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Ryanair may have “bluster more than anyone else in the world,” a senior executive for the airline acknowledged Wednesday, but it is serious about bidding for the short-haul operation of struggling Italian airline Alitalia and turning it into a separate division of Ryanair that might operate with a hybrid full-service, low-cost model.
But Dublin-based Ryanair has no interest in taking over Alitalia’s long-haul routes, despite what Ryanair CEO Michael O’Leary suggested to journalists last week in a briefing. Several outlets reported O’Leary said Alitalia’s long-haul fleet was “really attractive,” and that Ryanair was not opposed to flying longer routes.
“We are only interested in the short-haul,” Kenny Jacobs, Ryanair’s chief marketing officer, told Skift Wednesday during an interview in London. “But if someone else buys and runs the long haul, we’re very interested to feed their long-haul operations.”
(Asked about the discrepancy between the two statements, a Ryanair spokeswoman said: “Our position as Kenny outlined today is correct.”)
Ryanair has made a non-binding offer to control up to 90 of Alitalia’s Airbus aircraft, along with pilots and crews. It is waiting for early October, when commissioners running Alitalia — which filed for insolvency in May — will examine competing offers. Commissioners have suggested they would prefer the company remain whole, but it’s not clear whether that’s viable. According to reports, more than 10 major airlines may be interested in all or parts of Alitalia.
“We’re the biggest airline in Italy with 30 percent market share, so we have to be interested in the process with Alitalia,” Jacobs said, adding that Ryanair particularly covets Alitalia’s operation from Milan.
Still, there’s some question about whether Ryanair is serious or whether it bid to be a gadfly — and perhaps make it more difficult (and more expensive) for the winner. Or, maybe, Ryanair submitted a bid to examine the books of a competitor.
Jacobs said he is aware of the criticism, but noted there’s a first time for everything.
“Ryanair is 32 years old, and it has never bought an airline,” Jacobs said. “But we’re interested in things we were never interested in in the past.”
‘A Well-known brand.’
If Ryanair wins the bid, Jacobs said Ryanair likely would keep the Alitalia name. He said it wouldn’t call it a “great airline brand,” but said it has a good recognition.
“It’s a well-known brand around the world,” he said. “We haven’t thought about it much, but instinct says you would just keep calling it Alitalia.”
But Ryanair (or any acquirer) likely would have to slash Alitalia’s costs. And, at least if Ryanair took over, the airline would probably look less like a legacy carrier and more like a low-cost one. It might even adopt Ryanair’s seating configuration — not that Jacobs sees that as a negative.
“If it looks like Ryanair inside, it would look better than it does today,” Jacobs said.
But Jacobs said Alitalia might not shed all of its legacy attributes, even if Ryanair ran it, because sometimes passengers will pay for a better product.
On some routes, Jacobs said, Ryanair might want to offer different products — one a little better than the other. For example, on a Monday morning, when business travelers often fly, Alitalia might fly a route between major cities, but on a weekend, Ryanair might fly it. Other airlines that own two brands, such as Qantas Group, which owns Qantas and low-cost airline Jetstar, use a similar strategy.
“If you’re running a second brand, you can have differentiated service,” Jacobs said. “But differentiated in an old-school legacy carrier way isn’t always necessarily good. The days of lounges and curtains going back after the eighth row and…croissants and Bloody Marys are probably coming to an end anyway.”
On an operational level, Ryanair has long been proud of its all-Boeing 737-800 fleet, and having only one aircraft type makes it more efficient than competing airlines. But Jacobs said Ryanair can absorb Alitalia’s Airbuses, much like in the United States, where Alaska Airlines, a former all-Boeing operator, acquired Virgin America, which flew Airbuses.
“Yes, it would be a complication, but we think we could do it,” he said. “We wouldn’t see it as a challenge because we we would be also taking over the engineers and the pilots who fly them.”
No change in Air Berlin strategy
Ryanair has also made some news in recent weeks about wanting to bid for pieces of Air Berlin, another insolvent European airline, but Jacobs reiterated Ryanair does not think it will have a chance. At a press conference last week in Berlin, O’Leary said Ryanair would not bid.
Ryanair executives have repeatedly criticized the German government, saying politicians have been trying to ensure Lufthansa Group ends up controlling Air Berlin. Air Berlin has suggested it intends to place all its assets with buyers by the end of this month. That’s a fast turn-around for a company that only declared insolvency in August, Jacobs said.
“It has taken me longer to buy a car,” Jacobs said.
While other airlines and investors have placed bids, Ryanair believes Lufthansa has an edge. Lufthansa already leases a significant number of Air Berlin’s planes.
“This is clearly a stitch-up just to make sure that jobs aren’t lost and that all of Air Berlin is taken over by Lufthansa,” Jacobs said. “We don’t like that because we think it’s against the competition rules both in Germany and in the EU.”
Still, Jacobs said Ryanair plans to grow organically in Germany. He said Air Berlin’s demise should help with that goal, as more slots at congested airports could be made available. For now, he said, Ryanair controls about 10 percent of the German market and carries about 20 million passengers per year there.
Once Air Berlin stops flying, Ryanair expects to be Germany’s second largest airline by market share.