No such thing as a free toilet
Ryanair has recently been voted Britain’s worst family brand. Yet more people fly with them than any other airline in the world.
Ryanair represents the rise of the rational consumer. The rational consumer is much less open to manipulation by branding than previous generations of consumers.
What do people really want from an airline? “Affordable, safe air transport from A to B,” Michael O’Leary, CEO of Ryanair, recently told the Wall Street Journal. “It’s a commodity. It’s not some life-changing sexual experience, which is what the other high-fare airlines have tried to convince you that it is.”
In the past, branding has been very good at getting us to believe that taking a flight from Dublin to London is a spiritual, emotional experience. We are irrational at heart and very willing to believe such rubbish, and that allows companies to charge ridiculous prices for their products and services. It’s emotional exploitation and traditional consumers fall for it big time.
The rational consumer thinks that flying is like riding a bus. They are not shocked when they are forced to pay extra if they bring more bags. They are not disgusted if they have to pay to use the toilet on the plane. They are not outraged by the idea that buying the cheapest ticket means they might have to stand. They are rational. They weigh the cost against the benefit and make a rational decision, not an emotional one.
The emotional customer is outraged, shocked and disgusted by the very idea that you would have to pay to use the toilet on the plane. Because we all know that access to toilets is guaranteed by the UN convention of human rights. We all know that aircraft manufacturers don’t charge for the toilets on their planes and that toilet paper manufacturers are non-profit charities.
Ryanair charges you 100 Euros for the flight and one euro to use the toilet, while another airline charges you 150 Euros, but you can use the toilet as much as you want. The rational consumer chooses Ryanair.
The Web has been a major reason why Ryanair has grown from being a tiny regional airline to being the world’s largest carrier. The Web is a rational place. Many of the Web’s greatest success stories (Google, Amazon, Progressive) are built on rational propositions of value and usefulness, rather than branding propositions that emotionally manipulation the irrational consumer.
Because it sells cheap flights, Ryanair has allowed families to have more vacations. It has helped families get together more often. But because humans are deeply irrational and emotional, Ryanair has a terrible brand image.
Are you happy when, unannounced, a company you buy things from sends you a free gift? You shouldn’t be. What it in all likelihood means is that the company is price- gauging you.
The Web reflects a new era in consumer behavior. The rational consumer does more research, more comparison shopping. They are less impulsive and more considered. They place more trust in their peers than in the brands. They are increasingly skeptical and cynical. They are increasingly averse to warm, fuzzy, emotional words and images.
When you say things on your website like “we care” or “it’s simple”, the rational consumer thinks: “If you have to say you care, it’s obvious you don’t, and if you have to say it’s simple, it’s obvious it’s not.”
Pedro says:
Added on December 21st, 2009 at 8:37 amMr. McGovern,
I can not be more in disagrrement with the comments on Ryanair and the argument that you use. it is simply demagogic. Rational choice is not as simple as you depict. Using my experience as traveller, I have hever felt treated as an animal than with a Ryanair flight. This evoke me these westerns when the cows were directed to the trains for transportation. This is not emotinal in the bad and simplistic sense than you use. It is more simple, we are human beings not animals. Not only our wallet.Problably that means some extra fare in a rational world. Thanks, by the way I do not know if you forget the “Ads” at the beginning of the comment.
Alex Thurley-Ratcliff says:
Added on December 21st, 2009 at 9:08 amI’m not disagreeing with the premise, but there is at least one further category of consumer, which I would feel more akin to - the rational AND emotional consumer, who weighs the balance of cost and experience. I know that RyanAir will be cheaper but I choose NOT to fly with them for a number of reasons - quality, comfort, ease of use (I actually don’t think RyanAir scores highly there) and overall treatment. But when flying away on holiday - I think you’re wrong - I would actually like my “almost spiritual” experience to start as soon as I check in, or even when I park my car! That’s why I choose (rationally) to pay extra for a customer experience that will ensure (again rationally) a really good time!
