S1: Hi, this is just a heads up, the following podcast contains some rude language.
S2: You’d say, OK, I’ve just found a few flights here, there, 20 quid, will we go to Paris? Will we go to somewhere near Frankfurt? Will we go hopefully somewhere close to Rome?
S1: Seven Kryten worked as a business reporter in Dublin in the 1990s. One of the biggest stories on her beat back then was the remarkable ascent of a certain ultra low cost, very no frills Irish airline.
S2: But in the early days, you were really kind of taking a chance. You weren’t really sure where you were going. But, you know, it was a bit of fun. It was new. It was a way to go somewhere for a week. And it became known as doing a Ryanair.
S3: Writing for the Irish Times, Chavan covered Ryanair s climb from tiny startup to internationally known brand. She says the company’s rock bottom prices completely upended air travel and even made new lifestyles possible.
S4: Like a lot of people bought holiday homes all over Europe because they now had access to cheap flights to go do that. So it changed people’s lives, you know, the access to those cheap flights.
S3: Shavon eventually wrote a book about Ryanair at the center of the book and of the entire Ryanair saga is the company’s extremely media savvy CEO, Michael O’Leary.
S4: You know, I remember being at a press conference just before the book was written and he asked me in front of all the journalists, how’s that book coming along? He wanted them to know that a book was being written about Ryanair.
S3: Michael O’Leary has courted the media and castigated it in ways most CEOs would never dare. Along the way, he’s made himself into the most outspoken, most dyspeptic champion his own airline could ever ask for.
S4: He’s forceful. He says he doesn’t like what you’ve written. He will let you know sometimes he looks like an angry, angry man. It’s like he just has no tolerance for people who don’t agree with them.
S1: Michael O’Leary says things about his customers and his competitors that you’d think he couldn’t get away with yet he gets away with it again and again. He takes business risks that others wouldn’t dream of and they almost always pay off. O’Learys Midas touch has lasted for decades, but now, with a pandemic decimating air travel, Ryanair faces an entirely new challenge with a lightning rod CEO who can do no wrong pilot Ryanair through this turbulent storm. Or will his wings finally get clipped?
S5: I’m Seth Stevenson. Welcome to Thrilling Tales of Modern Capitalism. Today on the show, Fly the Unfriendly Skies, The Story of Ryanair.
S1: Before Michael O’Leary came along and became the face of Ryanair, the company was founded by a man whose name it still bears Ryanair.
S2: It was really, I suppose, the dream of a man called Tony Ryan, who was a very successful Irish businessman. He was one of the first really successful international Irish business people.
S1: Tony Ryan was an executive at Aer Lingus when in 1975 he had his first great entrepreneurial idea. He launched a new business where he’d buy up aircraft and then lease them out to airlines that needed planes but didn’t want to own them. He made gobs of money doing this. In 1984, he took some of that money and sort of on a lark created his own airline. Ryanair would turn out to be Tony Ryan’s second great idea, but it took a while to get off the ground. It started small. It used a little 15 seat plane to make a little deli hop between Ireland and England, mostly for business people going to meetings. It even hired a little flight attendants. Five foot two are shorter because the plane’s cabin was so cramped. Over the next few years, Ryanair grew much bigger. It added planes and a variety of short haul routes, mainly competing with the ferries that took people across the Irish Sea to the United Kingdom. According to Chavan Creten, the company and Tony Ryan lost a lot of money.
S2: So it was very, very challenging for them. It cost him a fortune because the airline business isn’t for the fainthearted. You know, you really bleed a lot of cash when you set up an airline.
S1: But he was kind of dogged by the early 1990s. Ryanair had lost many millions of dollars, but Tony Ryan hadn’t given up and was still pouring in his money. It was around this point that three important things happened. First, Tony Ryan put Michael O’Leary in charge of running the airline. O’Leary started as Ryan’s financial adviser, gained his trust and rose at supersonic speed to become CEO.
