As the end of the millennium drew near, technology swept all before it. The dot-com boom, which would implode in early 2000, was in full swing. The Internet, still a relatively new but fast developing phenomenon, was unavoidable; every business wanted to understand how to exploit its possibilities and was prepared to invest millions in the hope of hitting the Internet jackpot. The dot-com boom was based on the premise that profits did not matter. It was, in effect, a land grab, as new businesses raised money from credulous investors and then spent lavishly to achieve brand recognition. No matter their losses, the share prices of Internet companies were driven into the stratosphere on a wave of irrational exuberance. Few really knew how to make any money from the Internet, but investors were convinced that it represented a new world order.
O’Leary, though, was not prepared to rush in. EasyJet, his main rival in Europe’s emerging low-cost industry, had sold its first seat online in April 1997 and even the slow-moving Aer Lingus had joined the information superhighway with a website, albeit without a regular online booking facility. O’Leary could see the possibilities but saw no need to be an innovator. ‘Michael was hugely resistant to the Internet; he didn’t sign on at all,’ recalls Tim Jeans. ‘Michael took a lot of convincing,’ agrees Ethel Power. ‘At that stage he didn’t have a computer in his office.’
His opposition was not based on fear of technology or fear of the new; O’Leary was simply far from certain that the Internet could deliver what he wanted. He had dabbled the previous year, launching a brochure site which gave information on the airline’s route network but had no booking facility. It was a presence, a toehold in the market, but nothing more.
By 1999, the case for a genuine Internet presence was growing stronger. EasyJet had led the way, and now other airlines had begun to successfully sell tickets online. Senior managers at Ryanair could see the Internet’s promise as a business tool and knew that their company was in danger of being left behind.
Power says that Caroline Green, then chief executive of Ryanair Direct, was ‘very very pushy about the website’ and instrumental in getting it up and running. But Jeans says it was O’Leary’s acceptance that the Internet had evolved into a serious proposition that could provide a quantum leap in cutting costs which ultimately propelled Ryanair into the digital age. ‘We were trying to get better deals from [booking system companies] like Galileo and Amadeus. Michael and I traipsed around, and they really didn’t take us seriously and would not budge on costs. They really didn’t think that an airline could be run without them. What convinced us about the Internet, and what convinced Michael, because he needed to be convinced, was that easyJet were clearly making a very good fist of distributing their product entirely over the Internet.’
O’Leary could wait no longer. ‘There are two different stories, both of which are actually true,’ says O’Leary.
The truest is that for the first three or four years of the Internet I blocked any Internet development here. When easyJet first started off with its site, I said we are not doing the Internet for a very sane and obvious reason. At that stage 60 per cent of our sales were driven through travel agents. The software didn’t exist to sell half of your tickets online…If you were selling through the travel agents you had to have the old tickets with the dye on the back of them and all our tickets had to be like that. We weren’t set up to have both – old-style tickets through travel agents and email tickets as well. So I said that until we have the technology to get rid of the old tickets, we wait. Then later the technology came along where we could sell ticketless flights through the Internet and sell through travel agents as well. And that’s when we went into the Internet. And [from that moment] I pushed the Internet in here. I blocked the Internet for about three years, and it was the right thing to do.
O’Leary wanted a site that was simple and cheap, and he did not want to be surrounded by computer consultants with ponytails and cargo pants. The first quotations for the Ryanair site came in at around £3 million, and O’Leary said no. There had to be a cheaper way. In order to minimize costs Ryanair opted to entrust the website design to two students – seventeen-year-old secondary school student John Beckett and twenty-two-year-old dentistry student Thomas Linehan.
‘Michael couldn’t bear having these dot-com guys come in with fancy brochures, talking about the corporate model. He just wanted a simple website that worked,’ said Power. ‘He used to get a great kick out of talking to the guys that did the website, I think he recognized the genius in them.’
Beckett and Linehan came to Ryanair’s attention through the airline’s recently appointed human resources director, Eddie Wilson. Wilson had previously been at computer firm Gateway, where Beckett and Linehan had worked during the summer. ‘There was no tendering process for the contract,’ recalls Beckett. ‘They mentioned they had had these ridiculously high quotes of up to £3.5 million. They came to us because in the middle of a management meeting Eddie [Wilson] said, “I know a guy who might be able to do this for us, there’s no harm in chatting to him.”’ The next day, while Beckett was sitting in a classroom in St Andrew’s secondary school in Dublin, his mobile phone rang. It was Wilson, inviting him to come for a meeting with O’Leary and the Ryanair management.
