Ryanair’s profits surge as it enters Year 3 of customer experience plan

Derek du Preez Profile picture for user ddpreez May 23, 2016
Ryanair has experienced a 43% increase in net profits year-on-year - much of the budget airline’s success has been put down to its Always Getting Better programme.

One of Europe’s leading budget airlines, Ryanair, is continuing to see the benefit of its turnaround programme, which saw a shift away from ‘stack-it-high-and-sell-it-cheap’ towards low costs combined with an improved customer experience.

The airline launched its Always Getting Better (AGB) programme two years ago and has focused on creating an in-house digital team, building a new and improved digital platform and providing a more seamless customer journey and user experience across all channels.

The programme is now entering into its third year, with a renewed set of priorities for the company to focus on.

However, what’s interesting from the airline’s full year results, which are out this week, is that not only are net profits up a whopping 43% to €1.2 billion, but the programme has also seen average fares drop by 1% over the past year and unit costs fall by 2%.

For Ryanair, a focus on the customer has resulted in higher profits, reduced costs and a cheaper product for the consumer. Other businesses should take note.

Chief executive of Ryanair, Michael O’Leary said:

FY16 was a year in which we delivered significant traffic and profit growth in all 4 quarters
(despite an ave. oil price of $90bbl as a consequence of hedges put in place in 2014) as our AGB service programme is attracting millions of new customers to our lowest fare/lowest cost model.

Entering Year 3

Last month, Ryanair announced that its AGB customer experience programme would be entering its third year, with a renewed list of priorities for improvement.

It said that it would be lowering fares by 7% this year, there would be an improved Business PLUS service with more flexible ticketing, travel extras bookable in the mobile app, a new payment system on the mobile app, new rating systems online with real-time customer feedback, a digital gift voucher service and an increased focus on personalisation, amongst other things.

This week Ryanair said that the third year of AGB was going to be about developing the foundations that have been laid and moving on to accelerating the digital experience. The company said:

The success of Ryanair’s AGB programme is reflected in our record traffic and load factors. Over the past 2 years we have seen load factors improve from 83% to 93% as our traffic has grown from 80m to over 106m p.a. We improved schedules and customer choice as we grew in more primary airports. We’ve enhanced the in-flight experience with slim line seats, more leg room and Boeing Sky Interiors on our new aircraft, and our cabin crew helped design and deliver new uniforms.

Ryanair Labs launched our new, dynamic website and mobile app in Oct. These improved digital platforms have performed well with a rapid take up by our customers.

While AGB Years 1 & 2 were about fixing things that our customers disliked and improving our offering, Year 3 will be about digital acceleration and innovation, particularly through Ryanair Labs. This year’s initiatives will include a new Leisure Plus service, improved Business Plus, a “OneFlick” payment facility on our mobile app, auto check-in for “My Ryanair” customers and lower checked bag fees.

Getting personal

Ryanair’s latest priority is to improve the personalised aspect of its customer experience. We heard back in October last year when the company’s head of digital experience Dara Brady said that the airline would be continuing to invest in its My Ryanair accounts, so that it could gain greater traction with repeat customers. He said:

We have a lot of repeat travellers that we are asking to do the same stuff over and over again. We should be able to just put that information in front of you and take that work out. If you have people that come and buy certain products, we should put those products in front of them. It’s about customising the journey to make it more relevant for them. As opposed to going on to the website, you’re making a booking and you get to the end of the process and it’s as if you didn’t book at all.

We’ve introduced a new My Ryanair account because that allows you to set your preferences, it allows you to manage your companions, it allows you to manage your payment details. All this makes for a far more pleasant travel journey. It’s about being more relevant, more contextual and putting the right things in front of people at the right time.”

It’s about having relationship at a much deeper level.

Whilst a more personalised experience can help Ryanair improve its customer journey, it also helps the

company sell its selection of ancillary services - an area it has always been industry leading.

As part of the results out this week, the company said: “following the launch of our personalised website in Q3 last Oct., we are working hard to improve cross selling of all ancillary products/services and targeting an increased spend per customer in FY17.”

Which was reiterated as part of the post-results Q&A With chief executive O’Leary and chief financial officer Neil Sorahan. O’Leary said:

Our ancillaries are already up at 24% of revenue. We are certainly doing very exciting things with the new digital platform, both the website and the mobile app. We do expect to see that continuing to stimulate ancillaries, certainly cross-selling of ancillary services over the next twelve months.

Sorahan said:

In the short time it’s driving penetration on things like reserved seating and priority boarding. But we will continue to work on personalisation, the My Ryanair opportunities, on the website and the app, to try get better products and enhancements out in front of our customers.

My take

Ryanair is a good example of why focusing on the end user and customer experience isn’t a waste of money. It has led to lower costs, cheaper fares, higher profits and happier customers.

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