Michael O'Leary: chief who keeps Irish eyes smiling

The head of Ryanair, Michael O'Leary, has a happy knack of courting publicity with his sometimes outlandish pronouncements. But Ireland's hugely successful no-frills airline reaps the rewards in increased tickets sales.

Illustration by Christopher Burke for The National

You have probably never heard of an Irish taxi company called Tillingdale.

However, in its own small way it is a remarkable enterprise.

Its only customer is Michael O'Leary, the chief executive of the Irish no-frills airline Ryanair, and its existence tells you everything you need to know about the man's single-minded determination to always get his own way.

In 2003, after Dublin city council finally introduced dedicated bus and taxi lanes in a none-too successful bid to cure the city's notorious traffic problems, Mr O'Leary equally notoriously purchased taxi plates for his car and had his chauffeur acquire a taxi licence.

The ploy allowed the Ryanair chief executive to be driven on the 174km round trip between his farm in Mullingar and the airline's HQ at Dublin Airport along the then jam-free taxi and bus lanes - to local outrage and amusement.

The service, delivered through Tillingdale, which Mr O'Leary owns jointly with his wife Anita, is perfectly legal as long as the journeys remain metered and the driver holds a taxi licence.

It was a solution typical of the media-savvy chief executive: blunt; direct; outrageous; and headline grabbing. And of course, it worked.

Last year, figures show Tillingdale's accumulated profits increased by more than 7 per cent, from €582,637 (Dh2,635,756) to €624,144, and Mr O'Leary gets to the office without having to experience a daily dose of impatient rage.

Ryanair's results, also out within the past few weeks, have not been so rosy. Profits between April and June fell by 28 per cent to £88 million (Dh505.6m), although passenger numbers increased by 6 per cent to 22.5 million. Revenues, which rose 11 per cent to £1 billion, were held back by heavily discounted fares from some of Ryanair's regional British airports and a number of its continental destinations, the airline said. But Mr O'Leary has plans; and one of them is to acquire Ireland's former national airline, Aer Lingus. It is a move that could bring him into direct conflict with Etihad Airways.

Aer Lingus and Etihad, based in Abu Dhabi, at the end of last month reached a commercial agreement on an interline and code-share arrangement. Aer Lingus says it will cooperate with Etihad on flights between Abu Dhabi and Dublin and have full access to flights across the network beyond the UAE to Australia, Asia-Pacific, the Indian subcontinent and the wider Middle East.

Etihad will cooperate with Aer Lingus on services to 18 destinations, including Dublin to New York, Boston, London Heathrow, Amsterdam, Manchester, Birmingham, Edinburgh and Lisbon, with the arrangements beginning in the third quarter of this year. The airlines say they will discuss additional commercial and cost opportunities to develop a closer working relationship in areas such as joint procurement.

Etihad owns just under 3 per cent of the Irish carrier and is understood to be interested in acquiring the Irish government's 25 per cent holding when it is put up for sale.

Ryanair already owns 29.8 per cent of Aer Lingus and in June tried to buy the rest of the company for €1.30 a share, only to have Aer Lingus urge shareholders to reject the offer.

Ryanair's €694m bid was its third attempt to buy the airline since 2006 but Aer Lingus says it significantly undervalues the airline and anyway the takeover would hand Ryanair a virtual monopoly on many routes from Dublin, Shannon, Cork and Knock, as well as grant it significant slots at UK airports. Also, Aer Lingus believes the deal would give Ryanair even more dominance than it would have done in 2007, when the first bid was rejected by the European Commission on competition grounds.

Mr O'Leary is not talking about his bidbut no one believes he will take another no for an answer.

Despite the latest figures, he is still looking for opportunities. His development people have found another new airport to fly to near Warsaw, to which Ryanair's passengers can fly next year. This winter he will buy 30 new planes and another 20 next year and he aims to increase passenger numbers from 75 to 85 million over the next two years.

"Low-cost travel doesn't follow economic trends," he recently told The Guardian newspaper in London. "It continues to grow so long as we lower the cost. In recession, the Ikeas, Lidls and Aldis and the discount airlines do well. Whatever happens, there's no going back from the era of low-cost air travel."

Mr O'Leary's vision was born out of a trip to the United States in 1987 to study the business model of the budget Southwest Airlines. Mr O'Leary met Herb Kelleher who ran Southwest on four principles: fly one type of plane to cut engineering costs; keep overheads down; turn aircraft around quickly; ditch air miles. For the past 24 years Ryanair under Mr O'Leary has followed those basics. The business model uses receipts from onboard shopping, internet gaming, car hire and hotel bookings to replace the ticket revenue from selling airline seats.

Savings are also made by negotiating discounts with airports for reduced landing fees. In many cases, regional airports have made no charges so as to secure flights that bring passengers and wealth into their area.

"I'm in a very long line of Irish transport innovators," says Mr O'Leary. "We built all the roads and most of the railway lines and now we're proving that you can fly across Europe for £20 and make money from it." To make the money he charges passengers for checking luggage in and for inflight food and is now going to charge them to access internet movies on their own laptops and tablets. In announcing that, he again courted controversy by allowing journalists to run away with the idea people would be allowed to access some questionable sites.

The resulting media frenzy caused a 10 per cent rise in ticket sales. "It's brilliant," he said at the time. "The gobbier I get, the more cheap headlines I get, the more tickets we sell. "

Although fares can be as low as 99p, Ryanair squeezes an average of £2.50 out of each passenger in food, drink, car hire bookings and other things.

As he will tell you, all his efforts are for the greater good.

"We're bringing cultures together," Mr O'Leary said in an interview recently. "There hasn't been a war in Europe for 50 years because they're all too busy flying on Ryanair. I should get the Nobel Peace Prize."