Tuesday, March 17, 2015

Ryanair to Fly Across the Atlantic? Using Which Aircraft?

A Ryanair 737 taxis for a test flight at Boeing Field. Photo - Andrew W. Sieber FlickerCC

A Ryanair 737 taxis for a test flight at Boeing Field – Photo: Andrew W. Sieber | FlickerCC

Ryanair might soon start trans-Atlantic flights, but what does it mean?

At face value, this may seem like an earthshaking headline; after all, Ryanair has been either threatening or strongly implying that they will fly from various European airports to the United States.

But again, the truth is always in the details. Yes, Ryanair will be arriving on U.S. soil, but not tomorrow — not even next year. You see, the exact wording of the approval came in the form as part of their five-year plan.

You might have an opportunity to stare at the yellow cabin during longer flights - Photo: David Precious | FlickrCC

You might have an opportunity to stare at the yellow cabin during longer flights – Photo: David Precious | FlickrCC

It is alleged that the airline is investigating flying to various U.S. Airports from at least “a dozen” gateways. The catch? This is on condition of Ryanair being able to procure adequate long-haul airliners. They’ve given themselves a timeline of four or five years for this to happen.

What, then, will Ryanair purchase for the new long-haul arm? With fares being planned to be offered, at least promotionally, for roughly ten dollars, they are going to have to get something capable of ridiculous unit cost. True, their current all-737-fleet can offer this on short-hauls, as will their future fleet of MAX200s, but when the distance begins to exceed 3,000 statute miles, an airline is going to need more seats to compete on a per-flight basis. Especially when they’ll now be competing with airlines that offer more than the capacity of an entire 737 in economy class alone.

Serving their twelve destinations, we can assume that Ryanair will need roughly fifteen widebodies, maximum of twenty if they start expanding to the U.S. West Coast.

Ryanair is an enigma when it comes to aircraft purchase. While Michael O’Leary (their CEO) has made some famously off-color comments about the process by which they acquired their current fleet of 737-800s, they have also shown great loyalty to Boeing since. Now, of course, no company is going to disclose the results of their negotiations, but we can assume that both Ryanair and Boeing want to not only remain on good terms, but to have Ryanair continue as a single-supplier fleet.

Another Ryanair 737-800 undergoing testing at Boeing Field. Photo - Andrew W. Sieber FlickerCC

Another Ryanair 737-800 undergoing testing at Boeing Field – Photo: Andrew W. Sieber | FlickerCC

Seems rosy on the surface. However, given the fact that Boeing’s future long-range narrowbody to compete with the A321LR (the rumored 737-8ERX) is not going to be available in Ryanair’s timespan, things start to wilt with Boeing.

Ryanair already has up to 200 737-8 MAX and 737-MAX200 on order, but neither of these aircraft are going to be able to be full of enough high-yielding passengers to make their economics work for low-cost long-haul. The MAX200 wont have the range, while the 800ERX/800MAX will lack the capacity.

On top of this, Ryanair has never been one for multiple galleys, let alone multiple hot meals. Their 737 configuration (at least that of today) would not translate well even to selling hot meals, multiple times, across an ocean. So, if we assume that the 737 is, at least long-term, a non-starter for a transatlantic Ryanair venture, what can Boeing offer them?

The 787 would be an obvious choice, except Boeing is experiencing unprecedented demand for the frame. Today, Boeing is facing a very long backlog and has little incentive to discount their star product what so ever.

Norwegian uses the 787 on low-cost intercontinental flights. Perhaps Ryanair will as well. Photo - Bernie Leighton | AirlineReporter

Norwegian uses the 787 on low-cost intercontinental flights. Perhaps Ryanair will as well. Photo – Bernie Leighton | AirlineReporter

The 787, however, is proving itself an outstanding platform for low-cost long-haul. Scoot can place 375 seats in a 787-9 (including 35 premium economy), Jetstar can manage 335 in a 787-8. If that wasn’t enough, ANA can manage 395 seats for a domestic 787-9. There is nothing in the air, right now, in that size class that can beat those kinds of unit costs. Not to sound like a 787 brochure, but it would be a fantastic frame for Ryanair should they be able to get past the sticker price.

A 787-10 at a later date would give Ryanair unprecedented capacity and economics. That said, I don’t think they’ll order it. Not because the aircraft is too good, but because it offers a cargo capacity Ryanair has not yet chosen to add to their business model. Cargo loading/offloading, sorting, forwarding, and the lot all has a cost. Ryanair is trying to reduce those. While Ryanair may branch out into the international bellyfreight game, they would be flying a lot of empty plastic across the Atlantic. Ryanair would never want to pay for too much aircraft, at least under their current leadership.

