Michael O’Leary avoids his Gerald Ratner moment of truth – for now

July 17, 2010

I picked up Thursday’s Guardian with mounting anticipation and turned to page 9, as instructed. There it was, half a page of sheer, undiluted schadenfreude!

A half-page ad in which Michael O’Leary is forced to apologise fulsomely for calling his EasyJet rival Sir Stelios Haji-Ioannu a liar in print. Appearing in the Telegraph, too. And all paid for by Ryanair.

That’s the sadness of the Ryanair brand. For all the gritty enterprise that has made it Europe’s first airline, we don’t very much like it, or its leader. In fact, we can’t wait for him, or it, to get their come-uppance.

Not that O’Leary will be losing much sleep over such sentiment (see my Horlicks post). If anyone thinks this is his Gerald Ratner moment, they are very much mistaken. O’Leary’s arrogance is not yet so overbearing that he has lost touch with his market. Granted that both he and Ratner have the same contempt for the people they have served. But the difference is that O’Leary’s judgement of human nature is much shrewder. Spookily, he seems to know us better than we know ourselves. Just how much more are we prepared to be abused at the check-in counter, treated like cattle as we board and sheep once aboard, before outraged human dignity finally overcomes our greed for lower prices? A lot more, I suggest; even after Ryanair introduces the single paying loo. Ryanair never forgets that, despite our better selves, we don’t really have a choice – and rubs our noses in it.

Still, we can have a few laughs along the way at the great brand’s expense, and this is definitely one of them. The knife between Stelios and O’Leary is an outstanding illustration of mutual corporate and personal loathing. Others examples include Sir Richard Branson and Willie Walsh; and Sir Martin Sorrell and Maurice Lévy. My favourite, however, (for which I am indebted to the BBC News website) is the case of the two Dassler brothers, one of whom (Adi) set up Adidas, and the other (Rudi), Puma. The hostility between the two of them was so visceral that for many years the Bavarian town of Herzogenaurach, where both had factories, was in a state of undeclared civil war.

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Cookeing the media-buying goose

July 9, 2010

Outrageous indeed. I couldn’t agree more with IPA director-general Hamish Pringle’s take on Thomas Cooke’s contribution to an increasingly acrimonious global media-buying debate.

The travel operator is reported to be demanding a £1m signing-on fee at the conclusion of its £30m media review – in addition to “a reduction in agency fees currently paid” and “a minimum 10% saving through consolidated media buying” stipulated in the original brief for the 3-year contract.

And yet, the Thomas Cooke affair is only the most egregious example (to date) of a ripple of client practices which are causing stupefaction in media agency circles. It’s the way the world is going.

The principal bugbears in the debate are Unilever and Reckitt Benckiser. It is no coincidence that they are, respectively, India’s number one and number two advertisers. India, land of the cut-price call centre and the $2,500 Tata car, is after all where most of the low-cost action is to be found these days.

By way of background, read (if you haven’t read it already) a column by Les Margulis, an American media veteran – 22 years at BBDO. Promisingly entitled ‘When to walk away from an energy-sucking client’, the content below the headline does not disappoint. It’s a withering diatribe aimed at Rahul Welde – VP of media at Unilever for Asia, Africa, Middle East and Turkey – in particular, and cheapskate clients in general.

What (apart from an arrogant manner) had Welde done to deserve this opprobrium? About a month previously in a keynote speech encompassing the future of advertising, he had had the temerity to suggest that “marketing is all about brilliant ideas”. And one of them, apparently, is screwing down agencies, creative as well as media, to zero costs – if necessary by posting the brief on the internet and doing a bit of on-the-cheap crowdsourcing. See also George Parker on “Vindaloo Rat” and Jim Edwards at bNet.

Reckitt has stoked this controversy to fever-pitch by going one step further. Allegedly, it plans to charge each of the participants in a pitch for its Indian media-buying business up to $10,000. The suggestion has so upset the Advertising Agencies Association of India that it is advising member agencies not to pitch.

This bit may be a storm in a tea-cup, as I am assured by those in a position to know that RB has not actually asked for money (or is that just wiser-after-the-event back-pedalling?). Even so, the proven terms could scarcely be considered lenient: the “winner” will have to rebate volume discounts paid by media owners as well as offer compensation for any drops in TV ratings.

