Fight or flight response

 
 

With Ryanair now introducing changes to make them more customer-friendly, Cathal O’Reilly examines the rocky relationship between Ryanair and Aer Lingus

Ryanair and Aer Lingus are two names that don’t gel well together in the business world. One is associated with ‘no frills’ and cheap flights made possible by cutting whatever corners possible, whether they are flying to cheaper airports or making their passengers walk out onto the tarmac to get onto the plane.

Aer Lingus, meanwhile, is known as being the reliably Irish airline that has struggled to maintain profits against its cheaper rival. Both airlines have been battling on and off for the past seven years. The feud began back in 2006, when Ryanair boss, Michael O’Leary, made a bid of €1.4bn to become the majority shareholder in Aer Lingus.

While Ryanair’s three bids came with promises of new jobs and a rise in share prices, Aer Lingus refused them all with little or no explanation as to why. It seems even more surprising, given that this all occurred in the midst of worst economic crisis our country has ever seen.

Instead, Aer Lingus has hit back and initiated legal proceedings with the UK Competition Commission, claiming that it was anti-competitive that Ryanair had such a large stake, almost 30%, in their company. Ryanair are arguing that the UK body does not have jurisdiction.

Aer Lingus are in for a long haul of litigation and legal proceedings. Recent developments have shown that 91% of its cabin crew have voted for industrial action. This is includes disputes over rosters, pension deficits and its recent announcement to put 87 jobs at risk in Shannon airport.

But Ryanair can’t claim a high ground either, after registering their first profit warning in a decade. Their second profit scare came in recent weeks with projected profits to drop €90m from €600m to €510m. Share prices have plummeted with these reports.

Despite backlash and negativity, O’Leary refuses to back down. Ryanair have recently announced ten year growth deals with London Stansted and Warsaw airports, hoping to grow traffic in Stansted from 13 million to 15 million in the next 5 years. With 81 million passengers worldwide, they have just ordered 175 new planes to be built over the next 5 years.

One particularly infamous example of Ryanair’s money-grabbing policies concerned a student who could not board a flight because he did not have the £50 required to pay the surcharge on a bag of duty free. After all, O’Leary himself said a few months ago that negative publicity sells more seats than positive publicity.

Recently, Ryanair have tried to tackle the perception that they don’t care about customers. The new changes being introduced include customers being able to carry on handbags as well as their main carry-on. Seats are now allocated with a charge of €5 for those who want seat priority. Re-issuing of boarding card cost has been cut dramatically from €70 to €15.

Ryanair have also introduced quiet flights in the mornings and at night, which remove the ads for scratch cards and the annoying on time flight announcement.

Online efficiency has also improved with a decrease in the amount of clicks required to book a flight from 17 to just 5. Ryanair’s fuel costs rise by 7% and their average fare still falls by 2%.

Say what you will about Michael O’Leary, but he has transformed flying. Before Ryanair came along, there was no such thing as a budget airline and their fares are still the cheapest in Europe. O’Leary has also become his own brand. His flamboyant and witty personality has been a genius addition to the company in terms of a marketing strategy.

Sexual innuendo is his best friend when dealing with the press. It’s rare you will find an interview without him using some vulgar language for dramatic effect. The “Oh my god, did he just say that” factor continues to attract the public eye towards his company.

He’s not afraid of admitting faults, however. O’Leary’s focus on the future almost always overshadows any negative press. He recently spoke of the airline’s long-term goal of a low-cost transatlantic airline starting flights at “10 bucks” to the US.

Meanwhile, Aer Lingus seems to be a byproduct of the Celtic Tiger; still slightly confused in terms of their marketing strategies that focus on high spending tourists and creamy Guinness. They’ve built an image around motherly figures dressed in emerald green tucking passengers in with tea and biscuits.

Perhaps the problem is that Aer Lingus is not even that much of an alternative to Ryanair. Sure, they don’t try to sell you brand name luggage or blind you with their yellow seats, but they are not exactly what would be classed as luxury. In fact, Aer Lingus’ idea of luxury simply involves giving all passengers free tea and allowing them to walk directly from the terminal to plane.

Additionally, given the problems they are having with their crew, they can’t even be called the friendlier airline of the two. Maybe it’s no wonder that Ryanair is still making profit in a depressed economy, while Aer Lingus is struggling to stay relevant.

Why are we struggling so hard to save Aer Lingus? Is it because we don’t want Ryanair to be the only Irish airline? Or is it possible to have the best of both, since the practices of the two airlines seem to be coming closer together?

Ryanair continues to have a positive impact and create jobs elsewhere. Aer Lingus, on the other hand, is stubborn in trying to compete with Ryanair while 87 jobs are at risk in 2014.

Mr. O’Leary still expresses an interest in a merger. Will it ever happen? It is highly unlikely and certainly not in the near future. 2014 will be a long year of litigation for both parties. It remains to be seen whether Aer Lingus will still be around in ten years time.

 

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