Is This Any Way to Run an Airline? Michael O'Leary Has Already Made Ryanair the Hero of European Travelers and the Bane of Its Rivals. What Will He Do for an Encore? Free Seats for Everybody!

By McGinn, Daniel | Newsweek, October 4, 2004 | Go to article overview
Save to active project

Is This Any Way to Run an Airline? Michael O'Leary Has Already Made Ryanair the Hero of European Travelers and the Bane of Its Rivals. What Will He Do for an Encore? Free Seats for Everybody!


McGinn, Daniel, Newsweek


*****

CORRECTION: In "Is This Any Way to Run an Airline?" (Enterprise, Oct. 4), we reported that Ryanair claimed its average ticket is priced "570 percent lower than British Airways'." In fact, Ryanair claimed that British Airways' average fare is 570 percent higher.

*****

Byline: Daniel McGinn

CORRECTION APPENDED

Michael O'Leary is sitting in his spartan office on the outskirts of Dublin airport, wearing headphones and crooning along--badly--to the U2 classic "Bad." "If you twist and turn away," he warbles, in a key that makes a visitor wish a jet would roar overhead. The music is coming from a handheld device about the size of an Etch A Sketch. It's a digital media player, equipped with music from 100 CDs and hours of video: cartoons, sitcoms, even first-run movies. Starting next month Ryanair, the no-frills airline O'Leary has turned into an industry darling, will begin renting the devices to passengers for $6 per flight. The plan has all the markings of the strategies Ryanair has made famous. The handheld units are far cheaper than installing the seat-back TVs other airlines use, and renting them gives Ryanair a whole new way to squeeze money from its passengers during flights. Says O'Leary: "We think this is going to be the next really big thing up in the air."

If his track record is any guide, the hyperbole may prove prescient. Over the past decade, O'Leary has reinvented the European airline industry and driven down fares across the continent. While his strategies owe much to Southwest Airlines, the pioneer in low-fare flying in the United States, industry observers credit him with going beyond imitation to find ways to improve on the model.

That's one reason Ryanair's ascent offers lessons far beyond the airline industry. The company is already a case study at Harvard Business School, used to illustrate how competitors respond when a new player enters a business. And O'Leary, who routinely garners headlines for trash-talking and outrageous stunts (he once drove a tank to a rival's headquarters to denounce its high fares), could offer any executive lessons on using publicity to help build a brand. Looking ahead, O'Leary is toying with some revolutionary ideas about pricing: he envisions a day when Ryanair gives away the bulk of its tickets and makes money by selling things to its captive in-flight audience.

Ready for a tutorial from the world's best airline? Buckle your seat belt.

Like many start-ups, Ryanair took a few years to get off the ground. Founded by veteran Aer Lingus executive Tony Ryan, the airline began offering $180 flights between Ireland and England in 1986. Prior to Ryanair's launch, getting from London to Dublin required either a $400 flight or a nine-hour journey by ferry and train. While Ryanair's sales grew, profits were elusive. "In the early days the company was trying to be everything to everybody--they were trying to provide service and amenities comparable to Aer Lingus and British Air, but at a lower price," says Jan Rivkin, a Harvard professor who's written on Ryanair. That began changing in 1991, when O'Leary, an accountant who'd become Ryan's protege, visited Southwest's headquarters in Dallas. At the time, Southwest was already garnering accolades as the industry's big innovator, though it hadn't yet expanded to become a national airline.

O'Leary liked what he saw. Then as now, Southwest used a single type of plane, the 737, to keep maintenance costs down. It shunned assigned seats and in-flight meals, providing service more akin to Greyhound than American Airlines. Its employees worked hard to cut turnaround time, allowing aircraft to spend more hours in the air. Most important, Southwest avoided major airports and the hub-and-spoke system of connecting flights favored by bigger airlines. "It's like everybody drives into the city during rush hour so they can all swap cars to drive back out," O'Leary says.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

Is This Any Way to Run an Airline? Michael O'Leary Has Already Made Ryanair the Hero of European Travelers and the Bane of Its Rivals. What Will He Do for an Encore? Free Seats for Everybody!
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?