Ryanair: How a Small Irish Airline Conquered Europe
The purest European study of stripping cost out of a service business.
Summary
Creaton, an Irish financial journalist, wrote a history of Ryanair from its 1985 founding through the early 2000s, covering the Ryan family's original operation, the near-failure, the adoption of the Southwest model, and the growth under Michael O'Leary.
The operating model is the substance and it is Southwest's, applied harder. A single aircraft type, secondary airports with low or negative charges since Ryanair negotiated subsidies from regional authorities seeking traffic, twenty-five-minute turnarounds, no assigned seating, no free food, no interlining, no travel agent commissions after the shift to direct online booking, and every ancillary service charged separately. Creaton documents how far O'Leary pushed each element, including charging for services competitors provided free and generating publicity through deliberate provocation.
The airport subsidy element is the one that distinguishes Ryanair from Southwest. O'Leary negotiated payments from regional airports and local authorities for bringing traffic, which meant that on some routes the airport paid the airline rather than the reverse. The European Commission later ruled some of these arrangements were illegal state aid.
Creaton also covers O'Leary's deliberate use of confrontation with unions, regulators, airports and journalists as a marketing instrument, on the reasoning that publicity is cheaper than advertising.
The book is from 2004 and predates Ryanair's growth to its current scale, the pilot disputes and the later changes to the customer proposition. The reference has not verified its specific figures.
Key takeaways 7
- Ryanair negotiated payments from regional airports and local authorities for bringing traffic, so on some routes the airport paid the airline.
- Charging separately for every service that competitors bundled converted costs into revenue lines and allowed a lower headline fare.
- Twenty-five-minute turnarounds generated more flights per aircraft per day, which produced more revenue from the same capital.
- Deliberate public confrontation with unions, regulators and journalists generated publicity that cost less than advertising would have.
- Moving to direct online booking eliminated travel agent commissions, which was a large cost line the legacy carriers still carried.
- European Commission rulings later found some airport subsidy arrangements to be illegal state aid, which put part of the cost model at risk.
- The reference has not verified the specific figures in this account.
Who should read it
Operators studying low-cost operating models and the use of confrontation as a marketing instrument.
Who recommended it 1 · 1 direct
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