It’s been a good week for Ryanair. As well as finding itself in the position of kingmaker in IAG’s bid for Aer Lingus, the airline announced on Tuesday that its full-year profits were up 66% to €867m. In fact, it’s been a good period for budget airlines in general. Wizz Air reported record profits on Wednesday and easyJet reported impressive first-half revenues earlier this month. Part of the reason that they’re all enjoying success is that the European airline market is big enough for each of them to occupy their own separate corner. Although Ryanair and easyJet are often mentioned in the same breath, they actually directly compete on fewer than 5% of their routes.
I wrote about Ryanair in February last year, after they launched their new customer service programme, entitled “always getting better”, and embarked on a three-year turnaround plan. I was excited by the company’s potential and interested to see how quickly it could instigate such a dramatic change. The company’s recent results suggest that they did the right thing at exactly the right time – and not just because oil prices were about to crash. Ryanair’s change in tack has focused on making the company more customer-friendly. Out have gone the draconian restrictions on hand luggage and the annoying jingle that plays when you land on time; in have come cheaper fees for extras and allocated seating.
Over the last 20 years Ryanair has gained a reputation as the ultimate market disruptor. Led by its inimitable chief executive Michael O’Leary, the airline shook up a staid and traditional sector, and didn’t care whom it upset in the process, including its customers. Given this, I wasn’t sure that trying to be nice to people would work for a brand with such a strong reputation for hard edges. But Ryanair realised that in order to keep growing, it had to keep disrupting, even if that meant changing its whole philosophy.
The original low-cost airline, the US-based Southwest Airlines, is now a shell of its former self. Originally launched to disrupt the pedestrian domestic market in the US, the airline enjoyed quick success but now finds itself being undercut by more modern competitors. Unlike Southwest Airlines, Ryanair has moved with the times. In the age of social media, companies have much less control over their brand than they used to. Any customer with a YouTube or Twitter account can vent their frustrations very visibly on the internet, and brand promotions done through social media can be hijacked by angry punters. As a brand notorious for its lack of PR and customer service, social media was never going to be particularly kind to Ryanair.
Announcing such an unexpected turnaround plan, then, was always going to generate a lot of press – particularly when O’Leary publicly described it as an attempt to stop “unnecessarily pissing people off” – and the positive publicity has been a key factor in the airline’s recent resurgence. I said at the end of my last blog that I wasn’t sure what the future would hold for Ryanair and that they may have bitten off more than they could chew. I’m pleased to say that I was wrong, and now I look forward to how the brand will continue to reinvent itself.
Let me know your thoughts on the new Ryanair at moira@thembsgroup.co.uk, and have a great weekend.