Ryanair call for boarding in Plovdiv
Despite flying “in bulk” to more than 150 destinations throughout Europe, low-cost airline Ryanair is very picky in choosing which airports it uses. Among the list of conditions that must be met, the most important is that the use of the airport must come cheaply.
This is one of the main reasons why the largest no-frills airline in the world is yet to launch flights to Bulgaria. But all of that could change now that several municipalities in Plovdiv region – Hissarya, Assenovgrad and Rodopi – have joined forces to draw more tourists by exploiting the proximity of Plovdiv Airport.
In 2009, the Bulgarian Government completed work on a large passenger terminal in the country’s second-largest city, investing more than 40 million leva in the construction, which for now stands empty.
Until April, the only regular arrivals to Plovdiv were by Russian airline S7 out of Siberia, which will resume flights in September.
Cargo flights are out of the question because Plovdiv Airport has no cargo terminal, so the only option is to attract passenger flights by low-cost airlines, since the traditional carriers operate flights to the not-so-distant Sofia.
To draw the interest of big-name players like Ryanair, the Cabinet halved the fees for Plovdiv Airport starting May 1 until May 1 2012. The airport fee is thus half that charged by Sofia Airport and and the passenger processing fee is three times lower.
There is still no contract with the Irish low-cost carrier, but people familiar with the situation say that there is an unspoken competition to win Ryanair’s business. On May 26, the airline’s officials met representatives of all civilian airports in Bulgaria and a technical review of the Plovdiv Airport is said to have been scheduled.
ECCENTRIC: Chief executive of Ryanair Michael O’Leary poses for photographers during a news conference in Vienna in November 2007.
I want to fly
The three municipalities set up on May 20 a fund for the development of Plovdiv Airport.
“The goal of this non-profit organisation is to raise funds and help the creation of permanent flights to Plovdiv Airport, as well as advertise the municipalities,” the executive director of Plovdiv Airport Doichin Angelov said.
Plovdiv city hall is expected to join the initiative and 20 more municipalities are in talks to do the same. The fund’s decisions are taken by majority vote of its board, which includes all mayors, while Plovdiv Airport has been retained as a consultant.
The money would be raised from tourist taxes, which hotels have to pay to local authorities. Additionally, a small local tax would be levied on residents of municipalities that have joined the fund. For the three municipalities now on board, that would generate an estimated 56 000 leva a year.
“It is an opportunity for joint action if any given municipality cannot manage on its own,” the governor of Plovdiv region, Ivan Totev, said. “The fund is a mechanism to share risk, a practice common in the West, but not used a lot in Bulgaria,” he said.
The example that the local authorities in Plovdiv hope to emulate is that of Girona Airport in Catalonia, about 92km from Barcelona, which Ryanair picked as one of its destinations in 2000.
“After the creation of a similar fund by Catalonian municipalities, an airport that had no passengers managed to build a passenger flow of eight million people,” Totev said. “Such a practice can be used in other fields, Plovdiv Airport is just one separate case.”
The first step is to help attract airlines to use Plovdiv Airport, which is now underused, followed by the establishment of regular bus lines between individual municipalities and the airport.
After the local authorities announced their plans, the immediate follow-up question was whether the money would be treated as state aid. The fears are that the airline could be compensated under certain conditions, such as flights not being sold out.
“There can be no talk of state aid because the fund was not set up to help a particular airline,” Totev said.
The proposed solution is that airlines would sign separate contracts with Plovdiv Airport and the fund, the second one being optional and carrying certain obligations for both sides. “The airlines would be paid by the fund in return for advertising space on their websites, promoting [Bulgarian] municipalities and their tourist attractions,” Angelov said.
Like many other low-cost airlines, Ryanair flies mainly to regional or secondary airports that charge lower fees. Sometimes, these airports happen to be even closer to the central city areas than the main airports, as is the case with Belfast, Gothenburg and Rome.
Cheaper is better
Ryanair has the reputation of unscrupulously pursuing its agenda in all negotiations with airports, with the end goal being lower costs. It is no wonder that its chief executive Michael O’Leary is one of the least liked in the industry.
In the past, the airline has employed such tactics as pitting nearby airports against each other for its business and arm-twisting airports into agreeing to its terms. In April 2006, Ryanair surprised the management of Cardiff Airport by announcing an end to flights to Dublin. More recently, the airline said it would cease operations in Budapest and Prague starting with October 2010 because of the high fees.
This constant drive to minimise airport and ground personnel costs is the main reason for Ryanair’s ability to offer cheaper prices to its customers. As an example, by booking two months in advance, flying from London to Madrid would cost 35 euro with Ryanair, compared to about 150 euro using British Airways or Iberia.
The service offered for the lower price is also different – Ryanair passengers end up paying for extras like food, seat preference and luggage, as do customers of other low-cost airlines like easyJet and Wizz Air.
It is still unclear what destinations Ryanair would pick in Bulgaria and where those flights would be headed. But according to an Economy Ministry source, the expectation is that Plovdiv would be linked to five destinations and flights could be launched as early as September.
Kapital weekly, issue 22
