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Forward March of Ryanair Halted?.1st Feb 2004 Ryanair, the Aude's only airline with the UK and Belgium, have announced it's first ever profit warning and a slow down in expansion. Blaming a "communist" European Commission ruling that could effect the illegal state subsidy the airline receives from the Belgium region of Wallonia to hub out of Charleroi as well as their investigation into reduced landing and baggage handling rates at regional airports as well as increased competition from both schedule airlines and other budget carriers the airline threatened an increase in fares in this financial quarter. Ryanair, which increased capacity 50% in 2002/2003 and over predicted 60% in 2003/2004 is now in negotiations with Boeing to reduce the huge order for 125 new aircraft it placed less than 12 months ago. Shares in Ryanair plunged 31% on the news wiping 1.5 billion Euro off its market value. The main problem, aside from the legislative threat from Europe is that both Ryanair and its competitors, easyjet, flybe, Virgin Express, as well as British Airways and BMI have all increased the budget sector enormously in the past 12 months. Demand howver has not kept pace, with Ryanair flying on average with 30% empty seats despite prices as low as 0.99 euro each way. Asked about future profit margins Michael O'Leary, Ryanair's Chief Executive, said he could foresee them being as low as 10%. |
Despite
this slow down in growth most analysists are still convinced that
the Ryanair business model is still sound although increased pressure
to provide services to wheelchair bound passengers, who were previously
charged a fee to be provided for, increases in airport tax and environment
tax and the scheduled airline lobbying on state subsidies will inevitably
lead to increases in charges. However budget airlines will continue
to be a value for money way to travel and the Aude can expect to see
no noticable adverse effects. Residents of the Aude, indeed the entire Languedoc-Rousillon and Midi-Pyrenees regions, have seen a massive increase in flights. Ryanair now serves Perpignan, Nimes, Montpellier, and Carcassonne as well as just accross the border to Genoa in Catalonia from London, Charleroi and Frankfurt. Toulouse has a range of budget flights to the Uk and the BA flights are very competitive. Flights are usually pretty full, especially on the Carcassonne and Perpignan routes. While the hoped for increased services may be slower to arrive we can expect our existing services to continue albeit at slightly increased prices, indeed rather than automatically going for Ryanair it may start paying to look at alternatives out of Toulouse or Spanish Catalonia. |
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| Air France |
| Flybe |
| BMI |
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