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Ryanair is an Irish airline headquartered in Dublin, although its biggest operational base is at London Stansted Airport. It is one of Europe's largest low-cost carriers, operating more than 200 routes to 22 countries. Over the years it has evolved into a profitable airline *, running at remarkable margins by passing their costs directly to their customers. Ryanair has been characterised by rapid and continuing expansion, enabled by the deregulation of the air industry in Europe in 1997.

Ryanair is one of Europe's most controversial companies, praised and criticised in equal measure Its supporters praise its commitment to exceptionally low fares, its radical management, and its willingness to challenge what Ryanair calls the 'establishment' within the airline industry (similar to its American counterpart, Southwest Airlines). Critics, meanwhile, have attacked its trade union policies [http://www.eiro.eurofound.eu.int/2003/12/inbrief/eu0312204n.html, hidden taxes and fees, limited customer services, and that it practises deceptive advertising.

History

Early years

Ryanair was founded in 1985 by Irish businessman Tony Ryan. The airline began with a 15 seat Embraer turboprop aircraft flying between Waterford and London Gatwick with the aim of breaking the duopoly on London-Ireland flights at that time held by British Airways and Aer Lingus. In 1986 the company added a second route – flying Dublin-London Luton in competition to the BA/Aer Lingus duopoly for the first time. Under partial EU Deregulation, airlines needed only one government to approve an intra-EU service. Ireland refused in order to protect Aer Lingus but Britain, under Margaret Thatcher approved the service. With two routes and two planes, they carried 82,000 passengers in one year. Passenger numbers continued to increase, but the airline generally ran at a loss, and by 1991 was in need of restructuring. Michael O'Leary was charged with the task of making the airline profitable. Ryan encouraged him to visit the USA to study the 'low fares/no frills' model being used by Southwest Airlines. O'Leary quickly learnt that the key to low fares was a quick turn-around time, no frills, and no business class, as well as operating only one model of aircraft.

O'Leary returned convinced that Ryanair could make huge inroads into the European air market, at that time dominated by national carriers which were subsidised to various degrees by their parent countries. He competed with the major airlines by providing a no-frills, low-cost service. Flights were scheduled into smaller airports which were keen to attract new airlines and which offered lower landing and handling charges. O'Leary as Chief Executive adopted a hands-on style of management, for example helping out with baggage handling on Ryanair flights at Dublin airport.

He is said to have a pugnacious and aggressive management style, using a flat management hierarchy whose ethos is to provide a low cost, reliable and competitive service. By 1995, thanks to the consistent pursuit of this business model, Ryanair celebrated its 10th birthday by carrying 2.25 million passengers.

Deregulation and flotation

EU deregulation of the air industry in Europe in 1997 gave carriers from one EU country the right to operate scheduled services between other EU states, and represented a major opportunity for Ryanair. After a successful flotation on the Dublin Stock Exchange and the NASDAQ Stock exchanges, the airline launched services to Stockholm, Oslo (Sandefjord Airport, Torp, 110 km south of Oslo), Paris and Charleroi near Brussels. Flush with new capital, the airline placed a massive dollar|US$" target="_blank" >*2 billion order for 45 new Boeing 737-800 series aircraft in 1998.

The airline launched its website in 2000, with online booking initially said to be a small and unimportant part of the software supporting the site. Increasingly the online booking contributed to the aim of cutting flight prices by selling direct to passengers and excluding the costs imposed by travel agents. Within a year the website was handling three quarters of all bookings, and now accounts for 95% of the total.

Continental Europe

Ryanair launched a new hub of operation in Charleroi Brussels South in 2001. Later that year, the airline ordered 155 new Boeing 737-800 series aircraft from Boeing at what was believed to be a substantial discount, (taking full advantage of the downturn in aeroplane orders after the slump in air travel following the September 2001 attacks) to be delivered over eight years from 2002 to 2010. Approximately 100 of these aircraft had been delivered by the end of 2005, although there were slight delays in late 2005 caused by production disruptions arising from a Boeing machinists' strike.

In 2002 Ryanair launched 26 new routes and established a base in Frankfurt-Hahn Airport, its European expansion firmly on track. In 2003, Ryanair announced the order of a further 100 new Boeing 737-800 series aircraft from Boeing, and in February a third continental base was opened at Milan-Bergamo in Italy.

