Irish discount airline Ryanair prepares to cross the Atlantic

We may be headed towards an air fare war on trips between North America and Europe after Dublin-based discount carrier Ryanair announced its intention to break into the transatlantic market.

According to European media reports, Ryanair’s board of directors this week approved plans to fly between 14 European cities such as London, via Stansted, Dublin and Berlin, and 14 U.S. hubs, including New York, Boston, Chicago and Miami.

“European consumers want lower-cost travel to the USA and the same for Americans coming to Europe,” the company said in a statement reported by the Guardian. “We see it as a logical development in the European market.”

Ryanair’s transatlantic service won’t get off the ground for five years, as it works to acquire the aircraft it needs for the long-haul trips. But its reputation for deep-discount airfares on European routes will doubtless have competitors preparing to defend their share of the market.

“That would put pressure on at least the very price-sensitive part of the market,” David Tyerman, an airline industry analyst at Canaccord Genuity Corp., told Yahoo Canada News.

Canadian carriers have little to worry about from Ryanair for now, he said, “unless they come into Canada. Then you’re going to have more competition on routes that are already pretty competitive.”

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A few Canadian travellers might be tempted to go to the U.S. to take advantage of a Ryanair discount.

“The extremely price-conscious traveller who is willing to do a lot of legwork might be able to put together a trip,” said Tyerman. “The challenge for them will be they’re going to have to string together several different airlines to make this work.”

Famed for deep discount fares

Ryanair is known for its deep-discount pricing strategy. For instance, this week for £10 GBP ($18.78 CAD), not including baggage fees and taxes, you can fly one way from London to Oslo, Norway, Dusseldorf, Germany, and Strasbourg, France. For £15, ($28.17) you can get to Edinburgh, Scotland, or Bordeaux, France.

According to the Guardian, a Ryanair spokesman said a £10 one-way trip across the Atlantic was in the cards.

By comparison, a round-trip flight from Toronto to London on Transat costs $777, including taxes and airport fees. For Air Canada, the same trip is $824 all in.

Transatlantic travel is a highly competitive arena, Tyerman said, with low-cost carriers including WestJet, Transat and Air Canada already vying to put travellers’ bums in their seats. Discount flyer Norwegian Air Shuttle has also entered the market with loss-leader pricing, he noted.

Ryanair will want to make make a powerful impression on travellers to carve out a share of that market.

“This would presumably feed into that kind of competitive environment,” Tyerman said. “Ryanair is famous for having low costs, so presumably they’re going to try and use the model that they have.”

But, he warned, transatlantic run is different from the short-haul business Ryanair does now largely with leisure-oriented travellers.

“The long-haul market’s a bit different,” Tyerman said.

Cost of doing transatlantic business

For one thing, Ryanair operates only Boeing 737 aircraft, with a fleet totaling more than 400 planes. The 737-800 model it uses seats only 189 passengers, not optimal for long-haul flights from a cost-per-seat perspective.

WestJet also uses the 737, an airline industry workhorse, on its summertime transatlantic flights, but the airline has ordered some Boeing 767 wide-body jetliners for delivery this summer that will likely be used for its European flights next year.

Other carriers are using Airbus A350 and the new Boeing 787 Dreamliner for their long-distance routes.

Ryanair will probably order new planes and, being a good customer of Boeing, will likely get a fairly high priority for delivery, said Tyerman. But it may still have to wait if it wants the 787 because production of the new model is locked in for other customers for several years.

Short-haul flights are also quicker to turn around and can use alternative airports instead of large international hubs, which are more expensive to service.

There’s also speculation whether the run can be profitable if Ryanair maintains a single-class approach to seating, eschewing the profitable business-class seating most other carriers offer.

Tyerman said Ryanair can probably get by without it and target budget-conscious leisure travellers to and from Europe. That brings in another challenge, though.

“The North Atlantic is very seasonal, so this is somewhat of a challenge for anybody who’s quite leisure-oriented, especially because the demand just may not be there in the winter to be able to run the airline at the kind of load factors you want to run at in the winter,” he said.

The main Canadian carriers reassign those planes to take winter-weary Canadians to sun destinations, Tyerman said, adding Transat grounds or leases out some long-haul planes in winter because of lower demand.

Canadian airlines had little to say about Ryanair’s plans. Air Canada and Transat did not comment when queried by Yahoo Canada News. WestJet spokeswoman Brie Thorsteinson Ogle said there didn’t seem to be a lot to comment on at this point.

“We are busy planning for Dublin service to resume, in addition to the May launch of our second transatlantic route to Glasgow, and preparing for the arrival of our first wide-body aircraft by the fall,” she said via email.

“We are very proud of having launched a successful transatlantic program, and we look forward to building on that success.”