Friday, June 19, 2009



Look; love the business model and the functionality and even used to like the prices but have never quite understood Michael O'Leary's press releases. Well that's not true - the adage of no publicity being bad publicity has been adopted and made into an art form by the Irish entrepreneur.

Now if you reread all of his old stuff attacking the dominant airlines of the day you wonder where his principles went. The attacks he made on BA and BAA in the distant past were often justified and the role he played in opening up regional air travel cannot and shouldn't be overlooked but hey doesn't he make wonderfully selective usage of the facts when he releases another barrel at his selected target which earlier this week was - The Irish Government!

He said, “The Irish Government’s €10 tourist tax is “tourism suicide” which is devastating visitor numbers and jobs. Price sensitive visitors are switching to lower cost destinations in Europe where governments welcome tourists, not tax them.

“Ryanair will remove one aircraft from both Dublin and Shannon this winter and further cuts can be expected in the coming months if the €10 tourist tax is not scrapped. If the tourist tax is scrapped these cuts, and the tourism collapse, will be reversed. This tourist tax will raise just €125 million per annum and for this tiny tax revenue the Irish government will lose over 2,500 jobs and more than €750 million in tourism spend, the VAT receipts on which would exceed €150 million”.

Now we can't question his bravado and even his logic but the narrowness of the argument is ironic! Anyone who has tried to book a an Ironyair flights these days recognises that probably the cheapest element of the whole process is the Irish Government's €10 tax!

On the booking page for my return flights to Dublin the cost was £68.85 of which £7.00 was Irish leg taxes. On confimring my one piece of luggage, rejecting priority boarding and SMS text updates, I then had two web check ins of £10 each way and a further two charges of £5 each way for paying by Maestro (this confused me even further one reservation, one payment, two charges....hmmm).
So now my flight was all the way up from the titel price of £17 to a final total of £98.85. The Tax charge from the Irish Government being £7 of this total.

So really if we're looking at it from the outside yes, the Government Tax is damaging a price sensitive product and how it impacts on the end buyer is certainly up for debate. Whether it contributes to the current problems with inbound tourism to ireland is quite another.

I personally enjoyed flying Ryanair and still do when no other option arises. The difference I have now like many other thousands I'd guess is that when that other option is available I now jump at it. The charging by Ryanair for "extras" has gone beyond the laudable principle of charging customers for what they actually use to one of loading the profitability into what the consumer sees as unfair charges. This is Ryanair's option, it is Mr O'Leary's strategy but for such a brilliant product it seems so unnecessary to have taken the route of complete confrontation. There must have been another way.

Anyway, we ain't going to change Ryanair's pricing strategy or public pronouncements but at least we can enjoy the wonderful irony.

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