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Ryanair CEO: Airports unnecessary 'international shopping centers'

From Juliet Mann, CNN
updated 2:05 PM EDT, Thu March 15, 2012
STORY HIGHLIGHTS
  • Michael O'Leary, CEO of Ryanair, blames airports for hampering the aviation industry
  • He believes airport operators charge too much in the current environment of low-cost flight
  • He says airports provide too many services, passing on the cost on to passengers
  • Multiple airports serving major cities will encourage competition, he argues

(CNN) -- The head of Dublin-based budget airline Ryanair says that airport operators are holding the aviation industry back -- and describes the average airport as an unnecessary "international shopping center."

Michael O'Leary, CEO of the carrier he described as "the McDonald's" of air travel, told CNN airport operators were hampering the growth of low-cost flight by leveling unrealistic charges on airlines.

He questioned the need for the current model of airport, saying changes in technology had rendered many of their operations obsolete.

"If you look at it, we don't really need airports to do much any more," he said. "[The] airport terminal serves very few purposes any more, except that it is an international shopping center, owned and run by rich airports."

Costs could be reduced by simplifying the existing model, he said.

"Check in on the website, arrive at the airport, get through security very quickly, and board your plane," he said. "People want to arrive, get on a plane and fly. They want to spend time at destinations, not waste it at airports."

O'Leary said airports could no longer justify many of the costs they passed on to carriers.

Ryanair CEO Michael O'Leary: On airports
"[The] airport terminal serves very few purposes any more, except that it is an international shopping center, owned and run by rich airports."

"People want to arrive, get on a plane and fly. They want to spend time at destinations, not waste it at airports."

"[Many European airports] still think they have a God-given right to charge 25 pounds or euros for very little."

"McDonald's does well in a recession. We are the McDonald's, the Ikea, of the airline business."

"In the old regulated environment, when you had the flag carriers charging high fares, the airports weren't very good at costs and passed it on to the airlines. Those days are over," he said.

"Ryanair [flies] people all over Europe at fares that start at £10 one way. And if you want those low airfares, we need low airport costs."

He said the problem was a lack of competition, which meant that many state-owned airports in Europe "still think they have a God-given right to charge" high prices for airlines to use their facilities.

"We think the way forward is much lower airport fees and much more rapid traffic growth, much more tourism and job growth," he said.

Preferably, main centers could support a number of competing local airports, in the way London passengers had the option of Heathrow, Gatwick, Stansted and Luton.

"It is a better model," he said. "The competition between the airports keeps prices down, keeps services more efficient, and offers you ultimately more choice and lower prices."

He said the European aviation industry was undergoing a "big change," and splitting into two sectors. He predicted the "three high-fare connecting carriers" -- British Airways, Lufthansa and Air France -- would triumph at the top end of the market, while Ryanair would dominate the low-cost carrier sector. "I think you see most of the other flag carriers recognize that they can't compete with Ryanair," he said.

O'Leary said while Ryanair was affected by the current economic climate, and particularly by high oil prices, the airline tended to do well during economic downturns.

"What happens in a recession, and what happened in the last three downturns in Europe [is that] Ryanair has grown faster. Because people do not stop flying in Europe because of a recession," he said. "You see people get much more price sensitive, [going] to the lowest price operator, so if they are flying, they fly Ryanair."

"McDonald's does well in a recession. We are the McDonald's, the Ikea, of the airline business."

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