Which brings me back to Thomas Cooke’s modest contribution to the “media, it’s just a commodity” debate. What puzzles me, given that media agencies are being awarded virtually zero compensation these days, and are expected to indemnify the client against loss, is this: how does anyone make any money? It’s certainly not on the overnight interest rate. And yet media agencies continue to queue up and be plucked.

As for Thomas Cooke’s proposal, my only surprise is that it didn’t come from Ryanair first. Now that really would be “rapacious”, to use one of Michael O’Leary’s favourite words.


Seismic after-shock for Ryanair as the ash clouds clear

April 22, 2010

Now that the volcanic dust is settling, we’re beginning to see some explosive fault lines developing in the travel business. Packaged holiday companies, TUI Travel and Thomas Cook chief among them, are irate at the way the budget airlines have apparently been trying to wriggle out of their legal responsibility for repatriating stranded British tourists – while they themselves are left to bear the financial and logistical burden.

I say “apparently” because Ryanair – the largest short-haul European airline and budgetdom incarnate – has set itself up nicely by falling into its natural default role: pantomime villain. Last night we were treated on our television screens to the extraordinary spectacle of spokesman Stephen McNamara telling us that Ryanair could not, and would not, pay compensation to stranded passengers (other than the miserly £4 they might have forked out on an air fare) and it was just plain unreasonable to expect them to do so. Instead, we should blame the Civil Aviation Authority, who inflicted this phony lock-down on us in the first place, and from whom, by the way, we can expect Ryanair to extract “rapacious” amounts of money in due course for the inconvenience experienced by its shareholders over the past week.

Ryanair is a brand leader that likes to play the maverick. Its “irreverent” positioning makes me-toos, like Coca-Cola’s Glaceau Vitamin Water, look rank amateurs contending with the real McCoy. Who else but Ryanair boss Michael O’ Leary could get away with forcing his passengers to spend a penny by the simple expedient of reducing the number of on-board loos by two and persuading the airframe manufacturer to fit a lock on the one that remains? What a chuckle! And it fits the penny-pinching brand image so well.

But this time Stephen went too far. He was actually suggesting that Ryanair could break an inconvenient law – a quantum leap beyond O’Leary’s merely unethical behaviour in driving his Mercedes “taxi”  down Dublin bus lanes. That simply would not do. By this morning, O’Leary himself had announced a humiliating, if begrudging, volte face: Ryanair would be fully complying with the law after all.

However, I digress slightly. The Eyjafjallajökull volcano crisis and Ryanair’s reaction to it has opened some clear blue sky between tour and budget airline operators which astute marketers in the war-weary travel market may be able to exploit. Relentless price-cutting, which extends to hire cars and hotels as well as airline tickets, has enabled the budget airlines to turn “value for money” packaged tour deals into an endangered species – one that can’t compete on price. But, as events have proved, there’s more to a holiday than heavy discounting. Peace of mind comes at a price, and it’s one that’s enshrined in the ABTA and Association of Independent Tour Operators’ (AITO) charters, which binds all subscribers to provide a financial and logistical safety net for their clients.

If you’re flying with a budget airline, you’re on your own. That, at least, is the message Ryanair was sending out loud and clear – until the lawyers gagged it.


More Horlicks from Michael O’Leary

November 3, 2009

Michael O'LearyI have often thought that Michael O’Leary would be perfectly cast in a Horlicks ad. You know, the ones that star a dastardly traffic warden, bus or taxi driver, with the endline: “How does he sleep at night?”

The rambunctious one has been at it again, manufacturing a public tantrum against Boeing, which supplies Ryanair’s fleet. The US airframe maker has had the audacity to reject O’Leary’s outrageous ‘recession-priced’ discount on up to 200 new jet liners. Once bitten, twice shy apparently. After 9/11, when the industry was on its uppers, O’Leary managed to screw what he himself described as “rapacious” discounts out of the manufacturer. Airbus, the only competitor in the field, won’t touch O’Leary with a bargepole.

His response? “If we don’t get a deal with Boeing before the end of the year we’re going to … begin to run the business from 2012 for maximised profits.”

Whatever has he been doing up to now? Running Ryanair as a charity? If so he’s been the principal beneficiary. Shareholders must be heart-broken to learn they are about to receive a dividend for the first time.


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