Ryanair: How The Bad Guy Won

[00:00:00]Last episode, I told you to stow your trade table and fasten your seat belt because we're heading somewhere stupid.

[00:00:05]Well, here we are. The stupid place.

[00:00:08]It's the world of super lowcost airfares and drip pricing. And there's a champion, Irish airline Ryan Air. That's the business we're going to start off talking about. But as usual, we're going to end up talking about why a messed up economic system works on us. Welcome to How We Got Here. I'm Chris Coler and I'm joined as always by my excellent producer Rob. Hello.

[00:00:33]>> Hello Chris. How are we?

[00:00:34]>> We're talk I'm good. We're talking about super lowc cost airfares and drip pricing. I mean have you ever been in that zone before?

[00:00:40]>> I have been in that zone before. Um let me take you back to 2017.

[00:00:45]>> Okay.

[00:00:45]>> Uh the soccer Australia were playing Honduras to qualify for the World Cup.

[00:00:49]It's a World Cup here. So your story traveled up to Sydney to watch the game.

[00:00:53]Um and certain lowcost budget airline which I won't name. Feel free to >> Jet Star. Uh we had booked the last plane out that night from Sydney. Now for our international viewers, the current Sydney airport has a curfew on it cuz in the middle of the city and I think it's like 11:00 the last flight can go 10 something. Anyway, >> the flight got cancelled. So what happens? You're stuck. They wouldn't set us up for a hotel. They wouldn't refund us. And we slept the night in the airport. Um but the important thing was the soccer one. Oh, the soccer is won.

[00:01:27]All was worth it. But you had to sleep in the airport. Mate, this episode is going to bring back all kinds of memories for you.

[00:01:33]>> Yes, >> this is this is the situation. This is the common and familiar situation.

[00:01:38]>> Yes.

[00:01:38]>> Look, I mean, a lot of people are familiar with this sort of world. But for absolute clarity, the reason we talk about super lowcost airfares, uh, is cuz they're amazing at drip pricing. And drip pricing is where you think you're paying a low price, but then you know drip drip drip between starting the purchase and completing it, a bunch of little costs creep in. Service fees, payment fees, handling fees, processing fees, loading charges, optional stuff doesn't really feel that optional. I mean, there's a long, long list of stuff. It's all around us all the time and it's incredibly frustrating and incredibly lucrative. And yeah, elements of drip pricing have always been around, but now it's a scalpel. It's a precision tool for separating people from more money than they bargain for by using behavioral psychology. And Ryan Air is on the poster for it. I don't even think they'd mind me saying that. I mean, it's all pretty out in the open. And there's two ways to tell this story. The easy way is here's the villain, Michael Oolir, the CEO of Ryan Air. Here's his airline. And here's the charge sheet.

[00:02:43]And don't worry, we're absolutely going to do the charge sheet because it is one of the most ridiculous set of dick moves I've ever seen. Like Rob, leaving someone in a wheelchair at the bottom of a set of stairs for a long time. I mean, >> it's almost more than a dick move.

[00:03:00]>> It is. And we're going to get to that.

[00:03:02]And there's a lot of more than a dick moves in all this.

[00:03:05]>> But I [snorts] mean, I think that is the easy way to tell the version of that story. And I think it kind of misses the point because the second way to tell the story is that this is a business that has been testing where the limits are for years, kind of experimenting. And so now we have a better idea of where those limits are and even more importantly where they aren't. And that is a much more interesting story to me, the results of those experiments.

[00:03:35]What can you get away with? And the answer for Ryan Air is a lot. And on that note, Rob, I'm looking forward to getting into our two truths and a lie after a very short break.

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[00:05:00]Talk to your local mortgage choice broker today. Two Truths and a Lie Ryionaire Edition. Thank you to all those people who commented saying we should keep this segment, Rob. It has been given the thumbs up.

[00:05:11]>> Look, as a as the vice president of the two truths party, I'm happy that we've been reinstated for another term.

[00:05:17]>> I think so. Yeah, there was a little bit of twoing and throwing, but you know, the YouTube comments at least are saying it's okay. We should keep doing this, >> right? I will be honest though, this particular one was quite hard to write because almost almost everything this airline has ever done kind of sounds made up. But here we go. Three facts.

[00:05:34]Two of them are real. One of them is a lie. You have a guess now and then you see if you change your mind by the end.

[00:05:40]Fact one. Ryan Air cut ice from its drinks. Ice is a frill. No more ice for you.

[00:05:46]>> Okay, >> seems reasonable.

[00:05:48]>> Yep.

[00:05:49]>> Maybe that's the easy one to disregard.

[00:05:50]Maybe not. It's a warm up. I mean, if the Simpsons is anything to go by, ICE is really hard to obtain.

[00:05:55]>> Yes, it is. [laughter] >> Yes, it is. Some people are going to know that that's a deep reference, and I like it.

[00:06:01]>> Fact two. Michael Oiri, the boss of Ryanire, once registered his personal Mercedes as a licensed taxi so that he could legally drive in Dublin's bus lane and skip the traffic. That's fact two.

[00:06:12]>> That's just That's just smart.

[00:06:14]>> I mean, that's genius if it's true.

[00:06:15]>> If it's true.

[00:06:16]>> Fact three. Ryan Air once ran an online poll asking the public whether it should charge overweight passengers a fat tax, which would be a search charge by the kilo. The vote came back yes, and for 6 months, passengers over a certain weight paid the search charge, the fat tax.

[00:06:33]True or false?

