Ryanair can continue to expand its low-cost, low-frills formula to deliver 20 per cent increase in its business volumes each year, according to its chairman, Mr David Bonderman. Growth will come mainly from routes out of Stansted, but also from Dublin in the short term, he says, but the long-term vision is to be a low-cost airline serving routes across Europe.
Bonderman and his fellow US investors have already got a handsome return from their investment and are selling 1.2 per cent of Ryanair equity into the London flotation. The London float will expand the UK and European shareholder base, he says , appropriate to an airline growing in the European marketplace.
He brings extensive experience of the US airline industry to Ryanair, as a major investor in Continental Airlines and formerly in the low-cost carrier, South-West, which is the model for Ryanair. The Irish airline aims to grow as a low-cost airline, he said, forecasting extensive growth in this sector of the market. He sees "huge potential for Europe, with a large class of people who will fly at very low fares," even if they are brought to an airport some distance from the city to which they are travelling. Ryanair has pursued the strategy of flying to relatively low cost airports outside city centres on routes such as Paris and Brussels. Ryanair will continue to be based in Ireland, he says, and will aim for four to five or more new routes a year.
The main growth will continue to be from Stansted - from where France, Italy and Scandinavia are being targeted. But in the years ahead Ryanair will also consider routes originating in other EU airports, benefiting from the deregulation of the market. "South West has shown it can work." He is also confident that Ryanair can continue to lead the low-cost market in Europe, despite increasing competition from others such as British Airways Go airline. Ryanair already has a lead on its competitors, he argues, while "Go will not be able to maintain our costs," flying from higher-cost airports and as part of a national carrier airline.
He is confident that Ryanair can maintain its low-cost base and can put the industrial troubles behind it. Referring to the recent dispute, he says: "In the US it would not be possible for 39 workers to take that kind of action." However he concedes that the company "could have done a better job" explaining its position. The key issue arising from it, he believes, arises from the weekend of industrial action which closed the airport. Aer Rianta "has to find a way of keeping the airport open." He does not believe that most Ryanair employees want to unionise. He is sanguine about the outlook for the sector internationally. In the US the process of consolidation through alliances is mostly complete for the moment, he feels and "nothing bad will happen for a few years" as the economy is solid and there is no excess aircraft capacity.
In Europe alliances are also forming fast and he believes the only way forward for a national carrier such as Aer Lingus is to use its Dublin hub as a selling point to join such an alliance. "If anything Europe is behind the US cycle," he believes, with growth prospects looking strong as the main Continental markets start to perk up. The Continent is also entering a period of change, he believes, with the euro set to bring new stability to formerly weak currency states like Italy. Meanwhile he says that the dynamic changes which the euro will bring to Europe are impossible to predict, meaning an exciting but unpredictable period ahead.
