Ryanair investor presentation

RYANAIR STRATEGIC POSITIONING (B): ALWAYS GETTING BETTER

Professor Seán Meehan prepared this case as a basis for class discussion rather than to illustrate either effective or ineffective handling of a business situation. Some data are disguised.

We should try and eliminate things that unnecessarily piss people off.

Michael O’Leary, CEO Ryanair

Ryanair’s 2013 Annual General Meeting (AGM) took place in the context of record results and controversy. Clear but restrictive terms and conditions rigorously implemented was a trade-off understood and accepted by the majority of a public in search of the lowest fares. But Ryanair had a reputation for being “rough around the edges,” with detractors being highly vocal and widely reported. A high-profile tragedy the day before the AGM, however, inflamed shareholders. A passenger returning to the scene where his family had been murdered had to pay €188 to change his flight. Although Ryanair would, as it had done on many occasions, refund the fare, the check-in staff on the day were powerless to do so. At the meeting, shareholders accused O’Leary of being a bully and questioned whether the airline’s macho culture and strict service policies were deterring customers.

O’Leary’s uncharacteristically humble response took shareholders, analysts and journalists by surprise. He took personal responsibility for the “macho and overly abrupt culture.” He vowed to address customer- unfriendly policies and procedures and pledged improvements that would be evident shortly.

Observers wondered whether O’Leary was sincere and Ryanair really intended, after more than 20 years of rapid growth, to dramatically alter its approach, or whether this was just another one of his famous PR stunts. And, looking further forward, they asked what kind of strategy would prevail in the context of massive technological change, increasingly demanding and vocal connected consumers, and a competitive environment that was adapting to growth opportunities amid economic and regulatory volatility.

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Following Through

In early October 2013 O’Leary posted a request for feedback on Ryanair’s website:

…. we want to keep improving our services, which is where you can help me. Please send me your suggestions as to how Ryanair can further improve our industry leading customer service.

Customers’ responses confirmed management’s understanding of what needed to be changed. Ryanair embraced “quick wins,” and by the time it announced its half-year results in November 2013, it had already introduced a series of customer service initiatives, including scrapping the “Recaptcha” security feature, allowing a small second carry-on bag, introducing “quiet flights” before 8am and after 9pm, permitting passengers to correct minor booking errors within 24 hours at no cost, and significantly reducing the fees for boarding card reissues and standard hold luggage.

O’Leary realized he would need to bring on board an experienced chief marketing officer (CMO). He tapped tech-savvy Kenny Jacobs to drive sales and further service improvements, develop Ryanair’s digital go-to-market capabilities and enhance its brand. Jacobs’s experience as CMO of Moneysupermarket.com and brand director of Tesco UK made him the ideal candidate. During the interview process, Jacobs was persuaded of O’Leary’s commitment to deliver a much improved customer experience. He believed O’Leary’s decisiveness and willingness to experiment would be assets on the change journey. He also liked the informal culture, the tightness of the management team and their evident love of their industry as well as the impact they were making. He formed an immediate rapport with O’Leary and was convinced they could work together. Joining a motivated, well-resourced, winning team committed to change was an opportunity Jacobs could not resist. Like so much at Ryanair, the CMO search process was fast. Jac