[00:06:35]That's hard. Look, I'm going to go with the third one. Like, I feel like I've heard this been spoken about a lot, but I don't know if any airline would actually alienate that many people by doing it. But then again, I don't know.

[00:06:47]But I'm going to say that that's the lie. Number three, >> but you know what I mean about this being kind of a hard one, right? Yeah.

[00:06:51]Like they're all feasible. You you know enough about these lowcost airfares.

[00:06:55]They all seem like they could happen.

[00:06:57]>> Yeah.

[00:06:58]>> Yeah. Well, one of them is not entirely true or not true to hint there.

[00:07:02]>> Mhm.

[00:07:02]>> Um keep them in your mind because we will definitely come back to it. To understand Ryionaire, I think you have to understand the industry that it was born into and airline businesses are kind of insane. They're obsessed with cost. Everything you can think of is judged in terms of weight and fuel. The margins are terrible. The fixed costs are high and subject to risk like oil prices and refining costs. Regulation and scrutiny is intense. Labor costs are relatively high and they're spread across various government areas.

[00:07:33]Customer demand is seasonal, difficult to predict, and safety risks are huge.

[00:07:38]It's gross. This is not a good business to try to make money in. Rob, >> do any of them make money? Like it seems like it's pretty hard.

[00:07:44]>> Any even profitable? Yeah. Well, it's a good question. McKenzie wrote about this about a year ago and they said only about 41% of airlines cover their costs, which they said is good. Like that's up from previous research.

[00:07:59]>> Wow.

[00:07:59]>> I mean, it's it's an absolute shocker.

[00:08:02]Like, it's it's kind of the worst. Which makes it interesting that there are kind of quite a few of these airlines around.

[00:08:09]I mean, a lot of them are subsidized.

[00:08:10]Um, but the ones who do well, I mean, they're ruthless, cutthroat. I mean, here in Australia, we had four domestic carriers, but in 2024, two of them went bust. It wasn't that long ago. We probably remember Bonser and Rex.

[00:08:24]>> Yep, I remember those.

[00:08:25]>> They were doing, you know, regional trips. They were kind of trying to put pressure on the big guys. Now they gone.

[00:08:30]We're back to Quantis and Virgin. I mean other countries have similar concentration of carriers but safe to say it is a complete nightmare of an industry to make money in and so the ones that do well kind of end up being dicks and it helps to think of airlines in that light because when you do the weird and the stingy things that they do start making a bit more sense here's a story that illustrates the point. In 1987, American Airlines removed one olive from the salads that it served in first class. One olive. They did this because they had a report in their hand that showed 72% of the passengers weren't eating it anyway. I don't know how they got that data. Somebody scraping it into the bin. Must have been keeping a, you know, a sheet.

[00:09:22]>> Had a jar. Maybe >> maybe they [laughter] had maybe they had a discard jar and it was getting fuller and fuller. Anyway, they figured out 72% weren't eating the olive. So, they took it out and American Airlines saved around $40,000 US a year. And this is in ' 87. So, >> it's a lot of money.

[00:09:39]>> Look, it's not nothing. It's over $17,000.

[00:09:43]Now, when you adjust it for inflation and Rob, you know, have a guess how the CEO of American Airlines responded.

[00:09:49]>> I'm going to say they loved it.

[00:09:50]>> They loved it. He loved it. I mean, this is the the best thing that a CEO can hear is we can do something easy. It's going to save us a bit of money.

[00:09:59]>> Great.

[00:10:00]>> So, it sounded kind of the starting gun on a whole new chapter for commercial airlines because up until now, I mean, flying was it was exclusive. It was fancy. People kind of got dressed up.

[00:10:14]But then here we are in the late 80s and cost cutting started changing things forever. And this olive arguably started the whole thing. American Airlines CEO is a man named RobertrRandle. He created a reward system for staff who came up with savings like that. He gave him television sets, fur coats, cash bonuses, kind of made it into a game with prizes. And as you'd expect, word got out, other airlines started copying it almost immediately.

[00:10:47]And there was one guy who was particularly interested in this kind of no frrills approach. Naturally, he was an accountant.

[00:10:57]Michael Oiri did not grow up dreaming of airplanes or being a pilot. He made that abundantly clear on multiple occasions.

[00:11:05]He actually didn't really like the things that much. He was a KPMG auditor, but he hated it. So one day when he was assigned to do some work for Irish business legend Tony Ryan, he immediately set about trying to jump ship and work for him directly. And it worked. That's what happened.

[00:11:25]Tony Ryan had already made a fortune in aviation, but he was doing it by buying commercial planes and then leasing them to airlines, which is kind of the complete opposite of a lowcost airline business when you think about it. I mean, it's high cost, low volume, high margin.

[00:11:44]But anyway, he decided what he wanted to do was plow all the money he had made into an airline of his own. So, he whacked Ryan Air on the side of some of these planes. And in 1985, off he went.

[00:11:57]>> So, Ryan Air is just his name.

[00:11:59]>> It's just his name.

[00:12:00]>> Doesn't stand for anything.

[00:12:01]>> No, it's And there was a bit of this going on back in the day in the ' 60s, '7s, and ' 80s. I mean, Anset Australia, of course, that was Reg Anset. Yeah. Um, you've got Bran International, Laker Airways, Wheeler Airlines, just just dudes naming airlines after themselves.

[00:12:18]Which, you know, would you do that?

[00:12:20]>> Yeah.

[00:12:20]>> If you were starting one, would it be Crawford Airlines?

[00:12:22]>> I think so. Air Rob. I don't know. I'm sounds better.

