Ryanair looks to have ditched long-held American dream

The chief executive of the Irish low budget carrier, Europe's largest airline, has often expressed a desire to enter the US market. But that ambition seems to have died.

A Ryanair plane prepares to land at Manchester Airport in northern England. The carrier now looks unlikely to try its hand in the US. Phil Noble / Reuters

For at least a decade, the Ryanair chief executive Michael O’Leary dreamed about going to America, bringing the Irish carrier’s extremely low fares to the States.

Expand west to the largest aviation market. Price the cheapest seats at US$10. Offer business class up front for those willing to pay.

A leader among ultra low-cost airlines, Ryanair had global ambitions.

As one of Europe’s biggest airlines, any move by Ryanair into the US could have further upended fares by adding more capacity to an already crowded field. Yet O’Leary always found a reason not to pull the trigger.

Now it is 2017, and probably too late for different reasons. Much has changed over the Atlantic in recent years amid a sharp decline in jet fuel prices. The trans-Atlantic market now sees a surge of low-cost flying from the likes of Norwegian Air Shuttle, WOW Air, WestJet Airlines, and Air Canada’s discount Rouge unit. Air Canada itself has bolstered international flying, too. Even JetBlue Airways is mulling whether to cross the ocean.

For now, Ryanair has shelved its trans-Atlantic plans and is scouring growth opportunities closer to home. The Dublin-based carrier, which carries about 116 million passengers annually, has its sights set on 200 million by 2024 with almost 400 new Boeing aircraft on order.

“As there is plenty of capacity and growth opportunities for Ryanair in Europe, we are solely focused on European growth currently,” Ryanair spokesman Robin Kiely said in an email.

As with Dallas-based Southwest, Ryanair’s competitive advantages stem from short flights, which allow for more daily flight segments per airplane. Crossing the Atlantic would put a significant crimp in that.

“They wouldn’t be able to replicate their massive short-haul cost advantage on long-haul flights,” said Seth Kaplan, a managing partner at the trade journal Airline Weekly. And even with the cost benefits they enjoy over full-service carriers, low-cost airlines such as Ryanair and Spirit Airlines confront a revenue disadvantage for another reason: the longer the trip, the more frills matter. “Some customers who are willing to put up with spartan service on two-hour flights aren’t willing to put up with it on seven-hour flights,” Mr Kaplan said.

This is one reason Allegiant Travel – which operates the US budget carrier Allegiant Air, the world’s most profitable airline by operating margin – struggled to make money serving Hawaii from the US mainland, Mr Kaplan said. Allegiant ended the service last year.

Moreover, Ryanair is now a mature player in the aviation world, with investors who rely on measured, steady growth. Two years ago, when the market got word Ryanair might have put North America on its radar, the stock price reacted quickly, and not well.

Fielding a new aircraft type to fly against global behemoths would prove expensive – the virtual opposite of the business maxim of sticking to one’s knitting. It seems Ryanair has decided once and for all to end its American dream – and finish that sweater.

* Bloomberg

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