I noticed a figure in the travel news lately which struck me as powerful. It didn’t receive an awful lot of attention, but since I reflexively think about the longer-term implications of things, I got hung up on it.
European low-cost airline Ryanair posted a €341 million net profit in their last fiscal year, which closed at the end of March. They were down €180 million a year ago. That kind of comeback is quite the story!
There are not many airlines of Ryanair’s size operating in competitive markets that would be able to post such results. Anyone can post strong results in a monopoly or “national carrier” scenario–but it’s tough out there for carriers that don’t have sheikhs (or their “democratic” equivalents) behind them.
Given that Ryanair has been notoriously vocal in its dismissal of social media as a way to advance its brand and customer interaction, it seems they have reaped success the old-fashioned way–by moving mojo numbers of passengers, and doing so profitably.
Its detractors are myriad and loud. They decry Ryanair’s terse staff, maddening á la carte charges, and seemingly adversarial attitude to passengers. But the silent majority–equaling 67 million passengers last year–got where they were going (presumably) and didn’t pay for a high-end passenger experience. And the scary part is, those fliers will likely do so again.
Bostonians like myself are familiar with the very inexpensive (around $10 USD, last I checked) Fung Wah bus, which ferries hungover college students ’round-trip from Boston to New York City. Everyone has a story about a friend-of-a-friend who got ditched at a rest stop in Connecticut because, when the Fung Wah says they are stopping for fifteen minutes, they mean fifteen minutes. Years ago I remember thinking, “How can they make money at a price like that? Fuel, insurance, equipment, staff? It’s just too cheap.” At least ten years later, they are thriving and running more vehicles than ever before.
Obviously, what companies like Ryanair and Fung Wah have figured out is this is what a tremendous segment of traveling people want. They want to get from one place to the next as cheaply as possible–the rest is just details. The industry at large would be wise to be better prepared to deal with more passengers who don’t mind being packed in like cargo if it means getting the lowest price.
Not to get all Philip K. Dick about looking forward into the future of travel–but if customers vote with their wallets, we need to be prepared less for passengers demanding a high-def, 22-inch personal entertainment system in the cabin or free onboard wi-fi; and instead better prepared for way more passengers demanding nothing more than a ride to their destination. The new, expanding middle classes in emerging industrialized nations are an exciting opportunity for the travel industry.
But if the trends are being read effectively, they will care about seeing people and places at the lowest price, not about how far their seat reclines.
Road Warrior • Miami • Madrid • www.amadeus.com • Twitter: @tentofortysix