[00:12:26]>> Rob Air.

[00:12:27]>> I always found it, this is an aside, but I always found Qatar Airways funny >> because if you flipped it, you just say Airqar.

[00:12:33]>> Oh, >> you know, I thought >> that's a missed opportunity right there.

[00:12:37]>> That's a missed opportunity.

[00:12:39]We should be in this business. Yeah.

[00:12:40]>> Except it's a horrible business.

[00:12:42][laughter] >> Let's lease some airplanes. Let's go.

[00:12:44]>> Exactly.

[00:12:45]>> I mean, most of those ones I listed are no longer around, but Ryan Air obviously is, and that is just the guy's name, Ryan Air. Ryan Air, it started small, but things really kicked off in 1986 when it launched a Dublin to London route and undercut British Airways and Air Lingus prices by 50%. Which is, you know, that's a serious move and it did make a splash. The problem is the price wasn't enough to cover the high cost of running an airline. So Tony Ryan and his airline were losing money pretty much straight away. By 1988, the problem was obvious cuz they carried 322,000 passengers that year, but they lost 7 million. So it's not great. And this is where Michael Oir comes trotting into the story. Remember he's an accountant, young financial fixer for Tony Ryan. He was only 26 and Tony made him the CFO of the airline. And this I mean it could be my favorite part of this whole story because Olyri looks at the books for the first time really properly and he says to Tony Ryan, "Mate, you should shut this thing down. It's not worth it. This is a terrible airline.

[00:13:58]>> Have you thought about buses?

[00:13:59]>> Have you Have you thought about anything else? This is not working for you." Tony Ryan looks him dead in the eye and says, "I'll give you a cut of the profits.

[00:14:07]Once it hits a certain level of profitability, you're just going to start getting huge bonuses if you pull it off."

[00:14:13]>> And Oly [snorts] just goes, "All right." [laughter] You know, >> let's do it.

[00:14:18]>> That's the correct uh carrot to dangle.

[00:14:20]>> Yes. Turns out >> challenge accepted.

[00:14:21]>> Challenge accepted.

[00:14:23]>> So now Olyri is immediately on a mission to cut costs and lift revenue. and he's got he's got his own personal reasons now to do that. He doesn't really care about the airline at all. It's really just a vehicle to get paid and prove that he's a bit of a young gun in general. And his instruction to everyone can be summed up by what he said to the catering department. It became kind of legendary.

[00:14:49]He said, quote, "Cut the out of it."

[00:14:53]Am I putting it? You might need to um get the beeper button ready on this episode because there's a bit of this blue language coming from Michael.

[00:15:00]>> Sorry, kids in cars.

[00:15:01]>> Yes. Well, that'll be beeped.

[00:15:03]>> Yeah.

[00:15:04]>> All the staff, I mean, they're kind of stunned at how quickly this is all happening. You know, Ryo, this is how we're doing things now. And of course, it didn't take long for people to start hating Michael Ori for this, but he does not care. He's off and running now.

[00:15:20]And he implements his own strategy. He developed the roots that Ryionaire already had instead of chasing shiny new ones. He cut pay. He cut staff. I mean, he was verbally abusive. His attacks became known as hate beams, which is it's a fun way of talking about getting humiliated by your boss.

[00:15:40]>> Sounds like a Pokémon move.

[00:15:42]>> It does, doesn't it?

[00:15:43]>> Super effective.

[00:15:44]>> Yeah. I mean, you wouldn't want to be on the receiving end.

[00:15:47]>> No.

[00:15:47]>> But a hate beam became how he went about his his working life.

[00:15:51]>> Yeah. and it worked. You got to hand it to him on that front. By 1991, Ryan Air turned its first profit. Wasn't much, about £100,000, but things were going in the right direction.

[00:16:04]And then inspiration really struck.

[00:16:10]The hero of all of these airline executives is this guy called Herb Keller. He ran Southwest Airlines in Texas for about 40 years. And Southwest is the gold standard because it made a profit for 47 years in a row. And as mentioned, I mean, these airline businesses are tricky. It was the original lowcost carrier. And what it had done was strip flying right back to bare bones. It used one single type of aircraft, which meant that training and maintenance were pretty simple. It preferred smaller, cheaper airports that had lower costs and fees. It had absolutely no fancy meals, no first class, but their first tickets sold for $20.

[00:16:58]And this is the important part.

[00:17:00]Southwest wasn't trying to steal customers from other airlines. It was trying to bring in new people, the ones previously priced out of air travel. I mean, they were actually going for interstate bus companies or rental car companies or, you know, just trying to get people to travel who had never really thought about it before. New market and it totally worked and it had a profound effect.

[00:17:29]When Southwest started flying between Buffalo in New York and Baltimore, overall ticket prices on that route fell about 60%. and the number of people flying tripled. It became known as the Southwest effect. It now refers to such a fundamental change in pricing that something becomes a volume industry. But I mean, it's really just a way of talking about business disruption. It's a change so deep that competitors can't keep doing the same thing anymore. And it forces a shift. Whether it's a shift because of what consumers want, Rob, or because it's something that other businesses just, you know, we can't compete if we're going to be doing this.

[00:18:14]Here's a question for you. So, this change obviously budget airlines versus ones that provide a little bit more comfort. How far does the travel need to be for the comfort to matter more to you than the price? Because look, as Australians, if we're traveling overseas to somewhere that's not New Zealand, we're used to traveling 5 6 10 12 24 hours to get somewhere. You're like, well, if I'm going to be in this plane a long time, I want to be comfortable. But if you're only flying an hour to Adelaide or to Sydney or if you're in parts of Europe or America and you've only going to one city, it's like, well, cost probably matters more. It's like, where's that line?

