Ryanair, Europe’s largest low-cost airline, is considering a significant shift in its business strategy by potentially entering the package holiday market. This move, as indicated by CEO Michael O’Leary, represents a departure from the airline’s traditional focus on no-frills air travel. O’Leary, who has historically been against bundling flights with accommodation and transfers, mentioned to The Telegraph that he would evaluate the possibility of creating a holidays division once Ryanair has maximized growth from its expansion of the aircraft fleet.
He stated, “I wouldn’t rule out setting up a holidays division. The holiday product is probably a reasonable way of charging higher fares and yields and for wrapping it into a package.” This consideration follows the successful package holiday offerings from competitors like easyJet and Jet2, which have performed well during the recent summer season. In contrast, Ryanair has faced a fare slump due to an oversupply of seats and tighter consumer spending.
O’Leary acknowledged the rising popularity of all-inclusive holidays, pointing out that increased accommodation costs in destinations like the Canaries, Spain, Italy, and Greece may have driven more consumers toward package deals. Ryanair had previously attempted to enter the holiday market in 2016 with a program dubbed the “Amazon of air travel,” but it was quickly terminated after just two months due to issues with its software partner.
The potential move into package holidays would not happen immediately, as O’Leary noted that the company would wait until it has received all 350 aircraft currently on order from Boeing. This expansion is projected to fuel aggressive growth within Ryanair’s existing business model for several years. O’Leary stressed the importance of ensuring that any entry into the package holiday market would not merely shift revenue from the airline to the holidays division and that it would not create excessive management burdens.
As Ryanair explores this potential strategic shift, it remains to be seen how the airline will balance its core low-cost operations with the complexities of the package holiday market, which could reshape the competitive landscape of the European travel industry.
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