Fare killer Ryanair lets go of its American dream

For at least a decade, Ryanair Holdings chief executive Michael O’Leary dreamed about coming to America, bringing the Irish carrier’s low fares to the other side of the pond. Expand west to the largest aviation market. Price the cheapest seats at $10. Offer business class up front for those willing to pay.

A leader among ultra low-cost airlines, Ryanair had global ambitions.

The trans-Atlantic routes have long been the province of the largest full-service carriers, which fill their premium cabins with the rich and famous and famously rich. As one of Europe’s biggest airlines, any move by Ryanair into that world could have further upended fares by adding more capacity to an already crowded field. Yet O’Leary always found a reason not to pull the trigger.

“I don’t believe long haul, low fares, no frills works,” he said in 2008. “Because there’s always going to be 10 or 15 per cent of the market in long haul who will pay whatever it costs for a businessclass service.”

Despite periodic teases of new U.S. flights, Ryanair did not move to acquire any aircraft model beyond the Boeing 737s it flies exclusively.

In 2015, Ryanair made noises again, this time causing a stir when it said board members had approved plans to go ahead with trans-Atlantic flights — a logical progression given the airline’s growth. That led to a reversal three days later when directors quashed the notion with a statement: “In the light of recent press coverage, the board of Ryanair Holdings P.L.C. wishes to clarify that it has not considered or approved any trans-Atlantic project and does not intend to do so.”

But now it’s 2017, and probably too late. Much has changed over the Atlantic amid a sharp decline in jet fuel prices. The trans-Atlantic market sees a surge of low-cost flying from the likes of Norwegian Air, WOW Air, WestJet Airlines and Air Canada’s discount Rouge unit. Air Canada itself has bolstered international flying. Even JetBlue Airways is mulling whether to cross the ocean.

For now, Ryanair has shelved its trans-Atlantic plans and seeks to grow closer to home. The Dublin-based carrier, which carries about 116 million passengers annually, has its sights set on 200 million by 2024 with almost 400 new Boeing aircraft on order.

“As there is plenty of capacity and growth opportunities for Ryanair in Europe, we are solely focused on European growth currently,” Ryanair spokesperson Robin Kiely said in an email.

For years, O’Leary cited an inability to acquire a fuel-efficient aircraft for Atlantic routes. Ryanair was unlikely to get a price from manufacturers it would like, he explained in a 2014 interview, due to the market popularity of new, more fuel-efficient aircraft such as Boeing’s 787.

The CEO also cited the torrid growth of the three large Middle Eastern carriers: Emirates, Qatar Airways and Etihad Airways. Emirates flies between the U.S. and Italy and plans a route from Athens to Newark, N.J., in March, routes that have been condemned by U.S. carriers complaining the Gulf carriers are state-supported.

Even setting all that aside, flights to America were still a strategic stretch for Ryanair, whose advantages stem from short flights, which allow for more daily flight segments per airplane. Crossing the Atlantic would put a significant crimp in that. “They wouldn’t be able to replicate their massive short-haul cost advantage on long-haul flights,” said Seth Kaplan, a managing partner at trade journal Airline Weekly.

And, even with the cost benefits they enjoy over full-service carriers, Ryanair and Spirit Airlines confront a revenue disadvantage for another reason: the longer the trip, the more that frills matter.

“Some customers who are willing to put up with spartan service on two-hour flights aren’t willing to put up with it on sevenhour flights,” Kaplan said.