Ryanair route cancellations: about pilots or profits?

Ryanair route cancellations: about pilots or profits? 2 October 2017

The Ryanair flight cancellation debacle entered a new chapter this week, with the beleaguered airline announcing that it is suspending 34 routes for the coming winter season, from November to March 2018. The carrier described its move to ground 25 aircraft as “slowing its growth” in order to “eliminate all risk of further flight cancellations… across Ryanair’s 86 bases this winter”. The disruption is set to continue into the second half of 2018, with at least 10 Ryanair aircraft already set to be grounded from next April onwards[1].

With each fresh development, Ryanair’s original story that it “messed up” pilot rosters clearly does not hold water. There has been widespread speculation that the airline is struggling to recruit and retain its crew (see our previous article How much would it cost O’Leary to be nice to his pilots?). Whilst this may very well be true, we wondered to what extent the latest route cessations may also have been driven by other considerations for the airline. We set out to profile the cancelled routes to see if we could spot a pattern.

Aviation Analytics’ Network Grandstand platform provides estimates of seat profitability, based on our accurate accounts-derived airline seat costs and average fares from our in-house Low Cost Fares Database. The figures below shed light on the performance of Ryanair’s newly cancelled routes, at a sector level, in the last winter season (Q4 2016 and Q1 2017).

Profitability of Ryanair non-seasonal cancelled sectors (€ profit/seat)[2]

    1 Paphos – Chania   €7
    2 Sofia – Venice (TSF)   €1
  =3 Chania – Thessaloniki   €0
  =3 Thessaloniki – Chania   €0
  =5 Chania – Paphos  -€1
  =5 Gdansk – Newcastle  -€1
  =5 Trapani – Trieste  -€1
  =8 Trapani – Frankfurt (HHN)  -€2
  =8 Trieste – Trapani  -€2
=10 Paris (BVA) – Thessaloniki  -€4
=10 Trapani – Karlsruhe/Baden Baden  -€4
=10 Warsaw (WMI) – Thessaloniki  -€4
For a complete list of Ryanair routes by seat profitability, contact Jon Soars on +44 (0) 207 856 0159 or at jonsoars@aviationanalytics.com
=36 Sofia – Valencia -€14
=36 Valencia – Sofia -€14
=38 Berlin (SXF) – Cologne -€15
=38 Cologne – Berlin (SXF) -€15
=38 Newcastle – Gdansk -€15
  41 Las Palmas – Glasgow -€16
  42 Pisa – Sofia -€17
=43 Memmington – Sofia -€19
=44 Sofia – Stockholm (NYO) -€19
=44 Stockholm (NYO) – Sofia -€19
=46 Glasgow – Las Palmas -€29

Profits as much as pilots

Upon closer inspection, Ryanair’s cancelled routes demonstrate the geographic clustering suggestive of crew issues at particular bases. The most affected countries are Italy (the origin or destination of 15 of the 34 cancelled routes) and the UK (11 routes), followed by Germany and Greece (10 routes each) and Poland (9 routes). 13 of the 34 cancelled routes are domestic to these markets. The most impacted bases are Trapani (seven routes), followed by Hamburg, Sofia and Thessaloniki (five routes each)[3].

However, equally striking is the poor financial performance of the cancelled routes. The average loss per seat on the cancelled non-seasonal route legs was -€8, compared to a profit of almost €3 per seat across the Ryanair network as a whole. 91% of the cancelled non-seasonal route legs were loss making, versus 25% of the overall network. This raises questions as to whether some of the routes may already have been earmarked for closure and if the current crisis afforded Ryanair an opportunity to prune some of the weaker parts of its network. It also makes it more unlikely that the routes will be reinstated by Ryanair in the future.

So, how predictable were these cancellations?

Whilst Ryanair’s current predicament may be unprecedented, route churn is a fact of life for airlines and airports. Even in good times, Ryanair is known for its hard-nosed approach to turnover within its network. Thankfully, airport managers can find out if the sword of Damocles is hanging over them.

Key to Network Grandstand’s benchmarking ability is its AAIndex – a measure of route performance using an A to E index:

Previous research has shown that 71% of route legs discontinued by another major LCC at the end of a recent season had an AAIndex rating of D or E.

This is borne out by Ryanair’s most recent cancellations, of which almost 70% of the discontinued route-legs had an AAIndex rate of D or E. This compares to the 74% of Ryanair route legs that achieve the top three categories across the network as a whole.

AAIndex performance split: Ryanair non-seasonal cancelled sectors vs. whole network

The Ryanair cancellations episode again demonstrates why it is essential for airport directors to be fully aware of the performance of their own and surrounding airline route networks.

Know where you stand. For average fares, seat costs and route performance for all Ryanair (and other LCC) routes, contact Jon Soars on +44 (0) 207 856 0159 or at jonsoars@aviationanalytics.com

[1] Reported in The Independent

[2] Of the 34 cancelled routes, 11 were new routes in 2017 or previously seasonal routes due to enter their first year of winter operation. The following analysis is based upon the 23 routes for which a like-for-like comparison is possible.

[3] Local officials in Trapani have accused Ryanair, whose flights accounts for more than 90% of traffic at the town’s airport, of penalising them for failing to renew a marketing deal that had worth €5 million a year to the airline. Reported in The Times.

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