Ryanair – When Cost Cutting Becomes Too Much

Ultimately, you get what you pay for. That's a basic principle that is close to the heart of anyone working in procurement, and it applies in consumer businesses too.

Even though Ryanair apparently turned over a new leaf a couple of years back, when founder Michael O’Leary decided to stop deliberately annoying customers, I personally decided not to fly with the firm a while back. That’s not to say I wouldn’t use them if they were the only carrier going to a particular destination, but if I have any choice – no thanks. There comes a point where cost-cutting becomes too much, although I appreciate many people love the super-cheap fares.

Now with their cancellation of hundreds of flights, the question is whether they have damaged their business long-term in a Gerald Ratner type manner, or whether people have short memories. It will also be interesting to see how they handle their unhappy customers – will they take the “old” Ryanair approach and make it as difficult as possible for people to make claims, or put their hands up and play fair – which might win them back some friends?

It seems like the problem is a lack of pilots, caused by incompetent scheduling of holidays (sack the entire HR team?) Or is the Norwegian Air recruitment campaign eating into Ryanair’s manpower? Apparently that airline has quietly poached 140 Ryanair Captains in recent months, and there is also  some history of tension between Ryanair and its pilots.  (I flew Norwegian to Stockholm last autumn and it was one of the very best flights I have ever taken.)

I have a personal interest here. My daughter and her fiancé were stuck in Poland last week because of these events. She was there for a science conference, coming home Wednesday, when the flight was cancelled with two days’ notice. They were offered another flight three days later but like many others affected, they have work commitments to return for, so found a flight on another airline, getting back to a different London airport, only 24 hours late. So it will be interesting to see how Ryanair handle matters with them.

This is also a salutary reminder for corporates too, travel managers and category managers in particular. The days of every manager travelling nothing but the national carriers (BA, KLM and so on) are long gone, but at least in those days there was some feeling of security that these carriers would always get you home. With events like this, and Air Berlin’s problems, we can see it is a much less certain market these days. We don’t see businesses and business people deserting the low-cost airlines, but this does point out the downsides of this brave new world of discount travel.

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Voices (2)

  1. The Lady Doth Protest:

    Believe it or not, it’s not cost-cutting that’s the issue.

    Ryanair treats its pilots as self-employed independent contractors – http://www.ibtimes.co.uk/brookfield-aviation-international-alleged-be-letterbox-company-controlled-by-ryanair-1533172 . And when you’re dealing with independent contractors, you can’t suddenly then pretend you’re the employer and are able to control holiday schedules. You either can (as an employer), or you can’t (because they’re truly self-employed).

  2. VikingIVesterled:

    It is time for Ryanair to get a real cross-functional Deputy CEO, with a seat on the board, so it can work on more options for the future. O’Leary would keep an eye on proceedings and work as a back-out plan until some years down the line he could take his rightful place as a working Chairman.
    This person would need to have experience from how all parts of the airline functions, be focused on the core values but at the same time be a person of trust/truth and have creative ideas on how to adjust the path.

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