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For once, Ryanair CEO Michael O’Leary’s populist challenging of what he perceives as big business interests and monopolistic sectors could backfire on him |
IRELAND. The row over Ryanair’s decision to force passengers to fit their airport purchases into a single carry-on bag escalated over the weekend. Some media reports slammed the carrier’s policy while the airline itself hit back late last week with a strongly worded press statement criticising the airport community. Meanwhile travel retailers too have been reacting to the proposed new rules.
As reported, Ryanair, Europe’s biggest low-cost carrier, has rolled out new Europe-wide rules restricting passengers to a single item of hand luggage. The company has confirmed to The Moodie Report that these restrictions will include purchases made at airside stores.
The move poses a headache to the travel retail industry, as it forces passengers to pack all purchases into their single piece of hand luggage, with a maximum weight of 10kg – or face a €30 fine.
RETAILER REACTION
Travel retailers and airport commercial management have been reacting with great concern to the planned ‘one-bag’ rule, though it has yet to be implemented at many airports.
Rome Ciampino Airport is one of Ryanair’s major European bases. Aeroporti di Roma Executive Vice President for Commercial Development Andrea Belardini told us: “The potential strict application of one bag on board is a concern for us. At this stage we have not experienced any restrictions yet in Ciampino. But should this occur, we’ll try to frame the issue within the overall relationship with the airline and consider it as a component of the commercial agreement [with them].
“We all know that low-cost airlines manage their business with airports on the basis of ‘negotiated’ commercial terms that rely on the airport’s ability to generate margins through additional passengers. But what is a concern is the effect of the airline’s communication – confusion might be an incentive [for passengers] to avoid making purchases.”
Dublin Airport Authority – through its Dublin, Cork and Shannon airports – counts Ryanair as the biggest carrier across its locations. The company told us: “The one-bag rule has not been implemented yet, but if it is, it could be a big problem. Anything that causes customer confusion would be negative for the industry. At Dublin Airport it would potentially be worse for concessionaires than for core category retail, as the concessionaires offer items such as shoes and clothing that would be hard to carry under the one-bag rule.”
French travel retailer Aelia too stands to be affected, not just in France but in the UK also, notably at London Luton Airport. A spokesman said: “We’ve been monitoring this closely with our airport partners, and it is potentially very serious. As retailers we are aware of the concerns of airlines over excessive luggage, but airlines too have to see that shopping is not only a service to passengers, it helps airports to remain competitive. Hitting consumers in this way is in nobody’s interest.”
MEDIA REACTION
Several UK and Ireland newspapers have carried news (and in some cases criticism) of the initiative over the past few days. Here is a summary of some of the coverage:
Guardian Online, one of the best-read web sites in the UK, noted: “It could be the most expensive bottle of Asti Spumante you’ll ever buy. Ryanair has confirmed passengers will be charged £30 if they cannot fit their duty free purchases into their single piece of hand luggage.”
The report quoted Chris Tarry, Chairman of the CTAIRA consultancy, who said: “˜It will dissuade people from buying duty free. It could impact airports that are dependent on people spending at their shops. You are eating into an airport’s ability to generate revenues when low-cost carriers want lower fees from them.”
The Times Online said: “The airline has dented its low-cost image by bringing in a €30 penalty for passengers who cannot fit all their hand luggage into one bag.”
Making a crucial point that underlines how difficult it will be for many passengers to cram their travel retail purchases into a single bag, the report continued: “Passengers who check in bags with a combined weight of 15kg are charged €15 for every excess kilogram. So it’s hardly a surprise that fliers do what they can, including overstuffing their hand luggage, to reduce costs.
“The new charge means they’ll have no choice but to travel light, even if that means having to sacrifice the five novels they’d packed for a two-week holiday in the sun” (as well as sacrificing that intended airport purchase -Ed).
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The Telegraph (online) wrote: “Passengers are being charged £28.50 by Ryanair to take their duty free on board, if they cannot fit it into their carry-on bag.
“Under the new arrangements… passengers must fit whatever they buy at an airport duty free shop into their one piece of hand baggage. They also have to be able to close the bag with the duty free items inside the bag which can weigh no more than 22lbs (10kg) and be no bigger than 21.6 x 15.8 x 7.9 inches.
“The policy is enforced by Ryanair’s staff as they check boarding passes at the gate. Anyone found to have an extra bag – perhaps containing a box of chocolates or bottle of wine – will be given a choice if they cannot cram it into their carry-on bag.”
The Sunday Times was critical of the airline, noting: “As the no-frills carrier Ryanair continues to raise charges in an attempt to offset its £91m losses, a snap survey of fares to a number of European destinations has shown that flights with scheduled carriers are often significantly cheaper.”
It continued: “The airline’s Chief Executive, Michael O’Leary, claims it still offers better value than its rivals. “˜Ryanair is the lowest-cost provider – by a distance – in the European airline industry,’ he said last week. That’s not entirely accurate. With air fares tumbling as demand drops, flights to many popular destinations can now be better value with scheduled carriers.
“Comparing air fares for a Valentine’s weekend break, departing on Friday and returning next Sunday, The Sunday Times found the cheapest Ryanair ticket from Luton to Barcelona, including check-in and baggage fees, was £248. The cheapest Iberia fare, for the same dates and flying from Heathrow, was £140.