‘They wanted it done yesterday, is the quote they used,’ says Beckett. ‘So I gave them three prices: one was for setting up a site in a month, a slightly cheaper price for two months and cheaper again for three months.’
‘Michael said, “Yeah, we want you to do it, but you’ll have to reverse the cost of the three-month deal with the one-month deal.”’ O’Leary wanted the fastest job and the cheapest price, and the two students were no match for his negotiation techniques. ‘I just said yeah, fair enough.’ Beckett laughs. ‘The prices we quoted – £17,500, £16,500 and £15,500, I think – were basically figures that we plucked out of our head, and we thought great. It was a smashing payday for us.’
Beckett and Linehan dealt mainly with Wilson, Michael Cawley and Sean Coyle, a rising young executive known as ‘Mini-me’ because of his ability to ape O’Leary’s mannerisms. ‘O’Leary’s main concern was how long would it take and how much would it cost, and he was going to let everyone else worry about how it worked and what it did,’ says Beckett.
The students’ task was to create a website that would combine a simple marketing function – information on routes and special offers – with a sophisticated computerized booking system. Ryanair’s telesales department was already using the Open Skies system, and the objective was to integrate it with the website. It was a complex job, and IBM was retained to create the bridge between the marketing element of the website and the booking system.
Despite the stories of O’Leary’s technophobia, Beckett doesn’t recall him as particularly computer illiterate.
I didn’t get that from him. But maybe when I thought he was being shrewd by only looking at the things that affected him, like price and time, he was actually avoiding like the plague the technical side of things. He certainly seemed to know what he was talking about, but we were talking basic Internet design terms, ‘We’ll put the logo there, we’ll put the links there,’ that kind of thing. We didn’t discuss platforms or anything like that with him. When we tried, he got up and left the room and said, ‘I’ll leave you to sort that out.’
When the job was done, O’Leary tried to hardball Beckett and Linehan, offering to pay £12,000 instead of the agreed £15,500. ‘At that stage I knew he was in the wrong, so I stuck to my guns. They had signed what effectively was a purchase order – somebody signed the quote we had given them which outlined the price – but it was very informal.’
Beckett, however, did not stick too hard to those guns. Even though he and Linehan had produced a website for a fraction of what a design company would have charged, they were still beaten down on their original tender. ‘Two schoolkids couldn’t go up against Ryanair,’ says Beckett, and O’Leary had no qualms about hardball negotiations with a schoolkid and student.
‘Eddie gave us a cheque signed by Michael and Cawley,’ he says. ‘The last thing Eddie said to us, because we had invoiced them plus VAT, was, “I hope you’re registered for VAT, are you?” They thought we were trying to squeeze an extra few pounds out of them.’
Beckett and Linehan thought the cheque signalled the end of their dealings with Ryanair, but they had forgotten one thing. Ryanair had been given a site designed to sell seats, not one that encouraged, or envisaged, interactivity with the airline. ‘When we finished the site they didn’t have a single email address at all for Ryanair on it,’ recalls Beckett. ‘And the phone number led to Ryanair reception. Sometimes you’d get an answer and sometimes you wouldn’t.’
The only online contact details were for the site designers, Beckett and Linehan. ‘A month after the launch we asked them to remove our contact info from the site. It was huge publicity for us but it was getting ridiculous. We would get hundreds of emails every day saying, “This is a disgrace, my ticket blah blah blah, my flight was delayed.” We were like, what do you want us to do about it, we are web designers, we’ve got nothing to do with Ryanair at all…’
To drive Internet sales up, Ryanair began to shut down their other sales channels. It was a high-risk strategy. Just under half of Ryanair’s business came through travel agents, with the balance coming from direct telesales. Internet penetration in Ireland was still well below the European average and years behind the US, but having made the decision to go with the Internet, O’Leary would tolerate no half measures.
‘We were taking nearly 40 per cent of our passengers through Galileo and most of the [other] airlines were too,’ says Jeans.
