On 6 November 1998 the Irish Times published a letter from Michael O’Leary.
There is something incongruous in the Tourism Minister’s speech of Monday evening last in which he warned the tourist industry here ‘not to get too greedy and price itself out of the market‘. Yet while he is warning the industry, the Government-owned airport monopoly Aer Rianta is planning to significantly increase charges to airlines at Dublin next year by doing away with existing rebates and discounts.
Both Ryanair and Aer Lingus have confirmed that if Aer Rianta’s charges rise, then traffic growth will cease, and new route development plans will have to be reviewed. We need lower charges at Dublin Airport because this will mean lower air fares, more visitors and more jobs. If tourists are not to be fleeced next year, then the Government should start at its own Cabinet table and require Aer Rianta to lower existing charges. Ryanair for its part will respond with lower fares, and new routes from European destinations.
O’Leary’s next step was to launch a £200,000 campaign to get the public involved in Ryanair’s quest for lower charges at Dublin airport. In mid-November the airline asked its passengers to fill out a form designed as a ballot paper, where a vote for Ryanair was a vote for more routes, more passengers, more tourists and more jobs and a vote for Aer Rianta was a vote for the opposite. A vote also guaranteed passengers entry to a draw for a weekend for two in New York.
‘I think we have to get the public voice, to bring to the consumer’s attention this campaign, because that is what we need to influence the politicians,’ O’Leary told journalists. ‘When the public makes its views known, the politicians tend to listen.’
Aer Rianta remained unmoved by Ryanair’s latest stunt. ‘Traffic is going to grow by 1.2 million passengers this year – just 0.2 million of that is from Ryanair,’ said the airport authority’s public relations manager, Flan Clune. ‘Ryanair is part of the growth but no longer the total.’
Two days after the votes campaign began Aer Rianta chief executive John Burke sent a letter of his own to the Irish Times in response to O’Leary’s letter of 6 November. ‘Airport charges are one of the smallest elements of all the costs involved, accounting for just 3 to 4 per cent of airline operating costs,’ Burke wrote. ‘It is not credible to suggest that a charge which is lower than the local bus-fare to an airport would influence a decision on whether to take a holiday or not. This debate has much more to do with Ryanair’s profitability than it has to do with tourism.’
Burke argued that Aer Rianta would not be retaining its discount scheme at Dublin airport ‘simply because, with double digit growth, there is no need…Ryanair, on the back of a spurious tourism argument, is lobbying for its current average payment of £1.93 per passenger to Aer Rianta to be reduced to aflat 50p. A 50p airport charge would do little more than cover the electricity and gas bills at Dublin Airport. No other airline is looking for nor would expect such a deal. I am sure Mr McDaid [the tourism minister] was not referring to Aer Rianta when he mentioned greed.’
Two weeks later Ryanair took another swipe at Aer Rianta, this time claiming that the airline had cancelled plans to operate five new routes from Dublin to mainland European cities because Dublin airport was ‘too expensive‘. Ryanair claimed the new destinations would have been in Germany, Italy, Sweden, Norway and the south of France, with fares starting at around £70 return. The Irish Times reported that Ryanair had confessed that there was no way to independently verify that it had ever planned the routes, because the routes had only been discussed internally at Ryanair.
‘Those routes weren’t planned to the extent that we had them all scheduled and the aircraft allocated,’ admits Tim Jeans. ‘It was reasonably clear that it was going to be some time before Aer Rianta would be brought to heel. But it would be fair to say that had there been a breakthrough we would have done the routes. Airports all over Europe would have bitten our hands off to fly to Dublin.’
Ryanair gained some ground in mid-December when the EU heads of government acceded to a request from the Council of Europe and postponed the abolition of duty-free sales, which had been scheduled to happen on 30 June 1998. With the immediate threat of abolition removed, Aer Rianta’s plans to do away with discounts were harder to defend, and opposition politicians began to pressure Transport Minister Mary O’Rourke into urging the airport authority to reconsider.
