Skift Take

No longer a quirky upstart, Ryanair is among the most powerful airlines in Europe. But so far it has stuck to its roots and avoided many of Europe's biggest airports. That's about to change, with the airline poised to expand in Frankfurt. How will Lufthansa react?

Ryanair Holdings Plc plans to start flights from Frankfurt Airport, marking its first foray into one of Europe’s top aviation hubs and laying down a challenge to Deutsche Lufthansa AG, which has its main base there.

Discount giant Ryanair will unveil the strategy at a joint press conference with airport operator Fraport AG on Wednesday, according to invitations sent to the media. Neither company would provide details in advance of the event.

Ryanair Chief Executive Officer Michael O’Leary has said he wants to boost the Dublin-based airline’s market share in Germany and serve more major airports across Europe as the carrier seeks to add business travelers. At the same time, he has said that entering Frankfurt, London Heathrow or Paris Charles de Gaulle, the home hubs for the region’s top three network carriers, would be a stretch.

O’Leary has been reviewing his strategy in the wake of Britain’s June 23 vote to quit the European Union, downgrading expansion plans for its biggest market and looking more to countries on the mainland for growth. Germany is already gaining flights, with Ryanair opening a new base this week in Hamburg, where it has stationed two planes and added seven routes to take its total to 14.

The Frankfurt press event will be led by Ryanair Chief Marketing Officer Kenny Jacobs and Fraport CEO Stefan Schulte, according to the invitations, and start at 11:15 a.m. local time, meaning it will almost overlap with a Lufthansa earnings briefing being held at the airport.

Spanish Routes

Ryanair is likely to open the new base with two aircraft, increasing the figure to eight if demand matches expectations, Frankfurter Allgemeine Zeitung reported, adding that initial flights will serve Palma de Mallorca and Alicante in Spain.

Route cuts at unprofitable Air Berlin Plc, Germany’s second-biggest carrier, have encouraged Ryanair to expand, though a move into Frankfurt would present a direct challenge to Lufthansa. The No. 1 German airline is building up its Eurowings low-cost unit to stem Ryanair’s advance in its home market. The division has so far steered clear of Frankfurt and Munich, where the Lufthansa main brand’s short-haul services help feed lucrative long-haul flights. Eurowings will begin serving Munich sometime next year, it said last month.

At Ryanair, O’Leary said on Oct. 18 that net income for the year through next March would increase by about 7 percent rather than the 12 percent previously estimated. The revision, Ryanair’s first since the U.K. Brexit vote, was greeted as more positive than expected by analysts.

Ryanair’s previous foothold in the Frankfurt area has been at low-fee Hahn airport, a converted U.S. military airfield about 100 kilometers (60 miles) from the city. While derided for the distance involved, the airline won the right to advertise its flights as serving Frankfurt-Hahn after a series of court cases.

Fraport failed to raise fees this year for carriers using Frankfurt airport after regulators objected in late 2015. It has refiled the application, which includes incentives for airlines starting new routes. CEO Schulte told German financial daily Boersen-Zeitung in May that discount carriers would become more important for the airport, which currently counts IAG SA’s Vueling and Wow Air of Iceland as its only low-cost operators.

Fraport is building a third passenger terminal, scheduled for completion by 2023, which will initially add annual capacity of 14 million passengers. The company said in September that project costs may surpass earlier estimates of 2.5 billion euros ($2.76 billion) to 3 billion euros. Lufthansa meanwhile has curbed capacity growth at Frankfurt, pledging not to hire new pilots before the Vereinigung Cockpit union agrees on new contracts lifting productivity at the mainline operations.

–With assistance from Benjamin Katz

To contact the reporters on this story: Richard Weiss in Frankfurt at [email protected], Christopher Jasper in London at [email protected]

To contact the editors responsible for this story: Chris Reiter at [email protected], Tom Lavell, Benedikt Kammel

©2016 Bloomberg L.P.

This article was written by Christopher Jasper and Richard Weiss from Bloomberg and was legally licensed through the NewsCred publisher network.

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Tags: frankfurt, lufthansa, ryanair

Photo credit: Ryanair soon will start flying to Frankfurt, which is dominated by Lufthansa. Ryanair

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