Ryanair 2008 Annual Report Download - page 10

10
European Regulatory Failure
The European Union’s discriminatory passenger compensation legislation (which applies only to
airlines but not to competing ferry, train or bus travel), continues to increase the cost of air travel for
consumers with no perceptible benefit for the vast majority of passengers. This legislation has proven
totally ineffective – as we predicted – in reducing the cases of denied boarding for European passengers.
If the European Union was really serious about denied boarding, they would simply outlaw the practice
of overbooking as Ryanair has advocated. Instead we have a ludicrous and discriminatory
compensation regime under which airlines are obliged to pay compensation and/or overnight expenses
to passengers who are disrupted due to factors which have nothing to do with the airline such as bad
weather, strikes, or the repeated ATC (Air Traffic Control) failures. Airlines should not have to pay
these unjustified expense or compensation claims while the ferries, trains and buses are totally exempt.
The European Commission’s repeated failure to take any action against the blatant abuses of the
state aid rules in the cases of Air France, Lufthansa, Olympic and Alitalia, proves yet again that the
European Commission cannot be trusted to apply its own rules fairly or impartially in the case of flag
carrier airlines. The annual state aid bail-out of Alitalia’s extraordinary losses have become a joke. Air
France continues to receive hundreds of millions annually in unlawful state aid through discounted
airport charges on French domestic routes. Lufthansa continues to benefit from unlawful state aid
through the annual losses incurred by the state owned, state subsidised, loss making Terminal 2 at
Munich. The Greek government continues to bail out Olympic’s annual losses with not so much as a
murmur of action from the European Commission while Alitalia continues to fly despite in recent weeks
receiving another entirely unlawful state aid “loan” of 1300m from the Italian government which has
been miraculously “transformed” into equity in the company.
Conclusion
Ryanair remains committed to continuing to revolutionise air travel across Europe. In the coming
year we expect to grow to almost 60 million passengers by guaranteeing our passengers the lowest fares
and no fuel surcharges. Over the past ten years our traffic has grown from under 4 million passengers to
over 50 million. During that time our average fare has fallen from 152 to just 144 today. No other
airline or transport provider can demonstrate this decade long commitment to competition and lower
fares. Ryanair will continue to pursue lower costs and pass on these savings in the form of lower air
fares. We will continue to challenge monopoly abuses by Dublin and Stansted Airports, we will
continue to fight anti-competitive and anti-consumer regulation from the European Commission and
airport regulators in the UK and Ireland. We will continue to champion the best interests of consumers
at a time when they are being gouged for higher fares and unjustified fuel surcharges by our high fare
flag carrier competitors.
I sincerely regret that our share price over the last 12 months has fallen significantly from its
previous high, but as one of Ryanair’s largest shareholders, I am determined to grow your company and
remain confident that our earnings and share price will rebound strongly when the irrational exuberance
which currently effects the oil market settles down, as it inevitably will. This coming winter will be a
challenging one for Ryanair and the wider European airline industry, but Ryanair is well positioned to
exploit the opportunities which will undoubtedly arise from the significant capacity reductions and
consolidations which these turbulent times will deliver.
Yours sincerely,
Michael O’Leary