We took the decision to turn Galileo off. Travel agents could still book seats for their clients, but they would have to use Ryanair’s own Internet site rather than the Galileo system. But booking direct meant there would be no commission. The theory was that if people wanted low fares there was only one place to go, and that was Ryanair.com The carrot was the low fares and the stick was you couldn’t get it from anywhere else.
The booking options had been reduced to just two routes – Ryanair’s own Internet site and its telephone sales operation Ryan-air Direct. There would be no more travel agents and no more commissions. Just as significantly, the new technology would give Ryanair complete and instant knowledge of every booking on every route, as soon as that booking was made.
Online booking catapulted the airline’s accessibility to a new level. People no longer had to traipse down to a travel agent to make a reservation or endure long periods on hold for Ryanair’s reservation centre. Instead, they could choose to book a ticket whenever they wanted, and the whole transaction could be completed in a few minutes.
With the aid of the Internet, Ryanair’s growth was beginning to change the lives of a generation. For decades scheduled air travel in Europe had been the preserve of the moneyed classes, but now hopping on a plane was becoming as easy and familiar as hopping on a bus. Importantly, too, the young Irish had money to spend because the economy was booming.
Once one of the poorest and least progressive in Europe, Ireland’s economy had been growing at a phenomenal rate. The country was in the grip of a virtuous economic cycle, with surging employment delivering high tax revenues for government, which in turn spent ever more on the nation’s infrastructure, further fuelling the boom. The demographics were young – in 1999 40 per cent of the population was under twenty-five – and the traditional powers in Irish society were falling away. The Roman Catholic Church, the moral power behind Irish governments up until the late 1980s, had been brought to its knees by emerging stories of systemic child sexual abuse by parish priests and in Church-run institutions, and Ireland’s political class was rocked by allegations of corruption at the highest levels of the establishment, allegations that prompted the creation of a series of public tribunals of inquiry which would expose a rotten culture of self-aggrandizement.
Freed of the inhibitions that had governed their parents and grandparents Ireland’s youth was letting down its hair. Instead of being forced to emigrate, as half a million had in the decade from 1979 to 1989, they were able to get jobs at home and had money to spend. They had the world at their feet, and Ryanair was the airline to help them explore it.
Irish pilots were among the direct beneficiaries of the airline’s growth. In the late 1990s opportunities for pilots in Ireland were few and far between. Aer Lingus, which was finally carving out a modest profit after its latest reconstruction, was not expanding, and carriers with smaller planes, such as Aer Arann, were not an attractive prospect to men and women who dreamed of flying the newest jet aircraft. ‘I joined in 1999,’ says one pilot who is now a captain with the airline. ‘It was the only job for pilots. It was a different time. Before that there was no jobs. You got a job with Aer Lingus if you were very lucky, or you flew little aeroplanes for small companies like Iona. When Ryanair [started to expand] there was lots of jobs.’
Aer Lingus was still offering a small number of highly coveted cadetships, which included fully paid training for new pilots, but at Ryanair things were different. ‘It was do it yourself,’ says one pilot. ‘Ryanair would train you on the 737, and the cost of the training was taken out of your salary over the next three years.’ Ryanair’s pilots also learned that flexibility was an absolute requirement of the job. ‘You join the company, and the contract says you can be sent to any base at any time,’ says the pilot. Back in 1999 the only other base was Stansted.
‘I hated Stansted,’ says one staff member who was based there. ‘It is not London, it is forty minutes on the train from London. It’s like living in Naas [a satellite town some thirty miles from Dublin] and saying you live in Dublin.’
O’Leary’s doggedness, his refusal to let even the smallest irritation remain unscratched, came as a shock to Kerry airport in the late summer of 1999. The airport’s management had hoped that the temporary furore caused by its decision to introduce a £5 levy on passengers would fade away and that O’Leary would learn to live with a minor inconvenience.
‘The levy had operated peacefully for a couple of months,’ says a former Kerry executive. Ryanair’s pamphlet campaign against the charge had had an impact – about half the passengers at the airport refused to pay, while the other half handed over their £5 without a murmur. Those who would not pay were still allowed to board their flights as Kerry sought to raise money and avoid controversy. ‘And then,’ he says, ‘without much discussion either way, Ryanair went down the legal route. In a way we weren’t surprised, because to be honest nothing would ever surprise me with Ryanair.’
