Ooops, He Did It Again

(MoneyWatch)  Ryanair CEO Michael O'Leary was back last week, insisting that he was serious about that pay-toilet plan he first floated a couple months ago.

Not only that, but O'Leary said his airline might just rip out some lavatories altogether, and replace them with extra seats. "We are flying aircraft on an average flight time of one hour around Europe. What the hell do we need three toilets for?"

Oh boy, that wacky O'Leary.

When he first proposed the pay-toilet plan back in February, I dismissed it as a publicity stunt. Installing pay slots on the lavatory doors would create operational nightmares for the cabin crews: Who makes change? And what do you do when somebody tries to cram a one-pound coin into a slot designed to fit a one-Euro piece?

Besides, it would tend to discourage people from buying drinks on the flight, which is an important source of ancillary revenue for Ryanair, which relies on such charges and fees.

Likewise, the idea of replacing toilets with extra seats is bogus. Agencies like the Federal Aviation Administration and European Aviation Safety Agency limit the number of seats on each plane, not just based on how much room there is inside the cabin, but on how many emergency exits there are, so that passengers can get out quickly in an emergency. (See Sully Sullenberger, et al.) Ryanair already has the maximum of 189 seats crammed into its 737-800s. To get more seats, it would have to add more exits, and that would require a whole lot of engineering work.

And what about this notion of charging people for airsick bags? No reason why you couldn't, other than the first time somebody who wouldn't cough up a quid for a bag coughed up his lunch on the floor, it would be guaranteeing that a Ryanair ground crew would have to work overtime cleaning -- and airing out -- the cabin upon arrival. The whole low-fare business model is predicated on getting planes turned around quickly and back in the air; $50 million airplanes are dubious assets when they're parked for heavy-duty cleaning. And of course O'Leary knows this, even if some incredulous journalists don't.

So what is going on then? Has O'Leary gone off the deep end? Has he been sniffing too much jet fuel.

Well no, or at least probably not. As a handful of savvier reporters noted, O'Leary's latest outrages came as Ryanair reported its second-quarter earnings, which were pretty bad. The airline had its first big loss in 20 years, a loss of 169 million Euros, compared to a profit of 438.9 million Euros in the same quarter last year. Ryanair also was forced to write off 222.5 million Euros worth of the value of its stake in Aer Lingus. And perhaps even worse, customer complaints are skyrocketing.
Of course, most of us never heard any of that discussion, thanks to the uproar over O'Leary's comments. "If you're going to turn aside headline wrath in a sea of red ink, you need something to set the Sun (headline writers) hopping," notes The Guardian's Peter Preston. What could be better than a good potty joke?

O'Leary has decided, apparently, that it's better to be viewed as an inhumane cheapskate than a bad businessman. It's an interesting approach to investor relations; sadly, given O'Learly's incredible success at Ryanair, we shouldn't be shocked if it works.