MN6005 Managing Corporate Reputation, Re-Submission, Summer 2017
Assignment 2 (70% weighting), Case Study: Ryanair www.ryanair.com
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1. INTRODUCTION:
Despite being a hugely successful corporation, with impressive revenues of:
2015 Euro: 5,640 million (+12% from 2014)
2014 Euro: 5,037 million (+4% from 2013)
2013 Euro: 4,884 million
and impressive net profits after tax of:
2015 Euro: 866.7 million (+66% from 2014
2014 Euro: 522.8 million (-8% from 2013)
2013 Euro: 569 million
and impressive passenger numbers of:
2015: 90.5 million passengers (+10% on 2014)
2014: 81.7 million passengers (+3% on 2013)
2013: 79.3 million passengers…
…the ‘no-frills’ airline Ryanair still has a number of reputational problems.
The 2014 decline in profits was due, claims the company, to its reduction in passenger fares, keeping fares low. This appears to be true, as Ryanair’s actual passenger numbers increased from 79.3 million passengers in 2013, to 81.7 million passengers in 2014, a rise of 3%. The 2015 increase in profits is due, according to its 2015 Annual Report, to a further increase of passenger numbers, to 90.5 million, an impressive increase of 10%, while still keeping its fares low.
However, the airline regularly comes bottom, or near the bottom, of every major customer satisfaction survey, customers regularly use social media, such as Twitter and YouTube, to complain about the dreadful quality of service (see: https://twitter.com/hashtag/ryanair; also see: https://www.youtube.com/results?search_query=ryanair), and its belligerent CEO, Michael O’Leary, brushes aside any criticisms of his company, claiming that he gives customers what they want – cheap ‘no-frills’ flights with little quality service (see: https://www.youtube.com/watch?v=qQqGKMU5_NM).
Also, a consumer-based global branding website shows that Ryanair is one of ‘Worst Brands in the World’ (see: http://simplicityindex.com/2015/region/global), and the worst airline, for customer satisfaction.
But things are changing. In 2013 and 2014, faced with reductions in predicted profits, many shareholders, plus other key stakeholders and audiences, asked Michael O’Leary many tough questions, and demanded that Ryanair:
– radically improves its levels of customer service
– turns its negative publicity into positive publicity
– manages its communications, brand, and image more effectively
– radically improves its overall corporate reputation.
Ryanair’s CEO Michael O’Leary finally agreed, and made 2014 the year of change for Ryanair (see: www.thedrum.com/news/2014/01/17/ryanair-insists-it-s-changing-2014-weekly-twitter-chats-and-new-irish-ad
Yet two years later in 2016, the picture is still a mixed one. As recently as January 2015, the airline was fined by the Italian airline authorities for poor customer service, its third fine from the Italians in recent years (see below). On the other hand, business, revenue, profits, and passenger numbers are clearly impressive, and are growing (see FY data, see above), and recent figures from March 2016 show record numbers of passengers (see: http://www.telegraph.co.uk/business/2016/04/04/ryanair-passenger-numbers-surge-to-record-level/). But many stakeholder groups, especially customers and the media, continuing to draw attention to Ryanair’s poor customer service and damaged corporate reputation, while some other stakeholders, especially financial analysts and market researchers (such as YouGov), have praised the airline for improving it customer service, brand, identity, and reputation.
TASK:
So, Michael O’Leary will clearly need help, and will require the expertise from the industry’s best corporate communication professionals – you – in producing a comprehensive communications report which identifies Ryanair’s key stakeholders and audiences, improves communication with them, plus innovates new activities, in order to: (i) improve the company’s long-term customer service, identity, image, and brand (ii) ensure the company gains positive publicity, and (iii) develop a strong corporate reputation for the company overall, beyond 2016.
2. SELECTED NEWSPAPER / MEDIA ARTICLES (four in total):
(i) Daily Telegraph Business, 4th April 2016
(http://www.telegraph.co.uk/business/2016/04/04/ryanair-passenger-numbers-surge-to-record-level)
By Tim Wallace, Daily Telegraph Business, 4 APRIL 2016 • 8:44AM
Low-cost airline Ryanair’s passenger numbers shot up by 28pc in March 2016 compared with the same month in 2015, marking its fourth consecutive month of growth of more than 25pc. The average plane was 94pc full, up from 90pc a year ago and 80pc in the same period of 2014.