Mike Simpson says:
Added on December 21st, 2009 at 9:45 amI’m not sure Ryanair is such a great example of effectively using the web. They have an absolutely woeful record of customer relations, irrespective of their value for money, which has been extensively documented online as even a cursory Google reveals.
One often cited problem is that they have no way to make a complaint or ask a question through their website. Unless you want to book a flight, apparently, the only way to contact Ryanair is by fax or by post to their HQ in Dublin.
I’ve never used them, nor do I intend to. No-frills is one thing but many customers have a baseline level of acceptable service below which any savings are simply false economy.
On the other hand, Ryanair shows how successful a company can be if they find a niche and adopt an ‘everybody hates us we don’t care’ approach. But I wouldn’t use that as a business model…
Gerry McGovern (blog author) says:
Added on December 21st, 2009 at 12:36 pmIn November 2009, Ryanair carried 4.96 million passengers, 15 percent more than a year ago. With so many people hating Ryanair, why such an increase?
Jon J Demko says:
Added on December 21st, 2009 at 2:08 pmDear Gerry,
The answer to your question at the bottom of this post. ” Why such an increase in the hate to Ryanair at the same rate as the increase of their travelers”.
Its called the disappointment curve. Don’t expect people to use them and love them. Their service is more than crappy. They are the cheapest and not only in price. There are a lot of “overpay” expenses. Their website is not the most user friendly and their staff is horrible too.
I for once will never fly with them again. Based on my bad experience. Its the same as with cheap Burger Food. Its cheap, you try it out. Its filling, but not that healthy. So once in a while you do it. The other people who have money, rather pay next time for something more healthy. Same thing with Ryanair. I happily spend the 50EUROS on another airline than using them again. Not the aggravation worth, I promise you that.
Gerry McGovern (blog author) says:
Added on December 21st, 2009 at 3:32 pmSome disappointment curve, Jon. In a little over 10 years they have gone from flying 200,000 passengers a year to flying 60 million. And they just announced 15 new routes.
I fly about half the year. And I have flown with Ryanair many times. They’re cheap and they’re on time far more often than they’re much more expensive rivals are.
Valeria Vernon says:
Added on December 21st, 2009 at 4:40 pmAll this is very logical and I appreciated it, that’s why I express an emotion: I loved your articole all the way down to the last paragraph, especially the last paragraph.
Best regards
Malcolm says:
Added on December 21st, 2009 at 11:34 pmConsumers can perceive low cost to be low quality - or affect their status. But this doesnt seem to be affecting Ryanair as far as either goes, or perceived safety (eg low cost = skimp on safety measures).
From the comments above they probably don’t advertise either & rely on WOM, but if they did it would be “Get tough, fly Ryanair”.
When are they coming to Australia to give Virgin and Qantas a shakeup?
Gerry McGovern (blog author) says:
Added on December 22nd, 2009 at 1:56 pmMalcolm, they do advertise a bit but a lof the their growth has been through word of mouth, as you indicate. I just find it very interesting that a ‘brand’ that everyone claims they hate could be so successful. It might be a while before they get to Australia, though.
Mike Simpson says:
Added on December 22nd, 2009 at 2:40 pmIt really seems to me that Ryanair benefit from irrational, rather than rational customers. A rational customer would think that air-fares costing just pocket money are too good to be true and would investigate further - very easy to do on the web.
Even the most cursory search reveals extraordinary numbers of webpages where people describe horrendous experiences on Rynair, swear never to use the airline again, describe hidden charges plucked from thin air at the airport, relate dubious practices, report abusive staff, document safety short-cuts…
I consider myself a rational customer and, based on what I have read, I literally wouldn’t fly with Ryanair if you paid me. Their success is despite, not because of, the rise of the rational consumer.