Its chief executive John Burke went on a PR offensive, giving an interview of his own to the Irish Times. The reporter noted that Burke’s style ‘differs radically from his high-profile opponent on airport charges, Michael O’Leary‘, and referred to Burke’s ‘soft voice’ and ‘the initial impression of shyness’. Burke was keen to set the record straight on Ryanair.
Firstly, it is too simple to say that Ryanair was the sole driver of growth at Dublin Airport over the past decade. They have brought a very welcome increase in passenger numbers and we have always acknowledged that. But they were helped to a large degree by a more favourable economic climate, by a drop in fuel prices equivalent to £20 per passenger and by government protection on some key routes to the UK. We in Aer Rianta were also as supportive as we could be, as we had been looking to introduce competition to Aer Lingus for some time ourselves.
And he was unwavering on the issue of charges. ‘I would say we are reaching a point where our charges for a broad range of services are too low,’ he said. ‘As for airport landing charges, they only represent about 16 per cent of our total revenues. We are not aware of any commercial airport anywhere in the world where that proportion is as low.’ Burke was also dismissive of Ryanair’s complaint that Dublin airport was the most expensive of the twenty-six airports the airline dealt with.
Most of the airports they talk about are on the European continent and have a throughput of fewer than one million passengers per year, so they are not comparable. Why wouldn’t a small secondary airport offer discounts to attract greater custom? But in our case where we are a mature commercial airport that is investing over £200m to expand facilities and cope with passenger numbers, it doesn’t make sense to offer discounts any more.
Aer Rianta commissioned a report by accountants Price Water-house Coopers which found that higher charges were necessary to secure the airport’s long-term future. O’Leary promptly dismissed the report as ‘irrelevant’ because it referred only to published airport charges, ‘which none of the airlines actually pay, as Aer Rianta is well aware’.
O’Leary stewed, knowing the battle over Aer Rianta’s charges would take months if not years to resolve. Withdrawing from the airport was not a viable option – despite its allegedly high charges, Dublin airport was one of Ryanair’s biggest profit centres. But O’Leary wrote off Dublin for route launches. For the moment Stansted was where the future would lie, with Jeans expected to deliver sustained growth. The dynamics at Dublin also counted against O’Leary. In the UK and Europe Ryanair was used to being the dominant player in its negotiations with airports. Its growth had been hugely important to Stansted’s emerging reputation as a viable London airport, while at smaller European airports like Charleroi and Beauvais Ryanair was the only reason the airports had prospered. In Dublin, however, Ryanair was still just a small player. It was important to Aer Rianta as a customer but not as valuable as Aer Lingus. The balance of power lay with the airport operator, not with O’Leary, and this was not a situation he was used to or comfortable with. So he railed and he blustered, but without leverage there was little he could do other than chase expansion away from Dublin.
In February 1999 O’Leary announced phase two of Ryanair’s European expansion. Six new routes were announced from Stansted to destinations in Germany, France and Italy. Dublin was sidelined, and O’Leary goaded Aer Rianta, saying he would happily introduce ten new routes to the Irish capital over the next two years if only landing charges were reduced. ‘The 1999 Stansted launches were the most significant of all the launches,’ says Tim Jeans. ‘Unless Ryanair could crack the UK to Europe market we were never going to grow beyond being a niche carrier to and from Ireland.’
The launches were to be staggered between April and July as Ryanair’s new Boeing 737–800s came into service. The destinations – Genoa, Turin and Ancona in Italy; Hahn, which was to be Ryanair’s Frankfurt; and Biarritz and Dinard in France – were chosen through a methodical selection procedure. ‘They did very extensive research,’ says Andreas Helfer, manager of the airport at Hahn. ‘They employed a UK specialist company to cover all the potential airports in Europe, and they made a short list and then very comprehensively went through all of those airports.’
