Ryanair Flies High

Ryanair, the budget airline started in Dublin in 1986, is now on the verge of becoming the largest airline in Europe.

Ryanair, the budget airline started in Dublin in 1986, is now on the verge of becoming the largest airline in Europe.

The latest example of the management elan responsible for its success is a deal to buy 100 new jets from Boeing for €5 billion, some €4 billion below the list price. The chief executive of Ryanair has described it as an exceptional deal. Mr Michael O'Leary is not one to hide his light under a bushel but driving such a hard bargain with one of the world's biggest conglomerates is something about which he and his management can feel justifiably proud.

But such achievement has the effect of making some aspects of Ryanair's behaviour at home seem somewhat extreme, if not petty. As the Boeing deal was being announced last Thursday representatives of Ryanair were on their feet in in the High Court arguing with Aer Rianta about where the airline is allowed park its planes at Dublin airport. Ryanair claims that if it is not allowed park its planes close together at night it takes longer to get them flying in the morning. This matters because when airplanes are not in the air they are costing their owners money. In many ways the court action encapsulates the ethos that has made Ryanair a darling of the stockmarket and the envy of its peers. Anything that does not contribute towards profit is either eliminated - including ice in passengers drinks and travel agents commissions - or cut to the bone with a certain ruthlessness.

Ryanair is often criticised for going too far when it comes to cost cutting and has suffered numerous brickbats over its industrial relations strategy, the core of which is not negotiating with trade unions. Such criticisms seem a little hollow now when heavily unionised airlines across Europe - including Aer Lingus - are laying off thousands of employees, while Ryanair is talking about growing by 25 per cent a year and adding more staff. The airline plans to expand its fleet from 49 planes to 200 within eight years and boost passenger numbers from 10 million to 40 million. Up to 3,000 jobs will be created in the process, the airline predicts.

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Ireland will become a less important market for Ryanair if these plans are to come to fruition. Despite this, the airline is exerting a great deal of public and private pressure to get a better deal at Dublin airport and its own terminal. Clearly Ryanair needs Ireland to remain a very profitable part, if not the most profitable part, of its low-cost flying business.