Investigation By JM-Madeira
JM-Madeira recently published a headline article, comparing plane ticket prices between TAP Air Portugal as well as Easyjet and Ryanair. They raised the question of why TAP is much more expensive than its competitors. While the analysis was correct, they did not provide significant answers. Let’s take a closer look at why leaving Funchal is way more expensive with TAP Air Portugal than other airlines.
Flight Comparison
In their news article, JM-Madeira compared a round trip from Funchal to Lisbon and found out that TAP was charging 250% more than the cheapest competitors. The comparison mentioned but did not take into account that TAP Air Portugal does not charge for extras like hand luggage.
1-Week-Trip FNC - LIS - FNC
Departure: Funchal (FNC), May 24th
Return: Lisbon (LIS), May 31st
Ryanair: €142.02 (index)
Easyjet: €285 (100% more)
Tap Air Portugal: €497 (250% more)
JM-Madeira explains the difference with the fact that despite TAP Air Portugal offering a total of 7 flights to Funchal on these days, most of them have a last-seat alert, pointing out that there is a high demand for TAP Air Portugal. Obviously, this can not be the only reason.
Why Are TAP Air Portugal Flights More Expensive Than Ryanair Or Easyjet?
There are numerous factors contributing to this significant gap, prompting concerns about whether TAP Air Portugal may inevitably lose market share if these disparities continue.
TAP Has A Relatively Low Occupancy Rate
This is likely one of the most crucial factors is the occupancy rate. Both Easyjet and Ryanair have an occupancy rate that roams around 90%, sometimes, as in the case with Ryanair even going up to more than 95%, meaning the likeliness of having an empty seat next to you is highly unlikely. This is particularly impressive as Ryanair states it has a policy to never overbook flights, a common practice of most airlines to ensure that the occupancy rate will be kept low.
Streamlined Fleet Age and Type
Easyjet is known for its younger fleet. By ruling out long-haul flights, they can operate a single aircraft type, a smaller family of Airbus A320 models. This simplifies maintenance as mechanics specialize in a limited number of aircraft variations, reducing training costs and streamlining the parts inventory needed. The same goes for the Ryanair fleet. TAP Air Portugal, on the other hand, has a more diverse fleet with many different airplane models, catering to both short-haul and long-haul flights. This can lead to a more complex maintenance operation with a wider range of parts and potentially more mechanic specializations required. It results in higher costs which eventually reflect on the price of a plane ticket.
TAP Likely Has A Lower Utilization Rate
As so-called low-cost airlines, Easyjet and Ryanair are budget airlines that prioritize high aircraft utilization (turnarounds). Their goal is to keep airplanes in the air most of the time to maximize efficiency and keep costs down. An airplane that stays on the ground for longer can not generate profit and needs to pay for the crew while being out of duty. Also because they are serving long-haul flights and have an older and more diverse fleet, which can result in more repairs and maintenance, it seems likely that TAP Air Portugal has a significantly lower utilization rate than its competitors.
Higher Base Salary At TAP Air Portugal
Low-cost carriers usually have a lower base salary for their crew. While it is hard to find reliable data, sites like Pilotjobsnetwork.com give insight into the salaries of pilots from Easyjet, Ryanair, and TAP Air Portugal.
Low-Cost Carriers Reject High Airport Fees
Ryanair, a low-cost carrier, exemplifies an aggressive cost-cutting strategy. They famously challenge airport fees they deem excessive, as seen in their recent but permanent cancellation of flights from Madeira (Nuremberg, Milan Bergamo, Brussels South) due to disagreements with VINCI's pricing. In contrast, TAP Air Portugal, still a state-owned company to re-privatize, may prioritize factors beyond pure cost. This could include maintaining service to specific destinations or supporting national infrastructure, leading to a different approach to airport fees.
Flight Prices Today
Since prices for airline tickets are fluctuating consistently, it’s worth getting back to the JM- Madeira price comparison. Let's see how prices have changed since the Funchal - Lisbon connection on May 24th and May 31st. Here's a breakdown of current fares for this route according to Skyscanner. Keep in mind that you might still need to pay less for extras with TAP Air Portugal.
Ryanair: €176 (Index)
Ryanair still takes a comfortable lead, but tickets are now higher than in the JM-Madeira comparison (€142).
Easyjet: €257 (46% More)
Easyjet charges 46% more than Ryanair but the price for the tickets is lower than in the JM-Madeira comparison (€285)
TAP Air Portugal: €445 (153% More)
TAP Air Portugal charges 153% more than Ryanair but the price for the tickets is lower than in the JM-Madeira comparison (€497)
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