Ryanair changes tack as profits slump – but is it too little too late for its customers?

The boss of Ryanair, Mr Michael O’Leary must kiss the Blarney Stone every week as he deals with their latest news. The Blarney Stone is supposed to endow the kisser with the ‘gift of the gab’, something Mr. O’Leary has in lorry loads.

Following the second profits warning in as many months – ‘Ryanair shares plummet after £68M profits shock’ said Monday’s London Evening Standard – Mr O’Leary comes out of the green corner fighting with his rhetoric.

Although he accepts they can learn from easyJet he goes on to say “their profitability and traffic is well below ours”. Sounds reassuring on the face of it but he neatly omits to compare like with like. EasyJet’s fleet amounts to 195 aircraft whereas Ryanair are trying to keep 301 flying 24/7. So not surprising there is a difference in absolute profit and traffic, rather than profit per passenger, for example.

Unknown-3Ryanair is making changes in customer service, a much improved website, removing hidden charges, etc. It is also hiring a marketing director following years of Mr  O’Leary (left) regarding his PR stunts as their marketing strategy.

I’ve gone on record several times suggesting the profile and personality of Ryanair only works in a growing market; they rely on infrequent passengers choosing them due to perceived low prices and, once this market wobbles, so will their business. EasyJet on the other hand have gone down a ‘value added’ path with seat allocation, business options and – surprise surprise – strong advertising that positions them as a lifestyle brand.

O’Leary has flagged his departure from the airline within a few years and it wouldn’t surprise me if they culled their fleet and changed direction too as they get squeezed between BA and easyJet in Europe. I just don’t see how any brand in any market can be sustained with a disrespectful attitude towards its customers. At some point the worm will turn. In the case of Ryanair they have, in my opinion, taken the model of stripped-out service provision to such an extreme that they’re pushing potential passengers to the point of rejection.

The winter will be a telling time for Ryanair and easyJet. It will be very interesting to see who performs the best.

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About Paul Simons

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Paul joined Cadbury-Schweppes in brand management and then moved to United Biscuits. He switched to advertising in his late 20s, at Cogent Elliott and then Gold Greenlees Trott. He founded Simons Palmer Denton Clemmow & Johnson in the late 80s, one of the leading creative agencies of the 90s. Simons Palmer then merged with TBWA to create a top ten agency. Paul then joined O&M as chairman & CEO of the UK group. After three years he left to create a new AIM-quoted advertising group Cagney Plc. He is now a consultant to a number of client companies. Paul also shares his thoughts on his blog. Visit Paul Simons Blog.