Ryanair: The Airline That Made Flying Cheap and Miserable
In 1990, Michael O'Leary wanted to shut Ryanair down. He had looked at the numbers, studied the losses, and
In 1990, Michael O’Leary wanted to shut Ryanair down. He had looked at the numbers, studied the losses, and concluded the airline had no future. He told founder Tony Ryan as much. Ryan ignored him and instead sent O’Leary to Dallas to meet Herb Kelleher, the co-founder of Southwest Airlines. O’Leary later described the trip: “I had a legendary dinner with Herb Kelleher. I don’t remember anything about it because he drank me under the table. I was violently sick and hungover for four days afterwards.”
He came back from that trip with a plan that turned a failing regional carrier into the largest airline in Europe by passengers carried: 200 million a year, €13.9 billion in annual revenue, and fares lower than any competitor on the continent could profitably match. The Ryanair business model, built on a drunken night in Dallas, did the rest.
Where It Started
Ryanair was incorporated on 28 November 1984 as Danren Enterprises by Tony Ryan, his son Declan, and travel agent Liam Lonergan. The initial capital was £250,000. The first flight launched on 8 July 1985, operating from Waterford to London Gatwick in a 15-seat Embraer turboprop with a crew of 25 people.
The target was the Dublin to London route, then a duopoly controlled by Aer Lingus and British Airways. Both carriers charged a minimum of £209 return. Ryanair entered at £99 and started a fare war. By 1987 Ryanair had carried over 300,000 passengers on the route. It had also accumulated substantial losses.
The early model was not the Ryanair people recognise today. It was a full-service regional airline with multiple aircraft types, a growing route network, and costs it could not control. By 1990 the company had accumulated £20 million in losses across its six years of operation.
The Southwest Pivot
What O’Leary saw at Southwest was not an airline. It was a machine designed from first principles to fly as many people as possible for as little cost as possible, with no wasted motion anywhere in the system.
Southwest operated a single aircraft type, the Boeing 737, which meant one set of spare parts, one pilot training programme, one maintenance regime. It used secondary airports that charged lower fees and moved planes faster because they had less congestion. It turned aircraft around in 25 minutes rather than the 75 minutes standard at European carriers. It sold tickets directly, cutting out travel agents. It offered nothing on board that cost money to provide.
O’Leary brought that blueprint back to Ireland and applied it with a discipline that went beyond anything Southwest itself had done. Ryanair cut its route network from 19 destinations to 6. It moved its UK base from Luton to Stansted, a secondary airport with lower fees and faster turnarounds. The cheapest fare dropped from £99 to £59 return. It introduced buy-on-board catering, ending the assumption that a meal came with the ticket.
The turnaround goal was set at 25 minutes. Achieving it required a culture shift that extended to every person who touched the aircraft between landing and takeoff.
By 1993 Ryanair had broken the one million passenger barrier. In January 1994 it took delivery of its first Boeing 737 and O’Leary became CEO. In 1995 it carried over two million passengers. The Ryanair business model was working.
How the Ryanair Business Model Actually Works
Ryanair runs on two revenue streams and costs its competitors cannot touch.
The first is ticket sales. Ryanair’s fares are designed to fill seats, not generate margin. The airline frequently sells tickets for as little as €0.99, sometimes less, because a full plane flying to a secondary airport generates ancillary revenue, airport incentive payments, and operational efficiency even when the base fare covers almost nothing.
The second is ancillary revenue: fees for checked bags, seat selection, priority boarding, food, car hire, hotel bookings, and any other service that can be unbundled from the base fare and charged separately. In fiscal year 2025, Ryanair generated €4.7 billion from ancillary revenue alone, representing 34% of its total €13.9 billion in revenue. The average passenger who pays £29 for a flight and then pays for a bag, a seat, and a sandwich has contributed far more than the ticket price suggests.
Ryanair operates a single aircraft type: the Boeing 737. Currently its primary workhorse is the 737 MAX 8-200, a variant built to Ryanair’s specification that seats up to 197 passengers, roughly 30 more than a standard 737. More seats per flight means lower cost per passenger. Lower cost per passenger means fares can go lower than any competitor can match without losing money.
Ryanair uses secondary and regional airports almost exclusively. London Stansted rather than Heathrow. Frankfurt Hahn rather than Frankfurt Main. Beauvais rather than Paris Charles de Gaulle. These airports charge lower landing fees, offer faster turnarounds, and in many cases pay Ryanair incentive payments to bring passenger traffic to their region. Ryanair has, in documented cases, received airport subsidies that amount to the airline being paid to operate a route.
Aircraft utilisation runs at roughly 11 hours per day per plane, well above industry average. The 25-minute turnaround, introduced in the early 1990s, remains the operational standard. Every minute an aircraft spends on the ground is a minute it is not generating revenue.
Distribution costs are minimal. Ryanair sells almost entirely through its own app and website. When it moved bookings online in 2000, it shifted 75% of reservations to ryanair.com within a year, eliminating travel agent commission costs entirely.
