10
$\begingroup$

Of course, we all know that you're not exactly treated like a rockstar on Ryanair, and their CEO wants to charge us £1 to use the toilet; but still, how can they offer flights for a penny?!

Looking at flights with budget airlines, they usually end up costing more, with taxes etc added on, but I've seen Ryanair offering flights for literally a penny, all in.

Improve this question
$\endgroup$
7
  • 14
    $\begingroup$ Fees. Lots and lots of fees. They'd levy a breathable-air surcharge if they thought they could get away with it. $\endgroup$
    – egid
    Commented Mar 17, 2014 at 7:22
  • 8
    $\begingroup$ Even if they paid me to take a flight with them, I'd still decline. The answer btw, it's just a loss leading sales gimick $\endgroup$
    – Paul Leigh
    Commented Mar 17, 2014 at 8:08
  • 7
    $\begingroup$ it looks like some of the price is paid just by all those adds on the page $\endgroup$
    – ratchet freak
    Commented Mar 17, 2014 at 12:05
  • 8
    $\begingroup$ Ye Gods - I know how they can do it! All the money they're obviously NOT spending on a web designer! :) $\endgroup$
    – voretaq7
    Commented Mar 19, 2014 at 20:50
  • 1
    $\begingroup$ @egid In the UK, the advertised price must include all taxes and non-optional fees. $\endgroup$
    – David Richerby
    Commented Apr 8, 2014 at 22:56

6 Answers 6

Reset to default
17
$\begingroup$

Besides @Sebass van Boxel's answer, I'd like to add the following:

I was talking to a Fastjet pilot (ex easyJet) and he was telling me that obviously not all seats are available for a cheap price.

If you book early you will get a special price but try booking a day before and you will see.

As has been said, a lot of money is made on all the extra services such as luggage, food, etc.

From what he told me, the profit on each flight for easyJet is minimum \$400 per flight at 96% full — which is not much, but consider that easyJet has something like 1,000 flights a day and that means \$400,000/day profit. Not bad...

That how the money is made.

Improve this answer
$\endgroup$
3
  • 7
    $\begingroup$ especially that: per flight only 1-2 seats are offered at that special price, every other seat is more expensive. $\endgroup$
    – jwenting
    Commented Mar 17, 2014 at 9:18
  • 4
    $\begingroup$ Airlines in general are experts in price differentiation. Tickets for any particular flight of any airline were probably purchased at dozens of different rates. At one penny it's a loss leader and indeed there would be just a few seats in each flight offered for such low price and only on few lines, so people are attracted to them with the advertisement but end up buying different ticket for price that is still low but profitable. $\endgroup$
    – Jan Hudec
    Commented Mar 19, 2014 at 6:32
  • $\begingroup$ When I worked for Continental Airlines 20yrs ago, we were told the flight was paid by the time first class was filled and anything after that was mostly pure profit. $\endgroup$
    – Barnstormer
    Commented Feb 28, 2018 at 13:06
11
$\begingroup$

One of the reasons Ryanair has some benefits on other airlines are the subsidies they get from airports. Basically taxpayers are paying a part of your ticket (See this businessweek article).

Next to that they fly on relatively cheap times and small airports which means they have to pay less to an airport.

Lastly; as you know that charge fees for everything. Whether you want to bring an extra bag, something to drink or like to go to the toilet in the feature, you'll have to pay for it.

I wonder whether they can make money when people don't want to make use of the 'extra's' they offer. I don't think so.

Maybe someone can do the math and calculate what an average Ryanair flight costs (See this answer) and how much money they get from only the tickets.

