Why Ryanair Has So Many Business Travelers - Business Insider

Michael O'Leary, Ryanair's chief executive officer, recently announced that 22 percent of the low-cost carrier's passengers are corporate travellers.

Ryanair is Europe's biggest airline, carrying 79.6 million people last year, so it may not be surprising that certain routes attract a high volume of corporate traffic.

But for one in five customers across its entire network to be travelling on business is a noteworthy statistic.

Ryanair brands itself as Europe's only "ultra-low-cost airline". Its business model minimises non-essential perks, maximises ancillary revenue, and involves flying to cheaper, secondary airports on the outskirts of its advertised destinations.

None of these features seem suited to business travellers. Ryanair's no-frills ethos also attracts a significant amount of negative press. When the airline advertised a vacancy for communications director in December, Mr O'Leary called the role "the worst job in PR" and warned the successful applicant to expect a "never-ending series of absurd claims and fanciful stories that surface on a daily basis".

So why are 17.5 million suits flying with Ryanair every year? One reason is that companies are unwilling to splash out on business-class seats in the current economic climate. The industry body, IATA, says demand for premium seats is back to its 2008 level, having slumped during the global financial crisis. But because overall traffic growing, the proportion of passengers flying up front has actually fallen by more than one percentage point to 8 percent.

Another reason is the retrenchment of full-service carriers on short-haul routes. The advent of low-cost carriers in the 1990s forced Europe's older airlines to reappraise their business models. Although legacy carriers have had some success in improving their cost structures?by renegotiating union agreements and experimenting with ancillary charges, for example?progress is stymied by their full-service proposition.

On long-haul flights, perks such as extra legroom and complimentary meals command higher ticket prices, and in turn boost yields. But on short-haul, most of us are willing to slum it for an hour or two if it means a cheaper airfare. Full-service carriers have effectively been priced out of the market.

This bodes well for Ryanair, but Mr O'Leary cannot rest on his laurels. Europe's other low-cost carriers are experimenting with new ways of attracting business passengers. EasyJet says it promotes "business sense, not business class".

It offers its corporate customers flexible booking, priority boarding, allocated seating and a free baggage allowance. Meals are not included. Germanwings offers three distinct classes.

Its highest fare includes an empty middle seat, access to Lufthansa's lounges, and ? la carte meals. So far, though, Ryanair's only foray into premium service has been reserved seating. It will be interesting to see whether this changes.

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Source: http://www.businessinsider.com/why-ryanair-has-so-many-business-travelers-2013-2

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