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).
Hilarious how you guys deliberately didn’t include the second half of the sentence by CNN – “offsetting significantly higher fuel prices”.
Perhaps you can do some actual investigation and look at the history of Ryan Air pricing, how it compares to input costs, whether there is any catchup from deferred price increases over the years, and disclose the actual dollar values involved (is this a $50 to $70 ticket increase, or a $500 to $700 increase?)
Last week Qantas charged me significantly more for a return business class flight between Sydney and Perth than I paid for Europe return on Emirates in business class pre-Covid, and even more than I have paid on another quality middle-eastern carrier for Europe return business class for next summer. And for the privilege of handing over all that money, Qantas also required me to spend 30 minutes on hold to their overseas call centre, and fed me something that was almost, but not quite, completely unlike food. Even the hostie was embarrassed by the dish that she served up to me. Qantas is a shadow of its former self.
viva La Revolution – Madame Defarge get ya knitting girls – and boys – lets get out the maiden for those deserving
Monopolies or colluding duopolies will always charge the maximum the market will bear. They own enough market share to feel safe. When they see trouble coming a few greased palms takes care of it. In Australia, anyway.
The gouging is everywhere and easily identified where a business states that it’s “price increases are broadly in line with current inflation”. That statement means it’s not due to input or labour cost increases, just similar to (probably more than) the average of inflation across the economy. These price increases then feed forward to future inflation. A prices lead inflation spiral?
Greedflation. Surprised this is the first time I’ve seen the term… One of those forehead-smacking why-didn’t-I-think-of-that numbers.