Flughafen Hahn had begun life as a military airbase. When Ryanair first began talking to the airport authorities, in late 1998, Hahn had just been designated a civilian airport but had no commercial traffic. The possibility of attracting airlines seemed remote; Hahn is seventy miles from Frankfurt, so when Ryanair appeared the airport management welcomed them disbelievingly. But doing business with Ryanair was to prove a challenge for the airport’s new owners, Fraport AG. Fraport also owns Frankfurt’s main airport, and the managers were used to dealing with full-service carriers. ‘We had to learn the business concept behind Ryanair,’ Helfer says. ‘It was completely new in Germany at the time.’
Helfer says Ryanair were ‘very very tough’ negotiators. ‘They were always very straightforward. They tell you what they want and ask whether you are prepared to give it to them or not. And if it’s not okay then they leave you and you are not partners any more.’ To the delight of Helfer and his Fraport colleagues Hahn eventually struck a ten-year deal with Ryanair. A near-dormant regional airport would, at a stroke, become a destination for hundreds of thousands of passengers.
If Hahn was delighted, Lufthansa, Germany’s dominant airline, was unamused. ‘We were ambushed by Lufthansa,’ recalls Tim Jeans. The German airline decided to take Ryanair through the German courts, arguing that Ryanair should not be allowed to refer to Hahn as Frankfurt and seeking injunctions to prevent it from advertising the service. ‘We had no German lawyers. We employed Caroline Baldwin, who was made the German sales manager, and Caroline was a fluent German speaker and gave us invaluable advice into the way Germans did business. But clearly what she didn’t have, because she wasn’t a lawyer, was an insight into the German legal system.’
So ‘We winged it,’ he says. Winging it, O’Leary style, meant fighting outside court. Ahead of a court case in Cologne O’Leary ran a free-ticket promotion on the Ryanair website, but with a twist. As Jeans recalls, O’Leary’s message was, ‘If you come to the courthouse in Cologne with a banner insulting Lufthansa we’ll give you a free ticket on one of our flights from Hahn. A motley crew of a dozen Germans turned up – it was hardly the world’s biggest demonstration – but by the time a dozen or so Ryanair staff turned up, armed with helpful placards disparaging Lufthansa, the riot police were called out because they thought that there was going to be a massive demonstration.’
The tactic worked. As word spread of the peculiar scenes outside the court, the media got interested. ‘By the time the case was finished we were pursued out of the courtroom by six television cameras,’ says Jeans. ‘And by the time Ryanair took its first flight from Hahn, there wasn’t a German with a pulse that didn’t know that there was a low-cost airline flying from this place that purported to be Frankfurt but manifestly was not.’
Ryanair got an easier ride in France and Italy. ‘Alitalia wouldn’t know how to be predatory,’ says Jeans. ‘They were always in trouble and they were always in retreat. We didn’t challenge Alitalia on any routes. Initially we flew to places like Pisa where they didn’t fly. Before we came, if you wanted to go London–Pisa you went on a charter flight and people were being ripped off royally.’
In the early days France was a similarly soft market for Ryanair.
‘Air France were in denial; they thought that if they woke up it would all have been a bad dream,’ says Jeans. ‘They had ceased serving the French market from London. By the time we came in they only served Lyon, Nice and Bordeaux and Paris. They were feeding their Paris hub from provincial UK airports. French airports were neglected.’
But in Scandinavia, where Ryanair had launched flights a year earlier, Ryanair had a hostile reception. SAS, indignant at having to share a market it had monopolized for decades, threatened to sue Ryanair over what it termed ‘misleading advertisements‘. The Ryanair ads, which appeared in Scandinavian newspapers, compared SAS and Ryanair’s prices on the Oslo–London (or Torp–Stansted in Ryanair’s case) route.
Encouraged by the hostile fire he was drawing from incumbent carriers and by third-quarter results, announced in early February, which once again showed record profits, O’Leary plotted more route launches. The more the flag carriers complained and took him to court, the more publicity O’Leary generated for Ryanair and the more passengers he attracted to his low fares.
