Ryanair Cut Fares 7% on Purpose. The Cheap Seat Was Never the Product.

In its most recent full year, Ryanair did something that looks, on the face of it, like the act of a company in trouble: it cut its average fare by 7%.² Airlines are supposed to chase higher yields as they mature. Ryanair did the opposite, on purpose, and called it a strategy. The fare went down and traffic went up 9%, to just over 200 million passengers.² More than that - it made €1.61 billion in profit while doing it.² The cheap seat wasn't a sign of weakness. It was the bait.

The official story is that Ryanair is a low-cost airline that sells tickets and tacks on a few extras. That gets the business exactly backwards. The seat is the loss-leader; the extras are the product. Ryanair isn't an airline that monetises with fees. It's a fee machine that happens to fly you somewhere to collect them.

The fare line barely grew. The fee line did all the work.

Look at the two revenue lines side by side and the misunderstanding collapses. In FY25, scheduled revenue - the fares themselves - rose just 1%, to €9.23 billion, because the 7% fare cut almost exactly cancelled the gain from carrying 9% more people.² Meanwhile ancillary revenue rose 10%, to €4.72 billion.² That's roughly a third of total revenue of €13.95 billion¹ - not a garnish on the plate, but a second main course. And it's the faster-growing one. The fare line is running flat-out just to stay still; the fee line compounds. Ryanair has quietly built a business where the thing it advertises is a near-break-even formality and the thing it doesn't advertise is the part that grows.

Why a cheaper seat is worth more than a dearer one

Here is the mechanism, worked down to the gear that turns. Ryanair calls its pricing 'load active, yield passive' - it lets the fare fall as far as it needs to fill the plane, and stops worrying about the price per seat.⁴ In the first half of FY25 that meant Q1 fares down 15% and Q2 down 7%, repeated price stimulation to keep the seats full as consumer spending softened.⁴ On its own, a falling fare is a problem. But every cheap seat sold is a passenger who can now be sold a priority boarding pass, an allocated seat, a checked bag, a hire car, travel insurance, a hotel referral.⁵ The fare is a customer-acquisition cost paid by the customer. Fill the cabin and the ancillary till rings 200 million times. The lower the fare, the fuller the plane - and the fuller the plane, the bigger the base of people standing in front of the upsell. The seat is the foot in the door.

The low cost isn't all earned. Some of it is granted.

The model only works if the seat can be sold near-free without losing money, and that depends on a cost base often credited entirely to operational ruthlessness. Part of it isn't earned at all - it's granted by taxpayers. A 2019 analysis by Transport & Environment found at least 35 of Ryanair's 214 EU airports had documented government subsidies, with a further 17 likely loss-making; the aid flowed to the airports but acted as an indirect operating subsidy to Ryanair through below-cost landing charges.⁷ The legal picture is genuinely mixed. In December 2008 a European court overturned an earlier Commission ruling and found Ryanair's Charleroi airport deals fully compliant - a precedent Ryanair leaned on to defend the strategy for years.⁸ But the wind has shifted: in September 2024 the European Commission ordered Germany to recover roughly €14 million in incompatible state aid from Frankfurt-Hahn airport and Ryanair.⁶ Some of the discipline that makes the near-free fare possible is real. Some of it is a regional airport's deficit, dressed up as efficiency.

Isn't a third still a minority - and aren't the fees nickel-and-diming?

The fair objection is that fares are still the larger line - €9.23 billion against €4.72 billion¹ - so calling Ryanair an 'ancillary machine that happens to sell seats' overstates it. Two things answer that. First, direction beats size: the fee line grew 10% while the fare line grew 1%, and that gap has widened in the filing record, so the mix tilts further every year.² Second, the fare line is deliberately suppressed - Ryanair could earn more per seat tomorrow by stopping the price cuts, and it chooses not to, precisely because the volume those cuts buy is worth more downstream.⁴ The honest counter is the flatness of the per-passenger figure: ancillary spend per head rose just 1%, which undercuts any story of ever-escalating fees squeezing each customer harder.² But flatness is the tell, not the weakness. Ryanair isn't trying to extract more from each passenger. It's trying to acquire more passengers cheaply and run the same modest fee across all of them. The growth engine is the turnstile, not the price tag.

Ryanair cut its fares 7% and grew its profit anyway, which only sounds like a paradox if you believe the fare is the business. It isn't. The fare is the price of admission to a much better business - one that bills 200 million people a small, steady sum for the privilege of the cheap seat they were lured in by. The genius was never the low price. It was realising that the low price is the cheapest marketing in aviation, and that the real product begins the moment the booking is confirmed.