Passionate Cost Cutting Leads to Standing Room Only

How often have you heard long time flyers lament that air travel has become like riding the bus? Well, according to an interview with Michael O'Leary, CEO of Ryanair Holdings Ltd. -- the Southwest Airlines of Europe -- in this morning’s WSJ, Ryanair might bring air travel one step closer to parody with urban transit. Quoting O’Leary, The Journal writes "Another [cost cutting option] we're looking at is taking out the last 10 rows of seats and putting in handrails. In that case, you'd be able to offer on each flight, say, 125 seats. But you'd also have standing room for maybe another 100 passengers. And the proposition would be that if you want a seat, you pay €30 ($44). But if you're willing to stand, you pay €1.”

What's interesting about Ryanair’s putting their cost cutting plans "on steroids", as The Journal calls it, is that they appear adamant in their philosophy that there's no such thing as a free lunch -- or snack, lavatory, baggage check or seat for that matter. O’Leary says "... paying for checked-in bags: It wasn't about getting revenue. It was about persuading people to change their travel behavior -- to travel with carry-on luggage only ...[and] Now we're looking at charging for toilets on board -- not because we want revenue from toilet fees. We'd happily give the money away to some incontinent charity. What it means is, if by charging for toilets on board, more people would use the toilets in the terminals before or after flights, I could take out maybe two of the three toilets on board, add six extra seats and reduce fares across the aircraft by another three or four percent."

At a time when price/cost competition is perhaps the most acute concern across all industries, following Ryanair's lead of further commoditizing their sector may not be a universal long term solution. The world economy will recover. And when it does, a value added edge in competition will be leading the charge.

William Busch

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