Saturday, 7 May 2011

Ryanair Cover Their Costs and Then Charge Some More

Ryanair have introduced an additional charge of £2 per passenger in what they claim to be a cost to cover the compensation it has paid for flights and cancellations. It is undisputed that Ryanair have had to pay almost £88m as a result of claims made against strikes, snow disruption and volcanic ash. Yet the new levy is likely to raise up to £150m per year. The new charge will affect 80% of 75m travelers who will use Ryanair in the next year.

The nature of the Ryanair business model means that a great deal of business revenue is made from additional charges with £450m from online check-in fees, £350m through card fees and £320m from baggage charges.

Ryanair is not the only budget airline to introduce a fuel surcharge with Flybe likely to introduce a charge of £3 per passenger from 31st August. It has however promised to scrap the surcharge if the price of crude oil drops below $75 for four consecutive weeks. If that happens, everyone here at Alihoco will be dancing at the petrol pump!

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