Aviation profitability outlook for 2013?

In Airlines, Ancillary Revenue, IATA, Investments, Low Cost Airlines, Michael O'Leary, profitability, Travel Distribution, Yield Management by dannyLeave a Comment

World Low Cost Airline Congress, IATA, Ryanair,easyjet, Vueling, market share

What is the aviation profitability outlook for 2013? According to figures recently revealed by IATA it's pretty positive. Their recent quarterly survey of airline CFOs and heads of cargo  stated that 56% of them expect an improvement in profitability over the next 12 months. The lack of confidence was at it's lowest at the beginning of 2012 but now things are looking up for 2013, we have seen a rise in both passenger and cargo volumes over the past 3 months and the 12 month outlook continues to improve for both markets.

What's interesting is how LCCs such as Vueling, Easyjet and Jet2 are boosting yields per passenger by offering a more tailored value added service to the customer. Is the traditional pure LCC dead? Ryanair don't seem to think so, In May last year  Ryanair reported an annual profit of £406 million / €503 million for the year to 31 March. That's an all-time record for the company, and it did it in an age of austerity, with high fuel costs and with lower fares than almost anyone else. So how are they doing it?

  • Keeping overheads down – Ryanair are famous for their cost cutting strategies
  • Getting the most out of their planes – their turn around of getting planes back out has to be one of the fastest in the business
  • Low headline prices! – Currently the cheapest way to get from A to B

While it's not popular, there's little argument that Ryanair's business model is sound. Hammer costs at every turn, get as much as you can out of your staff and equipment and provide nothing you don't have to for passengers – they're paying for the trip alone and not the experience.As such, O'Leary has plenty of plans up his sleeve to get more from his ‘assets' including the likes of removing one or two toilets from each plane to make way for extra seats or widening the doors on planes to allow passengers to disembark in twos, shortening the turn-around time at airports.  Whether you love it or hate it, Ryanair knows what it is and so do its millions and millions of passengers.

Come and hear from the man himself, Mr O'Leary will be joining us at the World Low Cost Airlines Congress in September. Click here for more information.

To find out more about the event, please download the brochure here >

Figures taken from recent IATA business confidence index report which can be downloaded here>

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