Baggage ‘most profitable part of Ryanair business’
07.05.08
In an article about the 50% increase in Aer Lingus baggage charge (its passengers will now pay up to €18 for the privilege of checking in luggage), the Irish Independent reveals that Ryanair – the biggest shareholder in Aer Lingus – makes a 92.2% profit margin on its baggage fees.
Ryanair announced higher baggage charges last week. Its passengers now pay €15 for checked baggage (€10 baggage and €5 check in fees), compared to just £3.99 (€5) on easyJet. The airline said fewer checked-in bags would lead to a reduction in ‘handling costs’, which would enable the airline ‘to continue to offer our customers lower fares’.
However, the newspaper reports that recent research by Dublin stockbrokers NCB shows it costs Ryanair €1.17 to process one bag through Dublin Airport. If correct, this means Ryanair makes an average profit of €13.83 per bag, 'making baggage by far the most profitable part of Ryanair's business,' it adds.
NCB analyst Neil Glynn concluded in his report: ‘Baggage charges are more about maximising revenues than driving down baggage to reduce costs.’ Aer Lingus corporate affairs director Enda Corneille confirmed this, admitting that baggage collection 'would be a profitable exercise for the airline'.
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