A-Musings: On the Cheap

There was something I meant to tell you, but for the life of me I cannot remember what; the story of my life these days; getting quite forgetful – oh, yes! I remember: I wanted to tell you about Ryanair, but before it get into that, let me confess that when it comes to travel, long-haul travel, I am a terrible snob. For decades I only travelled First Class – we all have our little weaknesses – and if the cabin “up-front” did not attain the standards I expected, well, that was the end of that: no more travel on that airline. Of course, now that the airlines have more or less scrapped First and replaced it with all sorts of misnomers such as Business, Upper, Luxury, Premium, etc, travelling is not the fun it used to be.

Don’t get me wrong now; I have nothing against airlines that offer value for money no matter how cheap they are. Take Ryanair, for example – the airline most hated by most of its passengers, yet somehow the most profitable of all. I recently took a Ryanair flight out of the UK to Europe for £12 – yes twelve – instead of the BA flight that cost £640.

Established in 1985, Ryanair initially started flying between Waterford in Ireland and London Gatwick with just one plane, adding another plane and another route, Dublin to Luton, the following year. The airline ran at a loss in the first few years. Michael O’Leary, now chief executive, initiated four key principles that have seen Ryanair become the most successful airline of the last 20 years.??

Principle 1: Use one type of plane? to keep down maintenance costs, to get great deals from manufacturers through bulk ordering, to keep a new fleet, and to keep maintenance and fuel bills as low as possible.??

Principle 2: Turn aircraft around fast? to get them back in the air and flying full of passengers as soon as possible, which means more trips per plane and more trips out of crews. Checked baggage takes time to load and unload and adds weight to the plane meaning more in fuel per trip. Less checked luggage means less time in the airport and less time refuelling.??

Principle 3: Keep overheads down by avoiding flying to expensive major airports. Ryanair flies into London Stansted, not Gatwick or Heathrow. Stanstead is actually closer to London than Gatwick. Out-of-city airports not only save cash in fees, they mean more flights per plane. Unlike other airlines, Ryanair scarcely advertises. Customers book online, without using travel agents. The company has few airport check in desks but Ryanair brings so many passengers to an airport, many regional ones are prepared to pay for the privilege of having them fly there. Staff costs are also kept low; uniforms, training, drinking water while on the plane are frequently deducted from salaries, rather than provided by the company. That said, Ryanair has described its pilots as the best-paid in Europe.??

Principle 4: Increase ancillary sales and maximize profits; Ryanair structures its prices to ensure the planes are as full as possible by offering cheap seats rather than leaving them empty for the sake of keeping a single ticket price.?? The airline is more likely to offer cheap deals far in advance not at the last minute because once someone’s bought a ticket, it means you can start offering extras.
So-called ‘ancillary sales’ account for nearly a third of its income.?? It’s easy to see why. A Ryanair flight to Barcelona costs under £10 but by the time you’ve added on a £6 admin fee, £10 for reserved seating, and £15 to check-in a 15kg bag, etc, the total jumps to over £50. ??Then there are additional fees for infants, sports equipment, heavier bags, forgetting to print your boarding pass, priority boarding, etc.?? Ryanair will also sell you hotel rooms, travel insurance, car hire and travel luggage. A text message confirming your flight details costs another £1.50. ??

There’s little argument that Ryanair’s business model is sound. Cut costs at every turn, get as much as you can out of your staff and equipment and provide only the essentials for passengers, who are paying for the trip alone and not the experience.??

Ryanair’s fleet is modern and efficient. Its on-time record is the envy of the industry. Its customers are no longer leisure-seeking-pleasure-trippers alone. It’s timetable and departure times may appear a little eccentric at times but more and more business people are coming to realise that a pre-dawn outbound take-off and a fairly late return flight make for a useful day at the ‘foreign’ office without the need for an overnight hotel or aggravation from the family. All the same, I have a feeling it might take a while for Ryanair to introduce a First-Class or Business-Class cabin – unless they see a profit to be made!

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