It comes after the company promised to cut prices and start treating its customers better, in a bid to shed its reputation for terrible customer service. In 2014 chief executive Michael O’Leary said the airline “is more fluffy now” as he pledged to offer better service, a move the company now says is paying off.
Michael O’Leary has promised to treat customers better
Ryanair carried 8.5m passengers in March. In the past 12 months it has carried 106m passengers, a rise of 18pc on the year before. An early Easter could have helped boost the figures with more trips taken in the school holidays, but February’s passenger numbers were also up 28pc to 7.4m and January’s rose 25pc to 7.5m.
Rival airline EasyJet has yet to publish its March figures, but reported that it carried 4.9m passengers in February, a rise of 9.8pc on the year.
Ryanair’s chief marketing officer Kenny Jacobs said lower prices combined with better service had driven the improvement. “These record monthly numbers were delivered- despite three days of unjustified French air traffic control strikes in March which caused the cancellation of over 500 flights – due to our lower fares, stronger forward bookings and the continuing success of our ‘AGB’ [Always Getting Better] programme,” said Mr Jacobs.
The Ryanair group made a profit of €103m (£82.4m) in the third quarter of 2015, a rise of 110pc on the same period of 2014. Those improvements came despite the terrorist attacks in Paris, which Mr O’Leary said had dented demand for flights.
(ii) YouGov, 3rd November 2015
https://yougov.co.uk/news/2015/11/03/ryanairs-upward-flight-continues
By Milan Dinic
Ryanair’s Brand Flying High: On the crucial measures of value-for-money, quality and consideration, Ryanair’s brand continues to improve
Ryanair has announced its profits, revenue and share price have continued to improve. The airline’s traffic has risen 13% to 58 million passengers. This follows a strong summer for the company which became the first airline in the EU to have carried more than 10 million customers in one month.
YouGov BrandIndex data reveals that Ryanair’s brand strength has continued on its upward path since June when we reported the company was seeing the benefit of a more customer-friendly approach.
The value-for-money score has increased and is currently on an all-year high, from -14.2 in January to current +3.4 points on November 1st. In terms of the perception of quality the low-cost carrier has had a continuous growth up until the end of June and it has stabilized since then.
Regardless of the 2% raise in ticket prices, BrandIndex shows Ryanair’s consideration score (a measure of whether people would consider using the service) has gone up since the beginning of the year. Since October the air carrier has continued to increase the advantage over the average in the airline industry on this measure. Currently, Ryanair’s consideration score is on 21.3 points and rising, compared to 14.4 of the airline sector as a whole.
Ryanair has said it is planning an aggressive expansion in the coming period, with new bases opening in Berlin, Gothenburg, Corfu and Milan.
(iii) Daily Telegraph Travel, 23rd January 2015
(http://www.telegraph.co.uk/travel/news/ryanair/Ryanair-fined-550K-for-poor-customer-service/)
By Soo Kim, TELEGRAPH TRAVEL WRITER, 23 January 2015 • 12:00am
The budget airline was fined by the Italian competition watchdog AGCM this week following a flood of complaints received from passengers over its premium rate customer service phone lines.
Fliers found it “difficult and unreasonably expensive” to get reimbursements, find alternative flights following cancellations and receive detailed billing information for tax and expenses purposes, The Australian reported. Others complained of the difficulty experienced when changing their bookings before the flight and trying to obtain information about accessibility for passengers in wheelchairs.
The fine comes after an investigation launched last June which gave the airline 90 days to eliminate the “extreme difficulty” and exorbitant costs faced by its customers. The AGCM acknowledged Ryanair’s effort in the last year to improve its service, which included getting rid of a premium phone number for passengers requiring assistance with boarding, but those measures were deemed not sufficient to avoid a fine.
Ryanair has noted the ruling and is looking into an appeal, according to a statement. The latest fine is the second one imposed by the Italian authority on Ryanair in less than a year. Last February, the airline was fined €850,000 (£635,000) for the “lack of transparency in their travel insurance policies” and the “obstacles created in case of refund” during the online purchase of airline tickets. The airline was accused of not supplying adequate information or providing misleading information to consumers regarding travel insurance.