He needed them; the new planes from Boeing were about to arrive. On 20 March, O’Leary’s thirty-eighth birthday, Boeing delivered Ryanair’s first new 737–800, with four more due later that year. It was a momentous occasion for the airline. For the previous fourteen years they had survived on a range of second-hand aircraft, from the first propeller craft, through the BAC One-Elevens, to the ageing Boeing 737–200s. Now the airline would have the latest planes to mount its assault on Europe.
O’Leary tried to put the delivery to good PR use, promptly announcing the new plane would fly neither to nor from Dublin, because of the ongoing Aer Rianta stand-off. It was a gambit to garner a few column inches, but it was an empty threat. Within a month the Irish Times had spotted the shiny new plane on the Stansted-Dublin route.
For several weeks now skywatchers have been reporting that Ryanair’s new plane is indeed flying in and out of Dublin. This week, Ryanair confirmed this was the case, but described the journeys as ‘proving flights’ – the test-runs used by new pilots. The flights are, however, carrying fare-paying passengers on board. Ryanair now says this plane will not be used in Dublin for long, and that when the summer schedule starts, it will be moved to Stansted for routes to the Continent only.
Foreign airlines might have been easy prey for O’Leary, but at home the media had grown wise to his stunts.
Less than two years after Ryanair launched its route between Stansted and Kerry, with the route a success and tourism numbers on the rise, Kerry airport was looking to expand. The expansion would need funding, and the airport’s management decided the best way to secure that funding was a £5 ‘development levy’ to be paid by all departing passengers from 1 May.
In April O’Leary took to the newspapers and airwaves, denouncing the charge – which would add 6.25 per cent to its lowest fares of about £80 on the route – as ‘unworkable’ and urging passengers to refuse to pay it. A former Kerry executive says the airport was surprised by Ryanair’s reaction. ‘On the [first] anniversary of our first flight [June 1997] we said to Ryanair, “Listen, we’re going to bring in this thing,“’ he says. ‘They said, “Grand.” They didn’t seem too perturbed. And then they just decided against it, I think on the basis that if this was successfully introduced in Kerry this would happen everywhere and it would be a bad precedent for Ryanair to accept it.’
He was right. What was the point, O’Leary thought, of winning lower airport charges if a small-time operator like Kerry could then turn around and introduce new levies on his passengers? If he allowed Kerry to charge his passengers five pounds, how could he prevent them charging ten? Or object if Treviso or Charleroi introduced similar charges? Kerry had negotiated low landing charges with Ryanair in good faith, and Ryanair had delivered the passengers. The airport’s opportunity was to make money from those passengers by selling them goods and services, not by slapping on levies.
The Irish media, however, was instinctively sympathetic to Kerry and growing tired of O’Leary’s relentless hostility, with the Irish Independent reporting, ‘Ryanair, the discount airline, has declared war on yet another Irish airport.’ O’Leary did not care about the media’s attitude and rolled out another pamphlet campaign, distributing 20,000 ‘No to Kerry levy’ leaflets on Kerry-Stansted flights. ‘They handed them out for about a week,’ says Bellew. ‘We just thought, fair enough, if that’s what they want to do. We weren’t happy about it, I suppose, but it was just a bit of a nuisance.’
The leaflet’s impact was limited to the felling of a few trees, and the levy stayed, for the moment.
A year on from the IPO, Ryanair was still perceived as a family firm. The Ryans were no longer the airline’s sole shareholders, but about 27.7 per cent of the airline’s stock was still controlled by Tony, Declan, Cathal and Shane Ryan. At the end of May 1999 the company moved to correct that, announcing that the airline’s major stakeholders would sell a total of 15 per cent of Ryanair’s equity valued at about GB£168 million. The Ryans would reduce their holding by a third, leaving them with just over 17 per cent of the stock, and Ryanair would become a more attractive proposition to investors, who often shy away from companies where families exert a dominant influence. Bonderman was to almost halve his interest, reducing his 6.3 per cent stake to 3.2. O’Leary disposed of 1.5 per cent of the company, retaining a 9.3 per cent stake.
