How to make money from Ryanair

The Times recently shared a clever way to take back the money that you might have lost with Ryanair's £5 online check-in fee. A cup of coffee on board sets you back either £3 or €3, so you can pay for your coffee with either currency and ask for your change back in either currency. If you pay with a €50 bill, you could get €47 back in change, but that's only worth around £41. Instead, pay 50 euros but ask for your change back in pounds sterling - and instead of getting £41 back, you get £47 and make a profit of £6. Not only do you get back your online check-in fee, but you get an extra quid on the side (depending on the exchange rate, of course). I'm surprised that Ryanair boss Michael O'Leary, famous for his fanatical low-cost approach, hasn't removed this loophole yet, but I'm assuming that it's only a matter of time.

photo by jon gos from Flickr, licensed under the Creative Commons

Ryanair plans 'standing seats'

Ryanair boss Michael O'Leary

When the story broke last week about China's Spring Airlines looking into 'standing-only' flights, I figured that it was only a matter of time before European budget carrier Ryanair would announce plans for a similar concept. And sure enough, Ryanair, not to be outdone, finally announced today that it was in discussions with Boeing and the Irish Aviation Authority to look at "vertical seating" in its 737s - the last four rows of regular seats would be removed in order to make room for the new seats. Passengers wouldn't actually be standing, but "they would have something like a stool to lean on or to sit on," said Ryanair spokesman Stephen McNamara; CEO Michael O'Leary has described them as "barstools," according to The Sun, which also reports that O'Leary got the idea from the Chinese carrier.

The passengers who use the "vertical seating" would fly for less than those with a regular seat, and would apparently be used only on flights under 90 minutes. "We might take out the last five or six rows and say to passengers, 'Do you want to stand up? If you do, you can travel for free'," said O'Leary, to Sky News. "Why is this any different to what happens on trains, where you see thousands of people who cannot get a seat standing in the aisles, and it happens regularly on the Underground?"

Standing only flights on Spring Airlines?

That's right - CCTV is reporting that Chinese carrier Spring Airlines is looking at standing-room only flights on some of its Airbus A320s. The airline, billed as the first low-cost carrier in China, will try to get regulatory approval for the idea by the end of the year. Apparently, the new passenger layout means that the A320s can fit up to 40% more passengers (that's quite a bit) as well as cut costs by 20%. "It's just like bar stools," the airline said. "The safety belt is the the most important thing. It will still be fastened around the waist."

Spring Airlines wants the standing-only flights as a way to cope with capacity issues - it can't get a hold of new planes quickly enough to keep up with passenger demand. According to Spring Airlines President Wang Zhengua, the idea for the flights was proposed by Chinese vice premier Zhang Dejiang: "He suggested that, for a lower price, passengers should be able to get on a plane like catching a bus, with no seat, no luggage consignment, no food, no water, but very convenient." Wang also says that airline has been told by Airbus that the idea was safe, so "once the government approves it formally, we'll try it."

Apparently the tickets that require you to stand in the aisle would be 20% cheaper. I'm not sure whether the entire aircraft would be standing-only, or if it's just additional standing in the aisle. But this might be a novel, if somewhat uncomfortable, way of dealing with the problem of undercapacity - that is, if it gets regulatory approval, as the Chinese aviation authorities still require that passengers are seated for takeoff and landing. Maybe Vice Premier Zhang can do something about it, but in the meantime, let's not give Ryanair's Michael O'Leary any ideas...

BA's 'value calculator' goes after Ryanair, easyJet

If nothing else, British Airways certainly deserves credit for their latest attempt to fight back against its two main low-fare rivals, Ryanair and easyJet. The airline has launched a "value calculator" on its website, which illustrates the various "hidden" fees that have made the low-fare airlines famous. BA shows what Ryanair and easyJet charge for checking baggage and food and drink, among other costs, and then contrasts those with BA's "no extra charge" column. You can check off as many boxes as you wish, and the total at the bottom of the columns update "With British Airways," the website says, "the price you see is the price you pay."

