Ryanair made record profits last year by providing a cheaper alternative to the larger airlines, addressing the market for cheap flights to popular destinations. The record profits, in sharp contrast to BA's announcement of its largest losses since privatization, show that there is still money to be made in the airline business.
Ryanair, the low cost airline, has seen the number of passengers using the airline increase by 38%, to stand at an impressive 11.1 million passengers for the year. This increase has raised Ryanair's profits to E172 million, from E123 million in the previous year.
The success of the airline over the last twelve months should be seen as a great achievement, as not only was there the events of September 11 to contend with, but also the foot and month outbreak early in the year.
Micheal O'Leary, Ryanair's CEO, says he expects traffic to grow by 35% over the next two years, and insists that the company could go on cutting fares and increasing profits in the future. He also believes the recent tie-up of rivals easyJet and Go would not make for increased competition as they operate in a different market - rather, the real competition for all the low cost airlines are the high fare operators.
It is a refreshing change to see an airline actually make money this year, and shows that it is possible to make a profit in the air travel business, even under the most adverse of circumstances. The larger carriers are now beginning to learn from this, and understand that luxury travel is not always what customers demand.
In a weak economic climate, price is clearly a major criterion for deciding which airline to use.
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