O' Leary and his duff decisions.
Sunday Independent: June 18th 2006
O'Leary and his duff decisions
NOTHING, it seems, can stop Ryanair. This year the budget airline is planning to carry 42 million passengers. If it does, it will overtake Lufthansa to become the world's largest scheduled airline measured by the number of passengers carried.
While it might seem churlish to spoil Ryanair's party, the fact is that motormouth O'Leary is not quite infallible - and what's more, some of his mistakes have ended up costing Ryanair's shareholders a hell of a lot of money. So we decided to glory in them.
FUEL HEDGING O'Leary's most expensive mistake was undoubtedly his refusal to hedge Ryanair's exposure to rising fuel costs by buying fuel forward and locking in lower fuel prices. This meant that Ryanair had no protection as aviation fuel costs soared skywards. Last year the airline spent 462m on fuel, an increase of 74 per cent on the previous year.
If Ryanair had been able to lock in fuel prices even $10 (7.80) below the spot price, it would have added about 70m to last year's profits.
EUROPE While Ryanair has already repaid 4m in subsidies, that was only a small part of the cost of the Charleroi debacle. Make no mistake about it, gratuitously annoying the EU Commission was not a good idea.
By turning down the offer of a cosmetic compromise and publicly abusing the Commission, which had objected to Ryanair's sweetheart deal with the Walloon regional government that owns Charleroi, O'Leary has made powerful enemies in Brussels. Enemies who have long memories and are in a position to inflict serious damage on Ryanair.
GEOGRAPHY Whatever it was the Jesuits taught the young O'Leary during his time at Clongowes, geography doesn't seem to have been on the curriculum. Ryanair's Frankfurt-Hahn hub is virtually in Luxembourg, while Paris-Beauvais is closer to the northern French city of Amiens than it is to the French capital.
However, it was Ryanair advertising flights to "Copenhagen" a few years back that really took the Mickey, if you'll pardon the pun. On closer examination it emerged that the flights were not to Copenhagen, the capital of Denmark, but to Malmo in Sweden.
NO DIVIDENDS With its growth rapidly slowing, O'Leary's refusal to pay a dividend is now starting to hurt the share price. While the airline almost quadrupled passenger numbers to 35 million over the past five years, it is forecasting that passenger numbers will double to just under 70 million by 2011.
DUBLIN AIRPORT By pursuing a pointless vendetta against Aer Rianta over its plans to expand Dublin Airport and refusing to start any new routes out of Dublin for several years, O'Leary allowed Aer Lingus to open a slew of new routes.
Having a free run at these new European routes was one of the key reasons Willie Walsh was able to bring Aer Lingus back from the dead. With Aer Lingus rapidly evolving into a sort of Ryanair-lite, O'Leary had no option but to eat humble pie and start operating new routes out of Dublin.
CUSTOMER RELATIONS While O'Leary might view customer relations as an expensive irrelevance, treating the paying public in such a cavalier manner could yet come back to haunt Ryanair. O'Leary's handling of Jane O'Keeffe, Ryanair's millionth passenger, who was awarded 67,500 by the High Court in 2002 after the airline reneged on a prize of free travel for life, was merely the most notorious such incident.
With relations between Ryanair and the EU Commission now downright poisonous, what are the odds on enhanced consumer protection for passengers whose flights are delayed or cancelled?
POLISH U-TURN In 2004 O'Leary sneeringly said: "Who wants to go to Gdansk? There ain't a lot there after you've seen the shipyard wall." A year later Ryanair announced that it was after all flying to the Polish port - and now flies from Gdansk to Stansted, Frankfurt Hahn and Stockholm.
WHEELCHAIRS Whatever made O'Leary levy a charge on passengers in wheelchairs? In fairness, Ryanair had a better case than was generally recognised as it was merely passing on a charge imposed by the British Airports Authority and Aer Rianta.
It doesn't matter. When Bob Ross, who had been charged stg£18 for the use of a wheelchair at Stansted in March 2002, successfully sued Ryanair, it was the budget airline and not BAA which got it in the neck.
After the wheelchairs experience, you would have thought that Ryanair would tread carefully in its dealings with the disabled. Not a bit of it. Last September it chucked nine blind and visually impaired people along with their three fully-sighted minders off one its planes at Stansted citing "safety" considerations. Some people never learn.
THAT'S ENTERTAINMENT In September 2004 Ryanair unveiled ambitious plans for an in-flight entertainment system. Passengers would pay 7 for the use of a laptop-type device which would show films, cartoons and TV shows.
O'Leary predicted that Ryanair would make "enormous sums of money" from the system. Things didn't quite work out as planned. The system left passengers underwhelmed and it has since been quietly dropped.
Dan White