[00:18:49]>> It's such a good point. It's such a good question, too, because I think that is kind of the core of a lot of this.

[00:18:54]Whether it's um Ryan Air in Europe or whether it's Buffalo to Baltimore, we're talking really short flights and that is crucial to the whole policy of this.

[00:19:03]It's why people actually sit there and question, you know, do I need much leg room? Do I need to have, you know, a headrest? Yeah. the conversations that started happening later about whether or not you should be charging to use the toilet or whether a standing seat on a plane, which is a contradiction of terms, but a standing only airplane is laughable or not. I mean, it kind depends on the price, doesn't it? And this southwest effect, what it's creating, it's it's inviting people to come on for the first time who'd never be able to afford it before, but it's also giving people this calculation to make in their mind precisely the one that you just talked about, which is I mean, it's only an hour. I can be uncomfortable for an hour.

[00:19:41]>> Yeah.

[00:19:41]>> I can give myself 3 hours either side in case it's running early or late.

[00:19:44]>> Yeah.

[00:19:45]>> I mean, this is the whole thing. This is changing the entire industry.

[00:19:48]>> Yeah. But then if you're going international, you're flying from, say, Melbourne to Singapore, for example, it's like, yeah, I I need the leg room.

[00:19:55]I need a hot meal. I need to probably be able to sleep on the plane. Potentially have a TV screen that I can watch something >> to get me through.

[00:20:02]>> Yeah.

[00:20:03]>> Um, >> but again, it does come down to dollars.

[00:20:05]I mean, I'm my family's going to be flying to Bali in a couple of months and, you know, we'll go the cheaper one, I guess.

[00:20:12]>> Yeah.

[00:20:13]>> Maybe it's 7 hours or 6 hours. It won't be as comfortable.

[00:20:17]>> Just raw dog it. You'll be fine.

[00:20:18][laughter] >> Oh, the kids won't be raw dogging it.

[00:20:22]Tablets for sure.

[00:20:23]>> They'll be going nuts.

[00:20:24]>> I mean, basically what happened was Olyri was watching all this Southwest stuff going down and he became obsessed kind of for life. I mean, he personally idolized Herb Keller. In fact, this is a quote from Michael Olyri in the book No Frills by Simon Cder. Here we go. How important is Herb Keller? Herb Keller is like God. It's a big quote. He also called him quote the original genius, the Thomas Edison of lowcost air travel.

[00:20:56]I mean, that's that's idolizing someone.

[00:20:59]>> Wow.

[00:21:00]>> For sure.

[00:21:02]Apparently, he idolized him so much, in fact, that years later when Ryanire floated, he offered Keller 5% equity and a seat on the board for free, which Keller declined because he said he didn't want to be distracted, which I mean, this is a pretty weird part of the story actually because I mean, surely you just take it and then don't do anything.

[00:21:21]>> Yeah. Like, how much do you think this would have been worth today?

[00:21:25]>> About $1.5 billion.

[00:21:27]>> Wo.

[00:21:28]>> I mean, it's a big miss.

[00:21:29]>> That's a huge miss. shanking from Herb.

[00:21:31]>> He could start his own airline.

[00:21:32]>> He could have started many more airlines [laughter] and >> lost it all.

[00:21:36]>> Charged bugger all for tickets.

[00:21:39]>> The lesson that Oiri learned was that you don't have to be better than the competition. You just have to be cheaper. I mean, that's it. And that changed the whole world. In 1994, Michael Oly became CEO of Ryionaire. And this is where the cost cutting goes from sensible to legendary or completely horrifying depending on who you ask and what your perspective is. I mean, some of it was just some of it was just petty really.

[00:22:10]He banned cover sheets on faxes. He reportedly told flight attendants to buy their own pens.

[00:22:17]Some of it was smart, like straight out of the Southwest playbook, like switching the whole airline to a single type of plane so that crew members could work on any aircraft.

[00:22:28]And then, I mean, things do keep improving. Cheap fairs were filling the planes. Ryan Air had this promotion called Happy Days. 29 flights and seats were really filling up. And then Oly takes off his cost cutting hat and he puts on his sales hat. He sets about getting the passengers to pay him all the money they've saved in other ways.

[00:22:52]It was kind of an open playbook of keep cost low and just sell sell sell. He cut ice completely out of the business. And reckoned he saved about 40,000 bucks a year by not needing to buy it or keep it cold. You might remember this from the two truths and a lie >> section. Rob, those with eagle eagle ears.

[00:23:14]>> So that one's true. [laughter] giving it away.

[00:23:17]>> Yeah. Well, I that was another comment on YouTube is just you should flag it when you hit it.

[00:23:21]>> I think that's fair enough.

[00:23:22]>> Yeah.

[00:23:23]>> You don't want to have to remember too much.

[00:23:24]>> I mean, cutting ice out isn't isn't the worst thing in the world cuz there are a lot of places around the world that you travel to, unless it's an Australian.

[00:23:30]They say, "Don't drink the water." And the way they get you is you go, "Ah, I'll get this cocktail or drink, whatever, at a bar and they put ice in it." Not realizing that you're now drinking potentially.

[00:23:39]>> And you're halfway through it and you're like, "Oh, no. Now I'm doing the thing I said I wouldn't do."

[00:23:42]>> Exactly. And then tomorrow morning, well, you regret it.

