DAVID LEARMOUNT / LONDON
Michael O'Leary has set his sights on European growth but insists he will not let no-frills carrier expand too fast
Ryanair's Michael O'Leary and Southwest Airlines founder and chairman Herb Kelleher head two of the few airlines to have made healthy profits in the past fiscal year. Many other low-cost airlines have risen fast and collapsed into bankruptcy faster, but Southwest has flourished and O'Leary is confident that no-frills Ryanair is treading a low-risk business path to longevity.
O'Leary, unashamedly aping many of the Kelleher operating techniques and precepts, wants to make Dublin-based Ryanair Europe's equivalent of Southwest.
"Europe will have two big low-fare airlines, unlike the USA, which only has one," he says. Ryanair, obviously, will be one of them.
The airline is growing at 25% a year, but faces the UK's similarly fast-growing EasyJet and Go among others in Europe - and these two are set to merge. EasyJet's London Luton main hub is about 20km (12.5 miles) from Ryanair's largest operating base at London Stansted and Go shares the same tarmac.
Rapid expansion careering out of control has killed no-frills carriers before. US carriers ValuJet and People Express come to mind. But Ryanair is not exposing itself to the same risks, says O'Leary.
"People Express did not have a disciplined rate of growth," he says. "Kelleher kept to a disciplined rate." Ryanair's expansion is a mix of frequency increases on present routes, four to five new destinations from existing centres in a year and "one new base each year for the next four to five years", he says. Brand recognition is not a problem for Ryanair in Europe, he insists.
Stansted is the main hub and the other "centres" are Charleroi in Belgium, Prestwick in Scotland, Dublin and Shannon in Ireland, and Frankfurt Hahn in Germany. "That's the way Southwest expanded in the early years," O'Leary says:
At the centres all ground services are carried out by airport contractors, but flight and cabin crew have to work at one of the main UK/Ireland hubs at least a year to learn Ryanair's methods before being posted/repatriated there.
ValuJet was grounded by the US Federal Aviation Administration after a fatal crash and faced formidable media inquisition about the presumed unhappy relationship between low fares and safety. It has now been rebuilt as AirTran. The FAA had ruled that ValuJet's subcontractor safety oversight was inadequate, blaming its growth rate of more than 100% a year. O'Leary insists Ryanair's growth will never be in that league.
A recent confidential report alleged low-cost airlines' pilots were particularly impatient with air traffic controllers, implying the pilots were under pressure. O'Leary realises it would be a business disaster if a low-fare carrier were to have a serious accident.
He is resigned to the fact that the media believes low fares mean corner-cutting. But this does not stop him listing the differences between his business model and that of the main-line carriers to prove this is what brings the economies, not risk-taking. Unable to ignore the accusation of pressurising his pilots, O'Leary says: "We don't rank pilots by on-time performance."
The single-type fleet is the building block for the Ryanair business model. "We originally used to take secondhand aeroplanes of different types from other carriers and that made life much more difficult," says O'Leary. Ryanair owns 20 hushkitted Boeing 737-200s, but its future is with the massive order for more than 100 737-800s, many already in service.
It is not merely a cost-saving measure to fly to secondary airports, O'Leary says: "It's fundamental to our operating system. The airports are not busy. We can get turnarounds at speeds you could not get at [London] Gatwick. And you get on-time departures.
"We fly similar routes to British Airways, not the same ones [and] we don't fly to the big charter destinations." Ryanair's aircraft utilisation is four sectors in the morning with 25min turnarounds, then a 1h midday turnaround that O'Leary calls "the firebreak". There are four sectors in the afternoon.
"The aircraft and pilots do not work at night," he says. This gives the system time for catch-up and maintenance.
The airline carries out its own pilot selection and recurrent training on its simulators at East Midlands airport in the UK, and pays pilots good rates - no economies there, O'Leary insists. It mainly hires experienced first officers and promotes its own captains. Forab initio second officers the carrier has an arrangement with the Netherlands-based Schreiner training school.
O'Leary emphasises that Ryanair has been around since 1985, he has been in charge since 1990, and he intends to keep his airline expanding at a sustainable rate.
Source: Flight International
