Ryanair flies into the path of the economic storm

A dramatic opening line in an Guardian article suggests that bad news from Ryanair means that the “boom in European low-budget air travel has turned to bust”...

Earlier in the summer of 2008, management at Ryanair remained quite optimistic about the ability of their business to ride out the economic downturn.

However, Ryanair has announced that in 2009 the airline is likely to make its first loss in 20 years.  Hit by rising fuel prices and weakening consumer demand, Ryanair’s forecast is significant, not just for the business but for the low-cost airline industry as a whole.

The Guardian article (and other broadsheet features on the same news) is full of tremendous content for business studies teachers and students.  Key topics covered include:

- The low-cost business model
- Price elasticity of demand - cutting prices to keep passenger volumes up
- Calculating total sales (average fare x passenger numbers)
- Capacity management

A significant business story that will develop over the next few months (look out for low-cost airlines that don’t survive the quieter winter months).

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