Airline Revenue Economics

Who is right? Michael O'Leary or Elon Musk

2026-03-19 · 07:30 UTC ·Oliver Ranson ·15 min read

Brief

Oliver Ranson’s guest post by EPIC Insights’ Matt Johnston uses conjoint analysis to test whether Ryanair passengers would actually pay for inflight Wi‑Fi, framing the issue as a capital-allocation question behind the public disagreement between Michael O’Leary and Elon Musk over a possible Starlink rollout. The core empirical result is that passenger demand appears much stronger than Ryanair management’s stated assumption: 38% of more than 1,000 surveyed UK Ryanair flyers said they would pay for Wi‑Fi, and a deeper conjoint study of 380 qualified respondents found that what matters most is not low price per se, but capability. Full internet access with browsing and streaming ranked ahead of duration and price, and flight length had little effect on package preference, suggesting standardized pricing across short- and medium-haul routes may be viable.

The article’s most useful contribution is the segmentation and monetization logic. Latent-class MNL modeling identifies three behaviorally distinct segments with different elasticity curves, supporting a tiered product architecture rather than a single Wi‑Fi offer. A revenue-optimized lineup increased modeled revenue per flight by more than 25% with almost no loss of reach, and the premium tier captured much of the value. Business travelers were more likely to buy at all, but skewed toward lower messaging tiers, while leisure travelers were more likely to opt out yet over-indexed on premium full-internet purchases. Using Ryanair’s public Starlink cost estimates prorated to UK traffic, Johnston argues that demand assumptions are decisive: at 38% uptake the UK case pays back in about 3 months, while at 5% uptake it loses money. More broadly, the piece argues conjoint analysis can outperform backward-looking airline revenue-management heuristics when evaluating new ancillary products.

Why it matters

A survey of 1,000+ UK travelers who had flown Ryanair in the prior 12 months found 38% said they would typically pay extra for inflight Wi‑Fi at a reasonable price, far above Michael O’Leary’s public estimate that only 5% would pay.

Key details

  • Matt Johnston of EPIC Insights then ran a conjoint study on 380 qualifying respondents using 10 choice-card scenarios varying Wi‑Fi capability, access duration, price, and flight length; capability ranked as the top driver of purchase, ahead of duration and price, with full internet browsing/streaming for the full flight emerging as the preferred offer.
  • Latent-class multinomial logit analysis split demand into three near-equal behavioral segments: 35.5% messaging-focused and highly price sensitive, 29.7% full-flight but value-conscious, and 34.7% full-access and price-resilient; the last group still showed strong purchase intent at £15.50 for full-flight internet.
  • The proposed three-tier portfolio used a £3 one-hour messaging product, a £4 full-flight messaging option, and a premium full-flight full-internet tier tested at £12; across Wi‑Fi-interested passengers, more than 90% would buy one of the packages, while adding a one-hour full-internet tier mainly cannibalized premium sales rather than increasing total uptake.
  • Revenue optimization using elasticity curves raised modeled Wi‑Fi revenue from about £635 to £799 per flight on a 197-seat aircraft with 38% Wi‑Fi participation—more than a 25% uplift—while reducing package reach only from 90.8% to 90%; the one-hour messaging tier showed a demand cliff around £4.
  • The modeled UK-only Starlink rollout, using pro-rated Ryanair cost assumptions, required about £63.2 million upfront and £25.2 million in annual incremental fuel cost; at 38% uptake, breakeven was roughly 3 months with about £240 million annual net contribution on UK routes, versus 15 months at 15% uptake and an annual loss of about £0.5 million at 5% uptake.
Source evidence

title: Who is right? Michael O'Leary or Elon Musk
author: Oliver Ranson
contenttype: article
publication: Airline Revenue Economics
published: 2026-03-19T07:30:50+00:00
sourceurl: https://revman.substack.com/p/who-is-right-michael-oleary-or-elon

