Even the world’s biggest low-cost carrier needs travel agents, it seems… After several online travel agencies (OTAs) suddenly stopped selling its flights late last year, Ryanair has lowered its profit forecast by as much as five per cent (around AU$164 million) for the year ending March 2024.
In response to the hole in demand left by OTA business, Ryanair was forced to fill seats in December by reducing airfares.
Even still, Ryanair Holdings yesterday reported in a financial year (nine-month) update that it expected profits of up to €1.95 billion (AU$3.19 billion), down from its previous guidance of €2.05 billion (AU$3.36 billion) in November.
The airline said higher fuel costs had also offset revenue gains, as the price of fuel surged 35 per cent to €1.2 billion ($1.96 billion) in the October to December quarter.
Despite higher overall passenger numbers and fares, Ryanair said revenue per paying passenger had softened compared to the same period in the previous year – and it blames the removal of its flights from some websites.
Ryanair vs OTAs
For years, the Irish budget airline has accused third-party bookers of price gouging its flights and has even launched court cases against them, the Reuters news agency reported. Booking.com owner Booking Holdings and its subsidiaries including Kayak, Agoda and Priceline were among those caught up in legal action.
Then in December 2023, OTAs including Booking.com, Kayak and Kiwi.com suddenly removed Ryanair inventory from their websites.
Earlier this month, the carrier released an ‘OTA Pirate’ survey, which revealed eDreams as the number one pirate. According to the study, the Spain-based website was “overcharging customers by a scandalous 125 per cent for a reserved seat that costs just €12 on Ryanair.com”.
But willing to work with OTAs, Ryanair has signed new deals with Kiwi.com and loveholidays in the last seven days, which it says will guarantee consumers won’t be overcharged for its flights and ancillaries.
Short-term pain only
Despite feeling the absence of some OTA business, the airline’s chief financial officer, Neil Sorahan, told Reuters the impact would be temporary and was already beginning to “fizzle out”.
Ryanair also said passenger numbers had grown 11 per cent to a record 105.4 million in the six months to September, even though average airfares had increased by 24 per cent, the BBC reported.
Other impacts
The airline cautioned that potential further delays in receiving the new, more fuel-efficient Boeing 737 MAX 8 aircraft might also affect profits, but doesn’t expect the recent MAX 9 grounding to impact the MAX 8 fleet or the MAX 10 certification.
Global conflicts could also affect its bottom line.
“This guidance and the full year result remains heavily dependent upon avoiding unforeseen adverse events in Q4 (such as the Ukraine war, the Israel-Hamas conflict and further Boeing delivery delays,” it said in its update.
Ryanair was recently named the world’s third-safest low-cost carrier.
