EU LCCs continue to shine

Ryanair and easyJet reported another month of positive traffic results for October, with continued traffic growth and load factors at or above 85%. It seems clear that people are willing to "downgrade" to LCCs or stay at home. Ryanair transported 6.2m passengers for a 15% yoy increase in traffic. Load factors remained stable at 85% in the month. But the airline has been buying its traffic - it has held seven seat sales covering 1m seats, either for free or priced at €1, €3, €3 or €15 per seat (plus taxes and charges). Even with ancillary charges at around 20% of Ryanair’s average fare, the impact is minimal. The only reason the airline can be doing this sort of seemingly irrational behavior is to make its competitors bleed faster. With its huge cash pile, Ryanair can afford to bleed for longer. BA, for example, cannot.

Meanwhile easyJet carried 4.2m passengers in October, a 6.6% yoy improvement, while load factor gained 3.0 ppts to 86.8%. Slowing its growth to 7% from 15% means that easyJet is trying to be less risk averse. Culturally these two LCCs are quite different. easyJet is much less vociferous and flies to airports that actually are located at the city a person wants to get to.

The big take away here is this - between these two LCCs, over the past year they have carried over 109m people! Manifestly people are traveling on LCCs rather than network carriers. IATA, in its September traffic report noted network carriers were struggling, “partly reflects a loss of market share by network carriers on short-haul routes to low-cost carriers”.

The race for every airline to become an LCC is on. Which means the long haul LCC is on its way.

In other news --

• BA/Qantas JV renewal - and the Gulf threat to premium traffic
• JAL induced panic - yes it is showing now
• Bombardier eyes cuts - where is the stretch Q400?
• ATA sees a 4% weaker Thankgiving

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