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Ryanair Ltd

Ryanair Ltd. (ISEQ: RYA, LSE: RYA, NASDAQ: RYAAY) is an Irish low-cost airline. Its headquarters is located at Dublin Airport with its primary operational bases at Dublin and London Stansted Airports. Ryanair operates over 290 Boeing 737-800 aircraft. The airline has been characterised by rapid expansion, a result of the deregulation of the aviation industry in Europe in 1997 and the success of its low-cost business model.

Criticism

Ryanair Headquarters in Dublin Airport

Boeing 737-200 in 2003

 Employment relationsIn the early years, when Ryanair had a total of 450 employees who each had shares in the company, there was an agreement that staff would not join a union on the basis that they would have influence on how the company was run.[60] However, there were some early attempts to unionise Ryanair due to Michael O'Leary, board of directors, requesting that pilots take pay cuts and accept changes in their working conditions. Many of Ryanair's pilots were dissatisfied with the new moves and were represented by the Irish Airline Pilots Association. Ryanair's response was to outsource employees from other European countries.  Ancillary revenue and in-flight serviceTwenty percent of Ryanair's revenue is generated from ancillary revenue, that is income from sources other than ticket fares. In 2009 ancillary revenue was at €598 million, compared to a total revenue of €2,942 million. Ryanair has been described by the consumer magazine Holiday Which? as being the worst offender for charging for optional extras. As part of the low-cost business model the airline charges fees, these can be related to alternative services like using airport check-in facilities instead of the online service fee and using non-preferred methods of payment. It also charges for extra services like checked in luggage and it offers food and drinks for purchase as part of a buy on board programme. Ryanair argues that it charges for a large number of optional extras in order to allow those passengers who do not require baggage, priority boarding or other premium services to travel for the lowest possible price by giving customers the flexibility to choose what they pay for.

In 2009, Ryanair abolished airport check-in and replaced it with a fast bag drop for those passengers checking in bags.The option of checking in at the airport for €10 has been discontinued, and all passengers are required to check-in online and print their own boarding pass. Passengers arriving at the airport without a pre-printed online check-in will have to pay €40 (now €60/£60 May 2012) for their boarding pass to be re-issued. Ryanair has also replaced the free online check-in with a €6 online check-in fee which is charged per person, per flight.Although this fee is waived on "Free", "€1" and "€5" promotional fares, it has been criticised as being a non-optional extra charge which should be included in the headline fare.   No-frillsNew Ryanair aircraft have been delivered with non-reclining synthetic leather seats, no seat-back pockets, safety cards stuck on the back of the seats, and life jackets stowed overhead rather than under the seat. This allows the airline to save on aircraft costs and enables faster cleaning and safety checks during the short turnaround times. It was reported in various media that Ryanair wanted to order their aircraft without window shades; however, the new aircraft do have them as it is required by the regulations of the Irish Aviation Authority.

Other proposed measures to reduce frills further have included eliminating two toilets to add six more seats, redesigning the aircraft to allow standing passengers, suggested that passengers should pay to use the toilets, charging extra for overweight passengers, and asking passengers to carry their checked-in luggage to the plane.In common with other no-frills airlines, Ryanair is a strictly point-to-point carrier and does not offer connecting flights. Passengers who purchase an onward flight from their destination, intending to make a connection, are held responsible for making it to the airport on time for each flight. Ryanair does not compensate passengers who miss their flights because they arrive too late at the airport, nor does it provide replacement tickets free of charge. If a passenger misses their flight, then it is the passenger's responsibility to buy a new ticket at their own expense. This rule applies regardless of the passenger's chosen method of transport to the airport (including another Ryanair flight).

 

Customer service

A Ryanair Boeing 737-800 departs Birmingham International Airport, England. (2008)Ryanair has been criticised for many aspects of its customer service. The Economist wrote that Ryanair's "cavalier treatment of passengers" had given Ryanair "a deserved reputation for nastiness" and that the airline "has become a byword for appalling customer service ... and jeering rudeness towards anyone or anything that gets in its way". In 2002, the High Court in Dublin awarded Jane O'Keefe €67,500 damages and her costs after Ryanair reneged on a free travel prize she was awarded for being the airline's 1 millionth passenger. The airline has come under heavy criticism in the past for its poor treatment of disabled passengers. In 2002, it refused to provide wheelchairs for disabled passengers at London Stansted Airport, greatly angering disabled rights groups. The airline argued that this provision was the responsibility of the airport authority, stating that wheelchairs were provided by 80 of the 84 Ryanair destination airports, at that time. A court ruling in 2004 judged that the responsibility should be shared by the airline and the airport owners; Ryanair responded by adding a surcharge of £0.50 to all its flight prices. On 30 March 2011, it announced that from 4 April it would add a surcharge of €2 to its flights to cover the costs arising from compliance with EC Regulation 261/2004, which requires it to pay for meals and accommodation for passengers on delayed and cancelled flights. Ryanair does not offer customers the possibility of contacting them by email or webform, only through a premium rate phone line, by fax or by post. An early day motion in the British Parliament put forward in 2006 criticised Ryanair for this reason and called on the company to provide customers with a means to contact the company by email.

