Wilson (Ryanair): ‘With the rise in energy prices, European airfares will go up’

The key question, however, remains: to what extent will consumers be willing to absorb these price rises?

Italia is one of the cornerstones of Ryanair’s strategy. In the current financial year, the airline expects to carry over 70 million passengers to, from and within the country, making Italia the group’s largest market.

Growth is not uniform. In the Milan area, for example, Ryanair reports an increase of around 11 per cent for the winter season, with no reduction in capacity and an increase of two aircraft based at Bergamo Airport, bringing the total to 24, in addition to the nine at Malpensa, making a total of 33 aircraft in Lombardy, representing a total investment of 3.3 billion.

On the contrary, Rome does not grow by remaining at the same level.

The group also claims to be playing an increasingly important role in connections between Italian regions. According to Wilson, the reduction in domestic services by other major operators has created an opportunity for low-cost airlines, enabling Ryanair to expand its presence on domestic routes.

Particular attention is being paid to regional airports that are able to offer competitive financial terms, including reduced local authority charges and long-term agreements. According to the management, it is here that a significant proportion of future growth will be concentrated.

Relations with Rome’s airports, however, remain problematic. The manager takes particular issue with the operational restrictions at Ciampino and the level of airport charges at Fiumicino. According to Ryanair’s CEO, Ciampino is hampered by restrictions on the number of flight movements which, in his view, are not justified by current aircraft noise levels.

More widespread is the criticism of the capital’s airport cost structure. According to Ryanair, infrastructure investment and fare increases risk reducing the airport’s competitiveness compared with the main European hubs.

For this reason, the company does not intend, for the time being, to significantly increase its capacity in Rome.

As regards its fleet, Ryanair continues to expect 15 Boeing 737 Max 10 aircraft to be delivered next summer, despite the issues identified by the FAA during the aircraft’s certification process, which have delayed the go-ahead. The group has not received any indication from Boeing that there will be any changes to the planned schedule.

However, these deliveries represent only a small proportion of the fleet’s total size: Ryanair currently has around 656 aircraft. The group also continues to operate on the basis of a very large order book, which, according to Wilson, provides significant visibility on future growth.

In Wilson’s view, the rise in energy costs is part of a wider transformation of the European market. The executive foresees further difficulties for carriers characterised by high cost structures, burdened balance sheets or excess capacity relative to demand.

This refers to a number of European airlines that have undergone restructuring, downsizing or changes in ownership in recent years. The case of TAP Air Portugal, which is still undergoing a privatisation process following the public support it received, is cited as one example of the ongoing consolidation.

EasyJet, too, forms part of an industry that could see further mergers and acquisitions. The CEO notes that the British airline has a significant presence at airports facing capacity constraints, but emphasises that growth in European capacity can no longer be taken for granted.

The manager’s overall forecast is clear: ‘The sector will face further difficulties and possible market exits, particularly if fuel costs remain high.’

Despite the possibility of consolidation, Ryanair does not appear inclined to alter its strategy through major acquisitions. The group already has an order book of around 300 aircraft, which is sufficient to support organic growth for years to come.

The model remains one of capacity growth, the use of a relatively young fleet and the maintenance of a low cost structure.

Wilson also rejects the idea of transforming the low-cost model through the systematic introduction of premium classes or additional services. The strategy, he argues, remains focused on three elements: low fares, punctuality and operational reliability.

In the management’s view, this is the value proposition with which Ryanair intends to tackle the next phase of the European market: a phase in which rising costs could accelerate the process of consolidation in the air transport sector and drive up fares on short-haul routes.