Ryanair has signed a significant growth deal with Stansted, with the budget carrier vowing to grow traffic at the airport by a half within 10 years.
Announcing the deal at a press conference in London today, Michael O’Leary, Ryanair chief executive, said the agreement set more aggressive growth targets than that at other airports.
He said Ryanair will be expected to hit targets in order to unlock cost reductions during the course of the deal and there were no upfront reduction in costs agreed.
In return Stansted, which was bought by Manchester Airports Group (MAG) earlier this year, will meet this growth with improved facilities, including the possibility of a new fourth satellite, to cope with additional capacity.
The airport is currently undergoing an £80 million redevelopment, with a new larger security area expected to be finished by next summer before work starts on doubling the size of the departure lounge.
O’Leary said that as a result of the deal Stansted will be the only London airport to see growth, with capacity constrained at all the other facilities that service the capital.
“Stansted is going to be the fastest-growing airport in London over the next 10 years,” he said.
“This agreement, which will create over 7,000 jobs in Stansted, proves how UK airports can flourish when released from the dead hand of the BAA monopoly and is the first dramatic incentive by MAG to reverse seven years of decline, during which Stansted’s traffic fell from 23.8 million to 17.5 million.”
O’Leary said as many of 30 of Ryanair’s new 175 aircraft that will be delivered from September 2014 could be allocated to Stansted.
However some of the additional capacity will come from aircraft based overseas that will fly in early to pick up passengers and as a result help Stansted flatten out its daily demand.
Until new aircraft arrive Ryanair will cut capacity at other airports, as yet undecided, in order to meet its Stansted targets, and O’Leary said it would cut margins and bring down prices to do so.
As part of the deal Ryanair has also agreed to actively work with Stansted to find new long-haul carriers to add routes at the airport.
This is unlikely to go as far as a ticketing agreement for connecting passengers, but will see both MAG and Ryanair use their influence to attract new routes.
Ken O’Toole, MAG chief commercial officer, said data suggests 30 million people in the catchment area currently drive past Stansted to fly long-haul out of other London airports.
“We have relationships with 80 global airlines and we have no restriction in terms of what we can and can’t do at Stansted.
“We are out there actively talking to a range of other airlines. That means more choice, more routes and more value for customers. Under BAA there was no incentive to attract more long-haul routes.”
O’Leary would not reveal details of the cost implications of the deal, saying only that charges at the airport were currently too high and he was looking for a modest drop in percentage terms.
However, he did reveal that part of the agreement will see a change in Ryanair’s strict one bag rule which has impacted on airports’ ability to drive revenue from its retail offering.
Four new routes were announced from Stansted for summer 2014 to kick off the 10-year agreement; Bordeaux, Dortmund, Lisbon and Rabat in Morocco, a growing winter sun destination.