 

                                                                    Publicity

Controversial advertisingRyanair's advertising and the antics of Michael O'Leary, such as causing deliberate court controversy in order to generate free publicity for the airline, have led to a number of complaints to the Advertising Standards Authority (ASA) and occasionally court action being taken against the airline. Another Ryanair tactic is to make deliberately controversial statements to gain media attention. An example of this was the live BBC News interview on 27 February 2009 when Michael O'Leary, observing that it was "a quiet news day", commented that Ryanair was considering charging passengers £1 to use the toilet on their flights. The story subsequently made headlines in the media for several days and drew attention to Ryanair's announcement that it was removing check-in desks from airports and replacing them with online check-in. Eight days later O'Leary eventually admitted that it was a publicity stunt saying "It is not likely to happen, but it makes for interesting and very cheap PR".[87] The concept of Ryanair charging for even this most essential of customer services was foreseen by the spoof news website "The Mardale Times" some five months previously, in their article "Ryanair announce new 'Pay-Per-Poo' service".

'bye bye Latehansa' (referring to Lufthansa) is one of Ryanair's Boeing 737-800s, taken at Girona-Costa Brava Airport, Spain. (2008)Ryanair often use their advertising to make direct comparisons and attack their competitors. One of their advertisements used a picture of the Manneken Pis, a famous Belgian statue of a urinating child, with the words: "Pissed off with Sabena's high fares? Low fares have arrived in Belgium." Sabena sued and the court ruled that the advertisements were misleading and offensive. Ryanair was ordered to discontinue the advertisements immediately or face fines. Ryanair was also obliged to publish an apology and publish the court decision on their website. Ryanair used the apologies for further advertising, primarily for further price comparisons.

Another deliberately provocative ad campaign headlined "Expensive Bastards!" compared Ryanair with British Airways. As with Sabena, British Airways disagreed with the accompanying price comparisons and brought legal action against Ryanair. However, in this case the High Court sided with Ryanair and threw BA's case out ordering BA to make a payment towards Ryanair's court costs. The judge ruled "The complaint amounts to this: that Ryanair exaggerated in suggesting BA is five times more expensive because BA is only three times more expensive. Accordingly, in my view, the use was honest comparative advertising. I suspect the real reason that BA do not like it is precisely because it is true."

In 2007 Ryanair used an advertisement for its new Belfast route which showed Sinn Féin's Martin McGuinness (then Northern Ireland deputy prime minister) standing alongside Gerry Adams with a speech bubble which said "Ryanair fares are so low even the British Army flew home". Ulster Unionists reacted angrily to the advertisement, while the Advertising Standards Authority said it did not believe the ad would cause widespread offence.

Innuendo often features in Ryanair advertisements with one ad featuring a model dressed as a schoolgirl, accompanied by the words "Hottest back to school fares". Ryanair ran the advertisement in two Scottish and one UK-wide newspaper. After receiving 13 complaints, the advertisement was widely reported by national newspapers, generating more free publicity for the airline. The Advertising Standards Authority (ASA) instructed them to withdraw the advert in the United Kingdom, saying that it "appeared to link teenage girls with sexually provocative behaviour and was irresponsible and likely to cause serious or widespread offence". Ryanair said that they would "not be withdrawing this ad" and would "not provide the ASA with any of the undertakings they seek", on the basis that they found it absurd that "a picture of a fully clothed model is now claimed to cause 'serious or widespread offence', when many of the UK's leading daily newspapers regularly run pictures of topless or partially dressed females without causing any serious or widespread offence".Another incident where it is speculated that Ryanair has used controversial statements for free publicity occurred in November 2011. The airline has proposed the introduction of pay-per-view porn on its flights, CEO Michael O’Leary revealed to UK newspaper The Sun. O'Leary likened the service to those commonly provided in hotels, saying "hotels around the world have it, so why wouldn’t we?”.

