Ryanair is planning to create a new Holiday division to provide its customers access to additional travel services through the airline’s website. By offering full holiday planning in a single place, Ryanair will be better equipped to compete with full service tour operators, as well as compete with other on-line travel services like Skyscanner, Expedia and Hotels.com.
The new version of the Ryanair website will launch in October, offering a menu of complete ground as well as air travel for its 100 million annual passengers. This will include the ability to “package holidays” that include hotels, and rental cars, including a full comparison of air and ground options and prices for key destinations.
The new website has been developed over the past 20 months by a staff of about 200 people. This new project is both offensive and defensive in a strategy to ensure that Ryanair retains a leadership position in the market, and that the former lack of key holiday planning elements does not become a competitive disadvantage. Ryanair wants customers to shop them first, compare at their site, and book directly with Ryanair.
By contrast, Lufthansa seeks to redirect users to their site by introducing a tax for reservations made through other portals and GDS systems such as Amadeus, Sabre and Travelport. (see this link for more. Ed)
“We want to become the Amazon.com of the trip to Europe” – said the CEO of the Irish company, Michael O’Leary. They plan to do this by introducing a full load of additional services: comparison of airfares with other carriers, discounted hotel prices, and even discounted tickets for football matches.
The basic function of the comparative site will be to compare the prices of Ryanair with their competition. O’Leary in recent months has contacted the managements of EasyJet, Lufthansa, Air France-KLM, British Airways and Iberia in order to find a way to share their real-time fares. But EasyJet and Air France have already rejected the offer, as it would only help a competitor.
By their own admission, Ryanair is now considering the possibility of scraping competitive rates of others from their websites. Ryanair recognizes the double-edged sword in distribution, and considers the fare comparison tool an essential addition to its site. But it also does not want to pay third parties or competitors for that information.
Ryanair does not want to become dependent on third party companies, such as Skyscanner, which refers customers to airline, hotel and rental car sites, which wanted to charge a fee of 3 Euros per ticket on the Irish carrier.
In a low cost carrier environment, every incremental revenue and cost is examined. “We must be careful “to prevent Google from becoming the highway through which 50-60-80 percent of our sales passes ” said O’Leary. Today, Ryanair sells 95% of its tickets through its own website. New efforts to expand comparison shopping and purchasing of other services, such as hotels and rental cars, is aimed at maintaining that high ratio.
With Lufthansa now charging fees for bookings through GDS systems, the question is whether the rest of the industry will follow suit. Ryanair’s strategy, to develop expanded capabilities, is aimed at precluding that necessity through building a better mousetrap.