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Thursday, June 21, 2007

Ryanair's Michael O'Leary seeking to boost business amidst market slowdown but gets puck in eye on customer service

Ryanair Chief Executive Michael O'Leary said on Tuesday that the low-cost airlines average ticket prices will be lower this year and predicted a ``big downturn'' for the industry.

Ryanair cut prices on 3 million seats at a cost of as much as £45 million pounds over three months, O'Leary said today at a press conference in London.

``We expect a big downturn in the next 12 months, we just don't know what's going to cause it,'' O'Leary said, noting the cyclical nature of the industry. ``We must be due one.''

Ryanair wants to take market share from EasyJet Plc and meet targets for passenger growth by forcing prices lower. It is targeting to boost customer numbers by 22 percent this year even as it pays more for fuel. The company confirmed that profit will climb about 5 percent in its 2008 financial year as it slashes prices.

However, Michael O'Leary ran into flak on customer service from a recent customer, who happened to be a former editor of the Financial Times.

The following letters were recently published in the FT.

Albania's airport terminal is run more efficiently

by Michael O'Leary

Published: June 15 2007 03:00 Last updated: June 15 2007 03:00

From Mr Michael O'Leary.

Sir, Philip Stephens ("Put an end to the Heathrow misery", June 12) correctly describes the passenger experience at Heathrow as a nightmare. Sadly it is no better at the other BAA monopoly airports at Gatwick and Stansted.

These appalling and badly run facilities are further depressing proof of the abject failure of the Civil Avation Authority's regulatory regime in the UK. Any system that rewards a monopoly by setting its income as a fixed percentage of its capital expenditure is bound to incentivise that monopoly to waste not millions, but billions, on capital expenditure in order to inflate its future income.

Mr Stephens also correctly identifies the solution. Competition. The only way the London airports can be improved is for the Competition Commission to force the break-up of BAA's London airport monopoly. Spin out Heathrow, Gatwick and Stansted into three separately owned companies and force them to compete vigorously against each other. Competition will deliver more efficient investment, passenger-friendly terminal facilities, lower costs and improved services. Put an end to the regulatory scandal that allows the BAA monopoly at Stansted to contemplate wasting £4bn on a second runway and terminal, when these facilities can and should be built for less than a quarter of that sum.

The BAA airport monopoly has not delivered for passengers. Albania provides more efficient terminal facilities than the BAA monopoly. Ryanair welcomes Mr Stephens' support for our campaign to break up this overspending, overcharging airport monopoly.

Michael O'Leary,
Chief Executive,
Ryanair

O'Leary's protest is not without irony
By Andrew Gowers

Published: June 18 2007 03:00 Last updated: June 18 2007 03:00

From Mr Andrew Gowers.

Sir, While endorsing Michael O'Leary's sentiments about the horrors of BAA's "monopoly airports" (Letters, June 15), am I alone in finding such criticism somewhat hypocritical coming from the head of an airline with as cavalier an attitude to its own customers as Ryanair frequently displays?

A recent encounter by my family with Mr O'Leary's "On-time airline" casts an ironic light on his protests against the poor passenger experience at Heathrow, Gatwick and Stansted. Ryanair was supposed to fly us to Treviso for Venice, but our plane was diverted by a storm and we landed at Trieste.

Then the fun started. The airport was closed and bleary-eyed police and customs officers had to be summoned from their homes to deal with us. Contrary to pre-landing assurances from the crew, there was no transport, accommodation or refreshments for the arriving refugees. More entertainingly still, once we were ensconced out of sight in the airport building, the Ryanair crew simply disappeared, never to be seen again. Thus 184 passengers including elderly, infirm and infants, were left to fend for themselves in the middle of nowhere through the small hours of the morning.

According to the Air Transport Users Council, airlines have a contractual duty to get passengers to the destination they paid for at no extra cost. Can anybody explain why an airline that so flagrantly and insouciantly violates its obligations to customers should continue to have a licence to fly?

Andrew Gowers,
London SE21

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