“I think we’re entering into what I describe this morning as a grim winter,” the chief executive told analysts on a call. “It’s not related to Ryanair or unions, it’s related to excess capacity and certainly our willingness to continue to lower air fares into this winter. If there’s going to be a fare war, we want to lead this and win it.”
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His argument seems to be:
- There’s too much capacity, too many airlines flying too many planes
- Ryanair will lower fares to keep planes full. With high fuel costs and low fares that will push competitors to the brink.
- European carriers will go out of business
- That will solve the pilot shortage problem
- And it will damper union demands for higher wages
He seems to have rivals like Norwegian and Wizz Air in mind.
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Just because Ryanair has fuel 90% hedged at $68 per barrel, compared to lower levels of hedging than its competitors, doesn’t mean that it benefits from a fare war. It could simply pocket the difference in fuel costs and the spot price and continue to charge higher fares.
And just because Michael O’Leary says something doesn’t mean it’s true. He’s been talking up making passengers stand, and making them pay to use the lavatory, for many years.
However last year he predicted that Norwegian and Monarch Airlines wouldn’t survive the winter. Norwegian is still flying, and British Airways parent IAG has taken a small stake. Monarch ceased operations October 2, 2017.