Hold the frills: How budget airlines broadened our horizons
It's a quarter of a century this summer since Ryanair took to the skies. Budget airlines may have their critics, but they have set us free, argues Simon Calder
Thursday 24 June 2010
The travel media is constantly searching for "new" destinations. Invariably the only novelty in such a location is that a travel journalist has finally got around to visiting the place. The "new" destination that I have visited more than any other this year is the car park at Bedfont FC, a football ground beside the southern runway at Heathrow.
The experience is as joyless as the location, because on each visit I spend about an hour being chastised for what I have written or said about the British Airways cabin-crew dispute. The car park is the strikers' HQ. I go there to try to understand why intelligent and articulate customer-service staff are so incensed by their employer that they are prepared to lose earnings, travel perks and public goodwill by grounding as many flights as possible at the loss-making airline.
After half-a-dozen visits to the non-flying pickets, two main motives have crystallised:
(a) We want to bring back "the world's favourite airline", and
(b) Willie Walsh [BA's chief executive] is trying to turn us into Ryanair.
The tough truth is: (a) You can't, and (b) He isn't. But as the cabin-crew union, Unite, announces yet another strike ballot – aimed at causing maximum disruption to anyone foolish enough to book a BA flight in August – three crucial anniversaries are in alignment this summer. Together, they explain why British Airways will never again be the world's favourite, and yet British airline passengers will have the brightest prospects on the planet for many years to come.
Forty, 25 and 15 summers ago, courageous individuals chose to take on the aviation establishment. Each wanted to rip the joy and glamour out of flying – and along with those virtues, the absurdly high costs that excluded most of us from flying.
In the summer of 1970, BOAC (the long-haul airline that became part of BA) engaged Radio One DJ Tony Blackburn to promote its London-New York 'youth fare' of £103 return. At the time the average weekly wage in Britain was £35 (today it is £750). Rules designed to protect inefficient 'flag-carrier' airlines and the ludicrously generous pay and conditions for their staff made it illegal for anyone else to sell tickets below the internationally agreed fare, except to members of an "affinity group".
Any lean and reasonably efficient carrier could undercut the majors. And a number of airlines, among them Laker Airways, bent the rules and set up spurious clubs to allow travellers to fly on charters to New York more cheaply.
The downside was that the Board of Trade occasionally despatched inspectors to Gatwick to check on passengers' credentials. Inevitably, a few travellers would forget their lines ("Yes, I am a member of the Brooklyn Butlin's Appreciation Society") and get turfed off the plane, while Laker faced a fine.
In the summer of 1970, as Freddie Laker surveyed the emotional and economic wreckage of yet another raid, he stood on a chair in the terminal at Gatwick and announced to anyone who would listen that he would start a "no-frills" service to America.
Seven painful and expensive years later the Laker Skytrain took off: queue around the block for long enough at Victoria Station in London and you could buy a ticket to New York JFK for £59 – just three days' work for the average Brit. And don't forget your sandwiches. To use a slogan dreamed up later by another low-cost airline, "You're only buying the flying".
Skytrain hit the buffers four years later – the fate of many brave ideas in aviation. Existing airlines traditionally respond to new cut-price rivals by cutting fares on competing routes, cross-subsidising them from the bloated earnings on other services.
But when an Irish entrepreneur named Tony Ryan launched a new airline in the summer of 1985, Aer Lingus and British Airways could hardly have been less bothered. When Ryanair started flying from Luton to Dublin the following year its losses began to multiply. By 1988, a young accountant was brought in: after studying the books and business model, Michael O'Leary wanted to administer the last rites. The owner overruled the recommendation to shut down Ryanair, and instead challenged Mr O'Leary to resuscitate the patient. Last year, the increase alone in Ryanair's passenger numbers was more than the total carried by Aer Lingus. This year, Ryanair will fly 73 million people – far more than Lufthansa and Air France, and nearly three times as many as British Airways.
A note for the strikers at Bedfont FC: when BA proclaimed itself to be "the world's favourite airline", the justification had nothing to do with the in-flight experience; it carried more passengers than anyone else. BA lost that crown many years ago, and will be way off regaining the title even when it amalgamates with Iberia at the end of this year.
Ryanair's journey from loss-making minnow to massively profitable giant will be studied in business schools for decades to come as the prime example of the benefits of contrary thinking: inviting airports to pay for the privilege of handling Ryanair passengers; ordering 100 new aircraft when nobody else was buying, post-9/11; and allowing the passenger, rather than the airline, to set the fare. "To do what?" you may be thinking. Here is how it works. Ryanair's fares boffins are "fare passive, load-factor active". They aim to fill an average of nine out of 10 seats on every flight, and will adjust prices as necessary until this happens. And then the fun starts, at least from the airline's point of view: sandwiches, scratch-cards and space in the hold are among the highly profitable ancillaries for Ryanair. A week today, the charge for checking in a bag rises to £20, meaning many passengers will find themselves paying more for their luggage than they do for themselves.