O’Leary, frustrated by the airport’s persistence, had decided to force the issue to a conclusion. Ryanair, according to the executive, argued that ‘the terms of the particular agreement they had with us stipulated that additional charges could not be imposed. They argued that even if they were not imposed directly on Ryanair they could not be imposed on passengers using Ryanair.’
What had started as a minor row, a scuffle over a small charge at a relatively unimportant airport, escalated into a bitter dispute that would now demand a disproportionate amount of Ryanair’s management time. O’Leary, though, was sending out a clear message to all other regional airports. In early August he had threatened to ‘re-evaluate’ Ryanair’s future at Kerry if the levy was not dropped, but his threats had been ignored.
So he took his battle to the High Court. The Irish courts are practically dormant in August, as barristers and judges swap the Four Courts for their annual holidays, so Ryanair applied for a temporary injunction to prevent Kerry airport from levying the fee until the courts returned to normal service in September. The job of marketing the legal challenge to the media fell to Michael Cawley, Ryanair’s then commercial director. ‘We left a legal challenge until now because we thought the airport management would come to their senses,’ Cawley told journalists. ‘At this stage, however, things have got out of hand.’
The legal battle was to prove complex and costly. The High Court initially granted Ryanair’s injunction in September, but the airport was subsequently granted a stay against the injunction so it could appeal to the Supreme Court. The Supreme Court backed Ryanair, and Kerry airport was once again prevented from applying the charge until a full hearing had been arranged in the High Court.
As costs rose, settlement became a priority for the airport, which did not have the deep pockets required for a lengthy legal battle. ‘It got very bitter towards the end,’ says the executive, ‘and it was going to start getting very expensive. On top of that Ryanair had cut back some flights, so it was down to three or four days a week. It just didn’t make any sense for them or us to prolong it.’ He says that it came to a head when Peter Bellew, a senior manager at the airport, received notice that he was going to be a star witness at the legal hearing. ‘Bellew just said enough was enough. He was about to go on holiday, his wife was pregnant and it was a stupid dispute,’ the former executive says.
Bellew reckoned that a full legal hearing could be embarrassing and potentially damaging for Ryanair because once ‘you get into the discovery of documents, we could have sought discovery of all the deals they had made across Europe. It didn’t make sense for two Irish companies to be fighting each other like that.’
With a settlement his sole objective, Bellew called O’Leary. ‘He said, “Listen, lads, I don’t know anything about the lawyers, but can we not sort this out?” He had to listen to a bit of a tirade for a few minutes and then he said, “So what do you want?” And O’Leary mentioned a figure to sort it out that was ridiculous. Bellew said a figure and O’Leary said, “No no no, I can’t do that.” And Bellew said, “Go on go on go on go on” like Mrs Doyle [a character in Father Ted] and he started laughing. Michael Cawley was on the speaker phone as well and he started laughing as well.’
Eventually, a figure was agreed and O’Leary insisted on immediate closure. ‘He agreed the figure, and then said, “If we don’t get all the paperwork done by four o’clock it’s double that, and if we don’t get agreement by tonight it’s treble that.“’ Bellew met the deadline, and peace was re-established. ‘They [Ryanair] very publicly acknowledged that it had been sorted out and that we were back on level ground,’ says the executive, ‘and they acknowledged very publicly that even while the legal [dispute] had been going on that operationally our relationship had always gone well. And then they had a seat sale.’
Once again, O’Leary capitalized on media coverage of a dispute to promote routes and sell tickets. At the same time he won his battle by eradicating the levy. It was a comprehensive victory over a tiny, vulnerable airport operator. For once O’Leary had been Goliath, and he had shown no mercy.
While Kerry rolled over, Aer Rianta was a much more resilient foe. The trigger for renewed hostilities was the government’s plan to break up the state monopoly, replacing it with separate authorities to run the airports at Dublin, Cork and Shannon. There was widespread speculation that Shannon would be the first piece of the Aer Rianta jigsaw to be hived off.
