Posts Tagged ‘Ryanair’

Ryanair is the most fascinating case study for the student of reputation management. Brilliantly successful and yet widely reviled.

Reputation theorists argue that truthfulness/honesty are key ingredients for long term reputation. With Ryanair it is always hard to tell where truth and fabulation meet. If you take Ryanair’s word for it: they never make a mistake and simply have to change their scheduling or drop airports because of new taxes or airport fees.

For example is Ryanair’s threat to reduce services at Shannon by 75% about the 10 Euro fees or because they are struggling to make the numbers – who can say (Irish Times). Likewise reductions in winter services was anything from 40% to 7% depending on how or who you listened to. (see Financial Times report)

Journalist reporting often makes it no clearer what is happening. For example when Ryanair announced it was terminating most of its schedule from Manchester airport, the Guardian reported that 600 jobs were threatened whilst the Telegraph simply stated 600 jobs to go.

One of the key attributes of Ryanair’s PR strategy is to draw attention to hidden costs in the system. Announcing their departure from Manchester they provided a telling narrative for why it was necessary: “Airlines have been reducing fares in this recession but the one static factor has been in relation to airport charges. It is a huge undertaking to fill planes on a rainy winter day in Manchester when you can fly them down to the Canary Islands from somewhere else,” they declared, never acknowledging that the landing charges of £3 was covered by the fees they charge for accepting debit card payments which costs Ryanair only pennies.  As their own hidden costs rise, this could become a dangerous risk to their reputation for honesty. Complaining of Stansted charges, O’Leary declared, “”People have to pay £10 just for the privilege of getting on and off this rain-sodden and weather-beaten island,” but surely we could say something similar about getting an online check-in without which you cannot even get in the airport.

Ryanair’s strategy of blaming someone else rather than themselves helps to position themselves as “people’s champions”. It will unravel if customers begin to question the veracity of what Ryanair says – do they believe Ryanair or Manchester Airport. Ryanair will struggle to radically cut more costs in future even if they charge for toilets or make people stand.  Driving up profits through charging more for luggage or checking-in does not seem, long term, the way to grow the brand.

After reading Richard Branson book “Stripped Bare”, it’s no surprising the Virgin brand has done well for its self.  Richard has totally understood the importance of positioning his brand and creating a positive reputation about him and his Virgin Companies.  By creating this positive forward thinking extravagant reputation he has really benefited by people also being very positive about them, especially when it comes to Virgin being the under dog and taking on the big companies.  You only have to see what they achieved in NZ and AU in terms of taking over the domestic and short airline business, who else would also take on a giant like Coca Cola?

Creating positive stories, events and also different companies trading off the the brand name Virgin has allowed them to keep positive results in the search engines.  I typed in search this morning and got the following results and see the SERP’s:

1. www.virgin-atlantic.com
2. www.virginmedia.com
3. www.virgin.com
4. www.virgin.com/music
5. www.virgintrains.co.uk
6. www.virginmobile.com/vm/home.do
7. www.virginholidays.co.uk
8. uk.virginmoney.com
9. www.virginmoney.com
10. www.virginradio.co.uk

This shows the power of having a positive brand, I don’t think I have seen such a positive set of results for any company in Google’s search results.  Virgin’s group pretty much have control of the first 4 pages of google.

Virgin’s attitude to doing business has been completely different to Ryanair, I wonder how well Ryanair would do if they try to move their brand into other industries…

Michael O’Leary seems to divide opinion violently between those who love him (“he should be president” ) to those who hate him (“he’s a total prick”). There are two great merits about him: he is supremely entertaining and he is unvarnished (or at least gives that impression).

Compare him to other CEOs of large businesses and there are very few to compare. Not one financial services company has a CEO with real charisma, for example. The only comparative CEO is Steven Jobs of Apple. They have different styles, but both command fierce loyalty and exude charisma.

The reputation of Ryanair for being upfront, cheeky and “take no prisoners” is all O’Leary and noone else. In fact, even more than Apple, the rest of the Ryanair is entirely anonymous. When you hear mid-level executives from Ryanair at conferences, they try to come across as arsy but simply sound adolescent. Only O’Leary can carry it off.

A CEO who actually talks straight is very refreshing even if he rarely seems to actually answer questions directly. However, look how EasyJet has lost its visibility since Stelios left. Anybody know the name of the CEO now?

What Ryanair needs is to look more carefully at the reality of its actions and its rhetoric.

Ryanair is one of the most popular airlines in the world. It certainly flies more people than any other airline in the world. It is also one of the world’s most unpopular airlines judging by surveys of passengers. What’s going on?

Ryanair was not the pioneer of budget airlines, but it has been the most aggressive purveyor of the technique and perhaps the most famous example of the type, outstripping rivals like Easyjet. It has build its budget philosophy around low cost rather than cheap and in being upfront about what you are paying for. They pioneered the technique of charging taxes separately to highlight what the cost of taxes is and in the form of Michael O’Leary they have a voluble and cheeky CEO on whom few critics have landed a punch.

In the past few years the Ryanair story seems to have darkened as their business model is increasingly driven by extras that enable them to continue to advertise cheap flights and yet still charge passengers a lot more via online check-in charges, payment processing charges. It would seem as though the costs of providing the services have been squeezed out and now they are seeking to have their cake and eat it. Advertise low fares but charge the customer a lot more.

Their customer service philosophy is different and highly O’Learyesque – don’t delight or even please customers: just get them there cheaply and on time.  It is airline travel as commodity service rather than high value service.

The problem for the Ryanair reputation is this: they are losing their reputation for being low price. They may continue to proclaim, “we are lost cost”, but increasingly for customers the experience of being double charged for one payment, having to pay for checking-in calls that into question. A straw poll of my friends revealed that none were happy with Ryanair.

• all felt that some charges were deliberately exploitative of customers.
• Ryanair staff were rude and that the system was designed to confuse and punish customer mistakes.
• None would fly Ryanair by choice, only because they were the only airline flying to a particular destination.

They do not mind paying for food or baggage. They don’t mind queuing for seats and they don’t mind having to check-in online.

Ryanair portray themselves as an engine to drive down costs, but the accounts reveal that profitability is really about advertising low fares and then charging as much again on top. As more and more customers recognise and discuss this, one senses that the Ryanair brand will be associated with being a cheat.

The Ryanair strategy on reputation management is strike first and offer a withering character assessment of the critic. Increasingly it does not wash with customers. Ryanair will need to look more carefully at how it charges as rival operators exploit the Ryanair reputation gap. For Easyjet, this represents a huge opportunity if they can continue to drive out costs but deliver an honest service and establish themselves as customer champions.