Ryanair's €40 Ticket Isn't Sold at a Loss. The Loss-Leader Story Is the Wrong One.

You book a Ryanair seat for the price of a decent lunch, then watch the total climb: a bag, a chosen seat, a printed boarding pass you forgot to do at home. By the time you're at the gate, the €40 fare has quietly become €70, and you walk away convinced you've just witnessed the trick of the century - the airline gives away the flight and makes its money on the extras. It is a clean, satisfying story. It is also wrong, and the company's own accounts say so.

The official legend is that the ticket is a loss leader: sold below cost to lure you in, with the real profit hidden in the fees. But pull the filings and the lead product isn't bleeding at all. In FY2024 scheduled fares brought in €9.1 billion against €4.3 billion of ancillary - and the airline posted €1.92 billion of after-tax profit across both.¹ Fares are the bigger line, not the bait.

A loss leader you can't sell below cost

A real loss leader works like the supermarket's £1 rotisserie chicken: priced under what it cost to make, deliberately, to drag you past the higher-margin aisles. The chicken loses money on purpose. Ryanair's seat doesn't. On aggregate, scheduled fares cover their costs and contribute roughly two-thirds of all revenue.¹ The cheap fare isn't a sacrifice - it's a recruitment tool. Its job is to win the booking and stuff the aircraft full, because an empty seat earns nothing and a full one is the cheapest marginal revenue in the business. The thesis everyone repeats has the gear backwards: fares are the volume pump, and ancillary is the part that keeps the margins from buckling when the pump runs slow.

What ancillary actually does: it absorbs the shock

If ancillary isn't the whole profit, what is it for? It's the cushion that lets Ryanair cut fares hard when demand softens - without watching the bottom line collapse with it. The mechanism is structural: bag fees, seat selection, and priority boarding are tied to passenger count, not to ticket price. So when O'Leary slashes the average fare to keep planes full in a weak market, the per-head ancillary spend - around €23 a passenger - keeps climbing on the larger crowd those low fares pull in.¹ Cheap fares buy volume; volume feeds ancillary; ancillary steadies the margin the cheap fares just dented. The two lines aren't rivals. They're a flywheel where one product's weakness is engineered to trigger the other's strength.

FY2025 is the mechanism caught in the act. Average fares fell 7% over the year, yet scheduled revenue still edged up 1% to €9.23 billion because the airline flew a record 200 million passengers - the volume pump working exactly as designed. Ancillary, riding that bigger crowd, rose 10% to €4.72 billion.² The cushion did its job: a brutal fare cut, and the company still cleared €1.61 billion.

But the cushion isn't a parachute

Here's the honest counter to anyone who'd push the flywheel story too far. If ancillary truly stabilised everything, profit would have held in FY2025. It didn't - it fell 16%, from €1.92 billion to €1.61 billion, because total revenue grew only 4% while operating costs rose faster.² Ancillary cushions the fall; it does not cancel it. The single quarter that proves the limit is starker still: when the average fare dropped 15% to €41.93 in the first quarter of FY2025, ancillary still grew 10% - and quarterly profit collapsed 46% to €360 million anyway.⁴ A 10% rise in the cushion cannot catch a 15% drop in the larger line. The fees soften the landing. They were never the parachute.

And the symmetry runs the other way too. When fares recovered, the cushion stopped doing the heavy lifting. In the first half of FY2026, average fares rose about 13% to roughly €58, scheduled revenue jumped 16%, and ancillary grew a comparatively modest 6% - yet half-year profit leapt 42%.³ The lesson is blunt: profit tracks the fare, not the fee. Ancillary is the steadying hand on the wheel. The fare is still the engine.

The part of the cost base that isn't operational genius

There's one more reason the cheap fare can stay cheap without bleeding - and it isn't lean operations or the ancillary cushion. Some of Ryanair's famously low costs have rested on airports paying it to show up. The European Commission ordered France to claw back €8.5 million of illegal state aid granted to Ryanair through marketing agreements at Montpellier, finding they handed the airline an undue selective advantage.⁵ A separate ruling ordered Germany to recover roughly €14 million tied to Frankfurt-Hahn.⁶ One analysis estimated that around a quarter of Ryanair's EU airports were likely subsidised or below break-even scale.⁷ None of this is the loss-leader story either - but it's a reminder that a fare can look impossibly low because someone other than the passenger is quietly topping it up.

Ryanair didn't build a business that gives away seats and gets rich on baggage. It built two engines wired together: a cheap fare that fills the plane, and a fee structure that scales on whoever the cheap fare drags aboard. When the fare engine surges, profit surges. When it stalls, the fee engine keeps the whole thing from spinning into the ground - but only just. The genius isn't a ticket sold at a loss. It's a ticket priced to win the volume that makes everything else pay - and the discipline to know that the cushion was never meant to fly the plane.