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Is that it, Michael? October 29, 2009

Posted by supersonicswan in Swan Lake.
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Every industry has its legend, that mythical person that will surface sooner or later in any conversation. For aviation – especially for its low cost branch – Michael is just that. There is a general agreement of sorts that he’s the bad boy but at the same time everyone adores him and would like to be just the same when they grow up – just as clever.

And clever (or sly maybe) he is for sure. Michael has mastered the art of doing things wrong in order to do them right with the result of everyone being happy. Or rather, him making money and everyone else giving it to him even if they don’t quite like what’s on offer. In the end, it’s not his problem if they like him or not. Money keeps coming in. Michael is like an unpleasant itch on your back – it is awful but the more you scratch if the happier you become. That’s why I like to read about Michael and why I’m a regular reader of Air Observer’s blog – the autor apparently can’t get rid of that itching himself.

Several weeks back I gave some examples of how FR is going a bit too far with his costcutting, my point being there are some aspects of the product that cannot be unbundled because they are the preliminary requisite – such as for example on-line check-in. FR is now charging people for something they can’t give up on cause if they did they would be better off not buying the product in the first place. I really wonder how it is legal but so far FR has been successful in fooling people just like this.

AirObserver has an interesting piece on FR’s blackmail-like policies towards Shannon Airport. It is widely known that O’Leary plays dirty with airport authorities around Europe in order to get the best deals. There is a court case in Belgium against allegedly unlawful subsidies of FR by local authorities, some airports say right out they are not prepared to do business on FR’s terms as it equalled jeopardising their own goals. But there are many that do agree – the money comes out of the taxpayer’s pocket. It is astounding how local authorities which own these airports can let this happen in the name of regional development, etc.

Right, Ryanair has got the critical mass needed to decide on a regional airport’s future. Even so, it is enthralling how they have succeeded in terrorising the market. Commenting on AirObserver’s post, I asked for how long can O’Leary continue on the same bearing given the momentum of his opponents is gaining in strength. How much longer will it take for FR’s stakeholders of different breeds to weaken or maybe even bring the company down?

Surprisingly enough, it might be sooner rather than later. As TravelMole relates, Germanwings’ CEO said FR-type of business could come to an end very soon and this mainly due to the company’s abusive practices in its airport dealings. Winkelmann claimed that the more FR uses an airport the higher are the costs incurred by that airport. Which is largerly in line with what’s been said before – effectively, it is the taxpayer that helps maintain FR’s model sustainable. But the same taxpayer is obliged to pay extra for an ever increasing amount of add-ons (some of which are not add-ons at all).

However complicated all this may seem, there are two interesting points to be made here:

1. Never ever bite at the hand that feeds you – if you get better airport deals thanks to your customers’ money, don’t try to squeeze the last penny out of them pretending it’s for their own good. It is not.

2. Personally, I’m left pondering whether FR’s model is able to survive should their business partners and customers start turning away in search for fewer maybe but surely fairer deals – is FR just as low cost as O’Leary claims it is or does it appear so precisely because O’Leary wants us to percieve FR as low cost drawing our attention away from the fact its operations are based on sabotage and deception?

Do you think there is a way out of the limbo O’Leary got himself into? Can FR establish good relations with its stakeholders? Would their model remain sustainable if all the “deals” went?

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Comments»

1. airobserver - October 29, 2009

Hello Swan, this is Roman of AirObserver.
I believe that Ryanair’s business model is much more risky than any other in Airline industry. It is also one of the most successful in the past decade!
As you said, until Ryanair will keep the critical mass needed to decide on a regional airport’s future, the Irish company will keep going on like this, only EU legislation could stop it,
I’ve just added you in my blogroll, feel free to add me! 😉


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