Ryanair 2016 Annual Report Download - page 74

74
Low and Widely Available Fares
Ryanair offers low fares, with prices generally varying on the basis of advance booking, seat availability and
demand. Ryanair sells seats on a one-way basis, thus removing minimum stay requirements from all travel on Ryanair
scheduled services. All tickets can be changed, subject to certain conditions, including fee payment and applicable upgrade
charges. However, tickets are generally non-cancelable and non-refundable and must be paid for at the time of reservation.
Ryanair’s discounted fares are “capacity controlled” in that Ryanair allocates a specific number of seats on each
flight to each fare category to accommodate projected demand for seats at each fare level leading up to flight time. Ryanair
generally makes its lowest fares widely available by allocating a majority of its seat inventory to its lowest fare categories.
Management believes that its unrestricted fares as well as its advance-purchase fares are attractive to both business and
leisure travelers.
When launching a new route, Ryanair’s policy is to price the new route at its lowest fare so that it will be
significantly lower than other carriers’ lowest fares, but still provide a satisfactory operating margin.
Ryanair also periodically runs special promotional fare campaigns, in particular in connection with the opening
of new routes, and endeavors to always offer the lowest fare on any route it serves. Promotional fares may have the effect
of increasing load factors and reducing Ryanair’s yield and passenger revenues on the relevant routes during the periods
they are in effect. Ryanair expects to continue to offer significant fare promotions to stimulate demand in periods of lower
activity or during off-peak times for the foreseeable future.
MARKETING AND ADVERTISING
Ryanair’s primary marketing strategy is to emphasize its widely available low fares, route choice and great service
which has recently been enhanced by Ryanair’s “AGB” customer experience program. In doing so, Ryanair primarily
advertises its services in national and regional media across Europe. In addition, Ryanair uses topical advertising, social
media, press conferences and publicity stunts. Other marketing activities include the distribution of advertising and
promotional material and cooperative advertising campaigns with other travel-related entities, including local tourist
boards. Ryanair also regularly contacts people registered in its database to inform them about promotions and special
offers.
RESERVATIONS ON RYANAIR.COM
Passenger airlines generally rely on travel agents (whether traditional or online) for a significant portion of their
ticket sales and pay travel agents commissions for their services, as well as reimbursing them for the fees charged by
reservation systems providers. In contrast, Ryanair requires passengers to make reservations and purchase tickets directly
through the Company. The vast majority of such reservations and purchases are made through the website Ryanair.com.
Ryanair is therefore not reliant on travel agents. See “—Strategy—Taking Advantage of the Internet” above for additional
information.
In May 2012, Ryanair further upgraded its reservation system in order to facilitate the continued expansion of the
airline. The upgraded system gives the Company the ability to offer more enhancements to passengers, as the new platform
is far more flexible in terms of future development. Under the agreement with the system provider, Navitaire, the system
serves as Ryanair’s core seating inventory and booking system. In return for access to these system functions, Ryanair
pays transaction fees that are generally based on the number of passenger seat journeys booked through the system.
Navitaire also retains a back-up booking engine to support operations in the event of a breakdown in the main system.
Over the last several years, Ryanair has introduced a number of Internet-based customer service enhancements such as
Internet check-in, security fast-track, priority boarding service and limited reserved seating since January 2012 (with fully
allocated seating introduced in February 2014 as part of the “AGB” customer experience program). Since October 2009,
Ryanair has required Internet check-in for all passengers. These enhancements and changes have been made to reduce
waiting time at airports and speed a passenger’s journey from arrival at the airport to boarding, as well as significantly
reduce airport handling costs. Ryanair has also introduced a checked-bag fee, which is payable on the Internet and is aimed
at reducing the number of bags carried by passengers in order to further reduce handling costs. In April 2014, the Company
entered into an agreement with Travelport which operates the Galileo and Worldspan GDS. In October 2014, the Company