Will Ryanair return to the UK Domestic Market?
COVID-19 has led to many restrictions on international travel across the world, with a stronger demand for staycations and domestic travel. In the UK, many airlines have added new domestic flights in 2021 including Aer Lingus Regional, BA CityFlyer, Blue Islands, Eastern Airways, easyJet, Jet2 and Loganair. However, Ryanair have done the opposite - cutting all their domestic routes including flights from Belfast International, City of Derry, Edinburgh, Liverpool, London Stansted and Manchester. Could we see Ryanair return to the market?
Ryanair vacated the UK domestic market due to the UK Civil Aviation Authority due to regulatory changes post Brexit (1). This has meant UK registered aircraft are required for domestic and non-EU routes. This was a blow for many airports - especially City of Derry, where Ryanair had flights to Edinburgh and Liverpool. Loganair stepped in and replaced Ryanair at City of Derry, adding a Liverpool route and increasing its existing Glasgow flights, whilst Aer Lingus Regional and easyJet provided links between city pairs which have lost their Ryanair services.
Ryanair have registered two aircraft to the UK register and it is unclear if they will add more in the future. This has allowed Ryanair to maintain links from London Stansted to non-EU destinations including Kyiv, Marrakech and Podgorica. Yet, no UK domestic routes have yet to return.
Travel restrictions including the UK's traffic light travel system has discouraged many potential passengers from international travel, with staycations becoming a popular choice, as it was in 2020. Jet2 have added five routes to Jersey as a response to the increased demand for staycations whilst easyJet have added domestic flights to Bournemouth, Inverness and Newquay - popular tourism spots. Ryanair have added 2 UK airports to its network in 2021 - Belfast City and Teesside (whilst losing 1 - City of Derry), yet has not added any domestic routes. Ryanair may regret that decision, but another major reason to why Ryanair have not added UK domestic routes is the UK Air Passenger Duty (APD).
The UK APD is currently £13 for short haul economy passengers and is placed on all departing passengers. Therefore, for a return journey, the UK domestic market would be £26 in APD whereas UK - Europe would be just £13. This high APD fare discourages low cost operators due to lack of viability and being able to be more profitable operating UK - Europe flights. However, in March 2021, the UK Government announced a review on the ADP. If lowered, it may see Ryanair return to the market.
If Ryanair returned to the market - what routes could they launch? I believe there are three sets of routes which could operate:
1. Northern Ireland - Great Britain
2. London - Scotland
3. Cornwall
1. Northern Ireland - Great Britain
Ryanair returned to Belfast City in June 2021 after 11 years, with 8 summer seasonal routes to Italy, Portugal and Spain. Belfast City was heavily hit by the loss of Flybe but has managed to regain many of its routes (as noted in my previous article: Has Flybe's collapse allowed Belfast City to prosper? (seanm1997.blogspot.com)). However, frequency is significantly down compared to pre-COVID and this could provide an opportunity to base an aircraft at Belfast City and launch domestic flights to Ryanair's large bases in Great Britain including London Stansted, Manchester and Edinburgh. These would compete with Aer Lingus Regional and easyJet (from Belfast International) but as the Northern Ireland to Great Britain market being heavily reliant on flying, is a market where passenger demand is constantly present.
2. London - Scotland
Ryanair have previously operated domestic flights from London Stansted to Edinburgh and Glasgow and given the London - Edinburgh and London - Glasgow markets being two of the largest domestic markets in the United Kingdom (with 3.37m and 2.28m passengers in 2019 respectively), these routes would be a logical resumption for Ryanair. Additionally, Ryanair could launch London Stansted to Aberdeen flights, which is currently unserved. easyJet have resumed London Gatwick to Aberdeen flights in May 2021 after a two year break, whilst British Airways serve London Heathrow to Aberdeen to serve their London hub. Ryanair would be able to increase competition, which would benefit the consumer, whilst not facing direct competition, thus having a wealthy Cambridgeshire catchment to capitalize.
3. Cornwall
When Newquay dropped its Airport Development Fee in 2016, Ryanair entered the market and currently serve two routes from Cornwall - Alicante and Faro. It has had five years to grow its brand in the South West and the increase in staycations could be attractive for Ryanair to add routes from other British airports.
A public service obligation (PSO) was previously in place between London and Newquay and operated by Flybe, up to four times a day, before it ceased operation. Across the London-Newquay market, approximately 196,000 passengers flew in 2019. Since then, British Airways operated between London (Heathrow) and Newquay but the PSO has now been suspended until at least the winter season. British Airways and easyJet will operate between London (Heathrow and Gatwick respectively) and Newquay but with a combined 8x weekly flights during peak summer only. With this in mind, the lack of supply could be an attractive proposition for Ryanair to launch its own London - Newquay route from London Stansted.
Additionally, the Manchester - Newquay market is served by two operators - easyJet and Loganair, and operates a combined 10x weekly flights during peak summer whilst Loganair maintains 3x weekly flights during the winter months. This market served over 81,000 passengers in 2019 and was served year round by Flybe. The reduced capacity in both the summer and winter seasons as well as the increasing demand for staycations could be an attractive proposition for Ryanair to launch the route.
The lack of UK registered aircraft and the high air passenger duty fee are key barriers to Ryanair's lack of UK domestic flights, however, if they were to return, some lucrative markets remain underserved. Additionally, easyJet are very dominant on the main "trunk routes" of UK domestic routes, Ryanair may not be the consumers first choice in this market. Increased competition would be good news for passengers, however, existing carriers may struggle to compete with Ryanair's pricing - especially on low demand routes. There is a lot for Ryanair to contemplate for the return of domestic flying and time will tell if they want to return to the market.
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