Aviation legend and Ryanair CEO Michael O’Leary was once firmly committed to the future of Ryanair, and that future, as he saw it, was to close it down. His insistence that the airline would never make any money fell on deaf ears of its founder, Tony Ryan, who encouraged O’Leary to take inspiration from the granddaddy of low-fares, Southwest Airlines. One trip to the US and a drunken night with Herb Kelleher later, and the Ryanair we know today was born.
O’Leary wanted to close Ryanair down
The story of Ryanair started off in the 1980s as a very small airline founded by Irish businessman Tony Ryan. Michael O’Leary met Ryan in the mid-’80s, while he was working as a trainee Stokes Kennedy Crowley (later known as KPMG) as a tax advisor. His financial background gave him perspective on the new airline Tony Ryan wanted to launch, and he didn’t like what he saw.
Hired as Ryan’s personal financial and tax advisor in 1987, O’Leary took one look at the Ryanair business plan and demanded that Tony close it down. Speaking at an interview for World Travel Market, Michael O’Leary reminisced about his wish to end Ryanair,
“In the late ‘80s, Ryanair was a forerunner of trying to be a lower cost all-service airline, in a marketplace where the all-service airlines didn’t make any money. So being a lower priced, all-service was a recipe for disaster.
“I strongly encouraged Tony to close the place down. It would never make any money.”
However, Tony Ryan was convinced there was a way to make a budget airline work. He encouraged O’Leary to take inspiration from the pioneer of low-cost fares – Southwest Airlines.
“To be fair to [Ryan], he was the one who said, “look, there’s this interesting operation in the States called Southwest taking advantage of deregulation of the US market.
“Deregulation … was absolutely transformative in the US. It was clear Europe would eventually follow deregulation, so in many respects, it was combination of lucky timing and also Tony Ryan’s bravery and fortitude in not following my advice and closing it down.”
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Taking a field trip to Love Field
In a bid to get Michael behind his enterprise, Tony Ryan took him on a little trip to the States to see how Southwest were doing it. During a meeting with the legendary Herb Kelleher, O’Leary had his eyes opened to the amount of waste that was going on in European airlines at that time.
“I remember going to Love Field, seeing a 25 minute turnaround, which, at that stage, was almost like a Formula One pit stop. We saw what was going on with Southwest and it was revelatory.”
O’Leary noted that, in Ireland at the time, a typical turnaround would be at least an hour and 15 minutes. With most aviation markets monopolized by legacy and state-owned carriers, there was no impetus to drive this down. Seeing it happen in Dallas opened O’Leary’s eyes and gave him a new impetus to get behind Tony Ryan with this new airline concept.
But not before his dalliance with Herb was done, something which O’Leary remembers and regrets in equal parts. He said,
“I did have a legendary dinner with Herb Kelleher. I don’t remember anything about the dinner because he drank me under the table. I can’t remember anything except I was violently sick and hungover for about four days afterwards.”
Bringing the concept back to Europe
O’Leary said that, in order to achieve the level of success Southwest was enjoying in the US, all he needed to do was replicate that low-cost model back in Europe. He said,
“All you needed to see was what Southwest were doing at airports at that time, bring it back, replicate it. Go to a single fleet, do 25 minutes turnarounds, use secondary airports if necessary. In a Europe which at the time was bound by ridiculously high air fares, and by legacy airlines, which were hopeless, and you almost couldn’t lose, as long as you were sensible.”
And Ryanair did not lose. In 1986, Ryanair obtained permission from the regulators to challenge the British Airways and Aer Lingus duopoly on the Dublin to London route, launching services with a 46 seater BAE748. The launch fares were just £99, compared to British Airways and Aer Lingus fares which were, at their lowest, £209. It was the first fare war in Europe, and the first of many for Ryanair.
By 1993, Ryanair had broken the one million passengers a year barrier, and its growth was solidified. It bought its first Boeing 737s in January 1994, and the rest, as they say, is history. While 2020 has been a challenging year for Ryanair, the CEO remains bullish on its future success. With inspiration from Kelleher and the gamechanger that was Southwest, the Ryanair empire continues to thrive.