Boeing is looking for customers to bridge the gap between the sunset of the 777-300/ER and the beginning of the 777-8 and 777-9. Photo - Bernie Leighton |AirlineReporter

Boeing is looking for customers to bridge the gap between the sunset of the 777-300ER and the beginning of the 777-8 and 777-9 Photo: Bernie Leighton |AirlineReporter

While some suggest the 767-300, as it can still be ordered from Boeing, it just doesn’t seem competitive long-term. It’d be a nice idea, but the frames would have no resale value, let alone competitive costs with the legacy airlines that will fight tooth and nail against them.

The dark horse option centers around the fact that Boeing has found a way to not only add 14 more seats to the 777-300ER, but also improve fuel-burn by two percent. Furthermore, Boeing is looking for customers to bridge the gap between the wind down of that 777 series, and the spool up of the 777-8 and -9. A 550-seat Boeing 777-300ER in the Ryanair stable would do them quite well. The problem with that stems from the fact that Ryanair will only have a select few routes where 550 passengers will want to fly them, but they will not want to leave the commonality aspect out of whatever they purchase.

While a fully-loaded 777 offers 747-killing economics, an empty one is hauling tons more structural weight, burning more fuel, and not carrying revenue freight. Long story short; it’d be a huge gamble.

If Ryanair orders Boeing, I think the fact that they are exploring “at least a dozen” destinations is the clue to the fact they want 787s. It’s the only Boeing family that would offer them the necessary flexibility to both right-size capacity and keep trip costs low.

What can Airbus offer?

The Airbus A330-900neo - Image: Airbus

The Airbus A330-900neo – Image: Airbus

The A330-800 or -900NEO would be reasonably safe bets. Relatively low acquisition costs, economics within spitting distance of the 787, and availability within the timeline the board specifies. There are lots of A330 crews that could be easily recruited from elsewhere, as well as dozens of certified MROs that could handle the overall upkeep of such a frame.

Either variant could make the trip from Western Europe to Los Angeles, so range is not an issue. Airbus is building six A330s a month, so the timing for delivery would be perfect. It is also a relatively low-cost option, especially if Ryanair went through a lessor. It would be a great way for Ryanair to enter the long-haul market. The question, however, is what would their cabin configuration look like?

Despite all the bluster of the past, Michael O’Leary has said he wants to make Ryanair more appealing to customers. Would they opt for 16.5″ width and nine abreast (9Y)? If they do, they could probably get about 475 seats into an A330-900NEO. Would anyone pay for it? Good question. I am not even sure Ryanair has finalized their market segmentation for long-haul.

I would suggest that they are doing the responsible thing and watching as the legacy carriers race to their level before they pounce. If Ryanair were competing in a space where something like Air Asia or Jetstar already existed, you bet they’d order A330NEOs in 9Y — it would be the only way to survive. I am not a betting man, but the A330NEO seems like the perfect aircraft family to get their feet wet in the long-haul arena.

Except. One can obtain a 10-abreast (10Y) Airbus A350.

The Airbus A350 Final Assembly Line (FAL) in Toulouse - Photo: Bernie Leighton | AirlineReporter

The A350 might just be light enough to meet the needs of an LCC – Photo: Bernie Leighton | AirlineReporter

While it is slightly unclear just how many more seats you can get in a 10Y A350, it would certainly make the unit cost of a full one downright obscene. The problem arises from the issue that due to the optimizations for the larger Pacific and Mid-Eastern customers, the variant that was once the light-weight CASM king of the family (the A350-1000) is now more of a freight hauling, ultra-long-range monster. That’s a lot of airplane on a six-hour hop from the New York area to Western Europe. Not that it lacks the potential to earn a profit, just that low-cost carriers are concerned about all costs. Why pay landing charges for an aircraft where its extra weight is a hindrance, not a boon? Even the lighter A350-900’s regional variant comes as a paper deduction.

The final two questions, ones that would throw the economics of the order into complete disarray, is whether or not Ryanair would offer any sort of premium product. If they do, and they live up to the boast uttered by Michael O’Leary more than half a decade ago, that is going to take up a lot of cabin real-estate. Furthermore, if Ryanair gets into the bellyfreight game, they might not care about the weight penalties aircraft designed to hang out at the edge of the payload/range curve often bring with them.

No matter what, Ryanair is coming and we as AvGeeks and consumers get to enjoy whatever that means.

 Bernie Leighton – Managing Correspondent 

Bernie has traveled around the world to learn about, experience & photograph different types of planes. Bernie will go anywhere to fly on anything. He spent four years in Australia learning about how to run an airline, while putting his learning into practice by mileage running around the world. You can usually find Bernie in his natural habitat: an airport.

 @PowerToTheThird | Flickr | bernie@airlinereporter.com

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