Ryanair made no ambitious claims for how big its new Holidays service will become when it launched yesterday, but the budget carrier clearly sees an opportunity to disrupt a significant market.
If you want a good idea about the projected scale of Ryanair Holidays the Civil Aviation Authority’s Atol check service on the regulator’s website is a good start.
Under EU rules Ryanair Holidays must offer Atol protection in the UK and it will do this under a licence held by Spanish accommodation and transfers partner Logitravel.
Atol licence number 10767, registered to Logitravel’s London office, is licenced to carry 11,560 between December 2016 and September 2017.
The quarterly breakdown shows that Logitravel expects to have just over 1,000 more passengers per quarter in the six month period between June 2016 and December, the peak travel period.
These numbers can be revised during the year, but it indicates a modest start. Contrast that with rival easyJet Holidays whose Atol, with Hotelbeds’ Hotelopia, is for 81,921 annual passengers.
This puts Hotelopia in 38th place in the league table of UK Atol holders in which the top company, Tui, dominates on 5.3 million, more than double its nearest rivals Thomas Cook and Jet2holidays.
Ryanair also launched Holidays in Germany and Ireland, so you might assume the former, where packages dominate, will be a slightly bigger market than the UK and the latter a very small number.
So while Ryanair can be expected to be typically aggressive on pricing, claiming it will offer holidaymakers a 10% saving on their holidays, don’t expect it to sweep all before it – yet.
When easyJet Holidays relaunched its holidays division five years ago having opted to partner with Lowcost Travel Group it talked about breaking into the top three UK tour operators.
However, it failed to achieve this because it saw holidays as being a top-up sales opportunity to fill the final few seats it wasn’t able to itself.
As a result Lowcost had to operate under impossibly strict restrictions in terms of how it could market its holidays and therefore consistently fell short of its annual targets.
Ryanair’s chief marketing officer, Kenny Jacobs, made no grandiose claims yesterday when launching Ryanair Holidays.
But he did set out the strategy which is to use the airline’s huge traffic volumes and natural position as the place people tend to start their holiday booking to grab more of their share of wallet.
This is the big battleground now online as OTAs, airlines, metasearch sites, hoteliers, review platforms and even airports target the high attachment rates associated with travel products.
Any customer buying a flight, is also likely to be in the market for a hotel, airport parking, insurance, transfers, suncream, some new board shorts or even a good book to read while away.
This points to a revival of the package, not necessarily as we traditionally know it, but at least a rowing back of the dismantling of packages into components, driven largely by US entrants.
As Jacobs observed, agents and tour operators have been putting holidays together using Ryanair flights for years, so why shouldn’t it do similar and cut out the middle man?
Ryanair has fought, and continues to fight, a long and partially successful battle against the “screen scrapers” so Holidays opens up a new front.
It is understood that one major UK OTA includes a Ryanair flight in up to 40% of the holidays it sells, so the potential to grab back some of that business is considerable.
Jacobs could not say what proportion of the carrier’s sales originate from such sources but given the scale of some OTAs in the short-haul beach market they must be a significant source of bookings.
However, the carrier is determined to counter the activities of what it sees as ‘unwelcome partners’ on multiple fronts including legal and through technology.
Jacobs said 55% of its customers now have a myRyanair account, ahead of a new rule due to come in next year which will make it impossible to make a booking without signing in.
The airline also has 16 million app users, and it will use the data from this and myRyanair to ramp up ancillary sales by offering the right product to the right person at the right time.
Jacobs claimed this ability to out-retail the retailers will drive consolidation in a crowded UK online sector and see “half of the existing niche online agents disappear within the next five years”.
He said the airline has a “cunning plan” to become the “Amazon of travel” and he fully expects the web shopping giant to enter the travel space “within three years”.
And with Google also recently announcing it wants to “better understand the package sector” to provide customer transparency, Ryanair will be ready to take full advantage.
A crucial challenge remains for Ryanair. Will the airline’s improving reputation thanks to its “always getting better” programme ensure going on a Ryanair Holiday is perceived as being as desirable as those offered by rival brands?