Inside Ryanair: Michael O’Leary’s making of a ‘nicer’ airline
Book extract: Matt Cooper chronicles O’Leary’s struggles to reinvent Ryanair, keep pilots at bay, and stay in charge of the airline
Always getting better? Michael O’Leary decided to re-engineer Ryanair by improving its customer service. Illustration: Paul Ryder
In late 2013, having weathered two profit warnings, Ryanair’s chief executive, Michael O’Leary, took a decision that risked changing the existing Ryanair brand – even if he claimed not to believe in branding – and that might not convince the travelling public. He decided to re-engineer Ryanair, keeping all that he regarded as best about it, but adding a new dimension: improved customer service. It was the “be nice” campaign, and it was even going to have a catchy title: Always Getting Better. This extract from Matt Cooper’s new book ‘Michael O’Leary: Turbulent Times for the Man Who Made Ryanair’, chronicles what happened next.
“Always been a nice guy”
In an uncharacteristic move, Ryanair held a formal, bells-and-whistles launch for the Always Getting Better campaign at the end of March 2014. The strategy would be implemented by a new member of staff, Kenny Jacobs.
A picture of a smiling O’Leary, holding and petting a Labrador puppy, was projected on to a giant screen on one wall. It was put directly to O’Leary that people might find it hard to believe he could be friendlier and less confrontational and controversial, that a smiling, puppy-stroking O’Leary might not be believed. “It’s not an image,” he responded. “It’s real. I’ve always been a nice guy, just misunderstood.”
The catchword was “change”. The retrospective view is that O’Leary was indeed shifting. The really clever executives are content to change course, once they have come to the conclusion that the existing direction is counter-productive and an alternative is preferable. The big challenge for O’Leary was to prove that he could reposition himself, even reinvent himself, if his airline was to do likewise. But how much can any middle-aged man really change? Although maybe he was tired of the old act himself.
As the marketing guy, I am delighted to have a chief executive who is a celebrity and a rock star. Michael is the perfect CEO for a straight-talking brand like Ryanair
Given his promise to change it up, the first signal O’Leary sent out that he and Ryanair were evolving was a management reshuffle, just as he had done at the time of the major profit warnings of early 2004. Michael Cawley and Howard Millar had been the main beneficiaries of the management shake-up back then, but now they were the first to be ushered out the exit.
The two most significant arrivals in 2014 were John Hurley and Kenny Jacobs.
Hurley became chief technology officer in 2014, a job that would be crucial to implementing the growth ambitions O’Leary now harboured.
Jacobs was given responsibility for marketing, communications and sales, with an emphasis on innovation through digital technologies. His was effectively a brand new role, and he set about making it his own with great vigour. He was to the fore at the launch of Always Getting Better, becoming the face of the “new” Ryanair.
Jacobs publicly took responsibility for the Ryanair brand: “But as the person responsible for looking after the brand, I have at my disposal a great chief executive who is kryptonite. As the marketing guy, I am delighted to have a chief executive who is a celebrity and a rock star. Michael is never going to be the CEO of a brand like Rolex. He’s the perfect CEO for a straight-talking brand like Ryanair because it’s the way we operate.”
In the many subsequent interviews Jacobs gave, he constantly made reference to the approval he said he was getting from his boss. “Michael has been very receptive. He loves the numbers and growth in market share he’s seeing off the back of the changes. He’s agile in his approach. I have plenty of arguments with Michael, not a week goes by where we don’t argue about something.
“There’s always good tension. That’s absolutely the way you’d want to have it when you’re in a big business and you’re trying to change that business. You have to have tension, you have to have arguments. If we didn’t, it would be a bad thing.”
While O’Leary, with his focus on costs and revenues, didn’t entirely buy into talk of brands and marketing, he appreciated the approach taken by Jacobs and understood it.
Jacobs made a convincing argument that Ryanair was a “challenger brand”, similar to ones such as Aldi, Ikea and H&M in retailing, all of which had built their business on offering low-priced alternatives to incumbents and had evolved their models subsequently.
“They started off absolutely focused on low cost and then on top of low cost they added more choice and then they improved the service,” said Jacobs. “That’s a similar journey that the Ryanair brand will go on.”