word_count: 3275

This is a guest post by Matt Johnston of EPIC Insights. Matt is a specialist in conjoint analysis. He conducts statistical surveys of large numbers of customers to figure out how groups of consumers value different elements of products or services. Conjoint analysis is not widely discussed in aviation, because airlines have an established process of Revenue Management. They use black boxes of algorithms to figure out from historical data which trends are likely to be repeated in the future and price accordingly. Unlike RM, conjoint analysis is much more forward looking. It can be used to understand what consumers are prioritising about today. In some cases this may be a better indicator of future trends than historical data alone. So I reckon that conjoint analysis needs more attention in aviation. And when I saw what Matt had to say about using conjoint analysis to price inflight WiFi I thought that you would like to hear about it. Advertisement: You can download this article as a PDF on Matt’s website here . It is reproduced on Airline Revenue Economics with his permission. Matt’s website is here . For transparency, Matt and I have worked together before but this is not a sponsored post. Now, over to Matt… When Michael O’Leary brushed aside the prospect of a Starlink rollout across Ryanair’s fleet, arguing that only 5% of passengers would pay for onboard WiFi, the conclusion appeared disciplined. Firm. Financially prudent. Then Elon Musk publicly disagreed. Two high-profile leaders. Two very different views of demand. And a very public disagreement. The only view that really matters: that of Ryanair passengers. What did they have to say? We decided to find out. We asked a group of over 1,000 UK travelers who stated they had flown with Ryanair in the last 12 months a simple question. On Ryanair flights, assuming a reasonable price, would you typically be willing to pay extra for WiFi? 38% of the group answered YES That result alone materially exceeds the 5% assumption. But a single survey question does not build a business case. The phrase “reasonable price” carries little strategic value unless it is defined within real trade-offs. So we went further. Using rigorous conjoint analysis, we quantified true willingness to pay – modelling how passengers evaluate WiFi packages across capability, duration and price within realistic choice scenarios. This allowed us to identify not just stated interest, but the price ranges consumers would genuinely accept when faced with competing options. Who we surveyed We surveyed 380 UK respondents for the conjoint willingness to pay test across a nationally representative age, gender, and income profile. A statistically significant sample size based on the number of features and levels tested across 10 conjoint choice card options. All of them had: 1. Taken a return Ryanair flight in the last 12 months 2. Indicated they would be willing to pay for WiFi onboard at a reasonable price Flight frequency - return trips in the past year Primary travel purpose for flying with Ryanair Methodology: how we tested real trade-offs & willingness to pay To understand how passengers value inflight connectivity and their willingness to pay, we conducted a structured choice experiment in which respondents evaluated a series of potential WiFi packages for a Ryanair flight. Each option varied in key elements such as connectivity capability, access duration, price, and flight length. By asking respondents to choose the option they would most likely purchase, or to opt out entirely, we were able to observe how travellers trade off these elements when making a realistic purchase decision. This approach allows us to move beyond simple “would you buy it?” questions. Instead, it reveals how different features interact to shape willingness to pay, helping us understand which combinations of capability, duration and price create the strongest value proposition for passengers. What We Found When we modelled trade-offs across capability, duration, price and flight length, one structural insight emerged clearly: WiFi Capability Is the Primary Driver of Choice! Across both Business and Leisure travellers, the most important attribute was WiFi capability, and specifically, access to full internet browsing and streaming. This was followed by WiFi duration (2nd) and Price (3rd). As participants were instructed to treat flight time as context only, it makes sense that this feature was found to have minimal impact on driving package choice. This is important. It tells us that passengers evaluate WiFi primarily through a utility lens – what they can do online – rather than purely through cost minimisation. Oliver adds: At first glance Matt’s finding is at odds with airline lore, which states that passengers are always price sensitive. Consumers use products like WiFi regularly, they understand it and buy at the point of use. But most people do not buy plane tickets regularly and make their purchase in advance of travel, sometimes far in advance. So Matt’s finding should not be a surprise. It is analogous to airlines finding that it is easier to sell passengers onboard food and drink when they are hungry. Relative Feature Level Preference When we move beyond feature importance and examine the preferred feature levels, the optimal proposition becomes unmistakable: 1. Full internet (browsing & streaming) 2. For the full duration of the flight 3. At the right price point Crucially, this holds true regardless of flight length. At