In 2013, the airline was also fined £350,000 by the Italian competition watchdog Codacons for failing to provide a clear price at the very start of the booking procedure. Ticket prices should be “clearly and fully indicated from the very first contact with the consumer in such a way as to make the final price immediately clear”, the regulator said. Ryanair rejected the “unfounded decision”, and said it would appeal the ruling.
Last year, the airline saw an increase in passenger numbers and a rise in half-year profits, which Kenny Jacobs, the company’s chief marketing officer, put down to “improving customer experience”.
Michael O’Leary says “Ryanair is more fluffy now”, with customer service improvements on the way (Getty Images)
Last summer, Telegraph Travel’s Lizzie Porter was allowed to go behind-the-scenes at Ryanair’s customer service centre, where she spoke to Clodagh Rochford, a customer services manager who claimed that customer complaints had dropped significantly since Christmas of 2013. The 2013 figures from the Civil Aviation Authority showed that it received 35 complaints about Ryanair per million passengers, compared with 174 for US Airways and 139 for Virgin Atlantic.
The most recent charge against Ryanair’s customer service puts a setback on the radical overhaul of its image and service in the last year.
Previously, Michael O’Leary, Ryanair’s chief executive, has come under fire for a host of controversial statements he made about customer service and passengers, such as describing passengers who forget their boarding pass as “idiots”. On customer service, he once noted: “People say the customer is always right, but you know what – they’re not. Sometimes they are wrong and they need to be told so” while regarding refunds he’s said: “”You’re not getting a refund so **** off. We don’t want to hear your sob stories. What part of ‘no refund’ don’t you understand?”
Last year, however, the Ryanair chief admitted the airline’s failure to make customer service a priority and said the airline would invest heavily in improving the customer experience over the next few years.
“People used to come to us for the low prices and put up with the service,” he told the Telegraph. “I don’t want them to have to put up with the service any more.”
“Ryanair is more fluffy now,” he said, insisting the airline would stop things which “unnecessarily p*** people off”.
(iv) The Guardian, 23rd December 2014
http://www.theguardian.com/business/2014/dec/23/ryanair-richly-rewarded-transformation
By Gwyn Topham, transport correspondent, Tuesday 23 December 2014 18.42 GMT
Nicely does it – Ryanair is richly rewarded for its transformation
Gone are the cash-milking rules and girlie calendars. In come allocated seating, relaxed baggage rules – and more passengers
This time last year Ryanair’s conversion to being nice seemed an unlikely if relatively straightforward morality tale. Boss Michael O’Leary had repented his penny-pinching and potty-mouthed ways; customers were no longer to be fleeced for an extra bag or for forgetting to print a boarding pass; and the Scrooge in charge was no longer crying humbug about the internet and Twitter.
In the Dickens version, doing good becomes an end in itself for the transformed Ebenezer: “His own heart laughed: and that was quite enough for him.” But in the Irish airline’s story, what happened next would have delighted a miserly Scrooge: being nice has seen profits soar with huge windfalls for shareholders. This modern Christmas Carol sees the hero ever more loaded, even now that Tiny Tim can carry his crutch on to the plane for free.
And after years of berating the bleeding hearts, O’Leary hired former moneysupermarket.com and Tesco marketing executive Kenny Jacobs to become the smiley public face of a newly cuddly airline. Ryanair was, says Jacobs, “cheap and nasty”. But he resists talk of being “nice” – the shorthand used by his boss for the airline’s transformation. “I’m not sure we’re quite nice yet.” But they’ve definitely toned down the aggro: “There was a lot of antagonism between Ryanair and its customers that didn’t need to be there. In the past year we’ve just absolutely taken that away.”
Jacobs is frank about the experience many passengers could relate to. It was, he says: “I’m going with Ryanair [so] you’d better be ready for it, know the rules, pack this way, be there at this time, watch out for this and that – and when it’s boarding time, that scrum, if you’ve got your kids with you, what do you do?” After a year in the job he reckons that has changed: “The fear factor, the antagonism has gone – and that’s made a huge difference.”
