Thursday, December 15, 2016

How Ryanair cuts costs

Ryanair calls itself the world's most successful airline, while many former passengers insist it is the world's most hated.

Ryanair landed in Spain in 2004, and its business model proved an immediate success with short-haul passengers who are not interested in business class, a free meal or a complimentary newspaper. It has reduced turnarounds to 25 minutes, sells its tickets via the internet, and outsources pilots, who are paid by the flight. O'Leary made no bones that his objective was to have as many planes as possible in the air at any given time, and to offer passengers the cheapest prices in the market.

Eight years on, Ryanair now carries more passengers than Iberia, making it Spain's leading airline. Between January and August it flew 24.7 million people, giving it a market share of 20.4 percent. In a distant second place comes Vueling, with 14.1 million passengers; while Iberia trails in third place with 13.9 million.

However, the competition says that Ryanair owes its success to taking risks that other airlines do not. Among these is its policy of saving fuel. Ryanair pilots' instructions are clear on this. In an internal memo dated February 1, 2010, the company reminded its pilots that the minimum legal amount of fuel as specified in each flight plan is sufficient and that they do not need to follow the practice of other companies in requesting extra fuel during turnarounds to cover any delays that might be caused by weather conditions or other problems during a flight. Ryanair pilots are allowed to take on just 15 minutes worth of extra fuel. The theory behind the practice is to keep the weight of the aircraft down, which burns less fuel. But the company now wants pilots to reduce that amount yet further, which it says is costing Ryanair around five million dollars a year. Pilots who do not follow the policy must "explain their actions face to face," the memo concludes.

"The pilots are under pressure, and this is clearly compromising safety," says José María Íscar, the Secretary of SEPLA, the Spanish pilots' union. "The pilot is responsible for safety and should take the necessary decision without having to think about the possible impact on his or her job."

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