At the end of last year, Europe’s busiest airline Ryanair announced that it would be making some changes to its cabin baggage allowances. The new rules include a £5 fee for those passengers wanting to carry two items of luggage into the cabin, but make it free to check in their bags at the gate. Seven months after the changes coming into effect though, Ryanair’s chief executive, Michael O’Leary said that these policies might have to be reviewed by the airline.
The effect of the changes
Michael O’Leary said in a recent statement that, despite improvements in the airlines boarding times and punctuality, the changes in baggage allowances are “creating a handling issue, especially at peak periods”. He added: “There are many flights where we’re now having to put 100 or 120 gate bags free of charge into the hold. If that continues to build, it’s something we may have to look at again.”
However, Ryanair’s profits rose this year. Although the airline has suffered from issues like the recent rota problems that led to a shortage in pilots and around 10,000 flight cancellations, the company’s profits still increased by 10% to €1.45bn (£1.27bn) in the year ending March.
Going forward, what’s predicted for Ryanair?
Ryanair has seen strong results and profits in the last year. But, O’Leary warned that the company could struggle in the near future. He said that the current outlook is “on the pessimistic side of cautious”, adding that there are still concerns that there could be strike action in some of the countries it operates in. He also warned that there could be a slump in profits, which are estimated to decline up to 14% in the due to oil prices and extra staffing costs.
Further strike action is another worry for Ryanair. The strikes over Christmas were the first it’s seen in its thirty two year history. “Being unionised means we will have occasional strikes,” O’Leary said. He added that these costs would be unlikely to impact customers in the next year. It takes around 12 months for increased oil prices and staffing costs to affect fares; however, he warned that they could struggle this winter which will “accelerate the shakeout” in the industry.