The result is a cost per available seat kilometre, the standard airline efficiency metric, that sits consistently below every major European competitor. Independent analysis puts Ryanair’s ex-fuel unit costs at roughly half those of easyJet, its nearest low-cost rival.
O’Leary and the Media Strategy
Michael O’Leary became CEO in January 1994 and has held the role for over thirty years. He has proposed charging passengers for using the toilet. He has suggested removing reclining seats to fit more rows. He has floated the idea of standing-room-only tickets at €5. He has publicly insulted EU regulators, airport executives, rival airline CEOs, and occasionally his own passengers in terms that would end most corporate careers. He once dressed as the Pope to announce a new Rome route.
None of these proposals have been implemented. Most were never seriously intended. Their purpose was to generate press coverage worth millions in advertising spend at a cost of nothing. As O’Leary himself explained: “Charging for toilets is the number one story that resurfaces in the press. It’s the gift that keeps on giving. We’ve never done it, but it comes up every three or four months, the media picks it up, and someone writes a story. We don’t spend hundreds of millions on marketing.”
Ryanair consistently scores near the bottom of European airline customer satisfaction surveys. It consistently carries more passengers than any other carrier on the continent. O’Leary has never found the contradiction particularly troubling.
The Numbers Today
In fiscal year 2025, Ryanair carried just over 200 million passengers, the first time in its history it has crossed that threshold. Total revenue reached €13.9 billion, up 4% on the prior year. Profit after tax was €1.61 billion, down 16% from fiscal 2024’s record €1.92 billion, primarily because average fares fell 7% as the airline prioritised traffic growth over yield.
The fleet stands at 613 active aircraft, predominantly Boeing 737 variants, with 181 MAX 8-200s in service. Load factors run at 93 to 95%, meaning almost every seat on almost every flight is occupied. The gross cash position at March 2025 was €3.99 billion.
Ryanair has ordered 300 Boeing 737 MAX 10 aircraft for delivery between 2027 and 2033. The MAX 10 seats approximately 228 passengers, 31 more than the current MAX 8-200. When those aircraft arrive, the cost per passenger falls again, and Ryanair’s pricing advantage over competitors widens further.
The stated target is 300 million passengers by 2034.
The Limits of the Model
The Ryanair business model has real limits, and they are structural.
The airline carries no transatlantic routes and has no plans to add them. O’Leary has acknowledged, repeatedly, that the low-cost model only works at short-haul distances where turnaround time, fleet standardisation, and secondary airport fees can be maximised. A Dublin to New York flight cannot be turned around in 25 minutes.
Its near-total dependence on Boeing creates risk. The MAX delivery delays of 2023 and 2024 cost Ryanair seat capacity at peak summer periods, directly impacting revenue. When Boeing’s production slowed, Ryanair had no alternative supplier to turn to.
Environmental regulation is tightening. The EU’s Emissions Trading System extended to aviation from January 2024, removing the free allowance that had previously softened the cost impact. Ryanair’s own filings show ETS liabilities rising materially. Sustainable aviation fuel mandates, which require 2% SAF by 2025 under EU rules rising to 6% by 2030, add cost that cannot easily be hedged.
Labour relations have been persistently difficult. Ryanair did not formally recognise trade unions until 2017, after pilots in several countries staged coordinated strikes that disrupted operations across Europe. The airline’s relationship with its workforce remains transactional at best.
What Ryanair Actually Changed
Before Ryanair, flying in Europe was expensive, slow, and predominantly the preserve of business travellers and the relatively wealthy. A London to Rome return in the early 1990s cost several hundred pounds. Today Ryanair operates that route for under £50 in many booking windows.
Secondary airports that were barely operational in the 1990s now anchor regional economies because Ryanair routes made them viable. Cities like Wroclaw, Kaunas, and Knock became accessible to budget travellers in a way that had been structurally impossible before. European tourism patterns shifted as routes opened between cities that had never had direct air connections.
Competitors had to respond. Aer Lingus stripped costs and rebranded. British Airways launched Go, a low-cost subsidiary it eventually sold and which merged into easyJet. Legacy carriers across Europe restructured their short-haul operations under direct competitive pressure from Ryanair’s fares.
The Ryanair business model O’Leary borrowed from Southwest and applied to Europe with greater aggression and less sentiment than Southwest itself ever managed has defined European short-haul aviation for three decades. Whether passengers enjoy the experience is a separate question. They keep buying the tickets.
Sources
- Simple Flying. Done With the US? Here’s How Ryanair’s Profit Grew 40%
- Ryanair Investor Relations. FY25 Annual Results
- Quartr. Michael O’Leary: Ryanair’s Maverick CEO
- Simple Flying. How Southwest Inspired the Ryanair We Know Today
- Quartr. How Ryanair’s Relentless Cost-Cutting Redefined the Airline Industry
- AeroTime. Ryanair Annual Profit Drops by 16% for FY2024/2025
- Wikipedia. Ryanair
- Statista. Ryanair Net Profit 2010-2024
