Today (23 May), Ryanair released its full year financial results, which saw average fares fall by 1% but profits rise by 43% to €1.2bn, (£960m) from the year prior. Ryanair has said prices are likely to fall still further this year, promising to cut its fares by up to 7% and leading to speculation of a new price war in the airline business.
Ryanair says it is now the number one airline in almost every EU country, with the exception of France where it is placed third. CEO Michael O’Leary puts its financial success down to its low fare and “extraordinary customer service” mantra.
“It is a revolutionary concept in the airline business that you can have low fares and this extraordinary customer service as well – one where we love you, we take care of you,” he told Marketing Week at an event in London this morning.
This is a far cry from three years ago when O’Leary said Ryanair was portrayed as a company that “hated customers”.
“We have been the victims for about 25 years now of various consumer surveys saying we are the most hated company, airline, god knows what – yet remarkably if you look at the growth in customers, the public doesn’t seem to be able to get enough of what we do,” O’Leary said.
“The last YouGov survey did highlight how we are the most improved consumer brand in the UK, although admittedly from a very low base.”
That decision to improve customer service focused on its ‘Always Getting Better’ (AGB) programme, which aims to fix things Ryanair’s customers dislike and improve its offering. Since launch, Ryanair claims it has gone from carrying the same traffic as rival low cost airline Wizz Air two years ago, to now carrying 50% more.
AGB remains a priority for Ryanair, with this year’s focus on “digital acceleration and innovation”, particularly through Ryanair Labs, and improving its mobile app. There will be a new leisure plus service, improved business plus and a “one-click” mobile facility on the mobile app. There will also be automatic check-in for my Ryanair customers and lower checked bag fees, along with more legroom on flights, new interiors and new staff uniforms, designed by cabin crew members.
O’Leary admitted that he failed to focus enough of the company’s attention on customer experience enough in the past. “I think to be open about it I made a number of mistakes in the customer handling policy up until about two years ago. I would say we have been somewhat cavalier in the way we listened to customer feedback or responded to customer complaints,” he said.
“We should have move to allocated seating earlier, we should have eased up on the carry-on bag restriction earlier, we should have worried more about schedules and whether we had the right schedules for business passengers as well. We were genuinely dismissive of all these things.”
“If I’d only known being nice to customers was so good for our business, I’d have done it years ago.”
Michael O’Leary, CEO, Ryanair
O’Leary also claimed the airline never rejected more traditional marketing methods such as TV advertising but that without much money to spare for advertising or expensive PR, it instead followed every “ludicrous publicity stunt” it could, including floating the idea of charging customers to go to the toilet.
Ryanair has not totally left this strategy behind. Its most recent campaign, dubbed the “Brexit special”, offers people from the UK who live in Europe the chance to fly home to vote in the referendum on 23 June. Although the ad has received criticism from Brexit supporters and there are concerns it breaches bribery laws, Ryanair sees the move as good publicity in its vocal support of Brexit, something O’Leary believes “makes for a bloody good story”.
“If it makes for cheap PR we’re up for it,” O’Leary commented.
Yet O’leary admitted that the “benefits of the business are transformed” by listening and responding to what customers want it to do.
“If I’d only known being nice to customers was so good for our business, I’d have done it years ago. I’m genuinely surprised that customers have responded in this way. They have enjoyed the first two years of AGB and declining airfares. They are getting the better service at lower prices,” he concluded.