Ryanair profits from a business basic: be nice to your customers

Decision to be nicer to customers appears to be working

Customers have been flocking back to budget airline Ryanair in the clearest sign yet that the company’s decision to be nicer to its customers appears to be working.

The Irish airline also cashed in on eurozone businesses forcing their travelling employees to fly on Ryanair, sending half-year profits soaring by 32 per cent to €795m (£622m).

The company’s outspoken chief executive, Michael O’Leary, praised the turnaround in customer service and told the City to expect full-year profits to be €100m higher than previously thought – the third upgrade in four months.

 He said: “By keeping fares low and being nicer to our customers, more and more are flying with Ryanair.

“It’s a newfound experience, I must admit, for me. But if it works this well, I wish I’d been nicer to our customers much earlier.”

The airline is set to unleash a price war in European aviation this winter, as it adds bases at more major airports to lure business travellers from rivals such as EasyJet and British Airways.

Ryanair said its average seat prices would fall this winter “as we use lower fares to achieve our significantly higher traffic targets”, and expects to add about two million extra passengers, giving an annual passenger total of 89 million – up eight million on last year.

That means passenger numbers are expected to rise by 12 per cent in the current quarter and 20 per cent in the final three months – traditionally the weaker half in the aviation year – helping the Irish airline to upgrade its annual profit forecast to between €750m and €770m, compared with last year’s €523m.

Yesterday’s results were slightly flattered, though, by Easter falling in a different reporting period .

The company’s Business Plus product has also “pleasantly surprised” bosses as Ryanair charges a premium for business passengers who are allowed flexible tickets and priority boarding, while the low cost of Brent crude oil in recent months has also helped profits.

However, the biggest boost appears to be the change in attitude towards customer service, after Mr O’Leary famously said he wanted to stop “unnecessarily pissing people off”. Passengers now receive free seat allocations, more hand luggage without rigorous checking by cabin crew to add penalty charges, and a better website experience. It has also resumed co-operating with travel agents after a decade-long boycott.

According to the company, complaints have now fallen by 40 per cent to 80,000 letters a year. Mr O’Leary claims most are writing to complain about the music played on planes during landing.

One of the biggest remaining gripes is the legroom for passengers, and Ryanair said it wants to change that with its order for 200 new Boeing 737-Max 200 aircraft, which offer 197 seats with more legroom, and cheaper running costs.

The turnaround is in stark contrast to the same period last year, when Ryanair issued two shock profit warnings, with the second leading to the customer service improvements. Bosses have also embraced social media, with more than 100,000 users following the airline on Twitter.