Ryaniar Risks and Challenges

There were a lot of problems that Ryanair had to face throughout a year; dealing with these problems led them to have a bad name within the press and media. As Ryanair entered the second half of 2007, fuel prices, compensation to passengers, terrorism and security, industrial relations and safety issues were big challenges. Ryanair’s motto was “we guarantee out customers no fuel surcharges, not today, not tomorrow, and not ever.” This began to cause a major problem when the fuel prices throughout the economy began to rise. Ryanair’s fuel costs represented 35 percent of operating costs in 2006, compared to 27 percent in 2005. Although, they promised their customers they would not be charged for rising fuel costs, the airline found themselves paying an absurd amount for barrels of oil. They paid $70 a barrel up to October 2006 and $73 to $74 dollars a barrel up to March of 2007. When it came to compensation to passengers, Ryanair’s compensation costs amounted to 200 million dollars annually. Not only were they fighting fuel prices but they were handing out money left and right to customers for cancellations of flights, meals, refreshments and hotel compensation. With September 11 terrorist attacks Ryanair had to cancel 279 flights in the days after the incident and had to refund 2.7 million dollars in fares to 40,000 passengers. With this, the lost 1.9 million dollars in reduced bookings, another downfall to the 9/11 attacks were increased insurance costs for all the commercial airlines, which meant that the ticket fares had to be increased so they did not suffer anymore financial loss. O’Leary, the CEO stated “the terrorists must be rolling around in their caves in Pakistan laughing at us.” In 2006, a British broadcasting station did a documentary on Ryanair airlines. The documentary was titled, “Ryanair Caught Napping.” The documentary showed two undercover reporters that pretended to be cabin crew going through the Ryanair policies and procedures. It