Shannon’s fortunes were largely dependent on an archaic quirk of Ireland’s bilateral air travel agreements with the United States, which required a large percentage of flights to the US to touch down there even though it was just twenty minutes’ flight time from Dublin airport. The rule had been designed to save Shannon from closure. Europe’s westernmost airport, technological advances in air and jet travel since the 1950s had made it redundant. Modern airliners could travel with ease from the US to Dublin, London or any European capital without the need to refuel at Shannon. Ireland, however, had continued to insist on the rule because successive governments feared that the airport had no future without it.
O’Leary disagreed. He announced that he would bring five new routes to the airport in a move that would create 150 jobs – but only on condition the government supported his plan for a second, independent, terminal for Dublin airport. ‘The Shannon proposal was O’Leary’s idea,’ Tim Jeans says. ‘Shannon was on its knees, and we thought we could use it for leverage. Dublin was the big prize. If we could transform Dublin into a long-term low-cost base, no stone would be left unturned.’
It was a smart piece of opportunism. O’Leary was confident that Shannon could sustain new routes – lying on Ireland’s western coast, the airport is well located for tourist traffic heading north towards Galway or south to Kerry – and he knew that without new route development, Shannon’s future was in serious peril.
The Irish government faced a stark choice. On one side they had TDs and businesses from the west of Ireland lobbying for the salvation of their airport; on the other they had Aer Rianta and SIPTU, who were both determined to resist Ryanair’s vision for Dublin, no matter the cost. O’Leary further stirred the waters by claiming that Mary O’Rourke, the minister for transport, had invited him to make proposals that could help Shannon. ‘She came to us last May and asked us to come up with a plan in Shannon,’ he said. ‘Shannon will always be politically sensitive until someone goes in and puts some traffic in there. We can do that.’
But O’Rourke baulked at the price that O’Leary wanted to extract. ‘I think it is awful that Mr O’Leary is asking for a slice of Dublin airport as part of the deal,’ she said. ‘It would seem that he doesn’t want to come back to Shannon, and he seems determined on the coupling of the Dublin and Shannon proposals.’
In the event, O’Leary held back on developing routes from Shannon and the government ignored the mounting pressure to develop new facilities at Dublin.
O’Leary’s style in his dealings with the state was very unIrish: instead of lobbying ministers politely he chose to ridicule and harangue them, appealing instead to the ordinary voters and travellers, to whom he promised lower fares if inefficient state monopolies could be broken down.
‘What mystifies me in Ireland is we have this complacency,’ O’Leary said in an RTE radio interview in 1998. ‘Why doesn’t somebody call our bluff? If they think we are not serious about [building a terminal at Dublin airport] why don’t they say, “Ryan-air, off you go, build your terminal, spend your twelve million.”?’
His question went unanswered but it touched on one of the central criticisms of O’Leary’s attitude to Dublin airport: was he serious or was he just making mischief?
At the end of October O’Leary was given a chance to make his case for the second terminal in a more conventional arena when he was invited to appear before the Dáil committee which dealt with transport affairs to outline his plans. He broke with his normal check shirt and jeans and donned a suit and tie for the occasion. While O’Leary was keen to discuss Terminal Ryanair, the members of the committee were more interested in hearing about Ryanair’s tumultuous relationship with the British advertising watchdog, the ASA.
Emmett Stagg, a Labour party TD, was particularly concerned that Ryanair had been censured by the ASA thirteen times. Shane Ross, an independent senator who doubled as a business journalist, said the company’s relationship with the Irish ASA was equally ‘deplorable‘, resulting in six complaints, three of which were upheld. This, according to Ross, meant that half of the company’s ads were ‘misleading, untrue, dishonest and unacceptable to an independent body‘, casting a considerable shadow over O’Leary’s credibility.
‘What you say is very impressive,’ Ross said, ‘but can I believe a word you are saying when an impartial body says you are lying?’
Ross and Stagg set the tone for a hostile grilling, but O’Leary refused to be drawn into apologies. Talking about one case, where an error by an employee in an advertisement had resulted in a GB£18,000 ASA fine for Ryanair, O’Leary left the committee in little doubt as to where his priorities lay. ‘All advertising is now being vetted by three different people in the company, not only because we do not want to mislead consumers but because we do not want to waste £18,000.’
Two weeks later Aer Rianta had the chance to make its own presentation to the committee on Ryanair’s terminal proposal. Noel Hanlon, its chairman, did not hide his contempt for O’Leary’s plans: Ryanair was telling ‘blatant lies‘, he told the committee, and the airline wished to design a ‘cowshed’ and not an airport terminal.