He said the aim was “to become as liked as we are useful” – sounding an echo of the maligned Ryan approach, which hadn’t been heard around the building in some time.
The staff on the planes and at check-in desks were smiling – something O’Leary supervised personally on surprise visits
Jacobs started talking about building consumer trust, but on the basis of giving people what they wanted rather than engaging in corporate social responsibility “nonsense”. “Customers don’t want us to be lovely guys, they want to trust us to give them what we promise.”
The airline was chasing not customers’ hearts, but their minds. “I don’t want customers to say, “I love Ryanair,” “ Jacobs explained. “We want people to say, “This is a commoditised, functional experience getting from Dublin to London, from London to Madrid.”
He said this would be achieved by “catching up fast on digital” and by becoming a “digital leader in the aviation category”.
The digital aspect was crucial to O’Leary’s plans, but, in terms of Always Getting Better, the immediate changes had to come in three areas: on the website, when people made their bookings; at the airport, when people went to check in and board their flights; and on the flight itself.
Many of the proposed changes were actually relatively small stuff for Ryanair to implement, but they replaced what had been a major irritant to customers and a barrier to bringing in business.
The website was overhauled, with the number of clicks required to make a booking reduced from 17 to five. The hated baggage fees were amended, with the fine for excess loads cut by 50 per cent, and reduced fees were brought in for storing luggage in the hold. The €60 penalty for failing to print a boarding pass was cut to €15. Fully allocated seating was introduced on all flights from February 1st, 2014. The staff on the planes and at check-in desks were smiling, too, something O’Leary supervised personally on surprise visits to the desks and other customer service points.
The new website would be launched on April 10th, with the phone app to follow in May. The aircraft interiors were updated, to look less garish; there were new uniforms for the cabin crew, also toned down in their colours, and new menus.
The hidden motive
It looked like O’Leary was truly taking Always Getting Better seriously but, as always, there was a hidden motive. All of this wasn’t just for the usual customer. It was very much intended to attract a different kind of Ryanair customer: the business traveller, whom, as easyJet had shown, it was possible for a low-fares airline to entice.
This category of customer was what Always Getting Better was mainly about delivering, with the higher prices they would be willing to pay. If Ryanair was going to carve out a new market for itself in serving the business traveller, it had to do even more than it had done already. It would have to introduce something it had mocked previously: a business class. This didn’t involve erecting a curtain screen to separate the riff-raff from the more “important” customers. Ryanair couldn’t be seen to do that without alienating existing customers.
It had to be a more pragmatic version of the luxury class offered on the existing business-class airlines.
Ryanair’s first business fare was called Business Plus and was introduced in August 2014. It was a relatively basic product, offering an allocated seat, speedy access through security and priority boarding, as well as greater flexibility to change flight times if needed. It didn’t offer free food, drink, hot towels or extra on-board comforts. The price was pitched between the versions offered by rival airlines and its own cheaper offerings: €69.99 was mentioned as a standard. It was reckoned that company accountants would insist their staff use this option for travel instead of more expensive rival options.
“For 20-odd years, our focus has been to stack the product high and sell it cheap,” said O’Leary. “We’re still going to do that, but we’re going to let the customer relax in the process. Just imagine how many more people we’re going to carry and how much more money we’re going to make when we give customers more of what they want.”
A new home
There was one other major change at this time that pointed to a new era at the company. O’Leary had long been dismissive of companies that spent money on swanky new headquarters, believing it to be a sign of a collective corporate ego – or at least that of the top management – spiralling out of control. But even he found the converted hangar near the cargo area at Dublin Airport increasingly uncomfortable.
“It was a sweatshop that smelled of fuel, and shook every time an aircraft passed,” said former IT director Eric Neville. He, and others, persuaded O’Leary that the next stage of development of Ryanair could not be facilitated at the existing building, not when there was a major technological overhaul required.
Neville ended up as the man tasked with kitting out the new company head office at an industrial and retail park in Swords, a few miles from Dublin Airport, built and owned by one of Tony Ryan’s closest friends, the property developer Ken Rohan.
The new Ryanair HQ opened in 2014 and it was immediately compared with Google, in particular its games room, which included Xboxes, retro arcade machines and a pool table. It was visually dominated by a giant emergency aircraft slide to take people down to reception.
