Ryanair sees weak competition at Lisbon and Athens

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Ryanair’s decision to grow aggressively at Lisbon, Thessaloniki and Athens this summer is motivated by the disarray it perceives at TAP Portugal and Aegean Airlines, its better relationships with airport operators, and the caution of its low-cost rival EasyJet, deputy chief executive Michael Cawley indicates.

Cawley argues that the “monopoly positions” of TAP at Lisbon and Aegean in Greece has led to “very high fares on domestic [routes] and poor service”, which had led to a lower level of aviation activity than could be expected relative to population and tourism potential.

“Lisbon is an airport and a city which has been significantly underserved for a long, long time. If you relate the level of aviation activity to the level of local population at Helsinki, Athens and Lisbon, it’s very low, and we have set up bases at two of them this year,” he said during a Ryanair briefing in London on 3 February. “In fact, fares have been high, and there has been no substantial low-cost presence at either airport. Now EasyJet has a modest-sized base at Lisbon but with no commitment to further growth.”

The outgoing Ryanair executive, who departs the airline in March, says Ryanair’s new strategy was also motivated by a good relationship with the new owners at Lisbon and Athens airports: Vinci at the former and Canada’s Public Sector Pension Investment at the latter.

“The ownership in Portugal changed last year and we now have an excellent relationship with Vinci – the French utilities company who also own Porto and Faro – and Lisbon can hopefully become our largest base there [in Portugal].

“We have opened a new base [at Athens] primarily flying domestically to the islands and to Thessaloniki. This was prompted as much by the new ownership as by the fact we have a monopoly airline operation in Greece. The EU in its wisdom allowed a degree of concentration of activity of Aegean and Olympic.”

Ryanair plans to base one aircraft at Lisbon and to operate nine routes from the Portuguese capital from April. It is predicting it will serve one million passengers there in 2015.

Across Athens and Thessaloniki, Dublin-based Ryanair plans to base three aircraft and operate nine new routes from April. It predicts it will handle 2.8 million passengers across the two airports in 2015.

Cawely says Ryanair plans to become the biggest airline in Portugal and Greece, in both their domestic and international markets. This growth would come through driving new demand through lower fares rather than taking market share from existing airlines, he says.