S2: Over the years, he’s very much been the force behind Ryanair. People had described him to me as the ghost in the machine.
S6: Mainly behind the scenes at first, Michael O’Leary took control of every facet of Ryanair business, he’d eventually become one of the more notorious chief executives in the world. But we’ll get into that later. The second important thing Ryanair did in the early 90s was sent Michael O’Leary across the Atlantic to sit at the feet of an aviation guru. There’s a single theory.
S5: If you listen, you can hear it. People ask me why Southwest Airlines is so successful. There’s a certain Sopwith. Seemed perfectly obvious to be brilliant leadership.
S1: Herb Kelleher, the founder of Southwest Airlines, pioneered the so-called low cost airline approach in America in the 1970s and 80s. So over here.
S6: Michael O’Leary visited Kelaher in 1992 and in O’Learys telling they stayed up all night drinking bourbon and talking airline economics, Kelaher had come up with some clever ways to cut costs, which let him sell tickets cheaper than his competitors. For instance, he only used one type of airplane, the Boeing 737, so that all his pilots and mechanics could be trained the same way and were basically interchangeable. Here he is in another ad at Southwest Airlines.
S7: We want our passengers to spend their time in the air, not on the ground. That’s why we invented the 10 minute turnaround.
S1: A lot of Kelleher’s techniques, like having no assigned seats on the plane so passengers could be loaded quicker, were geared toward turning around planes more efficiently after a landing, getting them back in the sky again fast so they could fly more legs. And each day, the quicker you’re in the air, the quicker you get where you’re going.
S3: Michael O’Leary came back to Ireland full of Herb Kelleher, his wisdom and ready to turn Ryanair into Europe’s first low cost carrier, he would use Boeing 737. He’d have lightning fast turnaround times. He’d cut costs to the bone on his return. O’Leary quickly wrote up a memo titled The Challenge of Replicating Southwest Airlines in Europe. That challenge was about to become a lot less challenging because the third big thing that happened to Ryanair in the 1990s was a stroke of luck in the form of government deregulation. In 1993, the European Union began to relax a lot of its air travel policies. The result was that big national carriers like British Air Air France and Lufthansa suddenly became very vulnerable to competition from a Low-Cost upstart like Ryanair deregulation, keeping their wings expanded from their.
S8: Gary Deu worked in the aviation industry for 30 years. He’s now a lecturer in air transport management at Cranfield University in England. He says that European deregulation in the 1990s created a space for Ryanair because it gave carriers more control over setting their fares and more control over where they flew from. When Ryanair launched, regulations prevented an Irish airline from flying routes that didn’t start or finish in Ireland.
S9: By the time it got to the end of the 1990s, it meant any airline from any EU member state can fly anywhere within what’s called the common aviation area. So Ryanair is an Irish carrier, no longer had to fly to and from Ireland and also flying from the UK, France, Germany to any other route.
S8: This new freedom on fares on locations meant Ryanair could undercut Lufthansa with cheap flights out of Frankfurt or undercut Air France on flights out of Marseilles. Those lumbering legacy airlines were expensive to run, and they were accustomed to selling high priced tickets and offering top notch service. Ryanair kept its costs much lower, and it treated flying more like bus travel, cheap tickets, cattle call boarding, nothing fancy. Just get you there. If you wanted to indulge in luxuries like checking baggage or eating food in flight, Ryanair would charge you extra. We’re used to be nickel and dimed like that now, but at the time it was a novel strategy with its low cost model in place and deregulation clearing the runway, Ryanair was ready to take off. But how to market all those cheap seats so the droves of people would buy them? This is where Michael O’Leary looked in the mirror and saw an unconventional but potentially very effective spokesperson.
S10: The CEO was quite a colorful character, making colorful statements. Yes, that grabs attention sometimes what he says is realistic.
S3: And sometimes a little more on that when we come back.
