Budget airline Ryanair is reaping the rewards of a year-long brand rejuvenation program, announcing a 20% rise in passenger numbers for December, helped by a 7% pt increase in load factor to 88%. This follows two recent increases in profit guidance. The share price has climbed by 80% in the last 13 months.
This is some turnaround. Back in early 2014 Ryanair reported its first drop in annual profits in five years. It seemed that the strategy that had built the brand that I posted on here., based on controversial CEO Michael O'Leary, had stopped working. O'Leary had generated millions of pounds of free PR with outspoken comments about Ryanair's ruthless focus on low prices, even if this meant many extra charges, making your fight for a good seat and having a clunky website.
So, how has Ryanair pulled out its decline and got back to growth?
1. Remember what made you famous
Ryanair has kept the basic, budget business model that made it famous, based on cutting costs to the bone to drive down prices and rapidly turning round aircraft to keep them "in the air" for longer. For example, removing back-seat pockets cut costs and means there is no rubbish in them to clean out, speeding up turn-around.
2. Brutal honesty about failure
O'Leary recognized that the competition, especially easyJet, was pulling ahead and to then act quickly. And unlike many CEOs, he was brutally honest about his own failures, as shown in this interview quote (subscription needed): “I think I’ve been asleep at the wheel. Competitors have signiﬁcantly improved their websites, making it easier for people to use, and we’ve been going, ‘We’ve much cheaper fares, people will put up with it.’ But that’s not good enough any more. We want them to have a much nicer experience. We had to learn from my mistakes."
3. Hire and back talent
O'Leary was also big enough to accept he needed a senior marketer to help with the brand rejuvenation, bringing in Kenny Jacobs as CMO at the start of 2014. O'Leary then backed Jacobs by reportedly giving him a 2014 marketing budget of €35 million, three times that of 2013
4. Refresh the experience
During 2014 Ryanair implemented a program of customer experience improvements under the banner "Always Getting Better", including
- New website: drastically reduced the number of steps required to book a flight, and allows storage of travel documents and payment card information.
- Mobile app
- Allocated seating (at a charge)
- Relaxing of cabin bag restrictions
Ryanair have cleverly leveraged their key brand property: O'Leary. The fact that the brand in the past had almost been ant-customer care made the new improvements all the more newsworthy, as he said in this interview: "The great thing is, I’m generating so much free publicity from this Damascene conversion! You wouldn’t be here otherwise.” In typical O'Leary style he took the stage last year cuddling a puppy to show in a tongue-in-cheek style that Ryanair was going to be nicer.
6. Core range extension
Ryanaire have extended the core with their Business Plus proposition to enhance appeal to business travellers. Again, this was inpired by the competition, with easyJet having started courting business customers before Ryanair.
In conclusion, Ryanair is a great example of brand rejuvenation based on remembering and refreshing what made the brand famous. What stands out in particular is the brutal honesty about what needed changing and the speed and vigour with which these changes were then implemented.