Allegations of misleading advertising

Boeing 737-200Ryanair was ordered by the ASA to stop claiming that its flights from London to Brussels are faster than the rail connection Eurostar, on the grounds that the claim was misleading, due to required travel times to the airports mentioned. Ryanair stood by its claims, noting that their flight is shorter than the train trip and that travel time is also required to reach Eurostar's stations.In April 2008, Ryanair faced a probe by the UK Office of Fair Trading, after a string of complaints about its adverts. It was found to have breached advertising rules seven times in two years. ASA's director general Christopher Graham commented that formal referrals to the OFT were rare, the last occurring in 2005. He added that the ASA "would prefer to work with advertisers within the self-regulatory system rather than call in a statutory body, but Ryanair's approach has left us with no option." Ryanair countered with the claim that the ASA had "demonstrated a repeated lack of independence, impartiality and fairness". In July 2009, Ryanair took a number of steps to "increase the clarity and transparency of its website and other advertising" after reaching an agreement with the OFT. The airline's website now includes a statement that "Fares don't include optional fees/charges" and they now include a table of fees to make fare comparisons easier. In July 2010 Ryanair once again found itself in controversy regarding alleged misleading advertising. Ryanair circulated advertisements in two newspapers offering £10 one-way fares to European destinations. Following a complaint from rival carrier EasyJet, the ASA ruled the offer was "likely to mislead".[99] Ryanair made no comment on the claim but did hit back at EasyJet, claiming they cared about details in this regard but did not themselves print their on-time statistics. EasyJet denied this. In April 2011 Ryanair advertised 'a place in the sun destinations' but the advert was banned when it was found that some of the destination experienced sunshine for as little as three hours per day and temperatures between 0 and 14 °C. Criticism of surchargesIn February 2011 a Ryanair passenger, Mr Miro Garcia, brought a claim against Ryanair for unfair surcharges, claiming that the €40 (£36) surcharge on passengers who failed to print out a boarding card prior to arrival at the airport was unfair. Judge Barbara Cordoba, sitting in the Commercial Court in Barcelona, held that, under international air travel conventions, Ryanair can neither demand passengers turn up at the airport with their boarding pass, nor charge them €40 (£34) if they do not, and that the fines were abusive because aviation law obliges airlines to issue boarding passes. Judge Cordoba stated that: "I declare abusive and, therefore, null, the clause in the contract by which Ryanair obliges the passenger to take a boarding pass to the airport...the customary practice over the years has been that the obligation to provide the boarding pass has always fallen on the airline." The judge ordered a refund for Mr Garcia and said the fact the company was a low-cost carrier did "not allow it to alter its basic contractual obligations". However, Ryanair appealed the decision and the Appeals Court in Spain overturned the ruling in November 2011, holding that the surcharge is in compliance with international law; a decision which was welcomed by Ryanair. In December 2011 Ryanair announced that they would fight against the UK Treasury's plan to ban what Which? magazine calls "rip-off" charges made when customers pay by credit card.

Competitors

Passenger numbers. Ryanair carried 58,700,000 passengers in 2008, an 18% increase over 2007Ryanair now has a number of low-cost competitors. In 2004, approximately 60 new low-cost airlines were formed. Although traditionally a full-service airline, Aer Lingus moved to a low-fares strategy from 2002, leading to a much more intense competition with Ryanair on Irish routes.Airlines which attempt to compete directly with Ryanair are treated competitively, with Ryanair being accused by some of reducing fares to significantly undercut their competitors. In response to MyTravelLite, who started to compete with Ryanair on the Birmingham to Dublin route in 2003, Ryanair set up competing flights on some of MyTravelLite's routes until they pulled out. Go was another airline which attempted to offer services from Ryanair's base at Dublin to Glasgow and Edinburgh in Scotland. A fierce battle ensued, which ended with Go withdrawing its service from Dublin.In September 2004, Ryanair's biggest competitor, EasyJet, announced routes to the Republic of Ireland for the first time, beginning with the Cork to London Gatwick route. Until then, EasyJet had never competed directly with Ryanair on its home ground. EasyJet announced in July 2006, that it was withdrawing its Gatwick-Cork, Gatwick-Shannon and Gatwick-Knock services; within two weeks, Ryanair also announced it would withdraw its own service on the Gatwick-Knock and Luton-Shannon routes.Ryanair has also responded to the decision of another low-cost carrier, Wizz Air that plans moving its flight operations from Warsaw Chopin Airport in Poland to the new low-cost Warsaw Modlin Airport in Nowy Dwór Mazowiecki. Ryanair had previously operated the route to Dublin from Warsaw but they withdrew claiming that the fees at Warsaw's main airport were too high. When Wizz Air announced they would start operations from Modlin Airport, Ryanair announced several new routes from the same airport, most of which being exactly the same routes as offered by Wizz Air. Ryanair has asked the high court to investigate why it has been refused permission to fly from Knock to Dublin. This route was won by CityJet, which was unable to operate the service. The runner up, Aer Arann, was then allowed to start flights, a move Ryanair criticises on the basis that not initiating an additional tender process was unlawful. DFDS Seaways cited competition from low-cost air services, especially Ryanair, which now flies to Glasgow Prestwick Airport and London Stansted Airport from Gothenburg City Airport, as the reason for scrapping the Newcastle–Gothenburg ferry service in October 2006.[109] It was the only dedicated passenger ferry service between Sweden and the United Kingdom, and had been running under various operators since the 19th century.

