Things can only get worse: that was the outlook from the boardroom of a small Irish airline called Ryanair. Forty years ago this week, it launched flights between Waterford in southeast Ireland and London Gatwick.
The plane making the maiden journey on 8 July 1985 was a 15-seat Brazilian-made Bandeirante aircraft. Over the next few years, as the airline expanded its operations over the Irish Sea, the losses mounted.
By 1989, investors were down £20m. A young accountant named Michael O’Leary had just joined Ryanair.
“We had a business class and a frequent flyer club and all the rest of it,” he later told me. “But the fares were about 20 per cent cheaper [than BA and Aer Lingus], which meant we just lost more money than they did.”
In a last-ditch effort to stave off closure, Mr O’Leary travelled to Love Field in Dallas, Texas: the home of Southwest, a young and thriving low-cost airline. The visionary in charge, Herb Kelleher, was happy to share in the secret of his success: not chasing after more established rivals, but cutting costs and fares to entice an entirely new market to take to the skies.
“What took real brains and real balls was to say, ‘We can charge $10 a seat and still make money’.”
The last throw of the dice before closure was to halve fares across the Irish Sea. As you will have noted, Ryanair stayed aloft. Those of us who wearily boarded overnight buses and ferries between the UK and Ireland were the first in line.
The airline carried 5,000 people in its first year. Today, many passengers step aboard Europe’s biggest budget airline every 13 minutes.
In the 1990s, the conditions for a low-cost revolution were created by the expansion of the UK’s free aviation market to pan-European open skies. Initially, though, it was a different start-up that made the running: easyJet.
Stelios Haji-Ioannou had also made the journey to Southwest in Texas. Yet the founder of what is now Britain’s biggest budget airline took the template further. Sir Stelios, as he has become, built a carrier that bypassed travel agents, shunned the traditional paper ticket, and turned inflight catering from a cost to a revenue stream.
So, if Ryanair didn’t exist, would we have to invent it? Not strictly, because easyJet and others would have been happy to roll out the low-cost, low-fare model across Europe without an Irish competitor. However, Michael O’Leary made key decisions that have transformed the aviation landscape and made Ryanair dominant:
- Using small regional airports instead of major hubs, such as Beauvais, Charleroi and Hahn rather than Paris CDG, Brussels and Frankfurt, respectively. These airports came with minimal or even zero charges, allowing simpler, swifter operations.
- Ordering new Boeing 737s by the hundred shortly after the tragedy of 9/11, when no one else was buying. The price was so low that it secured Ryanair’s cost advantage during the first two decades of the 21st century.
- Making online check-in mandatory, saving a fortune on airport costs while opening up a new opportunity for ancillary revenue.
In terms of durability, Michael O’Leary is the Queen Elizabeth II of the airline world. He became the sixth chief executive of Ryanair in 1991. While easyJet and British Airways have been changing leaders roughly twice a decade, the Irish CEO has been in charge for 34 years.
During that time, Mr O’Leary has cheesed off countless people – from ministers and aviation leaders to passengers whose customer-service expectations are out of alignment with cost-obsessed Ryanair.
Yet he has also empowered more than two billion people to pursue their travel dreams, indulge in long-distance romances or two-home lifestyles, or simply get to work. And all of them without a single fatal accident, making Ryanair the safest airline in the business. Happy birthday.
Simon Calder, also known as The Man Who Pays His Way, has been flying on Ryanair and writing about travel for The Independent since 1994. In his weekly opinion column, he explores a key travel issue – and what it means for you.