Already the howls of outrage have begun. The next time you attend a polite dinner party try this simple technique for a lively evening: ask for views on Ryanair, then sit back, relax, and enjoy the vitriol. Even the sort of people who are barely aware of the existence of economy-class cabins will weigh in with an opinion. Someone may raise the case of that nice David Dimbleby, who was one of thousands caught up in a Stansted snarl-up last August, and ended up missing his flight to Toulon in the south of France. The most benign conclusion of a heated debate is that the Irish airline is a necessary evil.
Both parts of that conclusion are wrong. Necessary? No: European travellers are well served by a host of low-cost and full-service airlines. When Mr Dimbleby complained that Ryanair was the only option, he was overlooking the dozens of daily flights to Nice and Marseille on rival airlines. Britain is way ahead, with BA and BMI competing with easyJet, Flybe, Jet2 and Monarch for the biggest air travel market in Europe. Evil? No: economically and emotionally, Ryanair is a force for good. The market is a pretty good judge of character.
Anyone concluding that Ryanair is "the airline we love to hate" has got it wrong too: it is, in fact, the airline we hate to love. Middle-class British travellers seem strangely reluctant to accept what tens of millions of Europeans realise: that Ryanair and its ilk – such as Wizz Air, Norwegian and Jet2 – have dramatically improved the quality of our travelling lives by commoditising the business of flying. In 1985, British Airways and Aer Lingus had the London-Dublin route to themselves and insisted that the absolute lowest fare was £99 (half a week's work). Faced with the unpalatable option of an arduous terrestrial journey, we mostly stayed at home. Today, with the recognition that aviation is the joyless means to a joyful end, we are free to explore the great cities, cuisines and culture of Europe.
One reason to stay in Britain this summer will be to attend the High Court hearing scheduled for 20 July, in which the two men who led the no-frills revolution will meet in their most high-profile clash so far. Michael O'Leary will defend Ryanair in a libel suit brought by Sir Stelios Haji-Ioannou, founder of easyJet. Stelios is angry at a series of press ads lambasting easyJet's punctuality and appearing to portray him as Pinocchio. O'Leary suggested a lower-cost means to settle the dispute, involving a sumo-wrestling bout, or a race around Trafalgar Square, but instead Stelios will see him in court for what promises to be a spirited confrontation.
Fifteen summers ago, Stelios was a young shipowner who decided that the best way to shake up aviation was to deploy fresh thinking on every aspect of the operation. In the summer of 1995, he came up with the name "easyJet", appropriated the colour orange, and started what would become the UK's favourite airline, carrying far more passengers that British Airways.
Much of what has become the norm in no-frills aviation was initiated by Stelios: cutting out the middle man by eliminating travel agents' commission; turning in-flight catering from a cost into a revenue stream through the novel means of selling sandwiches and drinks rather than giving them away; and understanding the power of the internet in connecting traveller with airline. Ryanair trailed a long way behind, but has turned flying from "nowhere to nowhere", as Stelios calls it, into a much more profitable enterprise than easyJet.
These are difficult days for easyJet; its chief executive, Andy Harrison, is handing over to Carolyn McCall – a media specialist with no experience of aviation – at a time when the airline is fighting a separate legal battle with Stelios over the "easy" brand. Cost-cutting has hit the resilience of the operation, with flights being cancelled for that lamest of excuses, "staff shortages". Yet McCall takes over an operation that is both profitable and popular, much more a lower-cost BA than a higher-cost Ryanair. Even when British Airways and Iberia team up, easyJet will remain the dominant force between the UK and Spain, and it has long replaced BA as the leading airline at Gatwick.
Which brings us, or rather me, back to Bedfont – a place I may travel to once more in the second week of August, for the next bout of strike action. No-frills airlines, I shall try to persuade the strikers, have done BA the greatest of favours. British Airways has been able to set itself as a class apart, an airline worth paying a premium for (strikes notwithstanding). It has also had to cut costs to compete, delivering far better value for customers than in the dark days of cosy cartels. As the economic pips start squeaking, BA cabin crew will have to work harder – but they will still enjoy much better pay and conditions than their low-cost counterparts.
I met Michael O'Leary this week at the scruffy three-storey office close to the mortuary at Dublin airport whence he runs Europe's most successful airline. The chattering classes may regard him as the 21st-century manifestation of Satan; the numbers suggest he is Santa.
Did passengers appreciate what he and the other aviation revolutionaries had done, I wondered?
"We don't particularly want their appreciation," he replied. "We just want their bums on our seats."
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