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How can £7 flights to America make a profit?

How can Ryanair make a profit by charging only £7 for one-way flights to America? It’s ridiculously cheap.

Low-cost fares across the Atlantic will be made possible by the “open skies? agreement, which will lift the restrictions on where airlines can fly. Only BA, Virgin, American and United are currently allowed to fly from Heathrow to the US. From next year this will be opened to all carriers.

Technology is also making budget flights possible as the next generation of aircraft will be at least 20 per cent more fuel efficient and less expensive to maintain. Budget American airlines are considering doing the same.

But don’t get too excited, according to Bobby Avo, it is too good to be true, he believes only a few seats will be available at that price. He posted a comment on The Times report saying:

“Only a few seats per aircraft would offer the “bargain” fare, but the average ticket would still be less than the existing carriers. “

Of course, it’s ironic that this is all happening at the same time we are being warned about carbon emissions and global warming, but will you need much persuading to take up this offer? What’s the cheapest flight you’ve ever had? I remember flying to Barcelona once for only a few pounds.


21 Comments

  1. That is a crazy price! I have never seen them at that price from Portugal, more like 800 to 1000£! However they use a trick sometimes, you have a few seats at that price, so you can advertise with it, then the more seats you get filled the more expensive it gets (they know they can fill the plane up). So they always have the plane full and adjust the prices accordingly, having in mind how fast it fills up.

  2. I managed free flights up to Shetland and back for myself and my then girlfriend. I had to make her my next of kin to do it though – and wait around as she spent a good ten minutes taking all the things she’d stowed around her person for security (she didn’t want to be seen with a handbag with all the other oil workers. )

    Still I’ve married her now – so she really is my next of kin. ( So were the flights cheap – or was it just me ?)

  3. Jim, It makes flights to America seem expensive. Even I can afford that!!! 🙂

  4. Ellee, I have just broken my own record. Booked a 9-day trip to Finland in September for just 1p each way! Crazy, isn’t it?

  5. electro-kevin

    I agree with my old chum, Newmania on this one.

    Our Brownian economy is based entirely on a forecast of economic growth – that is the creation of consumerism and demand rather than the satisfaction of genuine demands which already exist; it seems entirely at odds to have our government (and our celebrities) lecturing us to cut back while their every action seems to make us want more, be it expansion of airports or the staging of pop concerts.

    Travel is one of the prime examples of artificially created demand – I would wager that for at least 50% of holiday destinations the aspirations of the carrier precipitated those of the resort owners, that the route availabity was the impetus for the development ergo the expansion of the market for Union Jack shorts, fake Ray Bans and bottles of AfterSun.

    So please – is there a global warming crisis or not ? Will someone make their mind up ?

  6. PS Elle – I was appalled to hear today that the carbon footprint of a cruise liner is worse than that of a jumbo jet.

    Not quite sure they were comparing like for like though …
    After all you are only in the air for a max of 12-16 hours, whereas a cruise can last 2 weeks or 2 months.

  7. Yeah He’s the Man,
    though I should be appalled by the alarming increases in short haul flights …
    I have a ‘soft spot’ for Ryan Air. The thought of getting to Sweden in less than 2 hours, and Southern Portugal or Spain, and just about anywhere in Europe in little more than two hours, is a weakness of mine.

    But yeah, Ryan Air flights to the US for £7.00
    Is that standing room only?

    Knowing Ryan Air
    He’ll probably charge £50.00 to use the inflight loo, and fine you £100.00 if you don’t

  8. electro-kevin

    Ellee,
    I was alluding to a recent news item in which the body was placed upright in a first class seat.

  9. Three of us are flying for a total of 3p one way to Nimes tomorrow morning. Except
    that actually it costs 50 GBP when you add the `taxes and charges’, and then you need to add the 300 GBP cost of getting back, and then add the luggage costs and the meal costs. Oh, and whatever you do don’t fly off to France and get caught in a snow storm and land in a different country (Spain) with no onward transport or compensation and then spend three days waiting for the the next available flight back. Still… we do continue fly with them, but it *is* actually quite understandable how they make their profits!

  10. Glass Boat’s point about contribution is right. It’s no accident that the lowering of fares has come about by direct relation to the sophistication of capacity management systems employed by airlines.

    However, the Ryanair story is all about opportunism by Michael O’Leary, a master showman and PR hound. They may well be planning something but I suspect it will not be as adventurous as they suggest. Between making a statement of intent and actually operating is a big gulf. There’s also the small matter of some very sophisticated competition, one that knows far more about dog fights over air fares than most of the air carriers in Europe, which were the ones that Ryanair took on to get where they are. Travel patterns on long haul flying are also vastly different to short haul.

