Ryanair today announced 50 new routes in a serious test of the airline market's resilience to the credit market crisis and a rising oil price.
Europe's largest budget carrier will fly from Edinburgh, Birmingham, Liverpool, Stansted, Manchester and Newquay to destinations in Spain, France, Germany, Italy and Romania.
Ryanair boss Michael O'Leary announced the expansion in spite of his role as one of the gloomier spokespeople for the industry in recent months. The outspoken chief executive has warned consistently that there will be "blood on the walls" in the airline market this winter because of weak sales. However, Mr O'Leary's reaction during downturns, as in the aftermath of the September 11 attacks, is to slash ticket prices and expand aggressively.
Ryanair has pushed ahead with multi-million pound aircraft orders this year and plans to double its fleet to 262 planes by 2012, leading some analysts to question whether passenger growth will keep pace with fleet expansion.
"If you increase the opportunities in terms of destinations, you might just redistribute passengers but not grow the market," said Chris Tarry, an independent industry analyst.
Ryanair's latest traffic figures continue to show exponential growth at the Dublin-based carrier, driven by the arrival of new Boeing planes. Last month passenger numbers climbed by nearly a quarter to 3.9 million. However, the customer increase was accompanied by a slight dip in passenger load factor - a measure of how many seats are occupied per flight - which some analysts believe is a sign that low-cost airlines are expanding too fast.
The Ryanair announcement was accompanied by another seat sale, offering 2m tickets for £10 and underlining the carrier's emphasis on filling its planes with cheap fares so it can make profits from add-on costs such as luggage check-in fees, hotel bookings and in-flight food. The airline surprised investors this summer by selling discounted seats during its busiest period, costing the company tens of millions of pounds in lost revenues and reflecting Ryanair's dwindling demand.
Ryanair will operate more than 600 routes by next summer following today's announcement. Five new routes will be launched from Edinburgh airport, with four new routes launched from Manchester next March.
The airline's bullish business plans are in stark contrast with the pessimism permeating the global industry. Last week the International Air Transport Association (Iata) warned that weaker sales growth, higher fuel costs and a surge in capacity – driven by significant aircraft orders - would reduce global profit forecasts by nearly $3bn (£1.5bn) next year. It revised its profit forecast from $7.8bn (pounds 3.8bn) to $5bn, as Giovanni Bisignani, Iata's chief executive, warned that an indebted industry had little protection against a downturn.
The global industry has debts of $190bn (£94bn) and an average profit margin of 1.1%, although Ryanair is one of the stronger players and recorded a pre-tax profit of €460m (£329m) in the first half of this year. Iata said it expected revenue growth to nearly halve next year to 4.7%, while passenger numbers will also increase at a lower rate of 4%. Aircraft deliveries will rise despite weakening demand, with airlines adding a total of 1,281 aircraft to their fleets.