There were even motivational quotes on the walls, including one that read: “Unless it’s crazy, ambitious and delusional, it’s not worth our time.” It all cost €18 million to put together, but it did have real purpose and included the operations room, where a huge screen showed every one of the Ryanair flights in the air at that moment.
O’Leary was now presiding over a massive operation, with huge demands on his time, decision-making capacity and strategic planning. He was more than up for it – he relished the expansion and was on top of every facet. He was made for this.
The brand-new Ryanair HQ meant that the digital and technology side of the business could be pursued vigorously. The company now had a location where staff could be hired to develop and operate a tech system fit for purpose.
John Hurley was appointed chief technical officer in 2014. Hurley was quite critical of what he found on arrival. In an interview with a technology publication, he described how the business model had been not to spend money on IT.
“Ryanair was totally focused on cost and in a low-cost environment you simply don’t spend money. This meant anybody with any good ideas, no matter what they were, needed to keep them away,” said Hurley, in a damning comment.
“We had been taking a siesta for 14 years. We didn’t just miss the first wave [of digital], we missed the second wave and are probably in the third wave. We are now a technology company and all we want to do for customer experience moving forward is maintain the price, improve the choice and the digital experience.”
Hurley and other techie new-hires were part of a €20 million investment in what was to be called Ryanair Labs. Although Ryanair would still work with expert third parties, O’Leary decided to bring the process of redeveloping Ryanair’s technology in house.
Ryanair Labs was populated by experienced website developers from backgrounds in finance, gaming and enterprise software, about 250 well-paid professionals in all.
“We rebuilt the website from the ground up. We replaced every line of code, nothing got reused,” said Hurley. “What we had was a booking website.”
The attitude of his new management arm was a challenge to O’Leary’s way of thinking. His new recruits spoke a different language from him, the lingo of the digital era
Constant redevelopments of the mobile app saw the average booking time almost halved, from 3 minutes 47 seconds down to 1 minute 54 seconds.
While O’Leary understood and was delighted by all of this progress, the attitude and intent of this new arm of management were something of a challenge to his way of thinking. His new recruits spoke a different language from him, the lingo of the digital era.
Whereas O’Leary spoke of keeping costs down, and after that of keeping costs down, the new breed spoke of “employing customer-focused technology” and “cutting-edge user-experience” – or UX – “design”.
While O’Leary was looking to expand Ryanair’s services and reach and ability to generate additional revenues, he never lost sight of Ryanair being an airline in competition with other airlines.
“Big data is wank”
Anyone who might have expected O’Leary to leave a division alone – especially one costing €20 million a year in salaries and other costs – did not know the man.
Hurley learnt quickly what O’Leary wanted. Within two years of arrival, Hurley was able to tell O’Leary that what he called “small data” projects had saved the company €20 million at the bottom line.
He even began to talk like O’Leary. “Do not do big data, it is wank,” he said in one interview. “It’s confusing, expensive and you can’t store it. Start with small data. Do small projects, prove to the business the value of small data. Get them hooked on it. You’re dealing crack cocaine here. Get them out there and someone who does budgets will start looking up and seeing the value.
“The key principles with data are if it’s not making you money or improving your efficiency, don’t do it. Stop wasting your time, stop navel-gazing. Big businesses want to save money, improve efficiency and make money. Nothing else.”
Hurley had obviously learnt quickly what the Ryanair culture was . . . and that some things would not change.
Technology was now central to how Ryanair would deliver everything. It had started from a low base, but the numbers downloading the mobile app thrilled the company. But it wasn’t just about making life easier for customers. In helping them, Ryanair was also gathering information about them – and it wanted to put this to profitable use.
“The opportunities for ancillary revenues through mobile are enormous,” O’Leary said gleefully. The idea was that in buying a flight, all Ryanair customers would automatically become “members” of its website, giving the airline an unrivalled source of data to mine .
After decades of refusing to contemplate the kind of reward schemes provided by other airlines, the company unveiled “My Ryanair Club”, offering customers discounts and free flights for using the airline. It was the first customer loyalty card since O’Leary had dumped its predecessor in the early 1990s.
“It’s all about the data, sharing the right information, mining it, protecting it. It is also being mindful of people’s preferences and anticipating them,” said Hurley. “ It’s about being transparent, no tricks. It’s about the information we provide about destinations.