BA has a point. Alison Hunt recently wrote an article where she researched a long weekend trip in Venice from London on BA and Ryanair. She notes that if "you were to fly with Ryanair (£157.06), check into the hold just one piece of luggage (£20 in fees, both ways) weighing 23kg (another £120 due to the expensive restrictions Ryanair places on heavy luggage), pay by non-VISA Electron debit card (£20) and spend £8 each on sandwiches and drinks on each flight (£32) you could be looking at a grand total of £349.06 - £64 more than BA. Eek!" £350 is a far cry from the base £9.99 fare that Ryanair advertises. In other words, if you were to take advantage on Ryanair of the little 'extras' that you didn't pay any additional money for on BA, your ticket would end up being more expensive.

But the popularity of Ryanair is due to its 'a-la-carte' pricing - if you don't want it, you don't have to pay for it. Assuming that you didn't check any bags or purchase any food or drink onboard, you'd still have to pay Ryanair's ridiculous online check-in fee of £5 and debit card charge of £10. But even with the £15 in fees, your new price of £172.06 would still be less than BA's £285. And Hunt assumes that you'll forget your boarding pass, which Ryanair charges £40 for doing. If you keep track of things, your cost will be even less.

The moral of the story - be careful when booking on low-fare carriers, because sometimes you might end up being charged for a lot of 'extras' that you didn't know about. But if you're smart about it, you can still end up saving a good deal of cash flying on Ryanair or easyJet versus on British Airways.

Buying airplanes, the Ryanair way

As airplane manufacturers gear up to pitch their products at the annual Paris Air Show, they're uncomfortably aware that the market for new airplanes is at its lowest in years. The realities of the tough market conditions aren't lost on Ryanair chief Michael O'Leary, either. But while Airbus and Boeing are struggling with a significant drop in orders, O'Leary is figuring that now's the time to open up the wallet, much as United is planning on doing; he knows that he's likely to get a better deal out of them when they're desperate for customers.

So the recent report that Ryanair is looking at ordering 300 new airplanes from either Airbus or Boeing should come as no surprise. That's a lot of aircraft - without a doubt, Boeing CEO Jim McNerney is salivating at the prospect of what he's labeled "the deal of the year." Ryanair is one of Boeing's best customers, operating a fleet of almost 200 Boeing 737-800s. CEO O'Leary, notoriously brash with his public statements, has told a group of Boeing employees that he would help them "kick the shit out of Airbus," and later told them that they "make the best goddamn aircraft in the world." "We love Boeing," he said. "Fuck the French."

So then why did Ryanair mention that it is considering an Airbus product? It has made fleet standardization one of the key points to its success, and there's no chance that it would operate both the 737 alongside the A319 or A320. And Airbus itself has said that it's not in talks with Ryanair; sales chief John Leahy told Dow Jones that "we're not negotiating," saying that Ryanair had set price expectations that were "unrealistically low."

The answer comes down to the fact that Michael O'Leary has always driven a hard bargain. He waited to order the initial batch of 737s until 2002, when Boeing was struggling after 9/11. But the order for Boeing was never a foregone conclusion; instead, he brilliantly played Airbus and Boeing off of each other, reportedly faxing the latest offer he received from Airbus over to Boeing and vice versa, in an attempt to get a lower price. Airbus offered to sell him A320s at half price, and O'Leary had apparently even shaken hands with the Airbus CEO before switching at the last minute to order from Boeing at even lower prices. O'Leary didn't mince words when recounting how he managed to get a spectacular deal from Boeing, saying: "We raped the fuckers."

But O'Leary can't fall back on competition between Boeing and Airbus to get a good deal anymore. Boeing knows that at the end of the day, barring some unforeseen tectonic shift, O'Leary will continue to be a devoted Boeing customer. And so it will be interesting to see how Ryanair will try to continue to get low, low prices on its new airplanes.

photo by Drewski2112 from Flickr, licensed under the Creative Commons

O'Leary: Ryanair interested in takeover of Lufthansa

photo by lorentey

European budget airline Ryanair head Michael O'Leary might have a history of making rather outlandish statements, and the announcement that he made this morning that Ryanair is "seriously interested" in taking over Lufthansa is no exception. According to an orf.at article, Ryanair "could almost buy [Lufthansa] in cash," according to O'Leary. This statement has been backed up over at the Financial Times, which also reports that O'Leary plans on expanding Ryanair's fleet by 15% and that the airline has 90% of the year's fuel hedged at $62 a barrel. According to financial results released on Ryanair's website today, Ryanair now is the largest airline in Europe by both traffic and market capitalization (€5.3 billion vs. €4.5 billion for second-place Lufthansa).

