Books: O'Leary left on the tarmac

A classic story, but it's a bit like Hamlet without the Prince, says Ray Webster

Last Updated: 31 Aug 2010

According to our latest count, there are 54 low-cost airlines in Europe, or those masquerading as such. Some will survive; most will not.

For budding entrepreneurs trying to emulate the success of easyJet, Ryanair or Southwest Airlines, Siobhan Creaton's book will prove an entertaining read on their next flight, but provide little insight into how the low-cost model works, or into the most important factor - making it work.

The Ryanair story is not unlike the easyJet story, the Virgin Atlantic story or any other tale of how highly driven and motivated people created a successful company.

Anyone who has read Nuts, the story of Texas-based Southwest Airlines, by far the most successful airline in the world, will be on familiar territory.

It's a story of financing an airline, getting it started and nursing it through the battles of the early years.

Ryanair is no rags-to-riches story. It is a riches-to-rags-to-riches story. It was born out of the wealthy, but ill-fated GPA leasing empire in late 1985 as a second Irish airline to rival Aer Lingus. Creaton cites an 'incensed' Christy Ryan as saying: 'If you write that Tony Ryan (founder of GPA) was the founder of Ryanair, you are in trouble.' But I suspect Christy might be swimming against the tide of established folklore.

He had followed Tony (a close family friend but not a relative) from Aer Lingus to GPA, and had come up with the concept of an airline based in Waterford. Christy got the operating licence, they used their common surname and Tony provided the cash - and got most of the glory, much to Christy's chagrin.

Ryanair teetered on the brink of financial collapse in the late 1980s and early '90s, not least because of the influence of Aer Lingus - 'the Department of Transport on Dublin's Kildare Street was known as the Aer Lingus downtown office', according to Creaton's sources. Later, when Michael O'Leary took Ryanair by the scruff of the neck and turned it into a proper no-frills airline, it fought a long-running and vociferous campaign against Aer Rianta over landing charges at Dublin airport.

The legacy of these battles persists and, reading the story, I was struck by the similarity to battles that easyJet (and Virgin Atlantic) fought with entrenched national airlines (notably British Airways and Air France) and monopoly airport suppliers over the cost of using airports. This can be seen as a case study of what happens when the Davids, however well-backed, take on the Goliaths. Typically, the big boys have had things their way for too long - monopoly profits, lack of competition, political power, market dominance - and use their strength and influence to push the little guys out of business.

In these circumstances, most airlines fail; some, like easyJet and Ryanair, survive. The book explains how opportune timing - entering Stansted Airport, for example - quick decision-making, sheer bloody-mindedness and providing what the customer wants enabled Ryanair to survive.

This proves that the consumer always comes first - airlines forget that at their peril. Aer Lingus was overtaken by an airline that provided what consumers wanted: simple, low-cost air travel across Europe. EasyJet had the same impact on British Airways' European network. Lufthansa and Air France are now being exposed to the same thing and - guess what? - they're using exactly the same tactics to protect themselves.

Unfortunately, Creaton has not spoken to O'Leary himself. I can imagine him politely telling her that he was rather busy running an airline, thank you for asking. This is a shame, because the Ryanair story needs Michael himself to tell part of it. Airline observers may wonder how the 'sober-suited accountant' who loathed the media came to be the jeans and rugby-shirt wearing personality we see today. It may also have given him a chance to counter an assertion that Ryanair would 'collapse' if he left the airline (which I believe to be incorrect) and that he 'runs the place by kicking people in the head'.

There's much in the book on O'Leary's bullish management style. While we deliberately adopted a friendly, no-blame and non-hierarchical company culture at easyJet, O'Leary's frequent volcanic run-ins with staff and unions are narrated in detail in Creaton's book. Never having worked for Michael, I cannot comment.

If you like your capitalism red-blooded, the low-cost airline industry is for you. Budding entrepreneurs have probably already skipped to the final chapter - the profits, the market capitalisation, etc - but the difference between success and failure in our industry comes in the middle chapters: turning a great idea with a great role model (Southwest) into a successful airline despite all the obstacles, entrenched positions, politics and frustrations. Few will master it; those who do deserve their place on the airport tarmac. And in the airport bookshop.

Ray Webster is chief executive of easyJet

Ryanair: How a small Irish airline conquered Europe

By Siobhan Creaton

Aurum £9.99

MT price £8.99 (see panel, p33)

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