Love ‘em or loathe ‘em, you can’t deny that Ryanair are masters of the PR game. The Irish low-cost carrier makes headlines on a regular basis. This week, it is claiming its customer service is better than that of beleaguered UK flag-carrier British Airways. Ryanair bases this on a report detailing punctuality, flight cancellation, and baggage performance by the Association of European Airlines (AEA). Between November 2008 and March 2009 Ryanair posted the best on time performance, the fewest cancellations, and the fewest lost bags.

Over 90% of the carrier’s flights were on time, 99.6% were completed, and it lost less than one bag (0.67) per 1,000 passengers. In contrast AEA reported that 17% of British Airways’ flights were delayed, 97.9% were completed and BA lost sixteen bags per 1,000 passengers.

Ryanair’s head of communications Stephen McNamara said: “Ryanair delivers the customer services passengers really value which is why 67 million passengers will travel with us this year.”

Is it true that the airline delivers the services customers value? Last week it was in the news thanks to chief executive Michael O’Leary’s announcement that Ryanair plans to get passengers to carry their own bags on board. Confusion reigned and news organizations all over the world misreported the story. The main difficulty lay with security. How can luggage possibly get to the hold without passing through a scanner? Then how could passengers take their own bags to the back of the aircraft? The answer is that the airline has no intention of getting passengers to perform this task. It is aiming to pass a large proportion of its handling costs on to airports. The bags will go through the hand luggage scanners.

Although airports are responsible for passenger screening, along with carry on bags, airlines have to pay for behind-the-scenes security services. O’Leary said that Ryanair would save up to €70 million ($99 million) per year by implementing the new move and maximizing cabin stowage.

But where do those savings come from? Hold baggage goes through a four stage screening process before it is allowed onto the aircraft and passengers are not allowed anywhere near the hold. Somebody will have to pay for these cost cuts. According to McNamara, that somebody should be the airports. He said: “This idea follows on from our move to implement 100% web check in, which will take place from October this year. We are hoping to start by winter 2010. Passengers can bring as many trolley-sized bags as they wish to the aircraft with them as hand luggage. We will take them off them and put them in the hold just as they get onto the aircraft. Customers can see their bags going into the hold. This also eliminates lost luggage since passengers will see their bags go on and go off.”

McNamara said that the airline was looking at how passengers who travel longer than two to five days could have a second bag “without facing financial implications.” These implications come with a hefty price tag. Currently a couple with a baby and travel cot lugging three suitcases between them has to pay an extra €85 ($121) on top of their airfare. Ryanair charges £10 ($16) to check in one bag, then £20 ($32) each for the second and third bags. The airline points out that 80% of its passengers flew with checked-in bags two years ago, but that number is now 25%.

According to Ryanair, customers suffer because airport charges are so high. “All our passengers pay €15 ($21) just to travel through an airport and security,” said McNamara. “Our proposals mean that the security cost goes to the airport, resulting in reduced fares.”

He added: “Passengers are already paying the airport to go through a security point, so a second and third bag would not burden airport security greatly.” He admits that there would be a need for more staff at busy times, but insists that this would be an efficiency improvement. This remains to be seen. Anyone who has stood at a security queue at rush hour at a busy airport would not welcome hundreds more bags in the checkpoint lines.

To date Ryanair has not officially discussed its latest proposals with airports, so BAA’s official statement is cautious. It reads: "Currently every airport has a different policy on hand luggage depending on its unique requirements. These policies are negotiated on a unilateral basis between the airport operator, airlines, and the Department for Transport.”

There is tough negotiation ahead. A spokesman for airports operator BAA said: “We have had no official communication with Ryanair. We need to speak about this in more detail. Aside from security issues, there are logistical implications.”

Savings
Ryanair is constantly on an efficiency drive. From October it will only accept online bookings. There will be kiosks available at the airport and customers need to have their check in number and credit card to hand before they can board. Hold baggage goes to a bag drop desk.

O’Leary caused outrage earlier this year when he announced that Ryanair plans to charge to use the bathroom within two years in an effort to eliminate two lavs in favor of six more seats. O’Leary said: "It's not because we need to generate money from the jacks. But ... if you get rid of two you can get six seats on a 737. They will all be scurrying to the toilet before the departure gate."

Other European low-cost carriers have responded warily to Ryanair’s latest measures. Most prefer not to add to their rival’s headlines by commenting, preferring to focus on their own customer service best practices instead. When asked whether her airline would consider a similar baggage policy, Alexandra Mueller head of communications for Air Berlin said: “There is no example of this happening before and it is something that would have to be investigated intensively. We’d never say ‘no.’ However, we would not want to jeopardize our image of being a customer oriented airline.” Air Berlin flies to smaller airports than Ryanair and has a different route network. Mueller added: “We don’t fly to bigger hubs like Frankfurt, so it is a different market segment.”

UK rival EasyJet, too, prefers not to get embroiled in discussions about Ryanair’s strategy. It is about to launch a new raft of add-on revenue generating services and said it prefers to focus on its own news.

The BAA spokesman said; “Each airline likes to differentiate itself. Ryanair is the leader in the sector and is always looking at ways to adapt its business and expand.” He said that no matter how the plans pan out, security would not be an issue: “I have never seen anything that would suggest any carrier would do anything to compromise safety. Ryanair has looked at what’s needed, what the passenger wants and the price they wish to pay. They only fly new planes and I have no doubt about their commitment to safety.”

Apart from cost cutting measures, Ryanair profits from ancillary revenues. Its website sells hotel rooms, villas (even in Costa Rica, where it doesn’t fly), financial products such as insurance and credit cards, cruise holidays, car hire, airport transfer and parking. It even has an online casino. Some experts believe that this is so far removed from its primary focus that its business model as an airline is questionable.

However, Ryanair is growing, while legacy carriers are folding up their wings. BA is struggling and about to ax 3,000 jobs, 1,000 of which will be from check-in and administrative staff. BA has already reached agreement with Balpa, the pilots' union over a pay cut which will save it £26 million ($43 million) a year. The airline is suffering major losses because of a drop in demand and rising fuel prices. BA posted a £401 million ($663 million) pre-tax loss for the year ending March 2009. It is now struggling with the possibility of strikes as its workforce rebels against its cost cutting measures.

Aer Lingus shoved Ryanair into its first annual loss in 20 years, but the airline has benefited from a 23% increase in ancillary revenues from add-on charges to €598 million ($848 million). These charges play an increasingly important role in underpinning its profits.

Should Ryanair get its way on its latest plans, airports will be looking to recoup the extra costs they will incur. This charge will inevitably be passed to customers, whether by taxes or increased retail costs as airports push rents up.

Unlike several legacy carriers, there is no doubt that many budget airlines are here for the long haul. The question is with the erosion of comfortable travel and the addition of extra charges, what price are we really paying to fly “low cost?”