The timing of the share sale was critical to its success and Ryanair opted to synchronize it with the announcement of its fourth-quarter results for 1998. The results once again showed record highs, with a 20 per cent rise in adjusted net earnings (to £37.7 million) and a 28 per cent rise in turnover to £182.6 million, and earnings per share up 11 per cent to 27.47 pence.
Ryanair also had good news on its protracted row over Dublin airport charges. Aer Rianta had insisted it would cease all rebates for airlines, but at the end of May had submitted a plan to Transport Minister Mary O’Rourke that would allow operators of new routes a 75 per cent discount on charges for the first year and a 50 per cent discount for year two. The compromise offer represented some progress: Aer Rianta was clearly prepared to encourage new routes with lower charges. But the plan fell short of Ryanair’s demands, and the market responded negatively to the news: the airline’s share price dropped 14 per cent, to GB£6.69). It was a short-lived plunge. The sale of the Ryan family, O’Leary and Bonderman shares proved a resounding success, with the share price closing at an all-time high of GB£7.30 on the day of the sale.
The Ryans, who had almost lost everything five years earlier after the collapse of Tony Ryan’s Guinness Peat Aviation, grossed £137.3 million, Irish Air grossed £34.3 million and Michael O’Leary got £16.6 million.
Dublin, Stansted, Kerry and then Manchester. Early in 1999 Ryanair’s five-year deal with Manchester airport came up for renewal. The airport seized upon Ryanair’s improved financial position to demand higher landing charges. O’Leary was not impressed. ‘Michael decided that he would withhold some of the increase whilst in theory we would continue to try to negotiate a more acceptable cost base,’ says Tim Jeans. ‘Ryanair had delivered on all its promises in Manchester, and Manchester then flexed its monopoly muscles, hid behind the fact that it had to charge all airlines the same, which of course is nonsense because there are all sorts of one-off arrangements.’
O’Leary’s tactic of non-payment worked well for a few months, but by June Manchester airport had had enough. On 19 June flight 553 from Dublin arrived in Manchester fifteen minutes ahead of schedule. The airport staff directed the plane, with 126 passengers on board, to a taxiing area for impounded planes. The airport then sent a blunt message to Ryanair: pay us what you owe us – rumoured to be about £500,000 – or you won’t get your plane back. The passengers and crew were allowed to disembark but the plane had been seized.
O’Leary caved in. The debt paled in comparison to the value of his Boeing 737 and to the chaos that would hit Ryanair’s schedules if it was deprived of a jet. Within five hours of the seizure Ryanair’s bank had given a verbal guarantee that the debt would be paid, and the plane was released.
The airline was quick to criticize the airport for its actions, claiming the non-payment had been a ‘clerical error‘. But, Jeans says, the seizure had longer-term implications for the airport. ‘It did have an impact on our relationship with Manchester ever after.’ Ethel Power agrees:
We were not expecting it as we had done a lot of business with Manchester airport. Basically it was Manchester airport being bolshie, as Ryanair would always be negotiating lower landing fees, and in my opinion it was an airport manager saying, ‘I’ll fix them.’ But really it could have backfired in their face as Manchester airport had an awful lot more to lose than Ryanair. In our world it was a one-minute wonder – bill was paid and away we went.
Manchester manager Jim Stockton was unrepentant. ‘I agree the powers we exercised were severe but they were justified in the circumstances,’ Stockton told journalists. Seven years later, his views haven’t changed. ‘If we hadn’t acted as we did, we would never have been paid what we were owed, and the scale of the debt would have grown each day. We had no choice.’
