Letter from Ireland

Airline baggage will one day be a thing of the past if Ryanair's Michael O'Leary has his way. Siobhan Creaton reports on the innovative, and often controversial, entrepreneur who now leads the world's most profitable airline

Ryanair's Michael O'Leary just loves cutting costs. Some who know the controversial and foul-mouthed Irish airline chief suggest it's the first thing he thinks about when he gets up in the morning and is his greatest skill. Ryanair has already pared the comforts on board its planes to the bare minimum, dispensing with window blinds, reclining seats and velcro-anchored headrest covers. Sick bags are handed out only on demand. His ruthless axe wielding has created the lowest cost base amongst the low-fares airlines and today it is the world's most profitable airline.

Despite the difficulties that have beset the industry, Ryanair pleased investors in August by announcing a 28% increase in profits from 45.1m euros (£30.1m) to 57.8m euros (£38.6m) in its first quarter from April to June. O'Leary is warning that the going will be tough for the rest of the year although analysts are forecasting that the airline will make more than 230m euros. But as oil prices rocket Ryanair shareholders remain concerned. O'Leary has been assuring them that there is still plenty of scope to trim Ryanair's lean cost base to offset any imminent threat to the airline's profitability. Clearly Ryanair's staff and the travelling public should brace themselves for more of his innovative ideas.

So far this year he has abolished free tea, coffee and water provided on flights for its crew. The subsidy enjoyed by staff dining at the Ryanair canteen has been withdrawn and employees have been told they are welcome to bring their own drinks and snacks to work - though pilots and cabin crew are banned from using the ovens on board to heat their food up. This measure was introduced to ensure no additional cleaning costs were incurred, according to the airline.

Pilots were told that in future they would only be issued with one ream of paper per day for printing weather reports even though this could lead to shortages on late flights. The pilots had to pay for their own bi-annual medical examinations, which had to be carried out in their own time. Their existing pensions were frozen, while no pension provisions would be made to new recruits. And for the first time they were told that Ryanair would now be deducting the price of their uniforms from their monthly pay packets.

Other cabin crew have lived with that particular cost for some time now. Ryanair charges these employees £175 a year for uniforms and anyone who leaves the airline after less than a year has to pay back £500 for their work gear. They must also bear the cost of security vetting procedures, airport identity cards and medical checks. This comes on top of the about £2,000 they each paid when they joined Ryanair to cover the cost of their training, travel and accommodation.

O'Leary has forced passengers to pay the cost of providing wheelchairs for those who are less mobile and he has plenty of other penny-pinching tricks up his sleeve.

His most controversial proposal is to impose a luggage tax of up to £50 a bag to encourage people to only take hand luggage on board its flights.

He has said that handling checked-in baggage is one of the company's biggest costs and that by levying a luggage charge Ryanair could save around £33m a year. 'If everyone travelled lightly the airline would eventually be able to reduce the number of check-in desks at its airports. Fewer baggage handlers and security staff would be needed. Maybe in 12 months time I can see us giving £5 back if you turn up without luggage,' he explained. 'The plan is not to get rid of excess baggage; the plan is to get rid of baggage altogether.'

O'Leary sees no reason why this initiative will upset people. 'I can go away for more than a week and don't need much more than a bag for toiletries,' he said. Persuading millions of travellers to do the same may prove challenging, but nobody doubts O'Leary's resolve to make it happen.

Siobhan Creaton is finance correspondent of The Irish Times. Her book, Ryanair How A Small Irish Airline Conquered Europe, was published by Aurum Press in June.