Paper 2 Ryanair: Cheapest In The Sky


Ryanair: Cheapest in the Sky

Intro

Low cost. Fast service. No frills. These three principles come to mind when I hear the word Ryanair. As an airline that thrives on nickel and diming customers, Ryanair has taken command of the low budget European skies and has emerged as one of the region’s largest carriers. The company’s overly efficient business model has brought it both fame and criticism in an industry where safety is paramount and the stakes are high. Despite being warned, I followed suit with the thousands of customers who chose Ryanair and did so without questioning the low airfare or my wellbeing for a moment. Unbelievably cheap, but it must be safe? Regulators look after this sort of thing, right? Who doesn’t fly Ryanair while studying abroad? In this paper, I will take you into the cockpit to explore the questionable business practices that take place high in the air and delve into the ethical consequences of extreme cost-cutting in pursuit of profit.

Welcome Aboard

Founded by the Ryan family in 1985 with a single route between Waterford, Ireland and London, England, it was only a matter of time before the competitive cost cutting spirit took hold of the 25-person airline. As early as 1986, Ryanair takes credit for sparking the first airfare war in Europe after obtaining regulatory permission to compete with British Airways and Aer Lingus. Ryanair charged a mere £99 to board its airline for the Dublin to London route compared to a minimum of £209 demanded by rival airlines. Growth continued throughout the late 1980’s as Ryanair’s focus on expedient economy service gave it the upper hand in the price war.

Focus on price war shifted abruptly to the outbreak of the Gulf War in the early 1990’s as air travel slowed and Ryanair consequently took a hit. Substantial restructuring took place at Ryanair in the form of cutting routes, planes and flight amenities such as free drinks and complimentary meals. With a much needed £20 million investment from the Ryan family and further adoption of the Southwest Airlines low cost model, Ryanair soon found itself in the realm of profitability. A huge break came for the company in 1996 as a result of from the passage of Open Skies deregulation on the European Union. Such legislation finally enabled Ryanair to expand outside of the United Kingdom and throughout Europe.

European expansion led to greater profitability for the airline and tremendous growth. 1997 was an outstanding year for the company as it went public on the Dublin and New York Stock Exchanges. Employees received shares as a part of one of Europe’s fastest growing airlines and ticket prices remained as competitive as ever.

Buckle Your Seatbelt

When considering innovative and successful companies, it is often difficult to overlook the influence of the CEO. Take Apple for instance. The influential role of Steve Jobs permeated throughout the organization and fueled corporate culture. His leadership influenced not only public opinion but also impacted the lives of his employees and the way they went about their work at Apple. The same goes for Ryanair and the influence of it’s outspoken CEO Michael O’Leary. Much in the same way Donald Trump speaks his mind to the media, Mr. O’Leary has carried out his career in a similarly abrasive manner, much to the dismay of his public relations division. In fact, O’Leary was even approached to star as the Trump equivalent in the British version of the Apprentice, which he declined. Achieving profitability is more than a skill for O’Leary, it is a talent; and one which he thrives at in leading Ryanair.

In the grand scheme of things, “if there ever was a crash on an aircraft, God forbid, a seatbelt won’t save you,” according to O’Leary. Since 2009, Ryanair’s CEO has been a strong proponent of abandoning seatbelts on airplanes, claiming that standing room only seats would be cost effective and cheaper for customers. “You don’t need a seatbelt on the London Underground. You don’t need a seatbelt on trains which are traveling at 120mph and if they crash you’re all dead…” he told the Telegraph. Such a claim is just one anecdote of O’Leary’s strategic make a profit at all costs mindset.
Mr. O’Leary’s strategy is evident in other aspects of the airline as well. Each plane is equipped with non-reclining seats to fit more passengers, minimal leg room, first come, first served seating, and aggressive salesmanship on the part of flight attendants to sell you anything from a drink to lottery tickets and hotel rooms. I could hardly count the number of times I was asked about my interest in a car rental after landing. A quick look at Ryanair’s numbers reveals that ancillary revenue, income taken in from non-flight ticket revenue, is growing and doing so very much on purpose. Idea Works, a management consulting group, believes that ancillary revenue is important to O’Leary to the extent that he “is on a mission to make flying free,” by focusing on selling everything possible to captive passengers.

http://www.youtube.com/watch?v=g3so6AJe4UQ

Ethical Tailspin

While Ryanair’s CEO is outspoken and highly visible like Donald Trump, its operations are far from it. Such curiosity led Dispatches, a UK television program, to send two reporters undercover as flight attendants to gain an understanding of how Ryanair treats two important stakeholder groups; it’s employees and customers.
Employment at Ryanair begins with a class candidates must pay roughly £1,400 to attend. Dispatches reporters Charlie and Mary partook in the 5-week training class in order to become undercover cabin crew. Shockingly, the class spent the vast majority time preparing for a final exam and only 2 hours on an actual aircraft.

While no in-plane instruction was provided, instructors did give the reporters the inside scoop on the consequences of Ryanair’s cost effective turnaround in between flights, “Because we only do a 25 minute turnaround, the aircraft doesn’t get cleaned in between flights, not like other companies that have an hour turnaround.” As far as cleaning is concerned, the instructors explain, “It gets cleaned once a day in the morning… It’s done for a reason, if a planes sitting on the ground its not making money.” In one instance Mary discovered a bit of throw up on the floor of the plane. With insufficient time to properly clean it, a superior crew member told her to step aside while he sprayed a deodorant and explained, “It’s better than smelling it, do you know what I mean?”

The timely and consistent turnaround leads to an ethical failure in cleanliness; however, the reporters soon discovered that it also represents deliberate ethical failures in safety as well. For the sake of time, Mary was ordered to simply check whether or not passengers were holding a passport instead of verifying if the name on the passport presented matched the name on the boarding pass. Such airline activity is not simply frowned upon but illegal and reckless when it comes to safety. Ryanair evidences an even greater disregard for safety when it comes to the number of flying hours it demands from pilots. One Ryanair pilot interviewed explained that he had worked 99.9 hours in 28 days out of the 100 maximum allowed by law. He admitted that being overextended and exhausted on the job is dangerous but that it’s just the way Ryanair operates.

Ryanair is far from an ethically sound company. Instead, it is a clear illustration of a no frills business model taken to the extreme with poor treatment of shareholders such as employees and customers taken to the extreme in pursuit of profit. Perhaps Simon Evans of the Air Transport Users Council summed it up best when trying to understand Ryanair’s approach to business, “It’s difficult to understand from where that cultural ethos comes down but lets face it we are talking about Ryanair and the bottom line in so many of their public pronouncements is you effectively don’t get what you haven’t paid for. You paid next to nothing so don’t expect a decent level of service.”

Works Cited

AbsolutZero. “Dispatches: Ryanair: Caught Napping.” YouTube. YouTube, 06 May 2012. Web. 21 Nov. 2012. .

Dolan, Rebecca. “Michael O’Leary, Ryanair CEO, Says Seatbelts On Planes ‘Don’t Matter'” The Huffington Post. TheHuffingtonPost.com, 08 Nov. 2012. Web. 21 Nov. 2012. .

“Paying For Toilets, Standing On Planes…O’ Leary Clears Up Some Ryanair Rumours.” YouTube. YouTube, 21 Jan. 2012. Web. 21 Nov. 2012. .

Ryanair “About Us.” About Us. N.p., n.d. Web. 21 Nov. 2012. .

Ryanair The Godfather of Ancillary Revenue. Web. 21 Nov. 2012.
.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s