It was a December Sunday when I was reading the Financial Times Interview with Ryanair CEO Michael O’Leary. Here is couple of nuggets from the CEO of one of the world’s most profitable airlines.
“O’Leary advise customers wanting refunds to f*** off”
On management consultants “should all be euthanized”
On MBAs “bullshit”
On Customers “The customer’s usually wrong”
On employees “My staff is my most important asset. Bullshit! Staff is usually your biggest cost”
The company issued a memo banning employees from charging their cell phones at work. Additionally O’Leary is contemplating “toilet charge” in the air as well as standing only airplanes to reduce costs.
O’Leary claims that customers are “too mentally bloody lazy to travel with carry-on bags” for three weeks vacation
For a CEO who does not bother with email or computers, the existence of www.ihateryanair.co.uk does not bother him. Social media? I am not sure he knows what it is
O’Leary’s ultimate argument is the fact that Ryanair was growing by 9 million passengers a year and therefore must be doing something right.
So this got me thinking. Even if I assume that some of Mr. O’Leary’ pearls f wisdom are a PR stunt, it is still pretty harsh. Unlike another blogger on this site, I do not regard Ryanair as a great customer experience. It is an experience alright but not a great one. I would not add it to my next book.
So how does he get away with it? I was wondering. How do customers accept this level of treatment? In fact Ryanair is not alone in this special treatment of customers. Spirit Airlines in the USA imitate the same strategy with an outrageous approach to customers. Their main argument: ” The price you pay strip you from any right to complain. For this price, we can do anything we want to. End of story”.
We recently published a new white paper on the citizen experience in the public sector which helped me understand this phenomenon. (Download a free copy at http://www.strativity.com/products/Public-Service-at-Your-Service.aspx) If you will go to customers and offer them better public service for higher taxes, what percentage of them will agree to it? Very small. The majority of customers will accept lower quality public services as long as taxes will remain low. Occasionally some citizen will pay extra for a rushed service but by and large, the reaction will be “keep taxes low”. Ryanair convinced their customers that real low rates are possible and keep the services provided to minimal, in return. Just like taxes, they got customers addicted to the low price and made them accept any treatment what so ever.
But are the prices really that low? Apparently, according to Chris Anderson in his recent book Free – The Future of Radical Price what Ryanair really did is unbundled its services. The initial price seems low but when you add up all the other elements customers pay for (how about a fee for online check in?), the company recover exactly the price it needs to be profitable. It simply do so by charging small fee for each service separately rather than one high price. A similar strategy to iPod’s $0.99 per song vs. $15.99 per CD.
Appalled as I was by Mr. O’Leary’s attitude towards his employees and customers, it is an experience some people are willing to endure. Price sensitive customers will trade down and accept mediocre to borderline obnoxious service in exchange for a lower price. (Last year, a Wal-Mart employee was killed by the mob of customers waiting for the store to open on Black Friday. After that I believe customers will do anything for lower price) Every value proposition and experience has a price. And every price seem to have a taker. Then the question remain do you want to be the one who deliver this type of experience? From reading the article it seems as Mr. O’Leary was very proud of it. I know I would not.
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