Changes such as allocated seating, he says, together with an accessible website, curbing punitive charges and relaxing baggage rules have filtered through to the public. YouGov polling for the airline shows 30% more people now say they would happily fly Ryanair. Now, he says, the emphasis is on “getting smarter [rather] than nicer … us being gushing and the most wonderful flight you’ve ever had, that’s not our territory. It’ll always be stripped back. It was cheap and nasty. Now it’s cheap and straightforward and smart. We’re one of those savvy brands: H&M, Hyundai, Primark – there’s no shame in that for us, that’s who we compare ourselves to.”
Jacobs’ inside story of Ryanair’s year of change starts with his interview for the job. He didn’t have to convince O’Leary that Ryanair needed to transform its image: “That was bleedin’ obvious.” The essentials of the new brand were written on a sheet of A4. “Michael had made up his mind that he wanted to be nice and had a list of things he wanted someone to come in and implement.”
Jacobs added some ideas of his own: the infamous Ryanair crew calendar was scrapped at that interview. They had to “wipe the board clean”, he says, and with the charity calendars the airline was unnecessarily closing down its own customer base. “When you’re raising money through a girls-in-bikinis product, it’s got a limited audience.”
That decision prompted “a few complaints from wannabe models”, he says with a grin, but otherwise staff were keen to change. Within a month of Jacobs’ arrival, town hall-style meetings were held at corporate HQ in Dublin. “We put up a slide saying this is what we’re going to do and how we’re going to do it. For people who had been there a while, there was a bit of eye-rubbing – we’re really going to do this: launch an app and not charge people for it, launch a family product, scrap the calendar?”
Some of the transformation could be implemented from head office, but he adds: “Where the rubber hits the road is 6,000 crew, 1,600 flights a day: it does come down to the flight experience.” Changing the staff culture is under way: the first retraining programmes, for about 70 senior cabin crew and base supervisors at a time, started in November at Stansted and Dublin. “If you go back to old Ryanair – in the queue, no allocated seat, wearing two jackets, packing your handbag into your case – you didn’t enjoy that, but the crew didn’t either. Now, taking off, you don’t have this grumpy crew versus grumpy passengers.”
O’Leary himself took little persuading in the new-fangled methods, from the crew training to hiring a generation of developers for a new department named Ryanair Labs and adopting recruitment, data and marketing tools that Jacobs says had taken too long to reach Ryanair’s Dublin HQ. “Ryanair at management meetings is probably talking about things that it didn’t talk about before: the blinkered view of ‘this is the way we do it’ is now gone.”
The internal company mantra is Always Getting Better – the “north star” in Jacobs’ management-speak. “I kind of had to take Michael through that, but he loves the fact it’s the umbrella we put up, and a core value in Ryanair.” Targeted mass emails – about 20m a week – have had high rates of conversion into customer bookings, almost 10%, claims Jacobs. Marketing spend and some other costs have gone up but are more than balanced by extra tickets sold to keep costs per passenger stable. Fuller planes and even healthier balance sheets will have helped sweep away doubts for the results-driven – and immensely personally rich – O’Leary. “He loves new Ryanair. He’s a big shareholder and he sees it in the numbers too: it’s easy to love it because of the net margins.”
O’Leary remains very visible on the shop floor at Ryanair HQ, even if he has kept some of the more colourful aspects of his personality from public view in the last 18 months. But Jacobs hints that the boss may soon make a welcome return to the fray. The cultural change may hasten the airline’s next big strategic change: Ryanair has made no secret of its low-cost long-haul ambitions, but with investors in America warming to its reincarnation, Jacobs says transatlantic flights may come even sooner than expected.
Getting the necessary wide-body aircraft remains the sticking point in linking Dublin to east coast US the Ryanair way, but the airline’s vast cash reserves mean it may yet jump the queue of international competitors for Airbus A350s or Boeing 787s. “It would need to be a cancellation from one of the big Gulf carriers – a Dreamliner or an A350. But three years out, it’s possible, yeah.”
Does he ever feel a pang of regret for the Ryanair past, the loudmouthed, customer-baiting, truculent misanthropes of old? Jacobs doesn’t pause. “I don’t think anyone will miss the way we used to be. But I guess a few of the lads might miss the calendar.”