In April Ryanair acquired its ailing competitor Buzz from KLM, at a knock-down price. Expansion continued apace with the launch of a base at Stockholm (Skavsta), Sweden. By the end of 2003, the airline flew 127 routes, of which 60 had opened in the previous 12 months. The airline launched two more bases in the first half of 2004, at Rome (Ciampino) and Barcelona (Girona), increasing the total to 11 hubs.

Recent history

During 2004, Michael O'Leary warned of a 'bloodbath' during the winter from which only two or three low-cost airlines would emerge, the expectation being that these would be Ryanair and easyJet. A modest loss of € 3.3 million in the second quarter of 2004 was the airline's first recorded loss for 15 years, indicating turbulent times in the low fares market. However, the enlargement of the European Union on 1 May 2004 opened the way to more new routes as Ryanair and other budget airlines tapped the markets of the EU accession countries. Since that date, Ryanair has opened new routes to six of the ten new EU member states.

In February 2005 Ryanair announced an order for 70 further Boeing 737-800 aircraft with an option for a further 70. This is expected to allow Ryanair to increase passenger numbers from the 34 million expected in 2005 to 70 million in 2011. Some of these aircraft would be deployed at Ryanair's 12 European bases, others to 10 new bases they intend to establish over the next seven years. In an example of the airline's relentless prioritising of cost over all other factors, the aircraft will be delivered without window shades, seat back recline and seat back pockets, which result in savings of several hundred thousand dollars per aircraft and give continued savings through reduced cleaning and repair costs.

In June 2006 the company announced that in the financial year ending March 31, 2006 its average yields (i.e. average fares) were 1% higher than the year before *.

Growth and expansion

Ryanair has grown massively since its creation in 1985, from a small airline flying the short hop to London from Ireland into one of Europe's largest carriers. The driver of the growth has been Ryanair's CEO, Michael O'Leary. After taking the rapidly growing airline public in 1997 he used the money raised to expand the airline into a pan-European carrier. Revenues have risen from € 231 million in 1998 to some €843 million in 2003, and net profits have increased from €48 million to €239 million over the same period. In an industry where the survival rate is 1 in 10 and where even the giants such as American Airlines and Delta struggle to keep in the black, Ryanair's success has confounded many industry analysts. However, it has been consistent with the growth of other no-frills airlines, such as Southwest and JetBlue, since the September 11, 2001 attacks.

Ryanair's passenger numbers have grown by up to 25% every year for most of the last decade. Carrying under 0.7 million annually in its early years, passenger figures grew to 21.4 million in 2003. The rapid addition of new routes and new hubs has enabled this growth in passenger numbers, and Ryanair is now among the largest carriers on European routes. In August 2004, the airline carried 20% more passengers within Europe than British Airways did.

Criticisms and complaints

Ryanair has been heavily criticised throughout the low-cost part of its history for many of its practices. In a number of incidents it has responded stubbornly to relatively trivial matters, often to make a point about the constant need to avoid adding "frills" to its service.

Customer service

Critics have accused Ryanair of poor treatment of customers whose flights have been cancelled The airline formerly refused to provide accommodation or meal vouchers when flights were cancelled or delayed, a practice which became illegal within the EU on February 17, 2005 *.

The airline has come under heavy criticism in the past for its poor treatment of disabled passengers. In 2002 it refused to provide wheelchairs for disabled passengers at Stansted Airport, greatly angering disabled rights groups The airline argued that this provision was the responsibility of the airport authority stating that wheelchairs were provided by 87 of the 93 Ryanair destination airports. A court ruling in 2004 judged that the responsibility should be shared by the airline and the airport owners £ 0.50 to all its flight costs. In 2005, the airline was criticised for ejecting nine blind and partially sighted passengers from a flight at Stansted, because the group meant the plane would be carrying more than the four disabled passengers permitted by the airline's safety regulations. [http://news.independent.co.uk/uk/this_britain/article319157.ece" target="_blank" >*

Airports

Ryanair has been accused of flying to airports which, while cheap, are far away from the cities they claim to serve. For example, the airline used to advertise a service to Malmö-Sturup Airport, in Sweden, as "Copenhagen", Denmark (65 km away).

