WE ALL know that Ryanair drives a hard bargain to keep its costs to a minimum.
This week, I got an insight into the negotiations that took place last year with the Shannon Airport Authority over a new five-year deal on passenger traffic.
Ryanair presented two options to the airport manager. The first involved it halving the existing deal that Ryanair has on passenger charges – it pays just €1 – €2 per traveller as part of a deal that expires in April.
It also wanted the Government’s €10 air travel tax abolished, something not in the gift of the SAA or the Dublin Airport Authority, which has overall responsibility for Shannon.
In addition, Ryanair wanted Shannon to give it a guarantee that the airport manager would pick up the tab for any future taxes or charges that might be imposed by the Government or the DAA during the five years.
In return, Ryanair would deliver 1.2 million passengers to the airport. This compares with about 2 million as part of the existing deal.
The second offer involved the passenger charge being halved and the guarantee against future taxes or charges. Under this proposal, Ryanair would deliver 600,000 passengers a year. The SAA demurred and Ryanair is currently paring back its operation at Shannon, where it will handle around 400,000 passengers a year.
A Ryanair spokesman declined to comment on the talks with Shannon, but said: “Others have given us completely free deals . . . they just want to get people through their doors.”
He cited the Canary Islands as an example.
This highlights the problem facing Shannon, which has lost about 1 million passengers over the past three years.
In reality, Ryanair is the only show in town in terms of an airline that can deliver substantial traffic. Yet cutting a deal with Michael O’Leary is unpalatable from a financial perspective.
The DAA has looked at stripping the passenger charge out of the air ticket price and making passengers pay it directly at the airport to try and remove one thorny issue. But Ryanair isn’t interested.
Michael O’Leary won’t be satisfied until he has forced the Government to abolish the travel tax.
In the meantime, it looks as if Shannon will have to muddle through.
