Wednesday, December 9, 2009

O'Leary Pilots Ryanair Into Lead With 'Mad' Ideas for Cost Cuts

WSJ: Your costs are already low. Do you reach a point where it's hard to keep cutting?

Mr. O'Leary: You do reach a point, but we're probably 20 years from that. What you have to do is be more revolutionary.

This year, thanks to a weaker dollar, we'll have lower aircraft costs and lower maintenance costs. We're lowering airport costs and we're lowering staff costs with pay freezes.

We now have to be more inventive in the way we lower costs, which is why we're looking at things that seem revolutionary to other people.

Like, paying for checked-in bags: It wasn't about getting revenue. It was about persuading people to change their travel behavior—to travel with carry-on luggage only. But that's enabled us to move to 100% Web check-in. So we now don't need check-in desks. We don't need check-in staff. Passengers love it because they'll never again get stuck in a Ryanair check-in queue. That helps us significantly lower airport and handling costs.

Now we're looking at charging for toilets on board—not because we want revenue from toilet fees. We'd happily give the money away to some incontinent charity. What it means is, if by charging for toilets on board, more people would use the toilets in the terminals before or after flights, I could take out maybe two of the three toilets on board, add six extra seats and reduce fares across the aircraft by another three or four percent.

So, there's always new ways of lowering costs, but you have to come at it with some imagination and some passion.