3. ADDITIONAL INDUSTRY RESOURCES TO RESEARCH:
History of Ryan Air: http://corporate.ryanair.com/about-us/history-of-ryanair
Full Year (FY) results for 2015, see the 2015 Annual Report:
https://investor.ryanair.com/wp-content/uploads/2015/08/Annual-Report-FY15.pdf
Ryanair Job Vacancy: Pan-European Brand Communications Manager:
http://corporate.ryanair.com/careers/vacancies/Sales%20&%20Marketing/174830850D
4. ADDITIONAL MEDIA / NEWSPAPER RESOURCES TO RESEARCH:
Video of Ryanair’s Kenny Jacobs on the airline’s Customer Experience Strategy:
¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬http://corporate.ryanair.com/news/news/150623-iata-confirms-ryanair-remains-the-world-s-favourite-airline/?market=en
http://www.theguardian.com/business/2016/feb/01/ryanair-predicts-price-falls-as-profits-double
Ryanair’s CMO on the Airline’s Ambitious Low-Brow Content Marketing Strategy
http://www.theguardian.com/business/2015/nov/02/ryanair-credits-being-pleasant-to-customers-for-profits-rise
“Ryanair is Changing in 2014”: http://www.youtube.com/watch?v=kf5PI2r95qo
Ryanair name second-worst brand in the world, Daily Mail, 31st October 2014:
http://www.dailymail.co.uk/travel/travel_news/article-2812512/Ryanair-named-second-worst-brand-WORLD-customer-service-AXA-insurance-comes-poll.html
BBC Newsnight Interview with Ryanair CEO Michael O’Leary, Monday 4th November 2013: http://www.youtube.com/watch?v=YMJ2gJ0SzP0
Note: This information has been obtained from a variety of sources to present a context for you to develop. You can, and must, introduce your own research, and apply academic theories, models, and concepts for the report, plus all your material must be fully referenced and justified.
5. ASSIGNMENT BRIEF, BASED ON THE RYANAIR CASE STUDY (above):
Individual Report: Your task is to write an individual report (2,000 words maximum), aimed at Ryanair’s CEO Michael O’Leary, where you set out in full detail your corporate communication plans for Ryanair. The suggested structure is as follows:
– Introduction (approx 200 words), where you analyse Ryanair’s corporate reputational problems
– Main Body (approx 1,500 words), where you analyse how to:
(i) improve the company’s long-term customer service, identity, image, and brand
(ii) ensure the company gains positive publicity, and
(iii) develop a strong corporate reputation for the company overall, beyond 2016.
– Conclusion and Recommendations (approx 200 words), where you explain how not only Ryanair, but other corporations in general, can benefit from enhancing their long-term strategic corporation reputation management
– Bibliography / References, using the Harvard referencing system (see below)
You must include and apply appropriate academic / theoretical frameworks, concepts, and models to justify your recommendations, taking in into consideration the various needs of the many and diverse stakeholder / audience groups. Also, feel free to augment your 2,000-words of text with images, graphs, tables, and charts.
Deadline: 3pm, Monday 31st July 2017 (via Turnitin)
Additional Academic Guidance:
London Metropolitan University Guide to Report Writing: http://learning.londonmet.ac.uk/studyhub/pdfs/a_quick_guide_to_report_writing.pdf
London Metropolitan University Guide to Harvard Referencing: http://student.londonmet.ac.uk/media/london-metropolitan-university/london-met-documents/professional-service-departments/library-services/referencing/Harvard-Referencing-guide.pdf
Note: You are expected to read and research widely beyond the case study, use and apply a wide range of appropriate academic / theoretical frameworks, concepts, and therefore you will have a large number of references (books, journal articles, industry publications media / newspapers).
If you have any questions about your coursework please ask your tutor.
See the feedback sheet(s) below for the Assessment Criteria
Finally, enjoy your assignment!
Barry b.dwyer@londonmet.ac.uk
London Metropolitan University
London Guildhall Faculty of Business & Law
MN6055 Managing Corporate Reputation, Summer 2017
Assignment 2: Individual Report (70%)
Student name: Student ID:
Tutor: Due Date: 3pm, Monday 31st July 2017
Assessment Criteria
Comments & Feedback
Use and application of theories, models, concepts, and techniques to the company
Identification and analysis of the key stakeholders and reputational issues
Evidence of additional individual research
Effectiveness and appropriateness of communication proposals
Quality of report: structure, academic language, presentation, Harvard referencing, and use of images
Overall Comments / 2nd-marker comments