O’Leary was incensed and responded with a terse letter to the committee on 22 November threatening legal action if an apology from Hanlon was not forthcoming. ‘Failing this, Ryanair will have no alternative but to initiate legal proceedings against Aer Rianta for libel so that we may have this untrue accusation laid to rest and Ryanair’s good name and reputation restored.’
Once again, what had begun as a matter of vital importance for Ireland’s infrastructure and the future of its tourism industry had become a personality clash between Hanlon and O’Leary. ‘There was a lot of personal antipathy between O’Leary and Hanlon,’ recalls Tim Jeans. ‘It probably was a big obstruction to the whole process.’
Instead of following through on his threat to launch a libel action, O’Leary moved his battle to the not unfamiliar territory of newspaper advertisements.
The Bank of Ireland branch at Dublin airport had been robbed in late October, with armed raiders making off with up to £250,000. Another airline CEO might have felt some sympathy for the bank’s workers, but O’Leary saw the robbery as yet another PR opportunity. ‘It’s not just the Bank of Ireland which gets robbed at Dublin airport,’ his new advertisement proclaimed. The Irish Advertising Standards Authority denounced the ad as a breach of its code of practice.
The government was due to give its initial verdict on the proposed second terminal project by the end of the month, but instead of a decision it kicked for touch. O’Leary had been confident of a swift decision. ‘I think the chances [of a second terminal] are very strong,’ he had told RTE’s Moneymakers programme in September. ‘It is going to be politically very difficult for the Irish government to tell the people, “No, you must continue to pay three hundred, four hundred, five hundred pounds to fly direct to Germany, France and Italy, when Ryanair can do it for £19 out of Stansted.” And it is going to be very difficult for the government to turn down 500 new jobs.’
He was wrong. For the next six years the government would do nothing. Congestion at Dublin airport would intensify and its development as a low-cost base would stall. O’Leary, finally recognizing the inevitability of delay after the government had failed to make a decision by the end of the year, opted for irony, liberally laced with doom. ‘We’re quite happy to wait it out for a year, two years or three years, if that’s what it takes. Airfares will rise, traffic will decline, we’ll cut back flights and tourism will start to surfer. Then Aer Rianta and the minister will ask Ryanair to come back into Ireland. And we’ll consider it.’
Stansted had become the base of Ryanair’s European expansion and the airline had five planes based there. But despite this Aer Lingus had stubbornly maintained its Dublin–Stansted service, which it had reintroduced in 1992 after Ryanair’s exclusive access deal had run its course, and it had stubbornly refused to be forced off the route. In November, that stubbornness was finally replaced with pragmatism when the flag carrier announced it would be dropping its Stansted service in favour of increased services to Gatwick from January 2000. O’Leary was quick to fill the gap by promising to add four new Ryanair flights a day between Dublin and Stansted from January, bringing their daily total to sixteen. He also pounced on the opportunity to take some PR shots against his ailing rival. Aer Lingus’s talk of‘a customer-driven plan with a clear business focus’ was ‘Japanese for high fares’, O’Leary said.
In November Ryanair reported a 17 per cent rise in pre-tax profits for the first half of the financial year, to £42.9 million. The airline was in the midst of its aggressive European expansion, had just launched its latest Scandinavian service, to Aarhus in central Denmark, and by the end of 1999 O’Leary told journalists that Ryanair was in talks with twenty European airports with a view to flying into ten of them in 2000.
Financially, Aer Lingus was also being outperformed by Ryanair. In April Aer Lingus had released full year results which showed a pre-tax profit of £52.4 million, up 14 per cent. But the airline’s chief executive, Garry Cullen, warned that margins, at 6 per cent, were too low. To solve the problem of low margins, Cullen wanted a review of pay scales, a proposal which put him on a collision course with trade union SIPTU, which represented most of the airline’s workers.
Cullen also had to contend with mounting speculation that the airline was to be sold by the Irish government, with sources saying in December that Aer Lingus would be floated on the stock market the following year. The airline had managed to claw its way back from bankruptcy thanks to a large injection of state aid, but a flotation would strip away its safety net and leave the airline, and its unionized workforce, at the mercy of the market. The day of reckoning appeared close, but the unions would fight the sell-off, and they could count on formidable political allies.
