“Putting the customer first.” Service corporations live and thrive with strict adherence to this stock adage. Businesses struggle to out-service their customers and win coveted spots on public ranking lists. Meanwhile, disgruntled consumers expect lavish reparations for any perceived injustice perpetrated by a careless company. Your food was cold? Have a free panna cotta. You found Doritos in your sheets? Enjoy a complimentary massage. The flight attendant spilled Merlot on your infant? Here’s a free flight voucher. Across the service industry, CEOs flaunt their customer service creed, insisting that service represents a central rudder on the ship that is their corporation.
Michael O’Leary, CEO of Ryanair, steers his corporate ship with a very different rudder. He believes that the customers who choose his low-cost European airline forfeit service for frugality. Forget customer comfort or satisfaction, these passengers will return for Ryanair’s unmatched discount fares. O’Leary then guides his company through one controversial, yet thrifty, innovation after another. First came the decision to institute a bathroom fee on all flights. O’Leary explained that the £1 toilet charge was a means of, “raising revenue so we can keep lowering air fares.” Next was the introduction of “standing room vertical seats” at the back of flights. “We need to make sure our efficiencies are high, so we can offer the lowest prices,” explained the head of communications. Soon after, O’Leary proposed eliminating co-pilots on flights. O’Leary explained to BusinessWeek, “Let’s take out the second pilot. Let the bloody computer fly it.”
O’Leary took this anti-customer service strategy to new heights this week after passengers “mutinied” on a flight from the Canary Islands to Belgium. The airline, projecting its revenue-saving doctrine, attempted to charge a passenger extra for outsized carry-on baggage. Over 100 student passengers on the plane revolted and were ultimately removed from the airline. However, O’Leary, refusing to sacrifice his corporate ship to customer service concerns, publicly advised Belgian universities to provide, “an online tutorial in how to pack light.” Forget an apology or flight voucher, the CEO scolded the customers and continued with business as usual.
While O’Leary’s policies attract significant backlash, observers credit his campaigns as both a creative means of increasing profit and a clever form of free media for the company. As the eccentric captain boasts of toilet fees and pilot cuts, news outlets rush to report on (and advertise) the airline. His rebuke of the Belgian students drew publicity-enhancing news articles around the web. Despite recent drops in revenue, the airline stands as the 2nd largest European airline and 7th largest in the world. The Ryanair case study then stands as an oddity in corporate and leadership studies. Arrogance and ego appear to win the day, as a leader abandons traditional micro skills in favor of a militantly economic model. The question than emerges whether pure supply and demand economics can supersede leadership logic. Can a leader throw figurative panna cotta in the customer’s face and still survive if the corporate ship floats on? The answer remains to be seen but the world eagerly watches as O’Leary drives his co-pilotless ship forward.
