Ryanair’s digital gambit continues to pay off - profits and forecasts on the up

Budget European airline Ryanair is beginning to reap the rewards from its investments in digital platforms and improving customer experience. In the company’s half yearly results, it said that pre-tax profits and passenger numbers were both up.

This is a very different situation than compared to a couple of year’s ago, where Ryanair was quickly gaining a reputation as both a technology laggard, thanks to unresponsive and unwieldy online experiences, and a company that didn’t care about its customers. It was perceived as a cheap and not so cheerful airline for those that only cared about price.

However, as its latest results show, customers obviously care both about price and experience.

Ryanair’s CEO, Michael O’Leary, said today:

We are pleased to report this strong set of H1 results. We have enjoyed a bumper summer due to a very rare confluence of favourable events including stronger sterling, adverse weather in northern Europe, reasonably flat industry capacity and further savings on our unhedged fuel, as millions of customers switched to Ryanair for our Always Getting Better (“AGB”) customer experience programme.

The results

Ryanair announced today that it saw a 37% rise in half-yearly pre-tax profit to €1.23bn (£879m). It also said that it expects to have 180 million passengers a year within the next decade, which is 20 million higher than the airliner previously targeted.

This year it expects to carry 105 million passengers. For the first half of the year passenger numbers jumped 13% and revenue 14%. Ryanair also said that it was the first EU airline to fly more than 10 million customers in a month in July.

Ryanair said that the early customer feedback on its its newly personalised website - which relies a lot on customers signing up to and using ‘My Ryanair’, a log-in and customer portal - has been very positive. It said that customers are finding it “easier and faster to book”, to “select keenly priced ancillary services” and it added that the number of registrations it is receiving is accelerating.

The results release states:

This new website will enable Ryanair to better understand our customers and better meet their travel needs with appropriate offers for hotels, car hire, restaurants venues and other services.

The key element of Ryanair’s AGB programme remains our relentless commitment to offer the lowest fares in every market, but with the best on-time performance. In H1, despite the impact of French ATC strikes, the fire closure of Terminal 3 in Rome (FCO) and record load factors, our on-time performance improved 2% points to 91%.

Q&A

During a results question and answer session, CEO O’Leary and Chief Financial Officer Neil Sorahan also took time to highlight the positive impact of the digital investments. O’Leary said that new features were on the way:

We have a number of new features that we intend to roll out on the new personalised website and mobile app over the next 12 months. We will be packaging those up for AGB 3 (the third phase of Ryanair’s Always Getting Better programme) and I think we will be hoping to unveil those new features sometime in the first or second quarter of 2016.

Whilst, CFO Sorahan noted that with the new platforms in place, Ryanair will likely begin to see more financial benefit over the coming months. He said:

Ryanair Labs (the digital team) are now one year into their existence, as you’ll remember they came into existence in October of last year. They’ve been very much concentrating on building a platform and that platform is now in place in the shape of our new personalised mobile app and website.

We now think we’ve got an opportunity over the next 12 to 18 months to monetise on the system that they’ve put in place. We will try to get more people signed up to My Ryanair, we currently have six million people registered on that. And we are excited to enhance penetration on things that we have such as reserved seating, car hire and hotels.

The future

It’s worth highlighting that not too long ago we heard how Ryanair’s head of digital experience Dara Brady said that he was planning to extend the airline’s online proposition and that it was planning to branch into providing services that cater to other areas of the travel journey and to build travel communities.

It’s likely that we will hear more about this investments in future results announcements from Ryanair. At the time, Brady said:

Our primary business and the core of what we do is to continue to be the number one for providing the lowest fare flights in Europe. But again, if we look in the context of when we are analysing the customer, when we took a step back, the booking of a flight is only one particular

part of the trip. You go through your discovery and research phase, you book the flight, you have to get transport, there is a whole sequence of events that happens – I think we were quoted as saying we want to become the Amazon of travel. No matter it is what you want to do, we can be there to service you for it.

When you analyse the customer journey there is a huge element of that that’s in discovery and research, people going to TripAdvisor and people going to Lonely Planet. Yet people go to these sites when we already have them as an audience, they’re part of our experience.

One of the things we would like to do is facilitate properly the conversations between customers and customers. So if you want to know what somewhere is like in October, we can facilitate that conversation, create a travel community that you can tap into. That’s the angle we want to go with.

My take

One of the few examples of a ‘legacy’ company that has made the necessary investments in digital and managed to turn around their fortunes. Good work.