In some cases the names were eventually changed by legal action (e.g. "Düsseldorf (Niederrhein)" and "St. Étienne (Lyons)"), but in other cases courts have upheld the designated name — this was the case for Frankfurt-Hahn Airport, over 140 km (87 miles) from central Frankfurt.

In February 2005 Ryanair published an advertisement in Norway's Aftenposten erroneously featuring flights from Oslo to London Prestwick: Prestwick Airport is in Scotland, 600 km from London **. The company said that the advertisement was a typing error.

]

Union issues

Ryanair has come under fire from unions representing workers in the airline industry for refusing to recognise trade unions and allegedly providing poor working conditions (for example, staff are banned from charging their own mobile phones at work to reduce the company's electricity bill *).

Ryanair has attempted to pressure employees not to unionise, according to the Ryan Be Fair website *, set up and run by employees to improve working conditions.

Ryanair does not recognise the Irish Airline Pilots' Association (IALPA), although it is the largest pilots' union in Ireland *.

On 25 January 2005 the Irish Labour Court guaranteed an investigation into allegations of victimisation of staff who wished to join a trade union *.

Subsidies

Ryanair receives subsidies from some European airports, a situation which has been investigated by the European Commission. The EC believes that subsidies from state-owned airports are a breach of European Union competition rules.

In February 2004 the European Commission ruled that Charleroi airport gave Ryanair illegal subsidies and ordered the airline to repay roughly €4 million of subsidies. Walloon authorities who offered the subsidies were considering appealing against the ruling because of the roughly €45 million that the airline route brings to the area every year.

Disguising fares as taxes

The UK newspaper The Guardian has alleged * that the insurance fee which Ryanair charges each passenger (charged on every passenger booking together with other additional travel taxes and charges) is unreasonably high.

The insurance surcharge amounted to more than 10% of Ryanair's average fare, Guardian estimated.

Ryanair declined to disclose its exact outlay on insurance. The Guardian estimates that in the year to March 2005 passengers would have paid £87 million in surcharges. EasyJet, which has a similarly sized fleet, paid £19 million for 2005 disaster insurance.

Ryanair introduced insurance surcharge in the wake of the terrorist attacks of September 11, 2001 to cover a spike in the cost of insuring planes. The charge was initially £1.85 but has since increased by 70% to £3.15 (May 2006). Experts claim that during the period the cost of cover has fallen to relatively normal rates.

Rivals easyJet spoksman claimed that "Ryanair's insurance charges appear to be far higher than they actually incur (…) Either this is poor cost management on Ryanair's behalf or it's a fuel surcharge in disguise."

Ryanair reiterated by pointing out that, even with taxes included, their average fare is well below easyJet. Ryanair spokesman Peter Sherrard said easyJet "charged each passenger last year £14 more per ticket than Ryanair thereby overcharging their passengers by £413 million".

Also, campaigners for the disabled accused Ryanair of profiteering from another part of "taxes and charges" tab – the £0.33 wheelchair levy. * The levy is used to cover the cost of transporting disabled passengers onto its planes. Ryanair is the only major airline operating in Britain to impose such charges.

The UK newspaper The Telegraph estimates that in 12 months up to May 2006 Ryanair received nearly £12 million through the levy. The governmental body Disability Rights Commission (DRC), which analysed the 2004 Stansted airport practice data, said that the levy should be no more than 2p – the company would still have collected £700,000 this way.

Telegraph quoted Michael O'Leary defending Ryanair's position: "We estimate it costs £25 person to transport disabled passengers at Stansted, and we carry 1.5 million such passengers every year."

British Airways said it had absorbed cost to transport disabled travellers into its ticket prices. EasyJet estimated that services for the disabled added no more than 10p to the price of a ticket.

Other criticisms

Also criticised are what are seen as vitriolic attacks on opponents, notably former Irish Minister for Transport Mary O'Rourke (1997-2002), who was personally ridiculed in a series of controversial newspaper advertisements when she refused to break up the state monopoly which then ran Irish airports, Aer Rianta. (The break-up of Aer Rianta remains a high-profile demand for Michael O'Leary. Under the State Airports Act 2004, Aer Rianta has been renamed Dublin Airport Authority, although as of April 2006 Cork and Shannon airports had not yet been given autonomy pending resolution of a dispute over debt transfers).