[00:23:44]>> Yeah. Well, I think a lot of us have been there. I mean, I think um the other thing to say is that not only were you not getting ice, but you weren't getting like Coca-Cola. [laughter] It was St. Bernard Cola or St. Bernard Cola.

[00:23:58]>> Whoa, whoa, whoa. Hey, well, don't don't disrespect St. Bernard Cola here. Come on. Iconic brand.

[00:24:03]>> I'll be honest. I was not familiar.

[00:24:05][laughter] Um I'm sure it tastes okay.

[00:24:08]It's a brown drink. Um and it's served at full price and it's lukewarm.

[00:24:13][laughter] I mean, I just Googled St. Bernard Coler and all I've got is pictures of dogs, so it can't be that big.

[00:24:18]>> Maybe it was pretty short.

[00:24:20]>> And here's a picture of a St. Bernard and a Coca-Cola sign. So, there we go.

[00:24:23]>> That is possibly an indicator that it wasn't a big deal and Ryanire got it on the cheap because the other one and sticking with soft drinks here is an Irish company called Finches, which gave Ryionaire free orange and lemon drinks and tried I mean it was basically just trying to get some brand awareness. They wanted Raire to give these drinks away to passengers for free. [laughter] But not only did Michael Oir charge full price, but he also got Finches to pay for the cups, >> which is just I mean, it's so petty, but he was a penny pincher.

[00:24:56]>> I mean, and there are millions of examples of how Ryan Air figured out how to charge you more than you expected to pay or skimped on something and charge full price for something. Like I mean if you didn't show up for a flight you were entitled to a small refund of airport taxes which you had already paid. So what Ryan Air did was it introduced a fee to process the refund. I mean they're just at this point they're just filling every single gap with a fee.

[00:25:24]You see what's happening? The advertised fair is going down and down and down but everything that used to be included is now expensive. the bag, the drink, the check in, the seat, which now doesn't even have a pocket in the back of it because that means that somebody has to spend a few seconds cleaning it. I mean, this drip pricing, it becomes very pure and deliberate and out in the open. You strip the headline price to the bone so it wins every comparison. Then you charge for the rest, one drip at a time, once the customer is already on the hook. It's not illegal in the blanket sense because someone could still only pay for the airfare in theory. It's a huge breakthrough and this is how Ryionaire conquered the skies of Europe with this system. But to increase that spend per passenger, Ryionaire has done some truly messed up things. That's after the break.

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[00:27:58]This next bid is pretty dark. To save money, Ryionaire had gotten rid of air bridges, which is those covered walkways that connect the terminal to the door of the plane. Cheaper to just have people walking across the tarmac and and up a set of steps. Thing is though, not everyone can walk up a set of steps. In 1999, a woman named Helen Newton, who has multiple sclerosis, said that Ryan Air told her, and I'm quoting, "We don't cater for the disabled." She said they tried to charge her £8 for a wheelchair, and that after a long wait, she was taken out onto the tarmac and just left there at the bottom of the aircraft steps, and she had a 16-month-old baby with her. Whoa.

[00:28:41]>> I mean, that would be so incredibly distressing.

[00:28:45]I feel like that's I mean at least in Australia I feel like there are some kind of discrimination laws against stuff like this. Now I obviously can't speak for this part of the world.

[00:28:53]>> There are discrimination laws and we're getting to that. I mean but just purely the fact that this happened. I mean can you imagine >> surely someone who works has a bit of a conscience.

[00:29:02]>> That's the thing isn't it?

[00:29:03]>> Like this is the thing like let's say we both work for Ryan Air in whatever when we 1999 >> and the manager's like you have to charge them for this. Like surely there's someone there who would have been like we can't be doing this. So this I think is the consequence of having a business whose identity is being a bit of a dick right from the top down is that there is no sense of you know personal ideals anymore. You're just kind of you're just part of this this machine of of charging people for anything and then not really caring about the consequences too much. I mean it is one of those really rare businesses that seems to not care about customers and kind of even have contempt for them. I mean, I think it's fascinating because so many businesses in so many different sectors are low cost, high volume. Yeah.

[00:29:50]>> And this is the only one I can think of where it kind of just has a middle finger up to customers at all times.

[00:29:56]>> I mean, you could have a supermarket, you could have a retailer that is high volume, low cost, low margin, and they're still kind of at least putting on a facade of customer service.

[00:30:06]>> Not here, though.

[00:30:07]>> Yeah. Like, well, you need us if you want to get to this place. Like, >> totally. I mean, but here we are.

[00:30:12]>> What else are you going to do? Pay more money. Okay.

[00:30:13]>> And this is the crazy thing. Like, we talk about Helen Newton's example, which I mean, not only I mean, that would have been just awful for her, but I mean, there are a bunch of people on the plane who would have been looking out the window and seeing this happen. I mean, just horrific. The weirdest part of this is that it happened a few times. Another woman with MS was reportedly charged £48 to be taken uh to and from the plane in a wheelchair. And in today's money, I mean, that's about $200 Australian dollars. And she said this, "No other airline," this is a quote, "No other airline charges for this. Ryan Air told me it's because it's a no frrills operation. Since when has a wheelchair been a frill?"

[00:30:54]See how far they go to test the limits here. In 2002, a man with cerebal palsy was charged 36 pounds for a wheelchair.

[00:31:04]He took the airline to court and in 2004 he won.

[00:31:08]>> Good.

[00:31:09]>> Ryionaire paid a very small damages bill and just started adding a 50 p fee on top of all airfares to cover some of the disability provisions that they were getting in trouble for not having.