“Families should be warned beforehand if a destination is more suitable for stag and hen parties and suggest they perhaps go somewhere else more suitable. Even providing data about the airport you are going to, whether you are better off getting a taxi or if the bus service is great.” Customers – or members as they would be called now – were required to log in, engage, interact. And, even if they didn’t choose to, there were further opportunities to sell to them on flights. Cabin crew were given handheld Android devices as point of sale devices. These provided them with data for proper stock control on each flight, indicating what passengers were likely to buy, right down to food and drink. If there was a record of a person showing consistent preferences on previous flights, then on board offers could be tailor-made to match those preferences.
The future of Ryanair, according to Kenny Jacobs, was to be a “travel retailer that specialises in flights”, a different description from the one being offered by Hurley. But suddenly O’Leary had a new slogan for the airline, and he and his colleagues pushed it as often as possible. Ryanair wanted to be “the Amazon of air travel”.
It was a lofty ambition, and realistically probably too ambitious for the airline, but, still, it sounded good, and it would become a regular mantra of the airline over the coming years.
It wasn’t new either, this goal of providing a whole range of services beyond the actual flight itself. Ryanair already made sizeable additional income by selling other things beyond airplane tickets and did some of this via the internet. The same retailing promise had been made as far back as 2000 and many times since, albeit without the Amazon reference.
But O’Leary felt better able to make the claim now, as his confidence grew in what his IT team was doing. He believed only Ryanair had the scale in Europe to do this. “We see Ryanair becoming a kind of digital supermarket for everything that you need for travel,” Jacobs said.
The big move was to offer a full suite of accommodation, again, based on far more than low price. By June 2016 Ryanair was offering its customers a choice of hotels, including five-star, hostels, B&Bs, holiday villas and homestay options. It invited accommodation providers to submit proposals to become partners in “Ryanair Rooms”.
The providers could plug into the Ryanair website and take bookings. Ryanair would operate the price-comparison element for those who logged in.”
If I’d known being nicer to customers was going to work so well, I’d have done it ages ago
It didn’t take long for Ryanair to declare Always Getting Better a success. The bottom line proved it, as did the revenue numbers. In September 2015, Ryanair announced that its profits for the year ending March 2016 would be about 25 per cent higher than stock-market investors expected. Instead of being somewhere between €940 million and €970 million, the profits would go crashing through the €1 billion barrier and beyond, to somewhere between €1.175 billion and €1.225 billion, a 40 per cent improvement on the profits reported for the end of March 2015.
The shares hit an all-time high of €14.27 and continued going up afterwards. By November 2015 the share price had more than doubled since January 2014.
O’Leary was the biggest winner, his own net worth going up by an estimated €500 million. Not surprisingly, he was exultant: “If I’d known being nicer to customers was going to work so well, I’d have done it ages ago,” he said at one press conference.
Not all of the Ryanair surge could be put down to its own brilliance. European airlines, in general, benefited from Europe’s modest economic recovery and lower fuel prices. Even Air France, KLM and Lufthansa, flag carriers hit by strikes, achieved record profits in 2015. “The summer peak this year was extraordinary. In all the 28 years I’ve been in the business, I’ve never seen such a perfect summer. Even the incompetent airlines made money,” O’Leary said.
O’Leary might have been feeling that he could do no wrong at this stage, but there was one desire he could not satisfy: the long-haul market. He had long wanted to break into the profitable transatlantic routes and give them the Ryanair treatment.
By early 2015 he had Jacobs talking publicly and excitedly about the possibilities. Ryanair, apparently, was studying plans to fly between about a dozen European and American cities before the end of the decade, with fares as low as €10, although about half would cost €99 or more. A statement given to the media declared: “The board of Ryanair, like any plc, has approved the business plans for future growth, including transatlantic . . . European consumers want lower-cost travel to the USA and the same for Americans coming to Europe. We see it as a logical development in the European market.”
In fact, the board were appalled. O’Leary had oversold their interest. As industry veterans, they knew the difficulty of achieving this plan. Chair David Bonderman did O’Leary the courtesy of listening to his arguments, but was unmoved in his opposition, seeing it as a rare occasion when O’Leary allowed his ego to overcome his business nous.