In August of 1999 the military airfield at Baldonnel in west Dublin returned to the spotlight when Defence Minister Michael Smith brought forward plans to sell off parts of it. Tony Ryan, who had first proposed setting up a commercial airport there in 1995, latched on to the news, terming it a ‘very positive development‘. But O’Leary was quick to distance Ryanair from the future of Baldonnel, pointing out that it was ‘important that the Ryan family’s plans for Baldonnel do not cloud the debate’ on the second terminal at Dublin airport. It was a rare public spat between the two men, but O’Leary’s motivation was clinical.
‘Michael would have been annoyed that we were perceived to be fighting on two fronts,’ says Charlie Clifton. ‘His view was, “Get Aer Rianta to give us a deal; don’t let them off the hook.” Aer Rianta did start to say, “What are we talking to these guys about when they’re pissing off down the road to Baldonnel?” And that’s what he didn’t want to happen. Michael’s view was succinct: “Draw a line on Baldonnel, we’re never going to get it.”’
O’Leary tried to drag the question of a second Dublin airport terminal back to centre stage in early August in a 445-word letter to the Irish Times. He began by congratulating the paper’s editor, Conor Brady, on an editorial which recognized the value of tourism to the Irish economy. ‘Unfortunately the Aer Rianta monopoly represents a far greater threat to the health of our industry than Bord Failte [Ireland’s tourist agency],’ he wrote.
The facilities at Dublin Airport are inadequate, overcrowded, and ludicrously expensive. They are a testament to the failure of the Aer Rianta monopoly. The Irish taxpayer – through Aer Rianta – is investing heavily in hotels and airports in Birmingham and Düsseldorf [a reference to Aer Rianta’s expansion overseas] – yet we are subjected to Third-World facilities at this nation’s principal airport.
Ryanair has submitted a proposal to the Government which would see us finance and build a second terminal at Dublin [he reminded readers, in case they had managed to miss the acres of media coverage which had been dedicated to the issue]. Immediately after its construction we will hand this building, free of charge, back to Aer Rianta to own and manage. In return we would obtain a long-term low cost base, save Aer Rianta from the capital expenditure, launch at least ten new routes from Continental Europe to Ireland, carry over one million additional visitors to/from Ireland, and create over 500 jobs.
He concluded:
In recent years competition has transformed Ireland’s airline sector, our telecommunications industry, our bus services, health insurance and broadcasting. Even the ESB will shortly be in a competitive environment.Competition will transform our airport infrastructure by improving facilities and lowering costs. Aer Rianta now needs a similar discipline. Why not introduce competition now at Dublin? The facilities will be improved, the costs will fall, and low fares to a wide range of European cities will underpin the continuing success of our tourism industry.
Noel Hanlon, Aer Rianta’s chairman, rose to the bait. Three days later he made his own appearance in the letters page of the Irish Times. It was a peculiar way for the leaders of two major companies to conduct business but such was the level of animosity between the two that direct negotiation was not on the agenda. Hanlon wasted no time in getting to the point.
Independent consultants have concluded that Ryanair’s proposal to build its own terminal at Dublin Airport would mean the transfer of between £70 million and £80 million by Aer Rianta to Ryanair over a short period, hence Mr O’Leary’s enthusiasm for such a proposal. Aer Rianta is the most competitive commercial airport company in Europe and frequent reference to the airport monopoly by Mr O’Leary does not change that fact.
Hanlon charged, ‘Mr O’Leary’s quite extravagant claims about bringing in one million additional visitors from Europe is, I would suggest, a nice round figure but one which is very hard to accept.’ He finished his letter by spelling out what he claimed were Ryanair’s true motives. ‘I can only conclude that the constant barrage of spurious claims, frequently couched in superficially plausible language, from Ryanair and its highly paid spin doctors is more to do with Ryanair profits and its share price than with bringing in additional tourists to Ireland.’
Hanlon was correct, up to a point. O’Leary was primarily concerned with Ryanair’s profits and not Irish tourism, but the two were not mutually exclusive. He wanted to exploit opportunities in Ireland but believed that he could not do so profitably enough unless Aer Rianta compromised.