Shouting and screaming at state monopolies and poking fun at cabinet ministers might have won O’Leary some popularity, but his hostility to all-comers was more problematic when it was directed at customers. In October Ryanair had incurred the censure of Ireland’s Daily Mirror when the airline refused to refund the ticket of a young boy who missed his flight because he was too ill to travel.
‘FAMILY’S FURY AS AIRLINE TELLS ASTHMA ATTACK BOY, 7: SORRY, YOUR FLIGHT’S GONE, YOU’LL HAVE TO BUY ANOTHER TICKET; FATHER BRANDS RYANAIR “HEARTLESS”’, the headline raged, in bold capital letters. The piece detailed the story of ‘little Liam Nolan’, who had travelled to Ireland for a family wedding. The day before he was due to return to the UK he had an asthma attack and doctors declared him unfit to travel. Ryanair chose to follow its no refunds policy to the letter, refusing to allow the Nolan family to change their tickets and outraging Liam’s parents. ‘I just can’t believe Ryanair can do this,’ his father Joseph told the Mirror. ‘I am absolutely furious with the way we have been treated. I’m never going to fly with them again because of this.’
The airline was unmoved by the family’s plight. ‘We have different types of tickets,’ a Ryanair spokeswoman said. ‘I presume the family bought the non-flexible ones, which means they are valid only for that flight…there is nothing we can do about it. The family could have opted for travel insurance which Ryanair offer their passengers. We recommend it because you don’t know what can happen.’
A public row was thus turned into a sales exercise but Ryanair was unrepentant. To those outside the company, it seemed heartless, but for O’Leary there was method. Publicity, he still believed, was good, and he needed to reinforce the message that low fares meant that the passenger got what he or she paid for. The public needed to be educated, and if Ryanair had played for a simple PR victory by giving the family a free flight, hundreds more would have sought similar concessions. O’Leary wanted his airline to have an uncompromising reputation: cheap but no concessions. ‘What part,’ he would say, ‘of “No refunds” do you not understand?’
In mid-December Ryanair attracted more public anger by announcing the halting of services to Knock airport in the west of Ireland. The surprise announcement came on 14 December and was prompted by Knock’s decision to follow Kerry airport’s initiative and levy a £6 passenger charge from mid-January. Local politicians condemned Ryanair’s decision as ‘disastrous for the west’ and as the save Knock airport campaign gathered pace, Ryanair performed a swift U-turn, changing its stance within days. ‘Ryanair has, this evening, announced that there will be no suspension of its twice-daily service from Knock to London, Stansted,’ a company statement said. ‘Passengers will continue, therefore, to enjoy Ryanair’s low access fares to and from the West of Ireland, without interruption.’
The airline also softened its position on the levy. ‘Ryanair continues to believe that the proposed passenger levy at Knock is fundamentally wrong. If Knock airport received the same parity of treatment in terms of regional support from the Government as airports like Sligo, Galway and Kerry, it would not have a shortfall and then would not have to introduce this unjust levy on passengers.’
It was a stunning reversal of policy, and in a very short space of time. Was O’Leary mellowing? Had he been swayed by public opinion? Hardly. The change of heart was not prompted by an attack of conscience about the potential devastation of County Mayo’s economy. In fact, O’Leary had miscalculated: he thought that if he pulled out Knock would be forced to come to him, cap in hand, begging for a return of the service. O’Leary could then screw an even better deal from the airport and consign the levy to history. It would be, he reckoned, a salutary lesson to any other airport, anywhere in Europe, that tried to take on Ryanair.
Competition, though, was beginning to bite and O’Leary quickly recalculated. ‘If you pull out you want to make sure that nobody else replaces you,’ says Jeans.
And we thought wrongly that if we pulled out of Knock the airport would probably shut. But at the time quite a number of people were leaving Ryanair for Virgin Express and Virgin Express was in expansion mode, and they were going to open up in Shannon. It became abundantly obvious that far from Knock suffering, what would happen would be that Virgin Express would come in. So rather than let Virgin Express in, Michael changed his mind and stayed. It was a total U-turn but it was a pragmatic U-turn.