an aggregate level, then, demand skews strongly toward full-flight, full-internet access when priced appropriately. But that does not mean all passengers value it equally. This is where the analysis becomes commercially interesting. The data indicates a value-led, capability-first proposition is most preferred by this group of respondents. Moving beyond averages: from optimal proposition to revenue architecture The overall results make commercial sense but they hide something critical, because when 38% say “yes” to WiFi, that 38% is not one homogenous group. Some passengers will pay almost anything for full access. Others only want messaging at the lowest possible price. Some sit in the middle. Designing one proposition for all of them would leave revenue on the table. So we moved beyond averages. Using latent class analysis, we identified three similarly sized customer segments - each with distinct purchasing behaviour and fundamentally different price elasticity curves. That segmentation is what turns insight into strategy. Segmenting the demand: where strategy emerges The latent class MNL (Multinomial Logit) analysis revealed three similarly-sized behavioural clusters, each defined not by demographics, but by how passengers trade off capability, duration and price. Messaging-Focused Value-Seeking Flyers (35.5%) This segment is decisively price sensitive. Cost minimisation dominates decision-making and, as a result, messaging packages are most attractive. While lower in per-unit revenue potential, this group expands participation and protects volume. Full-Flight Value-Conscious Flyers (29.7%) This group prioritises full-flight connectivity but with greater price discipline. While full internet remains the preferred option, their purchase probability is more responsive to price adjustments. They exhibit conditional openness to messaging-only tiers, particularly when price differentials widen. This segment requires careful optimisation rather than pure premium extraction. Full-Access Price-Resilient Flyers (34.7%) This group represents the highest-value demand. They show a strong preference for full internet access for the entire flight and demonstrate low price sensitivity within the tested range. Even at the upper end of pricing (£15.50), purchase likelihood remains robust. This segment underpins premium monetisation. The addressable market comprises three fundamentally different needs with three distinct price sensitivities. Effective monetisation requires a structured portfolio: a premium anchor, a calibrated mid-tier, and a volume-protecting entry tier each designed to capture a distinct customer profile. Translating segments into revenue-capturing packages Identifying segments is only useful if it informs pricing architecture. To ensure the final WiFi lineup monetises each behavioural group effectively, we first optimised packages at the segment level. Each cluster was modelled independently, using its specific elasticity curve to determine price points that balance volume participation with revenue yield. For the Messaging-Focused Value-Seeking segment, a one-hour messaging package at £3 captures 90.4% of buyers within that group. Oliver adds: 230 (29.5%) of Ryanair’s flights to or from the UK are under two hours. A one hour package represents more than half of the travel time. The Full-Flight Value-Conscious segment required a more calibrated approach. In isolation, a full-flight full-internet tier priced at £7.50 maximises revenue capture within this group, while a £4 full-flight messaging option secures a smaller but meaningful subset of buyers. Together, these configurations satisfy just over 81% of this segment under standalone conditions. For the Full-Access Price-Resilient segment, a full-flight full-internet package priced at £15.50 satisfies the entire segment within the tested range. This represents clear pricing power - and forms the premium anchor of the architecture. Reach generated among Messaging-Focused Value-Conscious Flyers by package targeted at them Price elasticity curve for Messaging-Focused Value-Seeking Flyers. £3 was selected as a price point which balances both revenue and volume share. From segment optimisation to portfolio performance Segment-level optimization, however, is not the final step. Real-world pricing does not occur in isolation. Tiers compete with one another. Premium anchoring affects mid-tier conversion. Elasticity shifts when alternatives are visible. We therefore constructed a unified lineup and simulated performance across the full respondent base. The two messaging tiers were kept identical from the segment-level simulations. The full-flight full-internet tier was tested at £12, a midpoint price acceptable to both the Full-Flight Value-Conscious and Full-Access Price-Resilient segments. This allowed us to observe how demand redistributed when a single premium tier served both groups. The results were encouraging. Over 90% of WiFi-interested passengers would purchase one of the available packages within the lineup. Participation remained high, and revenue concentration skewed strongly toward the premium full-flight full-internet tier. Notably, a one-hour full-internet option was also tested. While intuitively appealing, it primarily diverted share from the full-flight premium tier without expanding total participation. In other words, it diluted revenue without growing the market. More choice did not mean more value. Reach generated in overall market with a three-package lineup Optimising