Ryanair 2012 Annual Report Download - page 63

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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, 2012, the average aircraft age of the Company‘s Boeing 737-800 fleet was just over 3.8
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. Two of these simulators were delivered in the 2009 fiscal year. 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 2012 Compared with Fiscal Year 2011—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 Hotelscombined PTY Ltd. (―Hotelscombined‖), which operates a
price comparison website, pursuant to which Hotelscombined 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 hostel, bed-and-breakfast, guesthouse, villa and apartment
accommodation to its customers. In addition Ryanair has a contract with 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 also sells
attractions and activities on its website with the former going on sale in-flight in spring 2012.
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 £1.50 or €1.50, 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
February 2009, Ryanair introduced Google Adsense to its search results pages in order to monetize the traffic
levels that those pages generate. In March 2009, Ryanair expanded further into the area of third-party Internet
advertising with the introduction of third-party display advertising on the homepages on its website and, more
recently, on the subpages of Ryanair.com. In April 2011, Ryanair began to sell advertising on its boarding cards.