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Tuesday, April 18, 2006
Free is the new discount
Source: Business 2.0
One quarter of Ireland's Ryanair passengers fly at no cost and by 2010 Ryanair wants more than half to fly free. Last year Ryanair flew 35 million passengers to over 100 European destinations. The average fare? $53. So how do they get $368 million in net earnings giving them an industry-leading 22 percent net profit margin? (Compare that to Southwest’s at 7.2 percent.) They earn profits from other things. They sell ads - from seat backs to repainting the entire plane. They charge for every amenity. In 2007 they will introduce in-flight gambling and take a cut of each wager. Strapped U.S. carriers, take note – free is the new discount.
Posted by mwelch at 12:34 PM