Improve this answer
$\endgroup$
4
  • 1
    $\begingroup$ pretty much every airline gets subsidies in some places and has to pay fees in others (or even in the same location). That's not a factor. $\endgroup$
    – jwenting
    Commented Mar 17, 2014 at 9:16
  • $\begingroup$ @jwenting Good point. Though Air France-KLM sues them for the illigal subsidies they get, proofs they are - trying - to get more subsidies than other airlines. digitallook.com/dl/news/story/3332999/… $\endgroup$
    – Sebass van Boxel
    Commented Mar 17, 2014 at 9:19
  • $\begingroup$ I'm sure AF/KLM could be countersued for the same, especially for operations in Paris... And French government interference providing AF landing rights in exchange for discounts on Airbus aircraft is also well documented. $\endgroup$
    – jwenting
    Commented Mar 17, 2014 at 9:30
  • $\begingroup$ @jwenting Can you provide an article or source about that? $\endgroup$
    – Sebass van Boxel
    Commented Mar 17, 2014 at 9:33
9
$\begingroup$

The marketing term is "loss leader" - you lose money on the advertised product but make more money on other things. In this case fees and other things the customer might buy ( checked bags, water ) after we get them in the door (website).

Your grocery store does this weekly. For example: 2 litre Coca-cola $0.49 deals.

Improve this answer
$\endgroup$
2
  • 3
    $\begingroup$ Under European laws they can't advertise price without fees. It's other things the customer might buy and more importantly all the customers that come to their site because of the advertisement, but end up buying different, more expensive ticket (while they only provide few at the lowest price). $\endgroup$
    – Jan Hudec
    Commented Mar 19, 2014 at 6:27
  • $\begingroup$ @JanHudec then RyanAir is eating the airport fees and taxes themselves and genuinely losing money on the 2 available seats at that fare. They have done the math and it eventually works out for them. $\endgroup$
    – paul
    Commented Sep 28, 2018 at 23:27
2
$\begingroup$

The real answer has not been given yet, it boils down to marketing. Offering flights for a penny sounds to good to be true for most people. It makes them curious and draws them to the Ryanair website. That is exactly what Ryanair wants, it is free publicity. Then for given flights there are a set of seats available for that price. It will be on the days that most people can't fly for a leasurly reason thus during weekdays or on flights that draw not that many customers.

But since people have been drawn to the website they stick around and try to find a cheap deal. Ryanair knows this and the whole website is set to encourage you to buy a flight, they state how many seats are available for the discounted price, encouraging you to keep searching for a cheap deal. In the end most people will settle for a reasonable cheap flight to a destination which was not there first choice but the flight was cheap so they bought it. ;)

As of now they state that they have 500.000 seats available for discounted price of 25% off, they have roughly 2000 departures a day, with 189 seats per plane this works out to 378.000 seats departing on a single day. the campaign runs for a month so that results in 11.3 million seats. In the end they have put 4.4% of there seats for that month on discount. Not that many, that is roughly 8 seats per aircraft or little over 1 row of seats. In the end it is just a very cheap marketing strategy!

Then the part of the question, How can they offer them so cheap? Willingness to pay is the key, last minute seats are expensive, since you obviously need to go somewhere in a hurry, this means that you are willing to spend more on a ticket. These customers pay for the cheaper tickets bought way in advance buy others. Routes with a high demand also allow the airline to ask more for a seat.

Improve this answer
$\endgroup$
1
$\begingroup$

"how can they offer flights for a penny?!"

Do some research on the topic of Yield Management (hint: only a small proportion of people on any given flight will pay "a penny").

All airlines work on yield management for their pricing. Just the LCCs (Low Cost Carriers) have taken it to a whole other level.

Its a fascinating topic. But incredibly complex, especially in the "cutting-edge" form adopted and embraced by the LCCs.

P.S. Revenue Management is another big topic to look into in relation to airline commercials, again its an area all airlines do but again turned into an artform by the LCCs. Another one to investigate once you're done reading up on Yield Management !

Improve this answer
$\endgroup$
0
$\begingroup$

As mentioned above, there are many (hidden) fees. Plus, Ryanair uses small airports with small amount of movements a day, which gives the advantage to Ryanair when creating contracts with these airports. Basically, airport has 15 minutes to refuel, check, clean and service aircraft after landing, and the aircraft has to be ready to leave within this 15 minutes period. If the airport doesn't meet these requirements, the airport has to pay a huge fee (can't remember how much exactly, but at least close to two thousands Euro, maybe more).

Improve this answer
$\endgroup$
1
  • 1
    $\begingroup$ Other than the fees for delays, which would be good to have a reference for, this doesn't add anything to other answers. $\endgroup$
    – fooot
    Commented Feb 21, 2018 at 22:52

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .