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O'Leary: Ryanair-style Atlantic long haul LCC. Average fares below EUR100? Stansted likely airport

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Ryanair CEO Michael O'Leary's latest musings about a possible low cost transatlantic project indicate that he believes any such operation would need average fares below EUR100. This raises the question of just what is a sustainable fare in this market? Until recently the exclusive preserve of legacy full service carriers, the North Atlantic has witnessed the entry of LCC Norwegian over the past year.
However, it was always possible to find relatively low fares and Norwegian's pricing, while lower than that of premium airlines such as British Airways, does not appear to be substantially lower than the average all-inclusive economy fare of AEA member airlines between Europe and North America.
Mr O'Leary's thoughts suggest he would aim for a discount of 60% or more to legacy airline fares. This would undoubtedly drive volume. It would also be greater than the equivalent average discount offered by Ryanair in short haul. However, it may be difficult to find and sustain the cost savings necessary to make this profitable on long haul routes, even with a high fare premium cabin as part of the model.
According to the Irish Independent (24-Jan-2015), Mr O’Leary said: “Our average price on short-haul across Europe is EUR46. We'd want to have an average price in economy on a transatlantic low-cost carrier of under EUR100. The average price should be somewhere in the mid-EUR80s or mid-EUR90s.” Mr O’Leary added: “If we wanted to get into the pan-European transatlantic market, then starting in Dublin would be the wrong place to start. It's a tiny market... We'll need something in the order of 30-50 aircraft.”
Aircraft availability at the right price will be crucial
Mr O’Leary has speculated over establishing a transatlantic LCC for many years, using a separate vehicle from Ryanair itself, but has to date not moved beyond the concept stage. One of the keys to Ryanair's success in short haul has been its ability to buy large numbers of aircraft at attractive prices at the bottom of the aircraft valuation cycle.
The equivalent opportunity to acquire wide body aircraft has not presented itself since the Ryanair chief first started to toy with the idea of a long haul affiliate and this is one of the principal reasons for his not proceeding. The current order backlog enjoyed by Airbus and Boeing suggests that the ability to receive large numbers of long haul aircraft direct from the manufacturers is years away.
Mr O'Leary's return to the theme recently may indicate that he believes the cycle is turning down, or perhaps he believes that lower oil prices make such a project more attractive. Maybe he is just keeping the idea alive, so that the market remains warm to the idea if and when, one day, it is implemented. We can but speculate.
Are average fares in the mid EUR80s to mid EUR90s realistic on the North Atlantic?

 

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80-90EUR for a trans-atlantic fare would be killing, even for FR, unless they'll feed their own flights ex Europe (making it around 150-200EUR per o/w), IMHO

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