Ryanair achieved rapid growth by providing cheap flights with zero frills to a huge range of short-haul destinations. While that was the case it almost revelled in its position as the most hated airline, with CEO Michael O’Leary offering withering putdowns to anyone who dared complain.
He has memorably labelled customers “idiots”, called people that forget to print their boarding pass “stupid” and told anyone looking for a refund to “**** off”. Yet now he has performed a u-turn, embarking on a charm offensive aimed at improving negative perceptions and addressing its reputation for poor customer service.
Simon Carter, previously executive marketing director at Thomas Cook UK and Ireland and now marketing director at Fujitsu, says: “Ryanair has always been the enigma when it comes to customer service. Despite the brand being the bottom of most customer satisfaction tables and being the first name that most people cite when talking about brands they love to hate, O’Leary has grown his business.
“It is therefore interesting that Ryanair has finally concluded that the textbooks were right, that customers do have a choice and that customer respect is necessary.”
Ryanair has been hit by attempts by low-cost rivals, including EasyJet and Monarch, to improve service. Increased competition and weakening demand for air travel also caused Ryanair to cut its fares this year, entering a price war with its rivals. That is impacting on margins, with Ryanair issuing a profit warning for the fist time in 10 years.
Douglas McNeill, investment director at Charles Stanley Direct, says: “Ryanair has seen some decrease in financial returns. The onus is on it to respond to that.”
That has led to a raft of improvements, including cutting airport fees, offering a “grace” period on bookings and easing bag curbs. It is also overhauling its digital strategy, investing more in mobile and social media, and hiring its first marketing director.
These are not just cosmetic changes. Ancillary revenues from baggage fees and boarding pass re-issue penalties are huge for Ryanair and these changes will affect its bottom line.
Philip Price, formerly marketing director at P&O Cruises and now marketing consultant and client services director at Leepeckgoup, says: “These changes will directly reduce revenues by tens of millions. But O’Leary has not suddenly had a road to Damascus revelation, he has realised that customers are worth keeping and that it is far more effective to invest in CRM, in both its operational and marketing senses, than to go find new customers.”
The Ryanair Brand
Ryanair languishes at the bottom of almost every metric on YouGov’s BrandIndex, from reputation to satisfaction, through to impression and quality.
Since September 19, the day before its first announcement about the measures it is taking to improve service, its Reputation rating has increased from -53.1 to -52.7 on 31 October. Impression of the brand improved from -51.6 to -50.3 and Quality is up by 2.6 points to -50.3.
However, it is still miles behind its rivals. The next worst performing airline for Reputation and Quality is EasyJet on -17.2 and -14.7 respectively, while Turkish Airlines comes in second bottom for Impression with a score of 0.3.
There are signs that customers are listening to its attempts to improve perceptions. Buzz, a measure of whether people have heard positive or negative statements about a brand, is up from -29.8 to -23.2, a statistically significant improvement.
Meanwhile Ryanair’s Index score – BrandIndex’s average of all perception measures including impression, quality, value, reputation, satisfaction and recommendation – rose from -41 to -36.9.
McNeill says despite Ryanair’s poor reputation, it is still a very strong company and a very profitable business. Plus it has enough expertise and savvy to accomplish what it has set out to do.
It may take some time, with the kind of cultural changes needed to buy into this shift at all levels of the organisation not possible in short order. There need to be changes in how staff are trained and how they respond to customer.
While customer service remains a chink in its armour and to not make improvements quickly could impact the airline financially. Having announced its intentions, it must now make sure it delivers.