    In the short term expect little change. In the medium term who knows where the argument over taxing flying is going to take us. As I say Mr O’Leary’s statement is much more about his short haul business today than a possible long haul business tomorrow.

  11. Newmania, If we were travelling companions, I’m sure we would have a great conversation. I may embarrass you because I can’t help staring at people and wondering about their lives.

    Kevin, I thought passengers who died mid-flight were stored in the loo, I heard this on the radio the other way.

  12. electro-kevin

    Another ruse is to take a terminally ill relative with you – when they die mid-flight both you and the corpse get an upgrade to first class.

    Easy peasy.

    (Only available on British Airways flights, terms and conditions apply.)

  13. Regarding sitting next to a “Vision of Ellee”, I once flew Singapore Airlines from the Middle East and the plane was already fairly full with people from the Far East. M sat next to an absolutely beautiful striking woman with long fair hair, high cheekbones & excellent clothes sense. Unfortunately, she was asleep when I arrived and only woke for the bits when her seat had to be upright.

    She had a lovely smile though and said hello & goodbye very nicely.

  14. I’ve never been on a budget flight because they didn’t used to fly where I wanted to go! I think the cheap fares for the USA are great but I, too, think it’s too good to be true.

  15. Glass Boat

    You need to have a word with an accountant.

    It is all about the concept of ‘contribution’.

    Once you have got x percent of the plane filled, and have covered your costs, anything you get on top of that is a contribution to profit – whether that is seven pence or seven pounds.

    In the past airlines wouldn’t have ‘devalued’ their ‘service’ in this way, and would rather have travelled half-empty.

    Hotels are the same – they are far more likely to stack them up with people, even if some are paying wildly different rates.

  16. > the Global warming scare was a Left wing plot to tax and control in cahoots with grant sucking pseudo scientists

    It’s alright, Newmania, David Milliband is going to sort it all out for us!

  17. On the paradox of encouraging air travel at the same time as inventing a Global warming crisis we are also , of course ,continuing to plan airport extensions new airports and in every way gear up for massively increased traffic. This is because the politicians that use Green issues as Liberal marketing material don`t believe it themselves.Its just for the easily lead

    I thought , by the way , we had all agreed that the Global warming scare was a Left wing plot to tax and control in cahoots with grant sucking pseudo scientists. I turn my back for a second and its as if they hadn`t been exposed.I see time and time again an early Spring produced as evidence of climate change does anyone listen ? Its the weather !!!!

    I don`t often fly but when I have I get stuck next to a pile of lard with a supersonic snore. Oh how I would love to see the vision of Ellee take her seat next to me on a slow flight to Canada..if there is such a thing . About 13 hours of being forced to listen to my opinions . I expect she could hardly bear the bliss…

    I `d like it though

  18. Courtney, I’d like a friend like that too, he sounds very resouceful. I think I paid 25p for my flight to Barcelona, though the return fare ended up costing about £20-£30, which is still pretty amazing.

  19. London to Sardina return last month (£2)

    London to Dublin return (3x this year) average cost (£8)

    London to Amsterdam return – for this years forthcoming Queens Day in April – a heafty (£12)

    I’ve got a friend (honest I’ve got one) who hunts down cheap flights, he spends about £10 a mouth, but he might only go on one trip even though he paid for 4 or 5 tickets – so he ends up going to places that he never ever thought of going to in the first place.

    Like Jim says, not everyone can buy a ticket at such a low cost – others must pay the full fare before cheap seats are made available.

    £7 to America sounds absolutly fantastic, if you can get it at that price of course.

  20. Jim, Your trips sound wonderful, lucky you. I have been to St Petersburg, but didn’t have time to visit The Hermitage, make sure you allow plenty of time if you go, it’s massive.

    I’m afraid I’m not a very light traveller, I like my shoes and bags to match each outfit, then there are all the toiletries. If Ryanair only permitss minimal baggage, then it may well charge huge amounts for extra baggage, dread to think what mine would cost. 😉

  21. My best Ryanair deal was 6p (yes, six pence) return from Stansted to Malmo for a long weekend in Copenhagen. I believe they do it for the publicity. You tell you friends you got a flight for seven quid, they want one, by which time the price has gone up a bit, but since they have set their mind on it, they still buy. And so it escalates.

    Of course there are other ways they can fleece you, for checking a bag, sandwich on a plane etc. And NEVER try to change something – cheaper to book another ticket and let the first one go!

    Having said that, if you are prepared to “travel light”, take your own sarnies and be alert to the ‘extras’ it can represent splendid value. I have it down to a fine art… St Petersbug next week, Seville in May, Poland in June….

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