The ambitious expansion plans unveiled by Ryanair yesterday will, if they come to fruition, cement its position as Europe's largest low cost carrier. By 2012 the airline could be flying 100 million passengers a year from 48 bases across Europe.
To achieve its goal Ryanair plans to spend over €4 billion on 140 new Boeing 737-800 planes from 2008 onwards. The new order - which comes on top of an existing and equally ambitious plan - means that Ryanair has firm orders placed for 156 aircraft and options for another 193. If Ryanair exercises all its options it will result in a more than fourfold increase in its fleet which currently numbers around 100 planes.
These are big numbers and are indicative of Ryanair's confidence that it can continue to grow its business at a rate of around 20 per cent a year. Most analysts concur that this is not an unreasonable assumption given the untapped demand for low cost air travel that exists in Europe, particularly in newer members of the EU and the accession states. The airline continues to enjoy the lowest cost base - by quite some distance - of any airline in Europe and thus is positioned to compete aggressively on new routes. The new aircraft order will complete this virtuous cycle as the size of the order has allowed it negotiate an extremely attractive deal with Boeing, which should further underpin its cost base.
The only potential cloud on the horizon is that the company may be over-reaching itself. But analysts believe it has learnt its lessons from early 2004 when passenger demand failed to live up to expectation and the company was forced to issue a profit warning for the first time in its history. Correctly timing the introduction of new aircraft and new routes is one of the key challenges now facing the company's management.
Predictably there was much speculation yesterday as to whether any of the new aircraft will be based in Dublin or other Irish airports. The company's non-committal answers threw into sharp relief the disarray that continues to characterise the Government's aviation policies. The issue of a second terminal at Dublin airport remains unresolved and until it is built the truth of Ryanair's promises of millions of tourists and hundreds of jobs will not be known.
The future direction and ownership of Aer Lingus also remains unclear. The continued success of Ryanair only serves to underline the potential that is being squandered by the Government's failure to address the issue of Aer Lingus's future.