for revenue rather than reach The initial lineup struck a strong balance between revenue and participation. But airlines do not optimise for participation alone - they optimise for yield. We therefore stress-tested each package using its price elasticity curve, adjusting price points upward to the threshold at which elasticity approached -1 (the point beyond which further increases would erode total revenue). For example, the one-hour messaging package exhibits a clear price cliff around £4. Beyond this point, demand drops disproportionately. Staying just below that threshold protects both conversion and revenue. Applying elasticity-based optimisation across tiers produced a materially different revenue profile. Assuming 197 passengers per flight and 38% WiFi participation (~75 buyers), the base lineup generated approximately £635 per flight at 90.8% reach. Under the revenue-optimised configuration, total revenue increased to approximately £799 per flight, while reach declined marginally to 90%. That represents more than a 25% uplift in WiFi revenue, achieved with less than a one percentage point reduction in participation. This is the power of portfolio optimisation made possible by conjoint analysis. Price elasticity curve showing a price cliff at £4 for the 1-hour-messaging-only package Portfolio optimization drove a 25% revenue uplift. By managing tier interaction and strengthening premium pricing power, revenue increased materially with negligible participation loss. Debunking two common assumptions Does Flight Length Drive Willingness to Pay? We tested all feature combinations across four flight durations: 1. 1–2 hours 2. 2-3 hours 3. 3-4 hours 4. 4+ hours The expectation is that willingness to pay should rise with flight length. A four-hour passenger should value connectivity more than someone flying for ninety minutes. Our data, however, does not support that assumption. Across all duration bands, package preference remains virtually unchanged. This suggests passengers are not benchmarking WiFi against total flight time. Instead, they appear to evaluate the package in isolation. One hour is one hour. Full flight is full flight. The decision is about access and capability, not incremental minutes in the air. Capability drives choice. Flight time plays a minimal role. Pricing architecture does not need to flex materially across short- and medium-haul routes to preserve demand. Standardisation is unlikely to erode revenue performance. Oliver adds: This finding is important because Ryanair has a network where short flights are important. On Thu-26-Mar-2026, a week from the day that this article was published, Ryanair and all it’s subsidiaries will operate 780 flights to or from the UK. Under two hours: 230 flights (29.5%) Two to three hours: 357 flights (45.8%) Three to four hours: 135 flights (17.3%) Four hours plus: 58 flights (7.4%) Notes: only one Ryanair flight is longer than five hours – Paphos to Newcastle; each band stops at 59 minutes to the hour so two to three hours is 2:00 to 2:59 This section was written using data from OAG Schedules Analyser: visit oag.com. Thanks OAG! Leisure vs Business A common assumption may be that business travellers have a higher willingness to pay for WiFi while leisure travellers are more price-sensitive. The data tells a more nuanced story. Business travellers are significantly more likely to purchase WiFi overall. They are 7.8 percentage points less likely to opt out entirely and materially over-index on messaging tiers, particularly full-flight messaging (+7.6 pp vs overall). Business drives participation. But participation is not the same as premium selection. When we look at tier choice, business travellers skew toward functional, lower-tier options. Full internet for the full flight is slightly below the overall average among business flyers. Leisure travellers show the opposite pattern. While more likely to opt out, they over-index on the highest-tier package, full internet for the full flight (+1.3 pp vs overall). The latent segments reinforce this structural difference. Nearly half of business travellers sit in the most price-sensitive messaging-only segment, and only 18 percent fall into the price-resilient full-access group. Among leisure travellers, almost 40 percent belong to that price-resilient segment, more than double the business share. The pattern is consistent. Business travellers expand the addressable market through higher participation, particularly via messaging tiers. Leisure travellers, when they do engage, are disproportionately represented in the most revenue-rich segment. Segment membership by primary travel purpose (Business vs Leisure Travelers) For Ryanair, the implication of this data is clear. Frame messaging tiers around speed and responsiveness to capture business participation, but position full internet around streaming, browsing and complete access to resonate with leisure demand. Critically, if email access sits exclusively within the premium tier, that distinction must be explicit. Clear capability signalling can shift some business travellers upward-particularly those who genuinely require full functionality. The broader adoption opportunity While the conjoint exercise focused on passengers already open to paying for WiFi at a reasonable price, it is instructive to examine why others disengage earlier in the funnel. Among the 650 respondents who indicated no initial interest in paying for WiFi, the dominant reasons were not purely price-based: These findings