Ryanair does not employ an advertising agency, instead producing all its advertising material in-house. Michael O'Leary often states that the airline goes to extremes to make a point, an approach which has resulted in Ryanair's advertising occasionally being considered offensive [http://news.bbc.co.uk/1/hi/business/3456423.stm.

In 2002 Ryanair reneged on a promise of free flights given as a prize to the airline's one millionth passenger, Jane O'Keeffe. She received the prize in 1988, and had been using it for several flights every year, but the airline refused to carry her free of charge on a flight in 2002. The woman eventually went to court and won an award of €67,500. [http://www.ananova.com/business/story/sm_611142.html

In the first quarter of 2006, a substantial number of Ryanair flights were cancelled, with passengers receiving refunds or being rebooked. Ryanair's explanation was that these cancellations were the result of late aircraft deliveries due to the Boeing machinists' strike *. However, other sources such as pilot forums //www.pprune.org/forums/showthread.php?t=206892&highlight=Ryanair suggest that some of the cancellations were due to pilots reaching their annual 900-hour duty time limits earlier than anticipated, since the airline's duty-time year runs from April 1 to March 31. Whatever the cause, a number of other carriers operated wet-lease services for Ryanair during the first three months of 2006. One of these, Eirjet, was involved in an incident on March 29 (see below).

Dispatches programme

On February 13, 2006, Channel 4 broadcast a documentary as part of its Dispatches series, "Ryanair caught napping". Two undercover reporters obtained jobs as cabin crew based at Ryanair's operations at London Stansted Airport and secretly recorded the training programme, and cabin crew procedures. The documentary criticised Ryanair's training policies, security procedures, aircraft hygiene, and highlighted poor staff morale. It filmed Ryanair cabin crew sleeping on the job; using aftershave to cover the smell of vomit in the aisle rather than cleaning it up; ignoring warning alerts on the emergency slide; encouraging staff to falsify references for airport security passes; and asking staff not to recheck passengers' passports before they board flights. Staff in training were falsely told that any Boeing 737-200 (no longer in service with Ryanair) impact would result in the death of the passenger sitting in seat 1A, and that they should not rely on these passengers for assistance during an emergency. *

Ryanair denied the allegations and published its correspondence with Dispatches on its website. It claims to have forwarded all 20 allegations to the UK and Irish aviation authorities, both of whom agreed that there was no substance to them. *" target="_blank" >Much of the subsequent coverage of the programme in the media considered that the documentary was overblown and failed to make substantial claims against the airline, with some going so far as to label the attempted exposé as a vindication for Ryanair. *

Accidents and incidents

  • The Boeing 737-800 aircraft operating Ryanair Flight 296 from Dublin to London Stansted caught fire shortly after landing on February 27, 2002. Subsequent investigations found that although the aircraft was fully evacuated within 90 seconds, the air crew struggled to open the emergency doors, and some passengers were initially evacuated towards the fire. The UK Air Accident Investigation Board recommended changes to training procedures for air-crew to allow better handling of similar situations in future.

  • On 12 April 2006 a Ryanair from Paris to Dublin was diverted to Prestwick Airport in Scotland under instruction from the UK Department for Transport, after a note was passed to cabin crew claiming a bomb was on board. The Boeing 737 was escorted by RAF Tornado fighter jets to landing, and the airport was closed temporarily. Despite the suspicion of a bomb being on board, security forces apparently prevented the passengers from leaving the plane for several hours //news.bbc.co.uk/1/hi/world/europe/4904124.stm.

Competitors

Among Ryanair's main low-cost competitors are easyJet, Air Berlin, Germanwings, Transavia, SkyEurope, Vueling, Wizz Air, Flybe, Thomsonfly and Hapag Lloyd Express. In 2004 approximately 60 new low-cost airlines were formed. Despite traditionally being a full-service airline, Aer Lingus moved to a low-fares strategy from 2002, leading to much more intense competition with Ryanair on Irish routes – Ryanair's most profitable.