“The cheapest ticket with British Airways to Rome next weekend was £191, while the best Ryanair fare, flying into Ciampino, was £237, including the fees. The Irish carrier also lost out on flights to the Algarve: a flight to Faro, departing on February 14 and returning a week later, cost £261 with BA; Ryanair’s best price, including charges, was £294.”
Urging its readers to accept the airline’s challenge for passengers to avail themselves of Ryanair’s ‘double the difference’ guarantee (if a cheaper fare was found), the newspaper noted: “An easily missed link to the price guarantee appears on the Ryanair home page, but beware: the terms and conditions are Byzantine. On finding a cheaper flight (not including any of the “˜optional extra charges’, such as £28.50 for that bag of duty free), you must book the Ryanair alternative, download a claim form, complete it and e-mail it, together with screen grabs of the better offer. You must do this between 9am and 5pm, Mondays to Fridays only, and within one hour of making your booking.
“Bear in mind that the cheaper flight must be a return, and must depart within one hour of the costlier Ryanair flight on both sectors. Meet these conditions and the carrier promises to refund double the difference – if you succeed, let us know at travel@sunday-times.co.uk. Good luck.”
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RYANAIR RAGES AGAINST CRITICISM
Last week Ryanair hit back at criticism of its move by Airports Council International (ACI) Europe. In an extraordinary outburst it hit out at “false claims”, describing them as “rubbish”.
Perhaps underlining the need for the travel retail and airport industry to be careful with the semantics of “˜travel retail’ versus “˜duty free’, Ryanair pointed out that less than 5% of its 800-plus routes operate outside the European Union “and therefore the quantities of duty free purchased by Ryanair passengers is negligible”.
In a stinging but unsubstantiated tirade directed at ACI Europe, it added: “Airport shopping has never been “˜an integral part of the travel experience’. Passengers have no interest in “˜airport shopping’; they simply want to get through airport terminals and on to their aircraft with the shortest possible queuing time and inconvenience.”
Ryanair continued: “The key to guaranteeing low airport charges is not “˜airport shopping’ as the ACI claim, but rather the development of low cost, efficient terminal buildings, something that many of the ACI airports would know nothing about.”
It claimed that ACI’s members include “some of the biggest, most expensive, least efficient monopoly airports in Europe” including London Stansted and Dublin airports.
It noted: “Charges paid by airlines and passengers will cover the cost of efficient airport infrastructure, but not the over-specified and wasteful Taj Mahals so beloved by many of the ACI’s high cost, inefficient members including BAA Stansted and Dublin Airport.”
The airline commented: “Ryanair’s one carry-on bag rule does not, as [ACI Director General] Olivier Jankovec falsely claims, “˜interfere with the ability of airports to sell duty free/travel value items’. As long as these items fit into the passenger’s 10kg carry-on bag, Ryanair’s rule will have no effect whatsoever on the sale of these items.”
Ryanair spokesman Stephen McNamara concluded: “Perhaps ACI Europe should remember that intra-EU duty free disappeared almost ten years ago, and it’s not coming back. At a time when many ACI members are reporting substantial traffic declines, perhaps Mr Jankovec and many of the other monopolists in the ACI should begin to focus on delivering to passengers what they really want, which is easy to access, efficient airport facilities and not over-priced goods masquerading as “˜travel value retail’.
“If Mr Jankovec and his members spent more time reducing queues at their expensive airports, then perhaps their passenger traffic would be growing, rather than falling, at present.”
COMMENT: This debacle calls for cool heads. A slanging match is exactly the territory that Michael O’Leary likes – and often excels in. It also risks further damaging consumer confidence about what passengers can – and cannot – buy in airports.
For once, though, O’Leary’s populist challenging of what he perceives as big business interests and monopolistic sectors could backfire on him. In this debate his consumer champion credentials are tenuous to say the least. If one passenger did indeed, as the airline claims, try to board with five carry-on bags, he or she should have been dealt with at the time, rather than allowing the situation to prompt a swingeing crackdown.
The airline’s maligning of ACI Europe’s “false” claims regarding the impact on duty free and travel value items is even weaker. “As long as these items fit into the passenger’s 10kg carry-on bag, Ryanair’s rule will have no effect whatsoever on the sale of these items,” it says. Given that the carry-on bag is likely to be near full anyway, it’s hard to see how consumers are going to feel any confidence about buying, say, wine, books or any other bulky items.
Ryanair is effectively limiting consumer choice regarding their airport spending and thereby directly undermining the whole travel experience of its own passengers. It is also damaging the ability to earn commercial revenues of airports from which the airline operates. The retailers and airports concerned (supported by the ETRC and ACI Europe) need to negotiate firmly and fast – and not through claim and counterclaim in the newspapers.
They need to get their terminology right (“˜airport purchases’ is probably safest) and they need to convince Ryanair that it cannot bite the hands (of the consumer and the airports) that feed it. The adverse reaction towards Ryanair in some quarters suggests that this is a public relations battle that could and should be won. Much of the battle should be fought behind the scenes. Others, notably irate travellers and the media, will do the rest.
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