Established in 1984, Ryanair underwent significant organizational changes in the early 1990s, launching what many viewed as a laughable business model. During this era, commercial aviation was experiencing rapid growth, particularly following the deregulation that had taken place in the United States and Europe, which fostered heightened competition. Between 1990 and 2000, the number of airline passengers worldwide surged from 1.17 billion to 1.77 billion. The airlines in Europe received the green light to operate freely across all EU nations with the introduction of an EU liberalization policy, leading to aggressive price competition as legacy carriers strived to secure contracts and minimize expenses.
By the close of the century, airline fares in Europe had notably decreased, forcing traditional carriers to reconsider their growth strategies. This led to the formation of alliances, and by 2000, it seemed that nearly every major international airline had aligned itself with a global group. The Star Alliance, launched in 1997, brought together founding members like Lufthansa, United Airlines, Air Canada, Scandinavian Airlines, and Thai Airways. These conventional airlines were clearly intimidated by the rise of low-cost carriers (LCCs) that were capturing market share by providing more attractive options for consumers.
Inspired by Southwest: Ryanair’s Strategy
Among the LCCs was Ryanair. In 1988, Michael O’Leary, then 27, took the role of chief financial officer, quickly shaping the airline’s new direction with his assertive leadership style.
Six years later, O’Leary became the CEO, taking Ryanair down a revolutionary path. Drawing inspiration from the success of Southwest Airlines in the United States, he recognized the potential in this business model to compete against established alliances while offering something unique to European flyers. O’Leary had confidence that his refined low-cost concept could succeed, although he could not have foreseen that he was laying the groundwork for an airline that would dominate Europe. This is no exaggeration—by 2019, Ryanair’s profits exceeded 1 billion euros, and it was reported to be ferrying more passengers across the continent than any other airline.
Ryanair’s overall revenue for 2019 hit an impressive 7.6 billion euros, marking the airline’s most profitable year to date. In contrast, Ryanair significantly outperformed Southwest Airlines in terms of net profit, achieving a remarkable net gain of 1.917 billion euros (around $2.02 billion), while Southwest recorded a more modest profit of $367 million. When discussing Ryanair’s success alongside the comparatively slow growth of American airlines like Southwest lately, O’Leary points to the distinctly different conditions operating in the U.S., which have played a crucial role in Ryanair’s superior performance compared to other LCCs. O’Leary argues that many legacy carriers like Lufthansa and British Airways in Europe have considerably scaled back their operations since the COVID-19 pandemic and are consistently raising fares, which has allowed Ryanair the flexibility to expand and enhance its market presence, taking advantage of the difficulties faced by its rivals.
Ryanair’s Strategy: Minimal Offerings for Minimum Charge
O’Leary introduced a straightforward yet groundbreaking strategy for the airline: Provide the least and charge the least. He dismissed luxury-focused airlines burdened with the task of creating first-class suites, exquisite menus, and celebrity endorsements, arguing that they had lost touch with the needs of the typical middle-class traveler and required a fresh perspective that allowed customers the freedom to travel without excessive extras.
No free meals, no exceptional service, no entertainment screens, and no free luggage allowances—passengers get a seat and navigate their own way through life’s complications, and before long, they find themselves in Paris for perhaps just $20. Ryanair is upfront about its no-frills service, marketing directly to value-conscious consumers who are comfortable with a minimalist travel experience. In an era where transparency is increasingly demanded by consumers, they seek clear information on pricing and services to guide their buying choices.
When revamping the Ryanair business model, O’Leary concentrated on three essential principles that contributed to Southwest’s success:
- Implementing a single aircraft type
- Using lower-cost secondary airports
- Providing a no-frills, budget-friendly transit-like experience
Consequently, Ryanair has frequently been at the center of negative media attention and controversy. However, in his assertive and mildly egotistical manner, O’Leary dismisses such coverage as misleading. In a BBC Newsnight interview conducted in 2013, he remarked: “With the lowest fares in Europe, all you need is inexpensive publicity to attract interest.”
Capitalizing on Media Buzz: Ryanair’s CEO, Michael O’Leary
When O’Leary speaks of “inexpensive publicity,” he is essentially referring to his own persona. The CEO embodies the brand and, since taking the helm, he has transformed his image into one of prominence. “In the same vein that we have product brands, service brands, or even country brands, we also possess a human brand,” noted Cleopatra Veloutsou, a branding expert at the University of Glasgow, in conversation with European CEO. Prominent CEOs of global enterprises must carefully manage their public perception, as any misstep can lead to severe repercussions, including plummeting stock prices.
Despite not having a conventional media-friendly demeanor, O’Leary possesses a clear understanding of the media landscape. His ability to maneuver through complex challenges stems from a thoughtful approach to public reaction, cultivated through his experience in public relations and crisis management.
During a segment on Ireland’s The Late Late Show, O’Leary fueled speculation by confirming intentions to impose charges on passengers for using onboard toilets and hinted at investigating the idea of a standing cabin. Ultimately, both concepts were dropped. The Ryanair CEO is known for making outrageous proposals to the media to garner buzz and has a history of hosting press conferences where journalists can freely challenge him.
Following a critical BBC Panorama investigation alleging that his airline was employing exhausted pilots, compromising passenger safety, and secretly charging consumers additional fees, O’Leary refuted the accusations and declined a formal interview with the broadcaster, fearing that they would not air the complete discussion. Instead, he held a press conference where he joked about charging passengers for oxygen masks and the potential for onboard casinos to boost revenue. For O’Leary, his commitment is to provide the cheapest flights, regarding all other factors as secondary concerns in his view.
O’Leary’s vision has propelled Ryanair into a formidable player in the European aviation sector, largely through his daring, attention-grabbing methods. His unapologetic demeanor keeps the airline relevant in media conversations, but it is his relentless focus on maintaining rock-bottom fares that fundamentally propels Ryanair’s success. While his tactics may not be suitable for all businesses, they underscore the necessity of understanding core consumer expectations and fulfilling them. By persistently advocating for the lowest fares, O’Leary exemplifies how competitive pricing can yield significant results and, more crucially, foster a loyal customer base. As he succinctly stated in an interview with Skift, “All you need to do is make noise.”
