Ryanair plans attack on the package holiday market

Ryanair is planning the possible introduction of package holidays as the company struggles to attract more tourists.

Chief Executive Michael O'Leary, who has long opposed selling flights with rooms and airport transfers, told The Telegraph he would reassess the situation once Ryanair had achieved maximum growth by expanding its aircraft fleet.

He said: “I would not rule out the creation of a holiday division. The holiday product is probably a reasonable way to charge higher rates and yields and put it into a package.”

Mr O'Leary had previously rejected the possible introduction of package holidays, saying just three months ago that it would distract from Ryanair's main aim of dominating European short-haul travel.

However, as discounters EasyJet and Jet2 have also benefited from their partners specialising in the holiday industry this summer, the value of package deals has become increasingly clear.

Ryanair, on the other hand, is struggling with a price collapse, which the company attributes to an oversupply of seats in the battle for market share and lower consumer spending.

However, O'Leary said there was “some truth” in the assumption that all-inclusive holidays had proved particularly popular this year.

He said: “Accommodation in the Canary Islands, Spain, Italy and Greece has become significantly more expensive and this may have led to more people opting for such package holidays.”

Ryanair launched a holiday program billed as the “Amazon of air travel” in 2016, but discontinued it after just two months. The airline accused its software partner of “screenscraping” its website and reselling the seats.

Mr O'Leary said easyJet Holidays had been “quite successful” since it was relaunched in 2019 under chief executive Johan Lundgren, who previously worked for tour operator Tui.

However, the Ryanair boss said EasyJet had been forced to take the step because the airline was focusing on airports such as London Gatwick and Paris Charles de Gaulle, where time slots were expensive and difficult to obtain.

He said: “Holidays are a sensible way for them to monetise scarce capacity at expensive airports. We, on the other hand, are taking on many new aircraft and continuing to expand.”

Ryanair is about twice the size of EasyJet and is expected to carry 200 million passengers this year, compared to about 100 million for EasyJet.

Leeds-based Jet2 has also managed to “secure a lot of accommodation,” O'Leary said, characterizing the company as a holiday company with an affiliated airline.

He said: “It's a good, well-run company. But there are very few seat-only or scheduled services. And they have no presence outside the UK.”

Ryanair will not consider setting up a package holiday division until all 350 Boeing aircraft on order have been delivered, O'Leary said. The new arrivals would be enough to aggressively increase traffic without deviating from the existing model. That will take a few years.

O'Leary said he had to ensure that the move would not simply shift revenue from the airline to the holiday division and that it would not be too costly to manage.