A Nifty Little Trick (for Ryanair)

Posted by airobserver on February 27, 2012 · 4 Comments 

I’m petty sure I repeat myself but Spain is definitely all the rage right now for low-cost carriers (and infuriated civil society members). On that topic, a recent article in the Spanish press caught my attention. It seems that Preferente.com has uncovered a new, very nifty, little trick on Ryanair’s part while investigating the company’s contracts in the Canaries. What the newspaper found is quite puzzling and relates to how Ryanair advertises the amount of passenger it will bring to a destination.

To retake Preferente’s example. When Ryanair got in the Canaries, in its negotiation with airports and local authorities it advertised a net sum of 4,5 million additional tourists for the islands. Pretty tantalizing, no? And that’s only per year assured the airline. Even if the first thing it forgot to mention was that this number was only travellers, not tourists.

Now, according to members of the Canaries’ tourist industry, this number was more than optimistic. When Ryanair put forward 4,5 million passengers, it eschewed the fact that it totalized the number of passengers back and forth. Easy for the company, as it doesn’t sell round trips. But that doesn’t change the fact that people coming or going to and from the islands are bound to come back home at some point. This means that Ryanair is actually not accounting for the amount of round trips it delivers but only totalizes single trips, whatever their direction. This actually halves the amount of travellers, bringing it to 2,25 million passengers.

But another element that isn’t mentionned is the distinction between seats on a plane and seats occupied. Ryanair’s plane have 189 seats but rarely are all of them sold. Actually, most of the time Ryanair’s occupancy hovers round 80% of seats per plane. But of course, when it comes to estimating the amount of travellers carried, the company cuts to the simplest and simply multiplies the number of flights on a route by the number of seats in the plane. This means that any number given by Ryanair should be lowered by 20% to get a real estimate of the volume of travellers transported. That means 1,8 million passengers in our example.

Finally, if you take into account the fact that, of those 1,8 million travellers, not all of them are tourists and that, as Ryanair customers are prone to do, most of them will go to the cheapest lodging solution – meaning they will, when possible, find a room with a friend or through an exchange program – this translates into much much less business than advertised for hotels and other tourism professionals. According to Preferente’s sources, in the Canary this amount to between 70% and 80% of Ryanair’s passengers never taking a hotel room.

There’s a reason for everything : advertisement serving a strategy

Now, that’s quite a difference from what Ryanair advertises. This means number 4 to 5 times inferior to what the company uses to promote its routes. But the worst may very well be that those numbers are the building blocks of Ryanair’s strategy when it negotiates with airports. First because of its great “1000 tourists = 1 job creation” equation which it uses as a definitive argument for each and every route Ryanair has ever opened. Even worse, the company often appeals to this number whenever it gets into a row with an airport or a local authority, as is the case right now with Edinburgh airport.

Furthermore, this number is then used to negotiate subsidies - or, as some like to politely call them “marketing aids” – for every route creation. Ryanair advertises grossly inflated positives results so it can leverage more money from airports, even though the reality of job creations is sure to never match the purposefully miscalculated figures. Even worse, perhaps, is seeing Ryanair put the blame on elected officials for “destroying jobs” by cutting back on subsidies when in fact those officials are making the most sane and rational choice…

Filed under AO Article, Uncategorized · Tagged with Canary Islands, Numbers, passenger, PR, Ryanair, spain, subsidies, Tourists