[00:31:22]>> Wow.

[00:31:23]>> It's amazing.

[00:31:24]>> Ruthless.

[00:31:24]>> It is ruthless. It is amazing really to see the system when it's challenged and how it responds. I mean, if you overstep the mark, a slap on the wrist just isn't that bad. They were criticized, but again, they don't care, which becomes like their superpower.

[00:31:44]It's actually more interesting than that, I think, because Ryionaire has used all kinds of criticism to their advantage over the years. Michael Oolirri, I mean, he has always known how to make the right kinds of noises in the public arena. He knew that if he got written up in a newspaper for appalling fees or screwing over his staff or customers that he could spin it into a positive. He could say, "Yeah, we cut costs. We have terrible customer service and we can have low airfares because of that."

[00:32:21]In a way, he kind of becomes a caricature of himself. You know, in 1998, as mentioned, Olyri stops buying pens, the cabin crew, and he told them to either buy their own or just steal them from hotels or wherever you could just pick one up. He says he did that.

[00:32:39]And he's saying this publicly, Rob, but he's directing it to staff. It's all very out in the open, which is kind of like, why are you doing this is the sort of the initial feeling. And then you arrive at the why.

[00:32:50]>> M. It's not good culture.

[00:32:52]>> It's not good culture. It's kind of it's a truly toxic culture.

[00:32:58]>> But, you know, he's still chasing those bonuses. That's the whole point.

[00:33:03]Later, he banned staff from charging their phones at the company's offices, saying the saving per charge was 1.4%.

[00:33:12]I don't even know how he's working that out. And I don't even know 1.4% of what?

[00:33:16]>> I'm going to call [ __ ] Yeah, >> [ __ ] >> Can I charge my phone here? Imagine that. You say, "Actually, no. That's against policy."

[00:33:22]>> Sorry, Chris. [laughter] >> Yeah, we can't be doing that.

[00:33:25]>> No.

[00:33:26]>> All this stuff fed massive amounts of sarcastic media coverage and punchlines on, you know, late night talk shows and stuff like that, which is kind of exactly what he wanted because it was doing his advertising for him.

[00:33:41]Gez, they really are tight ass. It's no surprise. The airline is €10. That is what Olri is hoping that you'll say and it becomes the whole business identity and it remains that to this day. Just last week I saw the following post on Ryanire's Facebook page. Quote, this is a Facebook post. If you want more leg room, buy your own plane.

[00:34:05]If your friends don't pay to sit next to you, get better friends. And the third one I saw, this is all in the one week coming soon. Stinky feet fee.

[00:34:15]Yeah, >> it's not great.

[00:34:16]>> Not ideal.

[00:34:16]>> I mean, that's it's not good. It's not particularly good social media content, in my humble opinion. No, they've got several million followers and these posts, I think, had about 150 likes.

[00:34:25]>> Wow.

[00:34:25]>> But it's reinforcing this whole concept, this whole thing of being a tightass and being really open and funny about it. It's the whole thing.

[00:34:35]>> It's just mean.

[00:34:36]>> It's mean.

[00:34:37]>> It's a bit lame, but there it is. That's the whole point. It kind of just reinforces that this is a business that doesn't really care about customer experience at all. And it goes right to the top. It's been written that Michael Oir is one of the few CEOs who had that contempt that we were talking about for the customers. He made outright sexist ads on multiple occasions. He registered his car as a taxi so that he could use it in bus lanes on the freeway in Dublin, which is another two truths and a lie moment. There you go. there, Rob.

[00:35:10]>> That that as an aside, that taxi actually does turn a profit, apparently.

[00:35:14]>> Wow.

[00:35:15]>> I know. Who' have thought?

[00:35:16]>> Smart.

[00:35:17]>> He's not bad at business, this guy. In 1997, company documents show that Michael Oolir earned a 9.8 million pound bonus.

[00:35:27]And that was 40% of the total wage bill for the company that year, which it's kind of crazy because he's unashamedly cutting staff numbers and wages while putting millions into his own bank account.

[00:35:41]And let's take another look at how he did it because it's absolutely fascinating when you have a good look at it. And it's kind of the whole point of this episode. Should we do the greatest hits?

[00:35:51]>> Let's do it.

[00:35:51]>> I think we should. Right. Here we go.

[00:35:55]There was the £3 per minute fee for making a phone call from the plane. £3 per minute. There was the £2850 fee to bring duty-free on board. There was Ryionaire's own currency conversion system which charged you several pounds more than your bank would have. In 2011, Ryan [laughter] In 2011, Ryionaire gave a sandwich to a guy who was having a heart attack. Rob, I don't know why. And then it tried to charge him for it. [laughter] Wow.

[00:36:25]>> And he was like, he was getting better.

[00:36:27]He's like, "No, I don't want to pay for that."

[00:36:29]>> Uh, speaking of 2011, uh, that year, an adult could buy a one-way Ryan Air flight for £9.99. But if you wanted to bring a baby, the infid's fair was £20.

[00:36:40]So, the baby cost twice as much as an adult. Here's a good one. In 2015, a 19-year-old's ticket was booked under the wrong name, a nickname, Adam West.

[00:36:50]Ryan Air wanted 220 pounds to [music] correct the name. So this young guy worked out it was cheaper to le to legally change his name by deedpole to Adam West, get a new passport issued rather than do it Ryanire's way. And he did that [music] because it was cheaper.

[00:37:07]>> Wow.

