How Ryanair was transformed into a €1bn profit machine
Kenny Jacobs was the architect of Ryanair's extraordinary transformation, which saw the airline completely overhaul how it dealt with customers. For the first time, the Chief Marketing Officer explains how Ryanair was changed from within
Ryanair introduced low air fares to Europe 30 years ago. The 'powers that be' across Europe did not want this upstart to succeed, because it would disrupt and challenge the cosy model that existed between national flag carrier airlines and governments. A cosy model protecting the airlines where customers paid extortionate fares and had a very limited choice of destinations across Europe.
From the outset, Ryanair has always been very effective at giving customers what they really want: the lowest fares, the widest choice of destinations and the most reliable service. That is why the business has grown to become the biggest airline in Europe, one that will carry over 104 million customers this year.
Customers never doubted the lowest fares, but the approach to customer service was, at times, a bit rough around the edges. This, coupled with a 'take it or leave it' attitude when customers complained, marked the airline out as a single-minded business that did not listen enough to its customers. The business was slow to innovate at a time when customers' expectations were changing and the industry was changing, with some competitors being able to successfully combine low enough fares (though not as low as Ryanair's) with a higher level of service.
So, in 2013, Ryanair decided it was time to change and improve the customer experience to achieve strong traffic growth and superior returns for shareholders. At this time, low-cost carriers had about 30pc share of the European market, as national flag carriers continued to struggle and focus more on long haul. It was the right time to commit to some big orders of new aircraft, and reposition the airline with an improved level of customer service at even lower fares.
Ryanair moved quickly in identifying which parts of the product and service needed to be changed and improved for customers and, as importantly, it also identified what didn't need to be changed, such as the focus on cost, the low fares that other airlines could never achieve and industry-leading punctuality.
How we did it
The re-positioning of Ryanair as 'Low Fares. Made Simple' centres on providing customers with more choice, a much better travel and digital experience, and the same low fares they love.
This is similar to the repositioning of Aldi the discount supermarket over the past five years. Aldi has remained the price leader while at the same time it now offers more choice and better quality. Shopping at Aldi has become a badge of honour among savvy consumers and their market share gains reflect this.
Every business, regardless of its size or the industry it operates in, has to innovate and evolve. Many businesses get bogged down in never-ending change programmes with too much analysis and consultants' reports and along the way they lose their focus and more of their customers.
Ryanair didn't make this mistake.
The business agreed the policy, product and business changes we wanted to make, we put these into one plan we call 'Always Getting Better' and we got on with the fast and effective execution of that plan.
Always Getting Better - What we changed
• Improve the flying experience: We allowed customers bring two bags on board, and allocated seats were introduced last year, and later this year we will change the aircraft interiors and introduce more contemporary crew uniforms.
• Embrace digital: A new, simpler website was launched, a new app, a customer registration function called 'MyRyanair' so we can personalise our offers, communications and our digital platform, and improve the selling of ancillary products such as car hire and reserved seats. This October we go live with an even better website.
• Broaden the appeal of Ryanair: We launched 'Family Extra', a new product designed specifically for families, and 'Business Plus', for business customers. We also launched a groups and corporate service.
• Improve the product: We have added more primary airports into our network. These include Brussels National, Athens, Amsterdam Schipol, Milan Malpensa, Lisbon, Cologne, Hamburg and Glasgow International. We now get our schedule out before any other airline, meaning Irish customers can now book flights for October 2016. We also improved flight times and frequencies on the most popular routes.
• Keep the focus: We made these improvements but maintained our cost focus because this allows us to give our customers the lowest fares.
Always Getting Better - How we changed
• It starts at the top: A very decisive CEO and Board supported the 'Always Getting Better' change programme from the start. With a flat organisation structure and open culture, the changes were embraced by staff in the head office and across all 73 bases.
• Listen to customers: We asked customers across many different markets what they wanted us to change and this gave us a list of issues and ideas we then prioritised.
• Have one road map: We framed all the changes in the 'Always Getting Better' plan that spans the entire business. So far we have implemented over 20 initiatives that improve the product and customer experience, with many more to come this year; and we are already working on the initiatives we want to roll out next year.
• Add capability where you need it: That was principally in digital and technology. We wanted to become the leaders in the industry on all things digital, and so we created Ryanair Labs and created a team of over 150 working on our new digital platform.
Demand for flying with Ryanair has never been stronger. Ryanair's customer traffic for the summer (June, July and August) was over 30 million, with an average load factor of 95pc and over 90pc punctuality. In just those 12 weeks, Ryanair had more customers than Air France or KLM have in a full year, and became the first airline to carry over 10 million international customers in a single month. The business has grown from 81 million customers in 2013/14, to over 104 million for 2015/16. In this time frame, we have improved load factor by 7pc; that is around 14 additional, and happier, customers on every single flight.
'Always Getting Better' has now become a good way to describe Ryanair itself. It is a fast, ambitious and relentless business that is now driven by digital innovation and trying new things. At the same time we are keeping the focus on costs and having the lowest fares, because that's what made us famous in the first place. Low cost will always be the North Star for Ryanair and the 'Always Getting Better' plan has provided a new map to navigate the entire business.
That combination is proving to be a great formula for success which is better for customers, staff and shareholders.
Sunday Indo Business