Based on Ryanair’s reputation for honesty and straight-talking (i.e. a very poor one) we shouldn’t take at face value their announced reason for removing Belfast City services from their timetables. Yes, it’s true that the plan to extend the runway there has not been put into practice, with understandable public opposition and official caution. But, obviously, the current runway hasn’t been any impediment to Ryanair’s five UK routes operated from the airport.
If Ryanair wanted to add extra services with larger aircraft, there’s another airport twenty miles away, with runways long enough for the Space Shuttle to land. Being out of the city, Belfast International also has less restrictive hours of operation and more flexible air traffic routes.
Just for the sake of argument, let’s suppose that Ryanair needs to contract and cut costs, without alarming the stock markets. After a slump in share price caused by the disruption from the volcano dust in April, Ryanair has recovered steadily, with the share price today just short of the record high of early 2010. The announcement to quit Belfast did not affect the share price at all, and yet it was, really, an announcement that business involving almost a million passengers a year was to be thrown away.
After years of frantic expansion, Ryanair announced a cut in UK timetables by 16% in June 2010, in that case, blaming the flat rate tax of £11 per passenger. But that was a million and a half passengers lost per year, and the stock market’s reaction: nothing. In fact, in 2010 the airline has announced just one new route, two flights a week between Plovdiv in Bulgaria and London Stansted. The route may turn out to be popular, but it’s hardly going to compensate for the income from more than two million passengers a year.
My theory is that Ryanair is struggling more than the company would care to admit. With those shares at a healthy €3.93 today, it might be a good time to convert them to hard cash.