Ryanair likes to call itself ‘Europes Number 1 Airline’ and for good reason. In 2015/2016, the low-cost carrier became the first airline to carry 100 million international passengers. The Irish airline delivered a post-tax profit of €1,241.6 million – Up from €866.7 million the previous year.
Its fleet of over 350 aircraft across Europe, is just the tip of the iceberg – Ryanair plans to increase that number to 550 by 2024. All of this success, yet Ryanair was famously once known as the ‘nasty’ airline. It’s relentless focus on rock-bottom fares saw a barrage of unfriendly customer service policies forced upon their passengers.
It turned out these policies were actually a big money maker for Ryanair – Want to check in at the airport? That will cost you. Forget to print your boarding pass? There’s a charge for that. Is your carry-on bag 1 centimetre too long? Get your wallet out.
Ancillary Revenue a Big Money Earner for Ryanair
These fees and extra charges made up what airlines like to call ‘ancillary revenue’. That can include anything from excess luggage charges and flight change fee’s to food, drink and Duty-Free bought onboard.
Ryanair’s bombastic CEO, Michael O’Leary used to take great delight in playing up to Ryanair’s nasty image. O’Leary was the man who suggested charging passengers to use the toilet. He also came up with the idea of standing room only flights.
Of course, these ideas would never take flight. But they gained plenty of column inches in European newspapers and helped Ryanair promote its low-cost credentials. Want the cheapest flight available? Fly Ryanair.
The Always Getting Better Campaign
O’Leary however, decided to take Ryanair down a different path in 2014 with the launch of its ‘Always Getting Better’ campaign. The plan was not only to provide the lowest fares and best on-time performance but also “superior customer service”.
Over the last three years, the airline has introduced a slew of measures to make flying Ryanair a better experience (and one that doesn’t require tactical planning). The cabin bag allowance was upped to two bags and gate agents became a lot more lenient. Bag fees were lowered and minor errors weren’t punished with huge fines.
Always Getting Better (AGB) has been a big success. Ryanair attributes the campaign to an 18% increase in passengers and a 5% jump in load factors to 93%. But AGB has also hit ancillary revenue streams.
Ancillary Revenue Per Passenger Falling
The latest figures from Ryanair show passengers have been gradually spending more on ancillary services over the last few years. Up from €11.69 in 2012 to a high of €15.39. But that all changed in 2016 when for the first time in five years, ancillary spending fell to €14.74 per passenger.
The consequences have not been lost on Ryanair’s senior management who said of AGB:
“No assurance can be given that the financial impact of the initiatives will be positive, particularly in the short to medium term. In particular, certain of the strategic initiatives may have the effect of increasing certain of the Company’s costs (including airport fees and marketing expenses) while reducing ancillary revenues.”
A Plan to Increase Ancillary Revenue
In the third quarter of 2016, Ryanair profits dropped 8% as the airline was forced to slash average airfares by 17% to stimulate demand. Michael O’Leary said of the results:
“As previously guided, our fares this winter have fallen sharply as Ryanair continues to grow traffic and load factors strongly in many European markets. These falling yields were exacerbated by the sharp decline in Sterling following the Brexit vote.”
It’s hardly surprising therefore that the airline is once again trying to increase its ancillary revenue. But this time the pressure is being put on Cabin Crew. In a leaked internal memo sent in March, a supervisor at Stansted Airport outlines the minimum daily sales targets for all Cabin Crew.
Perfumes, Fresh Food and Scratchcards
The new targets ask Cabin Crew to sell the following:
- 1 bottle of perfume
- 1 meal deal and 1 fresh food item
- 8 scratchcard packs
The letter points out that these are daily targets. It goes on to say Crew members who do not achieve their quota will be “met with by their supervisor and further action taken.”
You can pick up a bottle of perfume onboard a Ryanair flight from €20, a breakfast meal deal will set you back €7 while a normal meal deal costs €10.
It’s not clear what action Ryanair will take against crew who fail to meet these targets. We have been unable to verify the authenticity of the memo and in response to a request for comment, a Ryanair spokesperson said: “We don’t comment on social media hearsay.”
A Similar Situation at Rival Airlines
Of course, Ryanair isn’t the only airline to make money from onboard sales. Its main rival in the UK, EasyJet told us:
“easyJet has a great boutique offering onboard with two stand-alone brochures – one for food and drinks and the other for all those luxuries, gifts and travel essentials. easyJet has also introduced its Boutique Price Guarantee.”
The spokesperson confirmed that Cabin Crew earn a commission on each sale but maintained that “this has no effect on the products that are sold or on the customer experience.”
Over at British Airways, Cabin Crew are now earning commission on both Duty-Free sales and the new Buy Onboard (BOB) food selection from Marks & Spencer. However, the airline refused to be drawn into speculation that BA crew members were expected to reach a daily sales target.