suggest that expanding adoption beyond the currently addressable segment will depend less on discounting and more on perceived utility, reliability and communication clarity. Pricing architecture unlocks monetisation within the interested base. Product positioning and experience design determine how large that base can become. The business case Behavioural insight only becomes strategic when translated into cash flow. To translate preference data into commercial reality, we modelled what a UK-only Starlink rollout would look like in cash terms. Using Ryanair’s publicly cited installation cost and incremental fuel impact, pro-rated to UK-touching flights, the initial investment is approximately £63.2 million, with an ongoing £25.2 million annual incremental fuel cost. On the revenue side, we applied the revenue-optimised WiFi lineup from the conjoint simulation and scaled it across three demand scenarios: 38% uptake (our UK stated interest level), 15% uptake (a conservative adoption case), and 5% uptake (O’Leary’s estimate). Breakeven Analysis for Starlink Installation (5% vs 15% vs 38% uptake) At 38% uptake, a UK rollout reaches breakeven in approximately 3 months. Reducing adoption to 15% extends breakeven to roughly 15 months. At 5% uptake, the model indicates an annual loss of approximately £0.5 million. The difference between these scenarios is not marginal. It fundamentally determines whether the investment is commercially compelling or financially detrimental. Under the 38% scenario, projected annual net contribution from WiFi on UK routes alone is approximately £240 million, after incremental fuel costs. Assuming similar willingness to pay and package performance across the wider European network, the implied annual net contribution at full scale approaches £830 million. For Ryanair, this is not about winning a public argument. It is about unlocking a potentially nine-figure annual margin opportunity with clarity and confidence. The difference between a 5% assumption and a behaviourally validated 38% adoption rate is the difference between a rejected idea and a high-return strategic lever. Crucially, it was conjoint analysis that translated stated interest into monetisable demand by modelling real trade-offs across capability, duration, and price. When investment decisions of this scale hinge on demand assumptions, those assumptions should be tested rigorously under realistic choice conditions. The real question is not whether passengers would pay for WiFi. The question is whether Ryanair can afford not to measure it properly. This is not a WiFi debate. It is a capital allocation decision. The difference between 5% and 38% adoption determines whether £63m is a risk or a high-return investment. Conjoint analysis provides the evidence required to decide. Co st assumptions are based on Michael O’Leary’s public statements indicating approximately £218m installation cost and £87m annual fuel impact for the full Ryanair fleet. Figures were pro-rated to UK-touching flights using publicly available data on total passenger volume for 2025 (206.5m) and UK passenger volume for 2025 (60m or just under 30% of the total). The bigger strategic lesson When demand assumptions decide capital allocation As previously stated, the question is not simply whether WiFi should be introduced - it is whether demand has been measured with the rigour required to support capital allocation. Conjoint analysis allows Ryanair to move beyond stated interest in onboard WiFi and rigorously test whether true, monetisable demand exists across its key European markets by embedding WiFi into realistic booking and ancillary trade-off scenarios. By simulating real-world choices rather than asking hypothetical questions, Conjoint analysis tools can: 1. Quantify demand and willingness-to-pay at different price points, across segment types 2. Model take-up rates under alternative propositions (free basic, paid tiers, bundled ancillaries) 3. Estimate elasticity and identify where pricing power genuinely exists 4. Forecast incremental revenue & build a robust margin and payback model that incorporates installation and operating costs. The result is a board-ready business case grounded in predictive demand evidence, clearly answering whether consumer uptake at defined price thresholds can sustainably drive incremental margin growth after accounting for the required upfront investment. Conjoint analysis does something fundamentally different: It allows customers to make realistic choices across multiple attributes and price levels. It doesn’t ask for opinions. It models behaviour. Why senior pricing & revenue growth leaders should pay attention This isn’t about Ryanair. It’s about every RGM* lead, every Brand Director, every Commercial VP who has ever said: “Our consumers won’t pay for that.” “It’s not worth launching.” “They’d never trade up.” Oliver adds: RGM = Revenue Growth Management The reality? Stated beliefs, even from experienced teams, can be wrong. The only reliable way to know willingness to pay is to simulate real-world trade-offs. That’s exactly what conjoint analysis was built to do. Whether you are launching a new pack size, introducing a premium tier, debating price increases, adjusting service levels, or responding to cost pressure, the risk is the same: You may be underpricing opportunity. Or worse: Not launching it at all. In today’s margin environment, that’s a strategic error you can’t afford. You can download this article as a PDF on Matt’s website here .