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Three days later Ryanair announced yet another set of record results, this time for the first quarter of the new financial year. Its pre-tax profit for the three months to the end of June had risen by 13 per cent to £14.2 million.
O’Leary always attributed Ryanair’s success to its ‘simple’ business model.
We have the lowest cost base of any airline in Europe. Business is simple. You buy it for this, you sell it for that, and the bit in the middle is ultimately your profit or loss. We have low-cost aircraft, low-cost airport deals, we don’t provide frills, we pay travel agents less [than other airlines], our people are well paid but work hard and we deal in efficiencies. A second low-cost airline will only survive in Ireland as long as it is prepared to keep losing money. Britain is a tougher market, but even there nobody can match our efficiency.
Other airlines were failing to implement the same formula with success because, he said, ‘nobody else has our discipline.’ It was a fair point. As Kerry had discovered, no airport was too small to escape his notice, no charge too minimal to be ignored. O’Leary’s pursuit of lower costs was relentless. ‘It was a war, a daily war,’ says one former executive. ‘Michael never stopped hunting for ways of cutting costs or boosting revenues, and his message was really simple: lowest costs means lowest fares.’
Aircraft turnaround time had been reduced to twenty-five minutes, compared with the one-hour turnaround that major airlines were used to at large airports. To achieve this Ryanair refused to sell peanuts, chocolate and other food so that it would take less time to clean the plane before take-off. ‘We can fly six aircraft a day where Aer Lingus or British Airways could fly four,’ O’Leary explained. ‘Where they can get six in the air, we fly eight. So we’re 20–25 per cent more efficient from the very start. It’s so simple a four-year-old could work it out.’ Ryanair’s flights were staffed by three flight attendants, compared with the five used by other carriers; its planes were all one type, so that crews and pilots could move seamlessly from one to another without retraining, while maintenance costs were kept to a minimum.
No employee was in any doubt about the company’s mission, or its style. Where rivals baulked at the simplicity of the Ryanair model, they paid the price with higher costs. For O’Leary there was no middle ground. He did not want to be a little bit cheaper and a little bit more efficient than the major airlines. He wanted revolution, not evolution: fares that were eye-wateringly low, matched by costs that were lower still, generating ever-rising passenger traffic and ever-rising profits. There was no magic formula, no creative accounting, just hard work, obsession and relentless aggression.
The airline industry had begun to notice Ryanair’s skill. At the Paris Air Show the following June the airline was presented with the Best Managed National Airline award, a rare accolade from its peers. But far from becoming complacent, O’Leary’s plans for the airline were more ambitious than ever.
I think we can revolutionize Irish tourism to and from Europe, and I think it is a cause worth fighting for. We have a plan over the next five years to double the size of the airline again. This year we’ll carry six million passengers; in five years time we want to carry twelve million passengers. That will make us Europe’s fifth-biggest airline. My hope is that one million of those passengers will be on low-fare services from the Irish airports to Europe, but if not we’ll continue to grow out of Stansted, and from points within Europe.
Ryanair’s plans were all the more ambitious against the backdrop of an increasingly competitive European aviation market. When talking to investors, O’Leary expressed caution about the changing situation, pointing out, ‘the trading environment is not all blue skies’ and yields would be affected by the competitive nature of the market. He was much more bullish when talking to journalists. When asked in December if he was worried about competing with low-cost carriers out of Stansted, he responded with a laugh.
Hardly…Competition from other low-cost carriers is just not an issue. We compete with British Airways, Alitalia, Lufthansa, SAS on routes all over continental Europe. Why the hell would we fear Go? It’s lost GB£21 million on a GB£41 million turnover. And Virgin Express is a tiny airline which has issued twelve profit warnings in the last four quarters. It’s not an airline that anybody in Europe would fear or acknowledge as a serious threat.
The emergence of a flurry of new low-cost carriers had also concentrated some minds on possible alliances and mergers between the start-ups. Not O’Leary though. When asked about the prospect of a merger he replied, ‘No thanks. I’d rather have a social disease.’