Lufthansa declined to comment on O'Leary's comments, although shares of the airline were trading higher on the Frankfurt stock exchange. And while I suppose that a takeover of Lufthansa could never be ruled out totally, I'm inclined to believe that O'Leary, being the king of free media attention, is just up to his usual tactics of getting some press coverage (or maybe even distract the media a bit from its announcement this morning of a lowered profit this year). A Ryanair takeover of Lufthansa just isn't realistic.

Ryanair considers "fat tax"

photo by wicho

European budget airline Ryanair has apparently been mulling over the possibility of a "fat tax" following the results of an online poll in which the airline asked passengers to come up with a winning "cost reduction" idea. Ryanair has been known in the past to use things like this as free publicity. For those who are interested, the results are as follows:

1. 29% - Excess fees for very overweight passengers
2. 25% - €1 for toilet paper – with O’Leary’s face on it
3. 24% - €3 to smoke in a converted toilet cubicle
4. 14% - Annual subscription to access Ryanair.com
5. 8% - €2 “corkage” fee for passengers who bring their own food onboard

Ryanair in trouble over ads

(click on both to enlarge)

Irish discount carrier Ryanair is facing a bit of trouble after recently running two advertisements. The first features French president Nicolas Sarkozy with his girlfriend, French singer Carla Bruni. "With Ryanair," thinks Bruni in the advertisement, "all of my family can come to my wedding." This is a reference to the rumors of marriage between the two. A Ryanair spokesperson called it a "humorous comment on a matter of great public interest in France" and said that the airline apologizes "sincerely for any offence caused", but that's not satisfying either Sarkozy or Bruni: they're suing the airline separately for 1 euro and 500,000 euros in damages, respectively.

The second advertisement, touting "hottest back to school fares," apparently caused the British Advertising Standards Authority (ASA) to receive 13 complaints about it. "We considered that her appearance and pose, with the heading 'Hottest', appeared to link teenage girls with sexually provocative behavior and was irresponsible and likely to cause serious or widespread offence," the ASA said. Ryanair was ordered to recall the ad. But Peter Sherrard, head of communications for Ryanair, remained defiant: "It is remarkable that a picture of a fully-clothed model is now claimed to cause 'serious or widespread offence', when many of the UK's leading daily newspapers regularly run pictures of topless or partially-dressed females without causing any serious or widespread offence... This isn't advertising regulation, it is simply censorship. This bunch of unelected self-appointed dimwits are clearly incapable of fairly and impartially ruling on advertising."

Olympic Airlines under pressure

photo by caribb

Greek flag carrier Olympic Airlines appears to be flying into even more turbulence. The Greek transport minister, Costis Hadzidakis, said that although the government was dedicated to keeping Olympic afloat, "the situation for Olympic has become even more difficult," especially after Ryanair complained to the EU that Olympic has not repaid over 700 million euros ($1.2 billion) of illegal state aid that it received between 1998 and 2002. The government has said before that calls for repaying the money is making it impossible to find investors interested in a possible privatization of the airline.

If Olympic is forced to close, Hadzidakis said, then none of the airline's 8,500 employees would lose their jobs, and none of the Greek islands would lose air service to the mainland. But the fact that the country's transport minister is issuing such a dire projection of Olympic's future is widely regarded as a sign that the airline might have to close down soon. According to the Greek government, Olympic costs Greek taxpayers 300,000 euros ($442,830) a day.

Skybus VP: we're "best financed" US airline

According to Skybus vice president Dennis Carvill, Ryanair-imitator Skybus is "the best-financed airline in the history of the aviation industry in the United States... We are capitalized to $160 million of initial startup capital, and that has given us the ability to do what we are doing, that is to grow rather quickly." By comparison, jetBlue, which started out a few years ago with quite a lot of cash, had an initial capitalization of $128 million.

Although initial capital is indeed important (and it certainly helped out jetBlue), Skybus' lack of amenities (e.g. no in flight entertainment, no food or drink, no telephone number to call) might not sit well with some passengers, and Skybus will have to focus on keeping its flights prompt in order to make up for the often out-of-the-way airports that they service.