[00:37:08]>> Which is wild. And then there's my personal favorite. Also in 2015, um a family of three either deliberately or accidentally didn't pay the [music] allocated seating fee. So Ryanire tried to put the three-year-old kid at the at the opposite end of the plane than her parents. Um the parents had to complain twice before the kid was eventually moved to somewhere where the parents could see her.

[00:37:31]>> That's just >> Isn't that wild?

[00:37:32]>> Criminal.

[00:37:33]>> It's just crazy. I mean, there's just absolutely no movement at all. The the rules are the rules. The fees are the fees.

[00:37:43]>> It's soulless.

[00:37:43]>> It's amazing. I mean, you kindless like I'm laughing as I read these, but in those instances, you would be absolutely losing your mind about what to do if you're flying with a kid.

[00:37:54]>> Absolutely.

[00:37:54]>> Or if you're Adam West.

[00:37:56]>> Yeah. Batman. Yeah.

[00:37:57]>> Yeah. The Batman. The real question is why does this work? Why do we fall for it even if we know that it's coming?

[00:38:07]Because it uses our brains against us.

[00:38:10]Michael Olyri once said, quote, "If we can get the average spend per passenger high enough, we could afford to cut the fair to zero."

[00:38:19]It has never been about the ticket.

[00:38:22]That's just bait. It's always been about the other stuff. They call it the ancillary payments, but it's, you know, it's just the other stuff. The reason why the bait works comes down to how human beings handle numbers. There's a wellstudied mental glitch that's called anchoring. When we look at a price, we grab onto the first big number we see the fair and we anchor to it. That becomes the price in our head. Then the fees come in a bit here, a bit there, and we do not adjust properly. We do not add them up cleanly. [snorts] And even when we've been screwed, we still hold on to that first price. I mean, if you snag a flight for $50 and by the time you pay it's $80, you're probably still going to tell your friend that it was a $50 fair. That's anchoring.

[00:39:15]And then there's the funnel. You start with the fair, but on your way to checkout, there are little hurdles that make you think. The seat, the meal, the baggage allowance, all fees, payment fees. By the time you see the final damage at the checkout, you know, you're 20 minutes in. You're committed. You feel like you've cleared all these little hurdles now and you don't want to bail out. And that's the sunk cost fallacy. And it's the same psychology that keeps people sitting at the poker table. Both of these things, anchoring and sunk cost, they erode customer trust over time.

[00:39:50]They piss you off if the business does it too much. But businesses are allowed to utilize them pretty much all over the world. Regulators are pretty clear on this. As long as the fees are disclosed, as long as you can see them, eventually there is no legal problem.

[00:40:09]But we all understand these systems now.

[00:40:12]So why don't we just draw a line and say no? We could take our business to an honest business.

[00:40:18]And there's the problem. This system has seeped into pretty much everything.

[00:40:24]First, it's spread across the airline industry, and it's spread in a fascinating way. Not really by other airlines copying Ryionaire from a distance. I mean, it spread because Ryionaire's own people left and took the recipe with them. The man who ran Ryionaire's operations went off and helped build Air Asia. Ryanire's sixth ever employee who had started on the reservations desk. He went off and started Tiger Airways where he helped set it up. Another Ryionaire manager became the head of operations at India's first lowcost airline. And now, I mean, it's obviously gone far beyond aviation.

[00:41:03]>> Regulators, they look at this sort of stuff and they do occasionally have a win when something just kind of goes a bit too far. In 2011, the EU brought in rules forcing airlines to show unavoidable taxes and charges inside the headline price. Ryan Air panicked and immediately got to work on some pretty dastardly workarounds, but the law was there from that point on. Here in Australia, the AC took Jet Star and Virgin to court over drip pricing in 2015, and they won. And then it went after Quantis in 2025, pretty recently, over a system of selling tickets on flights that it had already cancelled.

[00:41:44]It was called the Ghost Flights scandal.

[00:41:46]You remember?

[00:41:47]>> Yes. I've heard of this.

[00:41:47]>> They got >> they got fined 100 million bucks.

[00:41:50]>> Wow.

[00:41:51]>> It was solid. I mean, it wasn't solid in in terms of what Quantis makes in profit, but it was it was meaningful in terms of the headlines and what it did.

[00:42:00]And that's really ultimately the goal of an organization like the A C. They can extract fines via the federal court, but really it's about the brand damage. I think >> people got really annoyed at Quantis after that one.

[00:42:11]>> Yeah, >> stuff does happen here and it happens all over the world. Canada went after ticket master and the US brought in a law in 2025 forcing live event ticket companies and hotels to show their full price upfront. And this year, ticket reseller StubHub was made to refund $10 million US to customers that it has drip priced.

[00:42:36]As for Ryan Air, well, in 2025, a court in Belgium ruled that a whole string of its booking practices were illegal. The court in Spain ordered it to refund a woman who had been charged over 5 years for bringing a small bag onto a plane.

[00:42:50]>> What was in this bag? [laughter] >> I don't know. [clears throat] 5 years is a very long time. Right.

[00:42:54]>> I mean, I say all this because I think it's easy to get really disheartened and just say this is the economy we live in now. But I think it's important to say if you're lucky enough to live in a country with with regulators, they are working on it.

[00:43:07]>> Yeah, >> they're trying. Federal courts sometimes don't hand down the fines that we want them to. But, you know, there are lines.

[00:43:15]We've talked about where are the lines in this episode, and there are some.

[00:43:19]>> I mean, they're not where we hoped they'd be, but they're they're there.

