Fly the frugal skies: how low-cost airlines have transformed Europe—and what it means for America

Reason, Jan, 2005 by Matt Welch

Stelios has stepped back from the day-to-day management of the airline, and now the self-styled "serial entrepreneur" is taking his low-cost "easy" brand and online purchasing model into car rentals, Internet cafes, cruise ships, and even pizza delivery. "I think easyJet was instrumental in convincing people it was worthwhile to understand how the Internet works," he told The Independent in April. "It's been a watershed decade, an amazing period," he told the Times of London in May.

If Stelios and easyJet were the John the Baptist of European low-cost air travel, RyanAir and Michael O'Leary are Jesus himself--or perhaps the Antichrist. O'Leary, a foul-mouthed, jeans-wearing college dropout of an Irishman, took over RyanAir a decade ago, when it was a minor if profitable Irish airline serving 700,000 passengers a year, mostly between Dublin and London.

In business since 1985, RyanAir got the low-cost religion in 1991 and started aggressively hitting the newly liberalizing European market soon after Stelios popularized the no-frills concept to the masses. Unlike easyJet, however, RyanAir refused to take on popular routes at congested and expensive airports, sticking to a strict diet of cheaper regional flights to keep its prices the lowest in Europe. And unlike Stelios, who projects a friendly, go-getting cosmopolitanism, the 44-year-old O'Leary is a street brawler who has alienated swaths of the U.K. by brashly banning unions, hounding the Irish government to breakup its state airport monopolyAer Rianta, cadging subsidies from desperate airport towns, routinely referring to the European Commission as "the Evil Empire," and responding to his critics with a blanket "bollocks."

RyanAir is notorious for finding inventive ways of "penalizing" its passengers, such as setting absurdly low 15-kilogram (33-pound) baggage limits and charging four euros (nearly $5) for each additional kilo. (I once observed--and suffered heavily from--this practice at sleepy St. Etienne airport in France, where every penalized passenger I talked to said the limit had not been enforced on the flight out from London, where they could have easily switched airlines.) Even wheelchair users were charged an extra 18 [pounds sterling] ($33) fee, until a British court ruled the practice discriminatory in February. (RyanAir, which says it was simply passing along the standard British Airports Authority surcharge, announced that all tickets would be raised a half-pound to cover the difference.)

Still, the company makes up for customer grumbling by leading Europe in flight punctuality and keeping prices at absurd lows, which it (unlike most of the new low-cost competitors) can afford because of its massive cash reserve. Since O'Leary has taken over, RyanAir has become the most profitable major airline in the world (it had a 19 percent margin in 2003) and has the fourth-largest market capitalization ($4.7 billion as of June 3, just behind British Airways' $5 billion and Lufthansa's $5.5 billion).