Summary
Ryanair has been at the forefront of using behavioral economics to get people to make decisions which help to drive down costs to the benefit of both the airline and its customers. By charging customers for checking in at the airport and having hold luggage it has successfuly persuaded people to check in online and to take hand luggage only while still allowing passengers who want to check in at the airport and to take hold luggage if they want to. Its new policy of charging explicitly for on-line checking in is a completely tactic that appears soley aimed at raising revenue rather than changing customers' behaviours.
Analysis
Previous pricing policies adopted by Ryanair have been widely adopted by other airlines because they make clear commercial sense. By nudging their customers by pricing mechanisms they have helped to drive down costs for the airline allowing them to pass on savings to customers and maintaining their low fares. Its pricing policies also shone considerable light on how the cost of flights is actually built up. Although when comparing the add-ons to the basic ticket price on different airlines websites they vary dramatically. This new policy however, is rather different. In one way its still the same old nudge economics policy in that customers are offered a choice priced accordingly to how Ryanair would like its airline passengers to behave. But the hefty on-line checking in cost and the fact it can't apply to special promotions (due to the way fares must be shown in adverts) sends mixed messages to its customers.
Ryanair's pricing strategy has been amazing successful but its apparent view that all publicity is good publicity seems way off the mark. If the company was to change the negative perception it has in many segments of the market in relation to customer service and pricing strategies it could undoubtedly attract more passengers and hence revenues.
