Sky high success story that soars onwards and upwards
At the end of 2001 international publications like Forbes, The Wall Street Journal and Newsweek lauded him as a man to watch in 2002.
Ryanair's success has been based on emulating the low cost model of US airline Southwest, where O'Leary once worked. In America 18pc of travelling public fly on low fares carriers. In Europe the figure is just 6pc.
Ryanair forecasts growing demand for low fares carriers in Europe and is planning to aggressively exploit that opportunity with its purchase of 100 aircraft which it announced yesterday.
O'Leary, a 40-year-old Mullingar man, relishes a fight. And he has perhaps made more enemies than most businessman in Ireland as a result of his vocal attacks on Government ministers, Aer Rianta and his competitors. Abroad he has also fought with Lufthansa, airports operators and advertising standard authorities.
But underneath Ryanair's loud and aggressive image is a sleek and nimble financial operation which the stock market loves. The company's costs are pared back to the absolute minimum and it's highly profitable. Next year the company is expected to make a profit of ?145m while it will have a huge margin of 23pc.
Ryanair's philosophy is to cut out the middleman to curb expenses. Customers have to buy tickets directly from the airline either through the internet or over the phone because the airline refused to pay large commissions to travel agents. It also uses low cost airports outside European capitals to reduce its landing charges.
Unlike full service carriers it does not make arrangements so passengers can meet connecting flights and it saves on comforts like free meals and movies for passengers. While it reduces its costs and ticket prices it aims to increase the volumes of passengers it carries.
Ryanair's management has fought introducing the level on unionisation which exists in companies Aer Lingus. But its pilots are paid above the industry standard through a combination of base pay plus productivity bonuses. The company also aims to have its aircraft in and out of an airport in just 25 minutes.
Until 1997 many full service airlines, like Aer Lingus and British Airways, were protected from competition. But the Open Skies agreement ended that stranglehold giving Ryanair a vastly increased market. Some 44pc of its sales are generated in Ireland while 52pc come from Britain and 4pc from Europe. The purchase of 100 new Boeing aircraft will allow the airline ultimately carry between 40 and 55 million customers.
O'Leary is achieving this success at a time when full service airlines have had to drastically cut staff numbers to survive.
Even before the tragic events of September 11 fundamentally changed the airline industry the sector was facing serious problems. The industry was caught in a pincer movement as labour and fuel costs were beginning to rise and profit margins were declining. But the attacks on the US accelerated the problems.
The fall in passenger numbers after September 11 affected transatlantic travel most severely but companies like Ryanair do not fly to the US and were insulated from the worst of the trouble.
The Irish airline has not been alone in its attack on the low fares market. Earlier this week British Midland announced that its new no-frills service would run from Dublin to East Midlands airport in Britain in addition to servicing three sun destinations from the UK airport. British airline EasyJet is also expanding aggressively and recently announced it was buying 27 new aircraft.
Another UK carrier Go has been locked in battle with Ryanair for customers flying from Dublin to Glasgow and Edinburgh.
As a result of the stiff competition Go has decided to pull out of the Irish market after it claimed the Irish airline was selling seats below cost. Go claimed to have lost ?6.4m following its tussle with Ryanair.
Many may not like O'Leary's brash confidence but Ryanair has delivered in a market when other airlines have found it difficult to survive.
- David Murphy
