Mark Kleinman on marketing and the City: Flying close to the sun

Ryanair might get away with ignoring customer service now, but what about post-recession?

To call Michael O'Leary, the chief executive of Ryanair, a successful, if maverick, businessman, would be as big an understatement as suggesting that the England Test cricket team may occasionally yearn for the pace bowling of Andrew Flintoff following his retirement after this Ashes series.

O'Leary has built his career, and his business model, on the principle that those who do not upset the apple-cart, fail. At Ryanair, that philosophy has manifested itself throughout the busi­ness, not least in its marketing, which has probably caused more headaches for the poor officials at the Advertising Standards Authority than virtually any other company during the past decade.

O'Leary's brash style has undeniably been a major part of Ryanair's success. In the cut-throat world of no-frills aviation, worrying about upsetting people has been seen by the likes of O'Leary as a potentially fatal weakness.

He has also demonstrated the kind of marketing genius that eludes many challenger companies. Giving away thousands of free flights may not have done much to cultivate loyalty to the Ryanair brand, but it did inculcate in those customers a passion for regular foreign travel that had been inaccessible to them. In the early days of no-frills airlines, and even now, as many new­comers face market conditions too harsh to allow them to survive, Ryanair is one of a handful of companies that is genuinely able to satisfy that demand.

However, will O'Leary's flagrant disregard for others' opinions cost the company in the long-run? Ryanair's pricing power will always form a critical element of its marketing strategy, but the wow factor that existed in the aftermath of its arrival, alongside easyJet, to create a new tier of demand for cheap air travel, has long since begun to fade. Many people hold their noses when they fly with Ryanair. They dislike the company's ethos and the contempt that its founder often displays for them.

That sentiment has not gone un­noticed among investors. Last week's addition to O'Leary's catalogue of out­landish claims was that he was slashing winter capacity at Stansted because of a stand-off over airport charges. In fact, he had done the same thing (albeit on a slightly smaller scale) last year, and many analysts were not impressed.

O'Leary will not be losing too much sleep. His is one of the few airlines in Europe that is continuing to grow in the harshest industry climate in mem­ory; in the space of little more than a decade he has built it into the world's second-biggest airline by market capitalisation. Far more illustrious rivals are fighting a battle for survival.

Yet many investors have grown tired of O'Leary's inability to let the truth get in the way of a good rant. Of course, they can always sell their stock.

The nagging feeling remains, in my opinion, that, where O'Leary's piloting of Ryanair through its early years was indisputably positive, his berating of passengers' desire to check in luggage or use the on-board lavatory smacks of a tin-eared business leader not only oblivious to decent customer service and unable to establish goodwill for a time when he might really need it. That cannot be good for the company.

Developing genuine brand values did not require a loyalty programme or expensive on-board catering. Such things would have undermined the model that Ryanair pioneered.

One day, however, O'Leary may discover that when the global economy revives and the aviation industry emerges leaner and fitter, his lack of enthusiasm for the people who pay to fly on his aircraft might lead consumers and shareholders to take a different view of his long-term prospects.

Mark Kleinman is City editor of The Sunday Telegraph

30 seconds on the wit and wisdom of Michael O'Leary

  • 'We need a recession. We have had 10 years of growth. A recession gets rid of crappy loss-making airlines and it means we can buy aircraft more cheaply.'
  •  ‘I'm disrespectful towards authority. Like I think the prime minister of Ireland is a gobshite.'
  •  ‘Screw the share price, this is a fare war.'
  •  ‘Air transport is just a glorified bus operation.'
  • ‘They don't call us the fighting Irish for nothing.
  • We have been the travel innovators of Europe. We built the roads and laid the rails. Now it's the airlines.'
  • ‘At the moment the ice is free, but if we could find a way of targeting a price on it, we would.'
  •  ‘I'm probably just an obnoxious little bollocks.
  • Who cares?'
  •  ‘We bow down to nobody. We'll stuff every one of them in Europe. We won't be second or third and saying: "didn't we do well?"
  • ‘I don't like aeroplanes. I never wanted to be a pilot like those other goons who populate the air industry.'


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