Thank goodness there’s no greedflation in aviation

We know from the Reserve Bank and the business media that there’s no such thing as greedflation and absolutely no connection between inflation and rising corporate profits in Australia. Which is a big relief, because imagine how high inflation and profits would be if it wasn’t just a figment of left-wing imaginations,

Elsewhere, not so much. Take Europe’s mega low cost airline Ryanair. For the first time in nearly 40 years, it’s going to start paying shareholders a regular ordinary dividend in 2024 — €400 million a year. Why? By boosting average air fares 24% — twenty-four percent! — in the six months to September. EU inflation fell from 6.9% in March to 4.3% in September.

Ryanair took to the air on November 28, 1984, when the Berlin Wall was still up, Margaret Thatcher was PM of Britain, Ronald Reagan had just been reelected US president and Bob Hawke was in his first term as prime minister. Since then, it has made a virtue out of being low cost, an airline for the masses and not for investors. It has grown by buying broken rivals like Lauda and Buzz. It’s notorious for charging passengers for everything — from extra bags, bigger seats, cancellation fees and food and drink. And then there was dynamic pricing, which is now common across the entire airline industry.

It paved the way for a surge in imitators — Easyjet in the UK and Wizz in Europe, Jetstar in Australia, Scoot in Singapore.

On Monday, CEO Michael O’Leary revealed that as a result of a first-half profit (in the six months to the end of September) and record passenger numbers in the European summer, shareholders will get two dividends (interim in February and final next September) in 2024 of €17.5 cents each. And from the 2025 financial year, Ryanair will set its payout ratio at 25% of profit to be paid as ordinary dividends. 

Ryanair’s attributable profit jumped to €2.18 billion in the six months ended September 30 from €1.26 billion in the prior period.

The European Central Bank actually believes in greedflation and has been vocal about its impact on inflation in Europe. Here, the big business-influenced Reserve Bank continues its denialism act — in spite of Qantas (Ryanair-level service, but without the budget prices) boosting profits off the back of gouging travellers with higher air fares and cuts to services (complete with reportedly selling tickets to ghost flights).