Feb 28 2017
Low-cost companies are willing to sacrifice their profit for the bigger market share
Since the beginning of this year, the ticket prices in the large low-cost companies in Europe have fallen by 10%. If you have traveled in the last year, surely you’ve noticed. Companies such as Ryanair, Wizz air and EasyJet are in an unending war for territory. For the moment the winner is the Irish Ryanair, which transports about 120 million passengers a year, and the goal is to 2024 their number to get double. Everything looks great if you are a consumer – market economy operates, and competition is murderous, leading to ever-lower prices and better service.
Difficulties in the sector, however, not less. Nobody knows exactly how long it will last period of low prices and whether this strategy will ever work. Or whether Europe will not say goodbye to part of the airlines because of the insufficient largest market.
More, more, more…
For the moment the strategy of large companies in Europe can be attributed to a maxim – “More, more, more.” Prices are even lower, to carry more passengers and growth rates are even higher. This strategy does not seem stable, although so far to run. The Irish carrier Ryanair, which is far ahead of all others in the sector in the number of passengers, announced this year plans until 2024, providing the company transporting at that time 180 million passengers per year. Even before completed 2016, however, the goals have been changed to 200 million passengers per year, which would mean each year the airline to add at least 10 million new passengers. For the moment, this forecast seems realistic – in the past two years, Ryanair grows to about 20 million passengers per year – growth that other companies may reach only a percentage but not in real terms in the number of passengers.
If in 2010, Ryanair has carried just over 72 million passengers in 2015 their number was 101 million, and this year is expected to be about 120 million. Most probably for six years, Ryanair will double the number of passengers and quietly (as far as can be peaceful the situation in this sector) will move to the next, even greater purpose.The group from Dublin is far ahead of all others in Europe and expands constantly, not only the number of serviced clients but also destinations. Worldwide, it ranks second behind the US carrier Southwest Airlines, which has served nearly 145 million passengers in 2015. It is possible that Ryanair would surpass even the US company if indeed meet its ambitious plans.
For comparison, another very familiar company of Bulgarian customers – Hungarian Wizzair – has more than tripled the number of passengers transported by her between 2010 and 2015 to nearly 20 million passengers. The growth, it seems, will continue to be impressive after only until October this year the company has surpassed the number of 19 million. And in each month of the second half of the year adds at least another 2 million passengers to account. Despite strong growth, however, Wizz difficult will get to the scale of Ryanair.
Wizz air recently announced it is launching flights from Sofia to Varna, thus became a direct competitor of Bulgarian monopoly in this area Bulgaria Air. Varna Airport is gaining a strong lead in the number of flights per year and is becoming a desirable destination for many tourists. The city has a key position especially during the summer and the airport transport Varna is well developed.