April 5, 2006
Fly Free, Pay Plenty
airline industry has collectively made $0.00 in profits since it was
established, you can hardly raise much objection to anyone who comes
along with a different idea.
counterintuitive and then there’s really counterintuitive.
Michael O’Leary of Ireland’s Ryanair has an idea that is exceedingly
counterintuitive, especially if you’re trying to figure out a way to
make more money off what you do.
wants to make flying free. What’s more, this comes from a guy who runs
one of the few profitable airlines on the globe. Ryanair made $368
million in net earnings last year – a margin of 22 percent. So if it’s
working, why change it? Mainly because of the reason it’s working.
A full $265
million of that take came from stuff other than ticket sales. Ryanair
spends hardly any money, and gives away hardly anything.
check? That’ll cost you. Beverage? Show me the money. Plan to keep your
eyes open while you’re facing the back of the seat in front of you?
We’ve taken the liberty of putting an ad there for you to look at – and
we charge confiscatory advertising rates, so do buy whatever they’re
think about it, there is a lot you have to do when you fly – too much
stuff for some of us, who opt for the simplicity of two days on the
Interstate whenever possible. You have to park (cha-ching). You have to
either check (cha-ching) or carry on baggage (cha-ching redux). If you
eat or drink anything (do I have to say it again?), you have to put the
wrapper or cup somewhere. Who do you think is going to clean that up?
The maid? Let’s see some money, honey.
Oh, and you
were looking around for a bathroom? What’s it worth to you, junior? Your
eyes are turning yellow, but yes, it is free to hold it if you can.
more. Much more. O’Leary wasn’t about to spend money painting the
outside of the plane, not when corporate sponsors could do it for him
and pay for the privilege. OK, they’re going to paint their logos on the
plane and not his, but he doesn’t seem to care. He can always write
“Ryanair” with a Sharpie somewhere if he really wants to, but I don’t
think he really wants to. In fact, he’d probably rather charge Sharpie
thousands of dollars to write its name on the plane instead.
already allows 25 percent of its passengers to fly free, and by the end
of the decade, he expects that number to reach 100 percent. We’re
talking 2010, and you might think that by that time people would expect
to be able to use their cell phones in the air. O’Leary certainly thinks
they will expect that, so he’s already working on making it possible.
For a small price, you understand. And in a year or so, he even plans to
offer in-flight gambling. Of course if you win, Ryanair gets a cut. (And
if you lose, presumably Ryanair gets the whole cut.)
is almost limitless. A window seat is free, yes – all seats are free,
remember – but if you want to look out the window, well . . .
attendants? If you want them to walk over to your seat, that’s one
price. Then you can ask them for something, but if you want them to
actually listen to you, just a small consideration will be
remember, it’s free to fly. Landing, however . . .
This is not
the worst idea I have ever heard in business. It couldn’t be, because
the worst idea I’ve ever heard in business is the way traditional
airlines do things. Maintain a 7000 percent fluctuation in what you
charge for tickets from one hour to the next. Invent the maddening
concept of “stand-by” tickets, which means you get a ticket, but maybe
not a seat.
flights on a whim. Fly people from Detroit to Chicago via San Antonio.
Negotiate union contracts that make pilots wealthy for working five days
a month. Oh, and never make any money.
this, how can you criticize the concept of an admission-free, flying
casino/supermarket/advertising board where you can sit down for nothing
and breathe for practically the same money?
might work. In fact, I think Michael O’Leary may be sending me a bill
right now just for knowing about it. Enjoy your flight!
© 2006 North Star
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