Ryanair Holdings Plc (RYA), Europe’s largest discount airline, said it’s luring more business passengers away from established airlines as travelers shun higher fares and benefit from options such as allocated seating.
Corporate customers now make up about 22 percent of passengers at the Irish budget airline, Chief Executive Officer Michael O’Leary said in an interview in Kaunas, Lithuania, today. Ryanair introduced reserved seating on all routes in January 2012, and O’Leary said the high frequency of Ryanair flights also appeals to those travelers.
“It’s a combination of low fares in a recession where businesses are increasingly saying everyone must travel at low fares” and the “breakdown of business class as a product,” O’Leary said.
European low-cost carriers like Ryanair and EasyJet Plc (EZJ) are refining their no-frills, discount models to attract more corporate clients, a market traditionally dominated by full- service airlines. EasyJet, led by CEO Carolyn McCall, has also rolled out allocated seating, flexible tickets, and used corporate agents to attract business travelers.
Reserving a seat on a Ryanair flight costs an additional 10 euros ($13.55) and gives customers exclusive access to the front rows and the two rows over the wings. Ryanair operates an all- Boeing fleet of single-aisle jets.
British Airways (IAG), Deutsche Lufthansa AG (LHA) and Air France-KLM (AF) Group have sought to raise the appeal of their business-class offerings to corporate travelers, with BA honing its menu and Lufthansa has created more arm space on the high-price front of a plane. Still, the carriers are likely to continue to cede short-haul business that doesn’t feed their major long-haul hubs to carriers like Ryanair and EasyJet, O’Leary said.
“There won’t be an opportunity for people, when the economy recovers, to go back to flying these kind of short-haul airlines with their high fares and fuel surcharges, because I don’t think the services will be there,” O’Leary said.
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