Ryanair, EasyJet Compete in Budget Air Market

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Feb. 3 (Bloomberg) -- John Strickland, Director and Analyst of Aviation at JLS Consulting, discusses various strategies at Ryanair to raise revenue and keep up with their competitors. He speaks on Bloomberg Television's “The Pulse.” (Source: Bloomberg)

In the past, we are cutting costs, it is cheaper, but we are very aggressive and now they are trying to soften their image.

The next two or three years, we will watch as this plays out.

Michael o'leary acknowledged that he missed a couple of things that his competitor, easyjet, was doing.

Easyjet was attracting customers, delivering high levels of half it ability and growing.

Ryanair was still growing with its current and former business model, but it was missing new opportunities.

Ryanair always talked up the likely failure or entrenchment of traditional carriers around europe.

By changing the strategy, there is no doubt they can tap in and win more of the customers.

The novelty of being very cheap is wearing off.

Talk to me about their spokesperson.

We always used to have michael o'leary.

Now we have a chief operating officer.

Is that a strategy change or maybe there are changes up top.

Michael o'leary has ignored -- has acknowledged he will stand back.

His pony and trap approach of the british media.

His coo is retiring from the board and becoming a nonexecutive director.

They appointed a new person who is coming from outside of the company, a bit of perspective.

He will be the public voice more and more in the future.

This is in line with what we are seeing in terms of new advertising, changes such as seat selection.

It is important to note these things are being brought in with very little cost.

They are being offset by the upside revenue.

You can choose in advance a seat rather than a scrum at the gate, which has been the norm for ryanair.

There has been next to revenues for the company as well.

The share price is gaining some five percent.

Is this because we have had a correction compared to easyjet in the last couple of months or is it people saying i am happy to go back in?

People are realizing that their strategy will change and they are realizing their roots, looking good.

I think the forward outlook is a positive one.

There will be some relief if there was not another downgrade on the profit forecast and it has been maintained today.

For the year ahead, they said stronger-than-expected.

Last quarter next year, the yield will be yet -- will be less than per ticket.

-- than predicted.

That will lead to new growth.

In italy, we do not know what will happen yet with alitalia.

Even so, ryanair and other low-cost airlines have piled into italy.

They have new basis in rome for the spring.

Italian consumers will have plenty of choice and low fares.

Ryanair has announced basis in other big cities like brussels and lisbon.

This is where the opportunities to gain market share are.

Between easyjet and ryanair, who is going to win the race?

Do we have to watch out for competition from the national carriers?

The national carriers are one to adapt on the back foot.

They could change.

It is hard to change the culture in a big, legacy airline.

The interesting point is with dwelling.

Until a few months ago, they have been a successful, low-cost airline based in spain.

It is now owned by the parent of iberia.

That is one that michael o'leary has not given credit to as having a real chance of success.

He has more or less indicated that he will put pressure on them.

They have a new basis in brussels and rome and the same airports.

That will be an interesting one to play out.

We have a family member who is successful and backed by the resources of that legacy family up against ryanair with all its cash resources.

If michael o'leary wants to take you on, it means you are doing something right.

Thank you very much.

Still to come, tomorrow's cars today.

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