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Tuesday, 2 June 2009

Mr O’Leary’s Cash Cow

This morning’s business news shows that no player in the airline industry is immune to the march of events: Ryanair has announced a first annual loss, as detailed by the BBC. But head man Michael O’Leary is upbeat: he says that there is an underlying profitability. He is right. The item that pushed the carrier into the red was a write-down of its stake in Aer Lingus: here is proof that even O’Leary cannot resist playing a little “real Monopoly”, and that he would be better off sticking with the knitting.

Because Ryanair is still very good at selling its wares to We The People, even when those wares are not the least expensive on offer. I know this, as later this month I am aiming to be on my travels once more, to the land Dubya Bush knows as Yurp. And, for once, I can make a direct comparison between two of the so-called budget airlines. One of these is Ryanair. And it is not the lowest cost option.

It was to Mr O’Leary’s supposed bargain basement that I first turned, and had reached the last stage in costing the flight when I opted to pay by debit card. Only when the handling charge flashed up – a whopping ten quid – did the Yorkshire dissent kick in. A quick scan of the alternatives revealed a carrier willing to offer a flight between the same points for more than 25 pounds less. Moreover, the “taxes and charges” varied between carriers: Ryanair quoted over 56 notes, while the alternative was just under 38, with a debit card surcharge of only 5.50.

On top of that, Ryanair slapped another five quid each way on top for “online check-in”, while the competition made no such charge. In mitigation, it’s possible that the alternative choice is loss leading, and no doubt the combative O’Leary will be quick to point out that his firm does lots of promotions which offer cheaper options – if you are quick enough off the mark and are prepared to fly at certain times.

The moral of the story is that, just because Ryanair bang on about “cheap flights”, and tell you that to travel with them is to “fly cheaper”, that doesn’t mean you should take them at their word.

And, as if you needed to know, they’re not in it to be charitable.

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