 

Choosing destinations

A Ryanair Boeing 737-200, now retired, at Dublin Airport, Ireland. (2004)When Ryanair negotiates with its airports, it demands very low landing and handling fees, as well as financial assistance with marketing and promotional campaigns.[110] In subsequent contract renewal negotiations, the airline has been reported to play airports against each other, threatening to withdraw services and deploy the aircraft elsewhere, if the airport does not make further concessions. According to Michael O’Leary's biography "A Life in Full Flight", Ryanair's growing popularity and also growing bargaining power, with both airports and airplane manufacturers, has resulted in the airline being less concerned about a market research/demographics approach to route selection to one based more on experimentation. This means they are more likely to fly their low cost planes between the lowest cost airports in anticipation that their presence alone on that route will be sufficient to create a demand which previously may not have existed, either in whole or in part.In April 2006, a failure to reach agreement on a new commercial contract resulted in Ryanair announcing that it would withdraw service on the Dublin–Cardiff route at short notice. The airport management rebutted Ryanair's assertion that airport charges were unreasonably high, claiming that the Cardiff charges were already below Ryanair's average and claimed that Ryanair had recently adopted the same negotiating approach with Cork Airport and London Stansted Airports.[113] Ryanair was recently reported to have adopted 'harsh' negotiating with Shannon Airport and is closing 75% of its operations there from April 2010.[114] Ryanair was forced to give up its Rome Ciampino–Alghero route, after the route was allocated to Air One, as a public service obligation (PSO) route. The European Commission is investigating the actions of the Italian Government in assigning PSO routes and thus restricting competition.

 

Destinations

A Ryanair BAC 1-11 and an Aer Lingus Boeing 737 at Dublin Airport, Ireland in 1993. The two airlines are the largest operators out of Dublin Airport.  A Ryanair Boeing 737-800 and an EasyJet Airbus A319-100 at London Luton Airport, England in 2009. The two airlines are the largest low-cost-carriers in Europe.Main article: Ryanair destinationsRyanair's largest bases include London-Stansted, Dublin, Milan-Bergamo, Brussels-Charleroi and Alicante.[115] There are non-base airports which serve more destinations than certain base airports, some even have more daily departures than some base airports. Ryanair prefers to fly to smaller or secondary airports usually outside of major cities to help the company cut costs and benefit from lower landing fees. For example Ryanair does not fly to the main Düsseldorf airport, it instead flies to Weeze, 70 km from Düsseldorf. Secondary airports are not always far from the city it serves and in fact can be closer than the city's major airport; this is the case at Gothenburg-City and Rome-Ciampino. Ryanair does still serve a number of major airports including Barcelona, Berlin-Schönefeld, Dublin, Edinburgh, London-Gatwick, Manchester Airport and Porto although the majority of these cities do not have a secondary airport that Ryanair could use as an alternative.

Ryanair flies in a point to point model rather than the more traditional airline hub and spoke model where the passengers have to change aircraft in transit at a major airport, usually being able to reach more destinations this way. Ryanair has 50 European bases. Despite it being an Irish airline, and having a significant presence there, it also has a significant presence in France, Germany, Italy, Poland, Spain, the United Kingdom as well as many other European countries (although the airline has no bases in France). The United Kingdom is its biggest market, containing the airline's largest base, London-Stansted, and ten others, as well as a total of four other non-base airports. Ryanair's largest competitor is EasyJet, which unlike Ryanair has a focus on larger or primary airports and also heavily targets business passengers. Ryanair in more recent years has focused on sun destinations such as the Canary Islands and Greece. EasyJet often criticises Ryanair for its choice of airports and Ryanair often refers to EasyJet as a high fares airline.

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