Ryanair is a walking contradiction.
For months, journalists were bombarded with press releases denouncing online travel agents (OTAs) as “pirates,” “scammers,” and “parasites,” guilty of ripping off customers by marking up flight prices.
Then, in January, Ryanair announced it had been forced to cut its profit forecast after a group of battered and bruised OTAs banded together to strike the carrier off their websites; Booking.com, Kiwi and Kayak had had enough, it seemed.
It prompted a miraculous turnaround, and to the sector’s surprise, the famously no-holds-barred airline became the schmoozer in chief.
A few weeks later, at a press conference in the Pan Pacific Hotel in London, Ryanair’s Dara Brady was singing the praises of Loveholidays as he unveiled a new partnership between the groups. Not many details were given, but it tweaked the ears of most transport journalists given Ryanair’s months of aggression.
Then Ryanair did the unthinkable and got into bed with its arch nemesis, On the Beach.
More deals soon followed: Kiwi, El Corte Inglés and even Tui. Then Ryanair did the unthinkable and got into bed with its arch nemesis, On the Beach.
This deal was surprising as the two have fought it out in high profile court cases and have both sought regulatory intervention against the other; think the travel sector equivalent of Celtic vs Rangers.
The tie-up with On the Beach made one thing clear: Ryanair was intent on making amends with its online travel agent rivals. One can speculate on the motives; the hit to passenger numbers after its flights dissapeared from OTA websites in January seems the most obvious.
But in the months since it announced a first deal, the strategy has clearly paid off… for both sides.
“The curious thing about it all is that the OTAs and the low-cost airlines kind of need each other,” Martin Alcock of the Travel Trade Consultancy told City A.M.
Ryanair is the largest and cheapest airline in Europe and the OTAs need its flights in combination with their holidays to offer cut throat prices.
Meanwhile, Ryanair benefits from the distribution. “We’re not sure exactly what percentage of its flights are distributed through OTAs, but it’s been estimated at more than 20,” Alcock said.
“Its certainly likely to be considerable. And when OTAs removed Ryanair flights from their website in December (following the introduction of the new verification procedure), it led to a rapid drop in Ryanair’s load factors, and their share price took a bit of a wobble as a result.”
Just look at the numbers. On the Beach was labelled a “cash machine” by analysts last week after the group issued a first dividend since the pandemic. A significant part of revenue growth in the past six months was down to its tie-up with Ryanair and Peel Hunt’s Ivor Jones and Douglas Jack said the partnership “reduced risk” and created “growth opportunities.”
On Ryanair’s side, Monday’s £1.6bn full-year profit haul will quell any fears the share price wobble in January might continue, while experts are confident the OTA partnerships lean to the airline in favorability.
“The agreements feel like they favour Ryanair,” Alcock said. “There is generally a dearth of short-haul flight capacity in Europe at the moment, and the OTAs have little choice but to work with them if they want to fulfill the growing demand.”
“The agreements feel like they favour Ryanair,” Alcock said. “There is generally a dearth of short-haul flight capacity in Europe at the moment, and the OTAs have little choice but to work with them if they want to fulfill the growing demand.”
Ryanair has, broadly, been the winner among its low cost rivals Easyjet and Wizz Air over the past five years.
But Easyjet has closed ground in recent months, in large part due to its booming holiday platform.
Easyjet’s holiday business has helped the airline get back on track
Easyjet Holidays netted £122m in pre-tax profit in fiscal 2023 after less than two years of trading, leading analysts to speculate on the significance of package partnerships.
“There is significant opportunity for budget airlines to tempt leisure passengers that want the full package,” Conroy Gaynor, aviation analyst at Bloomberg Intelligence, told City A.M.
“For Ryanair, establishing formal partnerships with tour operators might be a good compromise as it can fill seats from this segment, supporting load factor and yield, while staying focused on its key competitive advantage of efficient point-to-point airline operations.
“Customers get access to more choice, competitive prices and levels of assurance that unauthorised OTAs may lack.”
Maybe Ryanair’s bipolar switch up is a bit more understandable after all?