The budget airline Ryanair’s net profit for the year to the end of March 2015 rose by a spectacular 66 percent to €867 million (£614 million). Helped by lower aviation fuel prices the airline’s CEO Michael O'Leary put the rise down to his "Always Getting Better" customer experience programme. “We have won substantial traffic and share gains in all markets,” he said.
There seems little doubt that improvements in customer facing services have contributed to the growth. Now Ryanair has committed to the purchase of 383 Boeing aircraft for its fleet by 2023.
Loizos Heracleous, Professor of Strategy at Warwick Business School says Ryanair’s strategy is one of classic cost leadership; having the highest efficiency in the industry, together with an acceptable level of service.
"This is combined with aggressive growth, in terms of opening up new routes, getting a bigger share of established routes, and in providing ancillary services. This is all supported by substantial expansion in infrastructure.
"The improvement in service levels, which has historically been a sore point for the company, can provide a sustained net benefit in Ryanair’s financial performance, provided that service improvement does not compromise operational efficiency.
"At the moment it is tricky to say how much of the increase in profit comes from lower fuel cost and how much from the impact of service quality. Ryanair’s quality rating on Skytrax remains at two stars (out of a maximum of five stars), and time will show if it will show real improvement.
"Nevertheless, Ryanair’s financial performance has been exceptional compared to the industry, irrespective of this service quality rating or service perceptions; since service quality is not Ryanair's unique selling proposition. Ryanair’s USP is value for money, reliable air travel, and that has been a winning proposition."