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Ryanair: European Pioneer of Budget Airline Travel

I n t roduc t ion R y a nA i r : The Sou t hwes t o f Eu r opean A i r l i nesin 2007

Ryanair, Europes biggest low-fares airline (LFA ) reported its third quarter results for 2007 with net profitsdropping 27 percent compared to a net profit of 48 million a year earlier. Ryanair cited poor market conditions,fuel costs (oil prices at $90 a barrel) and concerns on recession in the UK and many other European economiesfor its current performance and not so strong future profit expectations. With average winter fares droppingalmost 5 percent its underlying net profit in the three months to end December fell to 35 million euros ($52million). Other factors that contributed included doubling of airport charges combined with reduction of wintercapacity at Stansted , significant cost increases at Dublin Airport combined with longer sector lengths and staffcosts which increased by 18 pct to 67 million euros. Ryanairs net profit figure excluded a one-off gain of 12.1million euros ($17.99 million) arising from the disposal of 5 Boeing 737-800 aircraft

His to ry o f Ryana i rRyanair was set up in 1985 and is one of the oldest and most successful low-cost airlines of Europe. In fact,Ryanair was one of the first independent airlines in Ireland. In 2001, many believed that Ryanair was like theWal-Mart and Southwest Airlines of Europe. Ryanair transformed the Irish air services market where otherairlines like Avair failed to compete with the more powerful national carrier Aer Lingus.

Ryanairs initial efforts as a low-cost carrierRyanair began by offering low-cost no-frills services between Ireland and London. Ryan brothers Catlan,

Declan and Shane Ryan were the founding shareholders of Ryanair. Ryanair was set up with a share capital ofjust 1, and a staff of 25. Tony Ryan, their father and the chairman of Guinness Peat Aviation (GPA), anaircraft leasing company lent Ryanair its first airplane, a fifteen-seater turbo prop commuter plane. Ryanairsfirst cabin crew recruits had to be less than 5ft. 2ins. tall so as to be able to operate in the tiny cabin of theaircraft.

B us ines s m ode lEmployment relations

In the early years, when Ryanair had a total of 450 employees who each had shares in the company, there wasan agreement that staff would not join a union on the basis that they would have influence on how the companywas run. However, there were some early attempts to unionize Ryanair due to Michael O'Leary, board ofdirectors, requesting that pilots take pay cuts and accept changes in their working conditions. Many of Ryanair's

pilots were dissatisfied with the new moves and were represented by the Irish Airline Pilots Association.Ryanair's response was to outsource employees from other European countries. Though in later years, CEOMichael O'Leary, took a more hands on approach and could be seen working with other staff members on thefront line loading bags and checking passengers

Ancillary revenue and in-flight service

Twenty percent of Ryanair's revenue is generated from ancillary revenue, that is income from sources otherthan ticket fares. In 2009 ancillary revenue was at 598 million, compared to a total revenue of 2,942 million.Ryanair has been described by the consumer magazine, Holiday Which?, as being the "worst offender" forcharging for optional extras. As part of the low-cost business model the airline charges fees, these can berelated to alternative services like using airport check-in facilities instead of the online service fee and using

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non-preferred methods of payment. It also charges for extra services like checked in luggage and it offers foodand drinks for purchase as part of abuy on board programme. Ryanair argues that it charges for a large numberof optional extras in order to allow those passengers who do not require baggage, priority boarding or other

premium services to travel for the lowest possible price by giving customers the flexibility to choose what theypay for.

In 2009, Ryanair abolished airport check-in and replaced it with a fast bag drop for those passengers checkingin bags. The option of checking in at the airport for 10 has been discontinued, and all passengers are required

to check-in online and print their own boarding pass. Passengers arriving at the airport without a pre-printedonline check-in will have to pay 40 for their boarding pass to be re-issued. Ryanair has also replaced the freeonline check-in with a 6 online check-in fee which is charged per person, per flight Although this fee iswaived on "Free", "1" and "5" promotional fares, it has been criticised as being a non-optional extra chargewhich should be included in the headline fare.

No-frills

New Ryanair aircraft have been delivered with non-reclining synthetic leather seats, no seat-back pockets,safety cards stuck on the back of the seats, and life jackets stowed overhead rather than under the seat. Thisallows the airline to save on aircraft costs and enables faster cleaning and safety checks during the short

turnaround times. It was reported in various media that Ryanair wanted to order their aircraft without windowshades; however, the new aircraft do have them as it is required by the regulations of the Irish AviationAuthority.

Other proposed measures to reduce frills further have included eliminating two toilets to add six more seats,redesigning the aircraft to allow standing passengers, suggested that passengers should pay to use the toilets,charging extra for overweight passengers, and asking passengers to carry their checked-in luggage to the plane.

In common with other no-frills airlines, Ryanair is a strictly point-to-point carrier and does not offer connectingflights. Passengers who purchase an onward flight from their destination, intending to make a connection, areheld responsible for making it to the airport on time for each flight. Ryanair does not compensate passengerswho miss their flights because they arrive too late at the airport, nor does it provide replacement tickets free ofcharge. If a passenger misses their flight, then it is the passenger's responsibility to buy a new ticket at theirown expense. This rule applies regardless of the passenger's chosen method of transport to the airport(including another Ryanair flight)

Customer service

Ryanair has been criticised for many aspects of its customer service. The Economist wrote that Ryanair's"cavalier treatment of passengers" had given Ryanair "a deserved reputation for nastiness" and that the airline"has become a byword for appalling customer service ... and jeering rudeness towards anyone or anything that

gets in its way".In 2002, the High Court in Dublin awarded Jane O'Keefe 67,500 damages and her costs afterRyanair reneged on a free travel prize she was awarded for being the airline's 1 millionth passenger.

The airline has come under heavy criticism in the past for its poor treatment of disabled passengers. In 2002, itrefused to provide wheelchairs for disabled passengers at London Stansted Airport, greatly angering disabledrights groups. The airline argued that this provision was the responsibility of the airport authority, stating thatwheelchairs were provided by 80 of the 84 Ryanair destination airports, at that time. A court ruling in 2004

judged that the responsibility should be shared by the airline and the airport owners; Ryanair responded byadding a surcharge of 0.50 to all its flight prices. On 30 March 2011, it announced that from 4 April it wouldadd a surcharge of 2 to its flights to cover the costs arising from compliance with EC Regulation 261/2004,which requires it to pay for meals and accommodation for passengers on delayed and cancelled flights.

Ryanair does not offer customers the possibility of contacting them by email or webform, only through apremium rate phone line, by fax or by post. An early day motion in the British Parliament put forward in 2006criticised Ryanair for this reason and called on the company to provide customers with a means to contact the

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company by email. It is claimed that Ryanair is therefore flouting UK e-commerce regulations, which state thatthe email address of the service provider must be given