I honestly don’t think their model is sustainable. It relies too much on people who have never flown Ryanair before, don’t know anyone who has flown Ryainair or have absolutely no other choice. Sooner or later, surely the weight of public knowledge must curtail their expansion.
Unless people really are that irredeemably dumb that they will continue to believe they can get something for (nearly) nothing.
Gerry McGovern (blog author) says:
Added on December 22nd, 2009 at 3:56 pmMike, I fly Ryanair regularly. I don’t consider myself dumb. I’ve flown most airlines in the world at this stage. I have had far less delays with Ryanair than any other airline. I get on and off a Ryanair flight faster than with most other airlines. They’re way cheaper than most. Before Ryanair the big airlines (so-called cool brands) were absolutely ripping off passengers with totally exploititive fares.
60 million people. You think all of them have only flown Ryanair once? I know lots of business people–heads of companies–who fly Ryanair twice weekly. Are they stupid?
Ryanair has pulled the curtain away from most of the false and deceptive marketing and branding that most organizations try to fool us with. “We care.” Do you really think BA or KLM or whoever actually cares a damn about you? At least Ryanair is honest. I’ve been stuck in airports with airlines many times. Once they know that you’ve in great need, they ramp up the price 10 fold. Anyway, enough of my ranting …
Neil Parker says:
Added on December 28th, 2009 at 2:09 pmGerry
I don’t agree that Ryannair represents the rise of the rational consumer. Its success has been possible because of the rise both in disposable income and travelling abroad.
Their strategy has been appropriate. Relentlessly prune costs while the pie grows, and rising volumes will keep sales buoyant. Pass on reduced variable costs to customers to increase market share.
Externally, these policies work as long as the market is growing. Internally, in order to work they have to maintain high capacity utilisation. They did this firstly by commoditising the popular routes where they were rewarded as lowest cost producer. Secondly, they serviced less popular routes, sustained by rising demand, which they dominated by cost cutting. Competitors would not wish to compete in the niches without compromising their own business models.
As demand falls in niche markets, this business model unravels. Capacity utilisation on these routes falls so they have to cut back, risking a vicious spiral. Without jam from the niche markets and with idle capacity, they will no longer able to compete on price on the bread and butter popular routes.
The first signs that Ryannair were feeling the chill winds were when they cancelled their big Boeing order the other day. The shrill, petulant outburst by their boss-man that Boeing is a bunch of idiots was a red herring. Ryannair cannot afford percentage capacity utilisation to fall, no matter how little they pay for the planes!
If the environment becomes malign to an existing strategy, has the company the resources to invent an alternative strategy to cope with the new environment? Or has their previous strategy committed them to an inflexible path?
Remember IBM, when they lost their market (mainframe users migrated to the mini and desktop) and then their product (hardware manufacture)? Why did they not disappear? It was not the appearance of a visionary CEO. It was that the original values and attitudes of the founder Watson had so permeated the company over many years, creating an ethos of respect for the individual, and reflected in all its policies, practices and procedures, that they were able to respond to the new direction set by strong leadership. The people made it possible to change. Today with 400k staff they are a formidable services company.
Now look at the DNA of this airline under discussion. Cynical staff, poor customer relations and contemptuous behaviour towards suppliers cannot be changed overnight. Do you think that they will last long once the real recession kicks in (when quantitative easing has eased)? Personally, Gerry, I hope they stay in business because they keep their competitors more honest than they would be otherwise. As a rational flier, obviously I avoid using them when there is any alternative, same with you and most other people no doubt. But there is no need to make a virtue of necessity.
Regards
Mark Crowley says:
Added on January 11th, 2010 at 9:08 amOne explanation for the disparity between the huge rise in passenger numbers and the general bad press that Ryanair gets is that people who are satisfied generally don’t speak out. They do, however, continue to pay good money for a service that meets or exceeds their expectations. I flew Ryanair twice a week for 18 months and was never let down. If you don’t like its service,then pay more and enjoy the frills - that’s consumer choice.