Why Ryanair’s low-cost, high-fee model may be the future

It can be hard to know exactly how serious Michael O'Leary is. The CEO of Ireland's Ryanair has proposed many things over the years-a surcharge on fat passengers, standing-room airplanes-that have never come to be. So when he mused recently about yanking two of three toilets from his airplanes to make room for more seats, you could almost see the eyes rolling from the other side of the Atlantic. O'Leary, pugnacious and confrontational, can come off as a clown. He once dressed as the pope to advertise a new Italian route. Another time, he called the agency that operates British airports a bunch of "overcharging rapists." But for all his ideas that go nowhere-like pay-per-use toilets-an equal number have spun into business gold...

...One of the main foundations of Ryanair's success was its decision, early on, to target second-tier airports. Smaller airports don't charge the same tariffs as large urban ones. In some cases, they even pay Ryanair to fly there. "This is a great deal," says Karl Moore, a business professor at McGill University and a former consultant for airlines including Air Canada and British Airways. It's also one of the main reasons many believe a Ryanair clone would not likely prosper in Canada. There are some smaller airports here, such as Abbotsford, outside Vancouver, but not in the same density as Europe.

Deregulation is also a factor. Ryanair prospers in an open European market. North American airlines don't have the same luxury. As for WestJet, it broke into the market with lower prices, but it also built its brand on good service. Moving toward Ryanair's cheerfully hostile model might alienate customers. Add in the realities of geography-it's one thing to fly from Dublin to London in a cramped, frill-free tube; it's something else entirely to do the same from Vancouver to Toronto-and Moore, at least, sees problems for any ultra-discount clone. "Will we see a Ryanair start-up in Canada? I don't think so," he says.

Read full article: Maclean's, November 2, 2011