At the AGM in September, O’Leary had to admit that management had scrapped all its transatlantic plans in favour of sticking to its knitting. Many interpreted it as a rare public slapdown of O’Leary by his usually acquiescent board.
For his part, O’Leary was still trying to sell the idea that both he and Ryanair were maturing. “We are probably moving from what I would call errant teenagers into being somewhat more adult in the way we both interact with our customers and communicate with the outside world,” he told the Financial Times in October 2015.
I’m a parody of myself, because my function here, apart from driving growth in the business, is to be the PR extreme of whatever message we’re pushing
Once the rapid growth phase had ended, he said: “You then need to hand over to somebody who’s a bit more respectful of politicians and bureaucrats, talks about caring about the environment and old people, and fucking jungles and fish in the sea and all that shite.”
But it was clear that he believed he could continue dramatic growth, until 2024 at the very least.
There were commentators who argued that dullness was what the airline needed now, and what investors demanded, but others felt that part of the premium in the Ryanair share price was due to O’Leary’s attention-grabbing behaviour, as long as it was backed up with results.
What O’Leary had done to bring Ryanair to this stage was acknowledged as remarkable, but some wondered if those qualities were best suited to the more mature company. Was it possible that the era of consolidating a customer base around the personal brand of a CEO was coming to an end?
O’Leary seemed sensitive to the theory and suggested that he had been hamming things up deliberately: “Look, I’m a parody of myself, whatever it is, because my function here, apart from driving growth in the business, is to be the PR extreme of whatever message we’re pushing at that moment.”
“Worst job in Ireland”’
O’Leary’s noisiness had not died off when, in late 2016, he applied to hire yet another personal assistant. Ryanair advertised on its website what it called the “worst job in Ireland” – executive assistant to O’Leary. The job – aimed at an “ambitious, self-motivated qualified accountant” – had some pretty standard requirements: “The successful candidate will be expected to manage a wide range of issues including treasury and portfolio management, investment analysis, tax analysis and returns, project management and property development, and special project work.”
However, what caught the public eye was the promise that the job would also involve “general drudgery”, an “ability to work without sleep or contact with the outside world” and “(ego) massage qualifications”. A collection of bedtime stories was also deemed essential, for reasons unspecified. Candidates were told that they needed to display an “aversion to bolloxology”, a thick skin and a saint-like patience. “Dubs fans, Man U supporters and cyclists will not only be automatically excluded from the process, but will be tracked down, tortured and shot,” it said. There was no mention of salary.
By late 2017 Ryanair was in crisis. Amid a shortage of pilots across Europe the airline was forced to cancel up to 50 flights a day in September and October, leading to anger among passengers and a stream of negative media coverage. And pilots, knowing they occupied a position of strength, were threatening to strike.
The pilots knew what they wanted. They were demanding an independent European employee representative council (ERC) as the recognised representative body to present their views collectively to management. Ryanair insisted that its position remained unchanged: it would negotiate only with ERCs from individual bases, and would not engage with trade unions as part of those ERCs.
The pilots weren’t just angry, though, they were calculating, too. Many realised that, right now, Ryanair could not afford a strike because of the damage it would do to its reputation, even if O’Leary tried to blame the pilots. Many were so disaffected and so badly wanted to work elsewhere that they didn’t really care if they did Ryanair damage.
Within Ryanair, there was a growing realization, and horror, that a genuine problem was escalating and that a number of pilots would not be fobbed off with extra money, as expected.
The temptation to bully them into submission, driven by O’Leary’s long-standing methods, couldn’t be resisted, especially when O’Leary was deeply involved in what was unfolding, treating this as his priority. Pilots were told that if they went on strike, they would lose benefits, including guarantees over rosters and pay, and be denied promotion.
In Italy, for example, cabin crew were told that action by any one member would result in the entire base losing rights to transfers or promotions.
While negotiations went on at Stansted to Ryanair’s satisfaction – in that there was hope of a settlement and little or no threat of strike – the Dublin-based pilots proved far more troublesome.
“Chief people officer” Eddie Wilson warned them that if any of them supported strike action, benefits would be withdrawn along with certain pay and promotion opportunities. However, many of the pilots thought it unlikely that Ryanair would go that far in its response.
