O'Leary, Michael; Beith, Malcolm, Newsweek International
These are dismal times for the airline industry. In the past 18 months, fewer people have been flying because of terrorism fears, war in Iraq and SARS. All the world's major carriers are shedding staff by the thousands, and they expect more cuts throughout 2003. But one airline is standing head and shoulders above the rest: Ireland's Ryanair. The Europe-only short-haul carrier's profits rose 59 percent in the last fiscal year, and its customer base is continually growing. NEWSWEEK's Malcolm Beith spoke to Ryanair's charismatic CEO, 42-year-old Michael O'Leary, to find out the secret of his success and what he foresees for the airline industry. Excerpts:
NEWSWEEK: While the rest of the airline industry languishes, Ryanair is doing fantastically.
O'LEARY: [Laughs] Ah, we're probably doomed.
What's behind your success?
Fare-cutting is the principal factor. But we're also the No. 1 customer-service airline in Europe. We're No. 1 for on-time flights, No. 1 for fewest cancellations, No. 1 for fewest lost bags and No. 1 for fewest customer complaints. I always say that if it was only about lowest fares, Aeroflot would be the biggest airline in the world. It's about lowest fares and delivering what people want, which is [something] safe, on time, reliable... It's not s--ty wine and an inedible meal reheated for the fifth time that day.
By selling tickets through your Web site, you've cut out the middleman.
Four years ago we sold 60 percent of our sales through travel agents, who charged us about 9 percent of the ticket price. Then computerized reservations added about another 6 percent. So we were paying about 15 percent for distribution. Today, 96 percent of our sales are sold across Ryanair.com, and the cost is about a cent per ticket.
The last 18 months have been tough times for the airline industry. Will airlines pull through, and if so, how?
Some will survive. [But] these have not been the worst 18 months in the history of the airline business. The problem with the airline industry is that most of it is run by people who lose money hand over fist and then blame outside influences. They all throw their hands up in the air and say, "There's nothing we can do about costs."
There's always something you can do about costs. …