Low-cost carrier Ryanair will be forcing about 400 pilots and cabin crew members to take one week of unpaid leave. The airline’s brash CEO, Michael O’Leary, said that executives would be hit with a 10% pay cut. The flight crews’ mandated holiday will cost them about 2% of their yearly income.
O’Leary, usually singled out for is over-the-top antics and surly demeanor seemed to be talking sense, for once, when he said that smaller European budget carriers would not survive the current economic sluggishness. However, he was optimistic about Ryanair’s prospects, saying that the money woes will cause people to seek out the airline’s cheaper fares.
O’Leary also said that he is looking to develop trans-Atlantic routes by purchasing larger aircraft from bankrupt or soon-to-be-bankrupt airlines on the cheap. First, though, the airline will have to ride out the current economic downturn and keep their crews from bolting for other airlines.
A recent post on Ben Mutsabaugh’s Today in the Sky blog focused on statements made by Frontier Airlines CEO Sean Menke. Menke told a Denver newspaper: “I have been very vocal about (low-cost carriers) having to be aligned through some form or fashion…and not necessarily through mergers.” That’s not a surprising statement from a Frontier exec because of his airline’s buddy-buddy relationship with fellow budget carrier AirTran. The two help each other with ticketing, destinations served and promotions.
But the current economy and gas prices may make Frontier’s approach to the budget game a model for other LCCs. While some airlines, like Southwest, have the clout to challenge the big boys on their own, most carriers are finding their low-cost business model in jeapordy. Alliances could help when it comes to ticket sales and frequent flier programs, but also with the costs of using airports. A band of small carriers could agree to make a LCC hub at all major airports, sharing gates, ticketing counters, even employees. Helping each other a little could keep them all in the game longer.