On December 15th, 2017, Ryanair made possibly the most important and extraordinary announcement in its history: it would negotiate with trade unions
When a vote was called, about 115 of Ryanair’s estimated 390 pilots at Dublin, Cork and Shannon airports agreed to strike on Wednesday, 20 December. Although this was a minority – just 28 per cent, as Ryanair repeatedly emphasised – it was enough to cause mayhem because that number included 90 per cent of the captains, who were employed directly, rather than on contracts, and safety regulations required captains on all commercial passenger flights.
Wilson tried to whip up public opinion in Ryanair’s favour: “We apologise sincerely to our customers for any worry or concern that this threatened action, during the Christmas week, by a small number of very well-paid pilots may cause them.”
The company said it would “face down” the strike and claimed that “while some disruption may occur, Ryanair believes this will largely be confined to a small group of pilots who are working their notice and will shortly leave Ryanair, so they don’t care how much upset they cause colleagues or customers.”
The company promised it would publish contingency plans two days before the planned strike, to minimise disruption. That didn’t satisfy customers. O’Leary had promised that the second set of cancellations was Ryanair’s last and he couldn’t break that promise. If he did, the reputational damage would be extensive.
His negotiators returned and said they believed that the action planned for the Wednesday might be the start of a series of strikes, by unions in Ireland and Europe, unless Ryanair entered into dialogue with its pilots.
This was a genuine crisis. It forced O’Leary into lengthy consultation with his management team and brought them towards a conclusion that nobody foresaw, notwithstanding subsequent, unconvincing claims by O’Leary that he always knew dealing with unions was inevitable and that it was merely a question of when it would happen.
On December 15th, 2017, Ryanair made what was possibly the most important and extraordinary announcement in its history: it would negotiate with trade unions representing the pilots in Ireland, the UK, Germany, Italy, Spain and Portugal.
O’Leary was the voice of reform: “Ryanair will now change its long-standing policy of not recognising unions in order to avoid any threat of disruption to its customers and its flights from pilot unions during Christmas week.”
The company decided to present its position as one of the responsible CEO protecting and championing the consumer. Ryanair issued a written statement in which O’Leary said: “Christmas flights are very important to our customers and we wish to remove any worry or concern that they may be disrupted by pilot industrial action next week. If the best way to achieve this is to talk to our pilots through a recognised union process, then we are prepared to do so, and we have written today to these unions inviting them to talks to recognise them and calling on them to cancel the threatened industrial action planned for Christmas week. Putting the needs of our customers first, and avoiding disruption to their Christmas flights, is the reason why we will now deal with our pilots through recognised national union structures and we hope and expect that these structures can and will be agreed with our pilots early in the New Year.”
It produced a stunned, scarcely believing response from the pilots, their unions and the media in general. This went against one of O’Leary’s core, unshakable beliefs: unions damage business. It contradicted his previous vow that he would rather close the airline than deal with unions, or that he would cut off his arm first. This was the most remarkable of surrenders.
Changing his mind
Michael O’Leary has enough self-awareness to realise that what he has always done is not what always should be done, and that there are times when he has to shift course. He doesn’t care if he is criticised for changing his mind or his actions, regarding that as irrelevant. He shifts with the shape of the airline industry’s paradigm. Yet it is no exaggeration to say that Ryanair finished 2017 in the grip of a crisis, and that much of the work of the previous four years to better the company’s image, and sell more tickets, was damaged.
O’Leary had never cared much about branding or the views of advertising agencies, but even he must have flinched when Core Media, Ireland’s biggest media agency, published research that suggested Ryanair’s brand image had plummeted in value: “As Ryanair’s brand sentiment plunged to its lowest point ever, their visibility also jumped to 80 per cent, the highest ever. This tells us that Ryanair stood out in people’s minds more strongly than ever before, but for all the wrong reasons.”
It added that the crisis had effectively grounded the Always Getting Better repositioning of the brand. O’Leary had long treated rows as part of a game he controlled. He believed there was no such thing as bad publicity, or at least nothing that couldn’t be solved by a quick seat sale.
Now, it seemed, things were different.
This is an edited extract from Michael O’Leary: Turbulent Times for the Man Who Made Ryanair, published by Penguin. This article was edited on September 24th