In September 2004, Ryanair's biggest competitor, easyJet, announced routes to the Republic of Ireland for the first time, beginning with the Cork to London Gatwick route – until then easyJet had never competed directly with Ryanair on its home ground. Airlines which attempt to compete directly with Ryanair are treated harshly, with Ryanair reducing fares to significantly undercut their competitors. In response to MyTravelLite, who started to compete with Ryanair on the Birmingham to Dublin route in 2003, Ryanair set up competing flights on some of MyTravelLite's routes until they pulled out. Go was another airline which attempted to offer services from Ryanair's hub at Dublin to Glasgow and Edinburgh in Scotland. A fierce battle ensued, which ended with Go withdrawing its service from Dublin. *

Destinations

Ryanair serves more than 300 routes between 130 airports in 20 European countries and three in Morocco. Its main hub is London Stansted Airport, with 88 routes. Ryanair has other bases throughout Europe, at Charleroi Brussels South, Cork, Dublin, Frankfurt-Hahn, Girona, London Luton, Liverpool, Milan Orio al Serio, Pisa, Nottingham East Midlands, Glasgow Prestwick, Rome Ciampino, Shannon, Stockholm Skavsta and has announced a new base at Marseille Provence.

Most smaller airports Ryanair operates to are located farther from the city centres than their main airports, with Frankfurt-Hahn perhaps the most notorious example, 120 km west of Frankfurt. There are however exceptions: Gothenburg City Airport is 11 km closer to Gothenburg than the main Landvetter Airport, and Ciampino Airport is 17 km closer to Rome than the main Leonardo Da Vinci International Airport, although the latter is better connected.

The airline's first new routes outside Europe start in October 2006 when Ryanair plan to begin flying from Frankfurt-Hahn to Marrakech and Fez, both in Morocco. These non-European routes will be further complemented from November 2006 when Ryanair begins flights from Marseille to Fez, Marrakech and Oujda (all in Morocco). Ryanair also announced it would begin flying 10 other routes from Marseille and that it would make Marseille its 16th operational base.New flights to Morrocco News Release

Of all Ryanair's routes, the Dublin-London route remains both the busiest and the most profitable. This is largely due to the number of Irish people who live in the UK, the amount of business between the two cities, and increasingly the number of Irish who use the route to make connecting flights to other points in Europe. The London-Dublin route is the busiest international air route in the world after Hong Kong-Taipei.

Ryanair's interactive destination map

Ryanair negotiates extremely aggressive contracts with its airports, demanding very low landing and handling fees as well as financial assistance with marketing and promotional campaigns. In subsequent contract renewal negotiations, the airline plays airports off against each other, threatening to withdraw services and deploy the aircraft elsewhere if the airport does not make further concessions. In April 2006, a failure to reach agreement on a new commercial contract resulted in Ryanair announcing that it would withdraw service on the Dublin-Cardiff route at short notice The airport management rebutted Ryanair's assertion that airport charges were unreasonably high, noting that Cardiff charges were already below Ryanair's average, and claimed that Ryanair had recently adopted the same negotiating approach with Cork Airport and London Stansted Airport [http://info.cwlfly.com/en/news.asp?id=203.

Fleet

  • As of late April 2006, the Ryanair fleet consists of 107 Boeing 737-800 aircraft. All Boeing 737-200 aircraft previously used by the airline have now been retired. Ryanair has firm orders for an additional 230 Boeing 737-800 aircraft by 2010 (23 of them already scheduled), with options on a further 193. As of March 2006, the average age of the Ryanair fleet was 2.3 years.

  • It placed an order for 10 additional Boeing 737-800, in July 2006. These aircraft are due to be delivered in March 2008 (3), April 2008 (4) and June 2008 (3). With 142 on order Ryanair will have a total fleet of 249 Boeing 737-800 by 2012 and still holds options on 169 aircraft for delivery between 2008 and 2014.

Selected shareholders

  • Micheal O'Leary
  • Kyran McLaughlin
  • David Bonderman
  • Emmanuel Faber
  • Michael Horgan
  • Klaus Kirchberger
  • Raymond MacSharry
  • James R. Osborne
  • Paolo Pietrogrande
  • Anthony Ryan
  • Donald Hacker
  • Edward Wilson
  • Howard Millar

External links

See also

References

Airlines of the Republic of Ireland | Low-cost airlines | 1985 establishments

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