ancillary revenue management

Michael O’Leary given a taste of his own medicine: Airline ancillary revenue management

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(Last updated on: 04/04/2020)

If you’ve been following my posts over the past few weeks you will have seen that I have been addressing the importance of airline ancillary revenue management. Increasingly, airlines are depending more and more on income made from the different categories of ancillary products and services and I think that I would be doing the topic an injustice if I didn’t pay reference to the king of ancillary revenue- Michael O’Leary.

Michael O’Leary given a taste of his own medicine: Airline ancillary revenue management

As the CEO of Ryan Air, Michael has played a pivotal role in re-shaping the airline industry, capitalising on opportunities to yield income from a range of ancillary sources. From over-priced baggage, to making it near-impossible to opt out of ancillary purchases on their website (see insurance example in the video at the bottom of this post), to charging passengers to use the toilet, Michael has been nothing if controversial over the past decade or two. So when I saw this joke being shared on Facebook I couldn’t resist sharing it with you.

This post was originally shared by Joe Nebula.

Airline ancillary revenue management: Michael O’Leary gets taste of his own medicine

Michael O’Leary, Chief Executive of Ryanair after arriving in a hotel in Manchester went to the bar and asked for a pint of Guinness.

The barman said, “That will be £1 please, Mr. O’Leary.”

Taken aback, O’Leary replied, “That’s very cheap,” and handed over his money.

“We do try to stay ahead of the competition”, said the barman. “We have the cheapest beer in England”.

“That is remarkable value”, Michael comments.

“I see you don’t have a glass, you’ll need one of ours. That will be £3 please.”

O’Leary scowled, but paid up. He took his drink and walked towards a seat.

“Ah, you want to sit down?” said the barman. “That’ll be an extra £2. If you’d pre-booked it would have cost £1.”

O’Leary swore to himself, but paid up.

“I see you’ve brought your laptop” added the barman. “That wasn’t pre-booked either, that’s another £3.”

O’Leary was so incensed and his face was red with rage.
“I’ve had enough! I insist on speaking to a manager!”

“Here is his e-mail address, or if you wish, you can contact him between 9.00 am and 9.01am every morning, Monday to Tuesday. Calls are free, unless answered, then there is a charge of only £1 per second”.

“I will never use this bar again”.

“OK but do remember, we are the only hotel in England selling pints for £1.”

ancillary revenue management

Michael O’Leary on Panorama

If you’re interested to find out more about how  Michael O’Leary makes some of his money through airline ancillary revenue management, I recommend watching this Panorama video. It’s a bit old but it provides really good insight into his ways of working and how he has developed such a successful airline based on the low cost business model.

https://www.youtube.com/watch?v=RUe7zPsUDaI

For more info on ancillary revenue management and airline management in general I recommend the texts Airline Operations and Management by Cook and Billig and Air Transport Management: An International Perspective by Budd and Ison. You’re more than welcome to cite anything that I have written in this post, but if you’re doing research for an academic piece of work remember that you will need a range of sources in your reference list- I’ve added the links to these two recommended books for you here and here

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