S1: Ryanair became a genuine sensation in the early 2000s, thanks in part to another big gamble that Michael O’Leary made right after 9/11, when people weren’t sure what the future of flying would look like and airlines were being cautious about acquiring new planes. O’Leary locked in a deep discount on Boeing 737 after restocking Ryanair, its fleet at bargain basement prices. He then flooded the market with even cheaper fares than usual to bury his competitors when they were already struggling. Low fares like these made it possible to fly all over Europe for peanuts, with airplane tickets that sometimes cost less than the taxi to the airport, especially since the airport’s Ryanair flew out of here, often pretty far away from the cities they served. Ryanair could afford to sell seats so cheap precisely because it did things like fly out of inconvenient airports. This was another trick learned from Herb Kelleher at Southwest Airlines. He loved small airports, which charge lower fees and have less congestion. Letting planes zip in and out like southwest Ryanair was maniacal about keeping its expenses low. But Ryanair went further, doing things like severely limiting its customer service like it had no customer service. Chavan Creighton says this was so widely acknowledged it became a running joke.
S2: There’s been all kinds of hashtags over the years, people have written songs about Ryanair, you know, like The Guardian used to have a whole column dedicated to Ryanair and its complaints.
S11: I quickly found the website and could not believe my age 14, 19, I know you’ll be taking to the skies. In the small print, the tax was a disgrace and another A to. If you want to take your case.
S1: There are many Ryanair jokes on the Internet, for instance, in one cartoon, a man walks up to a Ryanair ticket counter and the clerk asks, Would you like to pay extra for a pilot? You’d think Michael O’Leary, a CEO, might try to fight the perception that Ryanair didn’t care about customers. In fact, he embraced that perception like here, answering a question on an Irish talk show, The world is the customer always right? No customer is nearly always wrong. But he explained, O’Leary seemed to take delight in imagining ways to treat his customers worse. There was the time he threatened to pack more people into planes by making them stand up on flights like on a subway car or the time he wondered whether Ryanair should levy an extra fee on passengers who are obese. Or there was this gem from a press conference in 2009.
S12: And we will continue to look at means or ways of at stimulating discretionary revenue. And if charging if we if we can find a mechanism of charging for toilet access, it would make perfect sense to me to charge for toilet access. We’re working on a plan to refit the doors on the door, on the planes for our own coins. So we did spend, say, a euro to use the toilet.
S1: Gary Deu with decades in aviation management, couldn’t help but earnestly consider the pros and cons of charging people to use an airplane bathroom.
S13: How much revenue would it generate compared to the stress and ill feeling as a result of that? Also, you know, there could be costs associated with damage to aircraft if people decided they didn’t want to do that.
S10: You mean like defecating on the sea, if you understand what I’m saying. I was trying to think. I was trying to think of a nice way to put it. Unfortunately, I do understand what you’re saying. Yeah. And it does happen working in the airline industry for 30 years. I mean, she covers up to.
S1: In the end, Gary’s fairly certain that none of these provocative ideas were ever going to happen. So why did Michael O’Leary keep suggesting them?
S10: Well, consider the aftermath of his comments about pay toilets that made church service on the front page of the newspapers people were talking about. This never occurred, probably never thought it would occur, replace the news and gave mind that free publicity.
S1: Michael O’Leary seems willing to say almost anything that might get him some attention. Here’s how he opened a speech he gave to an Irish Parliamentary Assembly.
S12: Ladies and gentlemen, it’s a great pleasure to be here in such August company, addressing such an August body of this reminds me much of making love to the queen of England. It’s never sure how much is you know, it’s a great honor. You’re just not sure how much pleasure it’s going to be.
S1: That was met with a fantastically awkward silence. There was also this occasion during a press conference in Germany when O’Leary mused about a luxury Ryanair service that, of course, never came to be in business class. It’ll all be free, including the blowjobs. The worst part here was how he treated the German woman who was translating for him.
S14: That’s German for blowjob because there’s no Germans about terrible sex life in Germany.
