Low cost, low blow?

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Le low-cost, devenu tendance en ces temps de crise, fait le bonheur des firmes qui s’y sont lancées. Derrière un prix défiant toute concurrence se cachent une stratégie marketing léchée, et souvent des frais supplémentaires de dernière minute. Les compagnies aériennes comme Ryanair en sont le meilleur exemple. Les pouvoirs publics britanniques semblent séduits par cette manière de drainer discrètement l’argent du contribuable. Ces petits prix profitent-ils réellement aux consommateurs moins aisés ?

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“Low-cost? Low-cost you say?”

No frills” is a model that proposes low prices for manufacturing products or services, reduced to a bare minimum. No-frills companies use many strategies to optimize their profits that are basically the same for a supermarket or a carrier: they reduce operating costs and additional services, simplify their process and put pressure on staff.

Let’s take the most controversial example: Ryanair. Ryanair is now Europe’s #1 carrier. In just a few years it has become one of the biggest airlines, thanks to its controversial manager Michel O’Leary. He became CEO with original ideas that made the success of the company but also stirred up hatred. First of all the airline offers only point-to-point flights without stopovers but it uses airports that are not in city centers. Moreover it has limited or stopped many services in the airport or during flight, like food, repayment or insurance. Ryanair’s ticket prices fluctuate according to the number of passengers expected. But the most controversial strategy consists in charging unexpected additional (very expensive) fees. If you make a mistake and forget to print your boarding pass or have excess baggage, you end up paying a fortune. Its stewards and stewardesses are paid only during flight (after the engine starts running). The other employees are low-paid and “versatile”.

O’Leary’s ways have caused many problems and complaints. A Ryanair pilot has recently questioned the airline’s safety. Several employees have publicly complained about their pay. Moreover a Canal+ documentary revealed that to become an employee at Ryanair you have to attend and pay for a really expensive training programme and you may need to take out a loan with the company. Therefore you are naturally indebted, trapped and threatened. Ryanair also infuriates some European governments as it doesn’t respect trade unions. O’Leary received complaints and European governments took the matter to court.

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Who benefits from ‘no frills’?

It should be profitable for consumers: the flight doesn’t come with services but poorer people can finally fly. We could believe that it increases people’s purchasing power. But Ryanair’s prices are also based on very low wages. Moreover there is a domino effect: in reaction to the new competition traditional airlines (like British Airways) cut their wages too. ‘No frills’ thus contributes to impoverishing people, all the more so as it affects all sectors of the economy.

There is a second more surprising effect: the British government itself has recently been seduced by the Ryanair ‘system’: British taxpayers pay lower direct taxes but are more often fined (for instance when they forget to renew they car insurance before the due date, they are exposed to an 80£-fine). The system has one advantage: it enables the government to tax people without visible pain. In fact the image of Britain as a liberal country is biased because it hides what taxpayers really pay. It doesn’t make them richer…

Clément MOREAU & Julien VIELCANET

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