Ryanair Earns Billions from Add-Ons
Wednesday, 26 Sep 2018
A new report has revealed that Ryanair has earned over £1.7 billion in just one year from ancillary revenue, placing the airline among the top 5 airlines for this type of income.
The revelation is not surprising in light of the airline’s constant introduction of new baggage charges in the last few months. The most recent change essentially means that all customers must purchase Priority Boarding at £6 a pop if they want to bring anything more than a handbag on board. Those customers who are not able to secure Priority Boarding must pay £8 for the inconvenience of checking their small, hand-luggage sized suitcase.
On top of checked baggage charges, Ryanair forces customers to pay for services that other airlines offer as a matter of course, such as printing a customer’s boarding pass or checking them in at the airport.
The report into ancillary revenue conducted by US travel consultancy, IdeaWorks, calculated that 28% of Ryanair’s entire revenue came from add-ons such as these, as well as commissions received from hotels and car hire companies, whose services they advertise during the booking process.
Out of the top five airlines for ancillary revenue, Ryanair made the most money from add-ons, or what the report refers to as ‘à la carte revenue’, whereas the four other airlines can attribute a lot of their ancillary revenue to their frequent flyer programmes. Southwest Airlines, for example, can attribute 79% of their ancillary revenue to their frequent flyer programme, with only 21% coming from ‘à la carte’ services. Ryanair, on the other hand, makes 100% of its ancillary revenue from add-ons.
Ryanair has seen a big increase in customers paying for such add-ons. The percentage of passengers paying for allocated seating is up from 23% in 2017 to 50% in 2018 and the percentage of customers purchasing Priority Boarding is up from 4% to 20%. With Ryanair’s changes to hand luggage fees in August this year, that figure will undoubtedly continue to increase
Ryanair CEO Michael O’Leary has said in the past that he could see air fares reduced to zero, with airlines making their money on ancillaries alone. The problem for customers, however, is that they will be attracted by a cheap flight, only to find the price increase dramatically once they have added on the bare essentials of air travel, like the right to hand luggage and reserved seating.
The problem with Ryanair’s pricing structure has been suggested by Italian consumer watchdog, Antitrust, who have taken issue with Ryanair’s £6 charge to bring a small suitcase on board. They feel that such costs should be included in the ticket price, so that customers can accurately compare the overall cost of a flight with those offered by other airlines.
Send My Bag founder, Adam Ewart, concurs and advises passengers ‘to book with caution – don't pick an airline based on advertised seat fares alone, spend the time going through the booking process on more than one airline and ultimately pick the carrier who provides the best price once what matters to you is included, be that sitting with your children, free hand luggage or whatever they are charging for next’.
It is becoming increasingly clear that travelling with Ryanair is much easier if baggage is taken out of the equation. This is why more and more people are choosing to ship their luggage to their destination, thus avoiding entirely the possibility of excess baggage charges, and allowing them to enjoy a luggage-free journey to boot. This is one way for passengers to take things into their own hands and introduce some luxury back into air travel.
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