S1: This sort of thing endears O’Leary to some people and makes other people despise him. But there’s no doubt it all serves a purpose, as O’Leary himself confessed during an interview in 2013 on the set of BBC NEWSNIGHT.
S4: Michael O’Leary is here. And I have to say much more seats than you get in Ryanair. You, first of all, made it your business to really be quite, you know, macho and offensive. But that was good for business, wasn’t it? I have ever been macho and offensive, but I’ve been generating an awful lot of cheap publicity.
S6: When you have the lowest fares in Europe, all you need is cheap publicity to persuade people to sell them. O’Leary went beyond mere shock value, he cultivated an almost antagonistic relationship with Ryanair customers, signaling how little he cared about their comfort that had a purpose to people who bought dirt cheap tickets on Ryanair, knew they were doing it to save money, not to travel in style. And Michael O’Leary’s bluster about treating customers with disdain primed them to gird themselves for an absolutely terrible experience. When it turned out the flight was OK, just mediocre, not excruciating. They were pleasantly surprised and felt they’d gotten a great bargain on the strength of O’Learys showmanship and his business acumen. Ryanair grew over a couple of decades to become one of the largest and most successful airlines in the world. It now boasts 200 destinations in 40 countries, 19000 employees, 150 million passengers last year. By the start of 2020, it seems like nothing could slow down Ryanair until something did covid, of course, changed everything.
S3: Gary Deu says airline operators are still coming to grips with the idea that travel slowdowns resulting from the coronavirus pandemic will not be merely a short term problem.
S9: A lot of airlines are predicting that we won’t get back to 2019 levels of production, so 20, 22 or 23 in one case or were 2024. So I think most people are starting to realize this is going to require to be covering.
S1: All airlines are hurting. But for a low cost carrier like Ryanair, there’s a particular worry, one that Michael O’Leary has been vocal about.
S13: He has said if we have to keep the middle seat empty, which a lot of people were speculating about because of social distancing, we’re not going to make any money. We’re better off having the aircraft on the ground.
S1: When you sell tickets as cheap as Ryanair does, you need to sell a lot of them. Ryanair depends on a load factor of more than 80 percent. That’s the percentage of a plane seats that it wants consistently occupied. Before the pandemic, it was routinely getting load factors of 90 plus percent. But now not so much fewer passengers means less money from ticket sales. But more than that, it means less opportunity to up sell people on things like drinks and meals and rental car packages and other ancillary revenue sources. Planes being forced to fly at lower capacity would be an absolute disaster for Ryanair. But just as he did after 9/11, when he doubled down on Boeing jetliners, Michael O’Leary is squinting into the chaos and spotting opportunity. O’Leary is once again gambling on the resilience of air travel. Instead of laying off Reiners pilots, he’s renegotiating long term contracts to his advantage, which will save Ryanair tons of money if and when flights return to normal volume. He’s also said he’ll drive hard bargains with airports, which are getting increasingly desperate for revenue. And he’s hinted that the fare war to end all fare wars is on the way. Gary Doughy thinks that’s almost always a winning move.
S10: Everyone likes a good deal. Let’s be honest about it.
S15: Behind all of Michael O’Leary’s bluster, the outlandish statements through jokes, there lurks an incredibly shrewd business. Mind if you want to know where air travel is headed? You do well to keep your eyes on what Ryanair does next. That’s our show for today. This episode was produced by Jess Miller with help from Madeline Ducharme Anticline P11 and Atia Solutia technical direction from Merritt. Jacob Gabriel Roth is Slate’s editorial director for audio. Alicia Montgomery is the executive producer of podcasts and Slate. June Thomas is senior managing producer of the Slate Podcast Network. If you’d like to support our show, consider signing up for Slate, plus, it’s only 35 dollars for the first year and it helps us bring you all the great podcasts you get from Slate.
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S15: Plus, next week on the show, a storied American brand finds out that everything it stood for might suddenly be a liability. That’s next week on Thrilling Tales of Modern Capitalism like.