Freemium Pricing Model: 25% of Europe's Most Profitable Airline's Seats Are Virtually Free

CEO of Ryanair Michael O'Leary's vision is to make most of its seats free by the end of this decade.
The goal, he says, is to make money by getting a share of the shopping and retail revenues from airports, where the airlines attract traffic. In 2016, Ryanair earned $2 Billion in ancillary revenues from snacks, check-in luggage, seat selection, insurance etc, amounting to nearly 30% of its total revenues.

Mr Leary's predictions are bolstered by the fact that a quarter of its customers are already being offered free fares. Passengers only pay the taxes and duties while the airlines make money through extras like checked luggage, snacks, food, water and in-flight merchandise sales.

source: Principles of Marketing: A South Asian Perspective,  13th Edition, Kotler Philip

Further, the airline also saves costs by selling 99% of the tickets online with offers of travel insurance, hotels, car rentals and various other packages. To reduce costs, they have introduced non-reclining seats and made them lighter by removing the seat pockets. The airline also uses a single model of aircraft i.e. Boeing 737 to save on maintenance costs.

A Typical Fare Card of a Ryanair Flight




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