotels or room renters to rent directly on Ryanair.com, and not give away commission to AirBnB.”
The airline launched a travel incentive to boost Ryanair Rooms this January, which offers customers 10% back in travel credit that can be redeemed against future Ryanair flights. The airline’s hotel, villa, residence and hostel listings are offered through partners. Current homestay properties listed on Ryanair Rooms are provided by Expedia’s Hotels.com.
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