Ryanair 2011 Annual Report Download - page 62

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crews qualified to fly these aircraft are likely to be more widely available on favorable terms than similar
resources for other types of aircraft. Management believes that its strategy, to date, of having reduced its fleet to
one aircraft type enables Ryanair to limit the costs associated with personnel training, the purchase and storage
of spare parts, and maintenance. Furthermore this strategy affords Ryanair greater flexibility in the scheduling of
crews and equipment. The Boeing 737-800s are fitted with CFM 56-7B engines and have advanced CAT III
Autoland capability, advanced traffic collision avoidance systems, and enhanced ground-proximity warning
systems. On July 20, 2011, Boeing announced that it was seeking approval from its Board of Directors to
manufacture a variant of the 737 with new, more fuel-efficient engines. This new variant could impact the
Company insofar as the residual value of its aircraft could be reduced if this new variant is produced.
At March 31, 2011, the average aircraft age of the Company’s Boeing 737-800 fleet was just over 3
years.
Training and Regulatory Compliance
Ryanair currently owns and operates four Boeing 737-800 full flight simulators for pilot training, the
first of which was delivered in 2002. The simulators were purchased from CAE Electronics Ltd. of Quebec,
Canada (“CAE”). The second simulator was delivered in 2004, while the third and fourth simulators were
delivered in the 2008 fiscal year. In September 2006, Ryanair entered into a new contract with CAE to purchase
B737NG Level B flight simulators. The first two of these simulators were delivered in the 2009 fiscal year and
are now fully operational. This contract also provides Ryanair with an option to purchase another five such
simulators. The gross price of each simulator is approximately $8 million, not taking into account certain price
concessions provided by the seller in the form of credit memoranda and discounts.
Management believes that Ryanair is currently in compliance with all applicable regulations and EU
directives concerning its fleet of Boeing 737-800 aircraft and will comply with any regulations or EU directives
that may come into effect in the future. However, there can be no assurance that the FAA or other regulatory
authorities will not recommend or require other safety-related undertakings that could adversely impact the
Company’s results of operations or financial condition. See “Item 3. Key Information—Risk Factors—Safety-
Related Undertakings Could Affect the Company’s Results.”
ANCILLARY SERVICES
Ryanair provides various ancillary services and engages in other activities connected with its core air
passenger service, including non-flight scheduled services, Internet-related services, and the in-flight sale of
beverages, food, and merchandise. See “Item 5. Operating and Financial Review and Prospects—Results of
Operations—Fiscal Year 2011 Compared with Fiscal Year 2010—Ancillary Revenues” for additional
information.
As part of its non-flight scheduled and Internet-related services Ryanair incentivizes ground service
providers at many of the airports it serves to levy correct excess baggage charges for any baggage that exceeds
Ryanair’s published baggage allowances and to collect these charges in accordance with Ryanair’s standard
terms and conditions. Excess baggage charges are recorded as non-flight scheduled revenue.
Ryanair primarily distributes accommodation services and travel insurance through its website. For
hotel services, Ryanair has a contract with Booking.com, pursuant to which Booking.com handles all aspects of
such services marketed through Ryanair’s website and pays a fee to Ryanair. Ryanair also has contracts with
other accommodation providers that enable Ryanair to offer camping, hostel, bed-and-breakfast, guesthouse,
villa and apartment accommodation to its customers. In addition Ryanair has a contract with the Hertz
Corporation (“Hertz”), pursuant to which Hertz handles all car rental services marketed through Ryanair’s
website or telephone reservation system. Ryanair also sells bus and rail tickets onboard its aircraft and through
its website.
Ryanair sells gift vouchers on its website. Such gift vouchers are also redeemable online. In May 2009,
Ryanair started to offer its passengers the possibility of receiving an SMS (text message) when booking, at a fee
of £1 or 11, to inform them of their flight confirmation details.
In April 2009, Ryanair signed a contract with Webloyalty International Ltd, which offers Ryanair’s
customers who have a UK, German or French billing address a retail discount and cash-back program. In