Is Ryanair starting to mind its manners?

A long-term shift in the industry could explain why Michael O'Leary's notoriously cavalier attitude toward his own customers is mellowing.

Good manners cost nothing but Michael O’Leary, the chief executive of the budget airline Ryanair, is an expert at putting a price on things people never expected to pay for. Customers who fail to print boarding passes are charged £70, checking in a bag at the airport can cost £100 and the airline periodically moots the idea of charging passengers to use the loos.

Ryanair ticket sales have historically proved immune to O’Leary’s lack of charm, and his boast that “short of committing murder, negative publicity sells more seats than positive publicity” appears irritatingly accurate. In June 2013, the International Air Transport Association reported that more than 80 million people flew Ryanair in 2012, nearly 30 million more than Lufthansa, the second most popular airline.

This makes O’Leary’s recent about-turn all the more intriguing, because he has announced a raft of concessions to make flying Ryanair a bit less unpleasant. The airline is increasing passengers’ carry-on allowance, decreasing penalty charges and giving customers a 24-hour “cooling-off” period during which they can correct mistakes to their booking. Passengers on early-morning or evening flights will no longer be subjected to headacheinducing public announcements urging them to buy e-cigarettes and scratch cards, or a grating fanfare every time their flight lands on time.

One possible explanation for O’Leary’s mellowing attitude is that Ryanair issued a warning that it might not meet its £480m profit target this year. Ryanair blamed the weakness of the European economies and price-cutting by rivals – but it could also point to a long-term shift in the industry. The gap between low-cost and legacy carriers is shrinking. Low-cost airlines were intended to appeal to holidaymakers on a budget but, having crowded out established carriers on some short-haul European routes, they are increasingly being used by cost-conscious business travellers, too.

Ryanair’s main rival, easyJet, has already introduced a series of measures to attract business passengers. Meanwhile, the low-cost airlines are expanding into markets still dominated by the conventional carriers. October brought the maiden international flight for Africa’s first low-cost airline, Fastjet. The same month, Norwegian Air Shuttle, the world’s fastest-growing budget airline, signalled an expansion into long-haul travel by unveiling plans for a flight from London to New York which will cost £149 one-way. On short-haul flights, where legacy airlines are at a comparative disadvantage, some carriers have tried to emulate their budget rivals. Aer Lingus and Iberia no longer provide free food and drinks on some routes.

In many ways, these changes were inevitable once air travel became a more accessible and, by extension, less luxurious mode of transport. In the early days of low-cost flying, passengers might have been willing to put up with rude treatment for Ryanair’s hugely popular £1 flights, but in a more competitive market O’Leary may be learning slowly that bad manners can be costly.

Has Michael O'Leary learned his lesson? Image: Rex Features

Sophie McBain is a freelance writer based in Cairo. She was previously an assistant editor at the New Statesman.

This article first appeared in the 30 October 2013 issue of the New Statesman, Should you bother to vote?

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Leader: The unresolved Eurozone crisis

The continent that once aspired to be a rival superpower to the US is now a byword for decline, and ethnic nationalism and right-wing populism are thriving.

The eurozone crisis was never resolved. It was merely conveniently forgotten. The vote for Brexit, the terrible war in Syria and Donald Trump’s election as US president all distracted from the single currency’s woes. Yet its contradictions endure, a permanent threat to continental European stability and the future cohesion of the European Union.

The resignation of the Italian prime minister Matteo Renzi, following defeat in a constitutional referendum on 4 December, was the moment at which some believed that Europe would be overwhelmed. Among the champions of the No campaign were the anti-euro Five Star Movement (which has led in some recent opinion polls) and the separatist Lega Nord. Opponents of the EU, such as Nigel Farage, hailed the result as a rejection of the single currency.

An Italian exit, if not unthinkable, is far from inevitable, however. The No campaign comprised not only Eurosceptics but pro-Europeans such as the former prime minister Mario Monti and members of Mr Renzi’s liberal-centrist Democratic Party. Few voters treated the referendum as a judgement on the monetary union.

To achieve withdrawal from the euro, the populist Five Star Movement would need first to form a government (no easy task under Italy’s complex multiparty system), then amend the constitution to allow a public vote on Italy’s membership of the currency. Opinion polls continue to show a majority opposed to the return of the lira.

But Europe faces far more immediate dangers. Italy’s fragile banking system has been imperilled by the referendum result and the accompanying fall in investor confidence. In the absence of state aid, the Banca Monte dei Paschi di Siena, the world’s oldest bank, could soon face ruin. Italy’s national debt stands at 132 per cent of GDP, severely limiting its firepower, and its financial sector has amassed $360bn of bad loans. The risk is of a new financial crisis that spreads across the eurozone.

EU leaders’ record to date does not encourage optimism. Seven years after the Greek crisis began, the German government is continuing to advocate the failed path of austerity. On 4 December, Germany’s finance minister, Wolfgang Schäuble, declared that Greece must choose between unpopular “structural reforms” (a euphemism for austerity) or withdrawal from the euro. He insisted that debt relief “would not help” the immiserated country.

Yet the argument that austerity is unsustainable is now heard far beyond the Syriza government. The International Monetary Fund is among those that have demanded “unconditional” debt relief. Under the current bailout terms, Greece’s interest payments on its debt (roughly €330bn) will continually rise, consuming 60 per cent of its budget by 2060. The IMF has rightly proposed an extended repayment period and a fixed interest rate of 1.5 per cent. Faced with German intransigence, it is refusing to provide further funding.

Ever since the European Central Bank president, Mario Draghi, declared in 2012 that he was prepared to do “whatever it takes” to preserve the single currency, EU member states have relied on monetary policy to contain the crisis. This complacent approach could unravel. From the euro’s inception, economists have warned of the dangers of a monetary union that is unmatched by fiscal and political union. The UK, partly for these reasons, wisely rejected membership, but other states have been condemned to stagnation. As Felix Martin writes on page 15, “Italy today is worse off than it was not just in 2007, but in 1997. National output per head has stagnated for 20 years – an astonishing . . . statistic.”

Germany’s refusal to support demand (having benefited from a fixed exchange rate) undermined the principles of European solidarity and shared prosperity. German unemployment has fallen to 4.1 per cent, the lowest level since 1981, but joblessness is at 23.4 per cent in Greece, 19 per cent in Spain and 11.6 per cent in Italy. The youngest have suffered most. Youth unemployment is 46.5 per cent in Greece, 42.6 per cent in Spain and 36.4 per cent in Italy. No social model should tolerate such waste.

“If the euro fails, then Europe fails,” the German chancellor, Angela Merkel, has often asserted. Yet it does not follow that Europe will succeed if the euro survives. The continent that once aspired to be a rival superpower to the US is now a byword for decline, and ethnic nationalism and right-wing populism are thriving. In these circumstances, the surprise has been not voters’ intemperance, but their patience.

This article first appeared in the 08 December 2016 issue of the New Statesman, Brexit to Trump