[00:43:22]>> They're definitely there. But the part of the story you possibly can become a bit disheartened with is Michael Oir. In 2025, Ryan Air share price hit a target written into his contract and it triggered a bonus worth over 100 million.

[00:43:38]Yeah. And he's worth about a billion maybe more euros that is.

[00:43:42]>> Wow.

[00:43:44]>> Yeah. I mean Ryan Air listed on the Dublin Stock Exchange and has secondary listing on the NASDAQ. In 1997, it listed at a $1.27 and it's now trading at about 60. It's a 4.5,000% return, Rob.

[00:43:57]>> Wow.

[00:43:59]>> It worked. Like that was the point all along >> to make money. It all started with Olives.

[00:44:04]>> It did a bit. It all started with Tony Ryan telling Michael Oly that he'd get rich if he made Ryan Air profitable. All came true. It happened. Like it or hate it. And I do hate these systems.

[00:44:19]It is a success story. You have to say that you can in theory fly on one of these planes for the rock bottom ticket price.

[00:44:29]You're probably going to have to pay some extra though. And that gray area is worth billions.

[00:44:35]It's a way of thinking that has changed businesses all over the world. Consumers now have more choices, but every choice comes at a cost. The fair you see is almost a lie. And now we have to be almost lied to when we buy pretty much everything, which is infuriating really.

[00:44:57]So the next time you watch a $40 flight turn into $110, you can get annoyed and that's fair enough. But if you feel like you've been misled, you should report it. Make a complaint. Post about it on social media. That is what being a customer is all about. You do get to object occasionally.

[00:45:16]Even if it goes nowhere, it's going to make you feel better.

[00:45:19]>> Yeah.

[00:45:23]>> Should we do the two truth and a lie?

[00:45:24]>> Let's do it.

[00:45:25]>> Let's do it. Fact one was Ryan Air cut ice from its drinks. This one's true. In >> 1998, ice was deemed to be a frill and people could do without it. It was estimated that they saved about €40,000 per year with that. And you know, as mentioned, you were getting knockoff drinks at at name brand prices and they were lukewarm. [laughter] [gasps] Fact two, Michael Oolir registered his Mercedes as a taxi to use Dublin's bus lanes. Also true. Time is money.

[00:45:59]>> Yeah, >> Michael Ori. Fact three. This is the interesting one. The fat tax. This is the online poll um that asked whether or not people should be paying um search charges over a certain amount of weight >> them and their bags weighed together. Um Ryan Air >> did do that poll. People did vote yes.

[00:46:20]>> It's a half lie which I think makes it the perfect lie for this episode really because it's an almost truth. Ryanire actually did run that poll. It was in 2009 floating the idea of a fat tax. It got a lot of attention, which was all part of the strategy, but it never actually implemented the search charge.

[00:46:38]And I mean, look, as mentioned, this is Li's favorite thing to do. Plenty of examples of him doing this. He suggested he might make people pay to use the toilet. Um, he said he was going to give the lady on the logo of Ryan a boob job.

[00:46:52]Um, which obviously he never did, but it got a lot of headlines. Standing room only tickets, he suggested. I mean, he never meant any of it. He just wanted the free advertising because he's a tightass. The whole thing is a kind of a dark masterclass, Rob. And it sort of puts you in two minds. The consumer mind or the business mind. I mean, you can see why a lot of people idolize this Herb Keller guy because he did it in a way that maybe wasn't as feral. Um, but people there might be a lot of people out there who think that Michael Oolir is a business genius.

[00:47:23]>> Yeah.

[00:47:25]I guess it just depends on where your conscience lies and you know is looking after people more important to you or is it just simply you know the bottom line is what matters to you the most. I mean I'm sure we'll get to a point one day in podcasting where halfway through the podcast we can stop and say it's an extra$129 and then we can keep going.

[00:47:43]We're not there yet.

[00:47:44]>> Are we there yet?

[00:47:46]>> Maybe maybe one day. [laughter] >> Spotify if you're listening.

[00:47:48]>> There was an intensity in your eyes just >> podcast. I just had I just had an idea.

[00:47:51]Oh god [laughter] I got to I got to get out of here. notepads.

[00:47:54]>> I got to get out of here.

[00:47:56]>> Coming to you soon. Um I don't know.

[00:47:59]Yeah, sometimes I reverse, this is a weird one. Sometimes I reverse drip price my son's pocket money. Rob, >> there's the base rate. Five bucks a week.

[00:48:06]>> Then he gets a little bit more if he like, you know, clears the table or cleans up his clothes in his room. I don't know if I'm teaching him bad habits or good habits. I actually >> What is the lesson? I haven't thought about that enough.

[00:48:18]>> Yeah, I'm not there yet. I'm not. Yeah, I'm not sure about it, but I'll It's not really working, [laughter] but that's neither here nor there.

[00:48:26]>> Yeah, >> but thank you. I mean, that is Ryan Air and that's drip pricing and the reason why nothing you ever buy really costs what you think it's going to cost. Next episode, we're sticking with the idea of selling people maybe something that they didn't absolutely need. It's a little bit smaller than an airfare, though.

[00:48:44]Something you maybe put your leftovers in. M >> maybe a big hint as to what that will be. Looking forward to that episode.

[00:48:52]Thank you, Rob, as always.

[00:48:53]>> Goodbye.

[00:48:54]>> Much appreciated. I'm Chris Coler. Thank you very much for listening. See you next time.

[00:48:59]>> Ryan Air didn't ask permission to change aviation. They just made flying something everyone could do. And the industry never looked the same again.

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