...DOG FIGHT OVER EUROPE – RYAN AIR Protagonist. Cathal and Declan Ryan of RyanAir. Macro & Micro Industry Analysis. * The aviation industry over Europe and Atlantic routes was a heavily regulated and subsidised by the respective governments. * Most were heavily ‘unionised’. * Recessions of 70’s and oil crisis lead to a period of losses in most operators and were borne by the state in one manner or other. * Gradual ‘privatisation’ of the operators was in progress and allowed introduction of some new players but the market was not ‘even keel’. * In the British – Ireland segment the larger player ‘BA’ and Irish carrier Aer Lingus were established. * BA had a large ‘ticket sales network’ and was effective in a large volume through such agents 83%. * Aer Lingus was operating in loss as far as Trans Atlantic segment was concerned but making a profit in non transportation businesses it had diversified in. * Competition also existed in form of ferry service which took nine hours but costed only £55 for a return trip as compared to I£208 for BA and Aer Lingus. Problem Identification * Evaluate the possibility of sustaining the operation of RyanAir with two routes. Observations. The problem of Ryanair is basically concerned with three major components:- * Defining the Value Proposition to the Customers. In this case the values of air travel in a country which typically does not lend itself to commercial aviation in comparison to a cheaper option...
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...Ryanair – The low fares airline: Whither now? Main Problems Ryanair’s growth rate is affected by macroeconomic factors such as the recession, as seen in 2010 when Ryanair saw a 200% increase in profit and traffic growth, as the low fares became attractive for those suffering from the current climate. Uncertainty still remains regarding the economic climate; problems would arise if it continued, as passengers would reduce spending restricting the company’s passenger volume growth. If the economic climate was to grow, business and leisure passengers may choose to pay more and travel with a full service airline, this could consequently result in demand for low-cost flights to drop. One of the greatest concerns is fuel prices the ability to estimate future costs are limited due to unforeseen natural disasters and conflicts. Rising oil prices have had an impact on Ryanair, in 2008 Ryanair’s profit before tax was £439 million which fell down to £181 million the following year due to an increase in fuel costs by £100 million. As Ryanair’s declaration of ‘no fuel surcharge ever’, and its reliance on low fares limit its capacity to pass on increased fuel prices will inevitable result in low profits or ticket prices will have to rise. Ryanair faces stiff competition in Europe from a number of airlines including, BritishAirways, WizzAir, SkyEurope and EasyJet. In this competitive market airlines will need to adopt new strategies to avoid losing market share. Rivalry among existing...
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...Dogfight over Europe : Ryanair (A) 1. Assessment of Ryanair's launch strategy To analyze the launch strategy of Ryanair i.e. its direction & purview to achieve advantage over rivals by adapting with available resources & build competency we need to first look into the industry level analysis, profitability potential & competitive dynamics and then assess its launch strategy. PORTERS FIVE FORCES * COMPETITORS : * Deregulation-increased rivalry, Competition for marginal customers * Strategic Alliances eg - Aer Lingus & BA * Comfort & premium services to Business Class * Increased use of online ticketing Ryanair’s Perspective: Intense & increasing competition (Aggressive) * ENTRY BARRIER : * Rise of Charter flights in Europe * European Deregulation-New Competitors; Pricing, routing, pooling abolished * Huge financing to enter may cause high entry barrier for new entrants * High maintenance costs & personnel costs * Low/unstable prices & profitability Ryanair’s Perspective: Moderate threat of entry * SUBSTITUTE : * Accessibility: Other cheaper form of transports eg-fast rail & land travel * Charter flights for Holiday goers * Flights bundling ancillary services such as lodging along with cheap fares Ryanair’s Perspective: Low threat from Substitutes * BUYER POWER : * Increased customer base for air travel due to increased competition...
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...com/20131002214624535.pdf"] BS3100 Business Strategy Summary report “Ryanair – The Low Fares Airline” Ryanair – The Low Fare Airline Being founded in 1985 by an Irish businessman, Tony Ryan, Ryanair today is Europe’s first and largest low fares airline (Thomson and Bade-Fuller, 2010). Since 1991 with Michael O’Leary taking a position of CEO of the company, Ryanair in 2008 had served about 50.9 million passengers in around over 25 European countries with a total number of 163 Boeing 737-800 planes (ibid). The low-cost model airline is pursuing seem to be successful, resulted in continuously increasing margin rate and overwhelming competition with other major airlines, like easyJet and Lufthansa (ibid). The predominance of Ryanair as Europe’s largest low cost carrier is a consequence of the following cost advantage sources. Homogenous fleet, frequent short-haul flights, high seating density and planes filled to capacity due to cheap early bird tickets allow Ryanair to benefit from economies of scale (Thomson and Bade-Fuller, 2010). Standardisation and simplification of jobs results in economies of learning and residual efficiency. Process design, that includes 96% card only online bookings, fast boarding, short haul flights, use of homogenous fleet with simplified aircraft design, low number of staff, use of secondary airports and departures before 9pm leads to efficient service delivery (ibid). Ryanair product design is aimed at delivering customers no-frills service while...
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...underlying the concept of generic strategies is that competitive advantage is at the heart of any strategy, and achieving competitive advantage requires a firm to make a choice, if a firm is to attain competitive advantage, it must make a choice about the type of competitive advantage it seeks to attain and the scope within which it will attain it (Porter, 2004). The purpose of this report is to assess the key strategies chosen by Ryanair within cost leadership and that were likely to generate competitive advantages to the organisation. Furthermore, this paper will analyse the Ryanair’s decision to become a low cost airline through Porter’s five forces. It will help to understand the industry attractiveness and competitive forces. PEST analyses will be directed in order to analyse the business environment where Ryanair operates. SWOT analyses will be piloted to diagnose the strategic capabilities of Ryanair. Porter’s five forces will explain the strategic choice made by Ryanair. VRIO frame work deeply diagnoses the strategic capabilities of Ryanair, it evaluates and explains the reasons of choosing cost leadership and become a low cost airline. VRIO will evaluate...
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...Executive Summary Ryanair operates as a cost leader in the European low cost carrier segment of the airline industry. As a cost leader they aim to achieve high volume sales by attracting customers with low prices. As a result of charging some of the lowest prices in the industry, Ryanair has seen growth in traffic and reported record revenues. To remain profitable the company focuses on maintaining low costs and efficient operations. The key issues facing Ryanair include how to remain profitable in light of rising fuel prices and currency exchange risk, the ability to maintain market share and growth in a segment characterized by intense competition, and whether or not it would be profitable to expand into the growing international/emerging markets and internet retailing space. In addressing these key issues, it is recommended that Costco focuses on opportunities in the internet retailing space to grow bottom and top line growth as well as increasing market share. It is also recommended that they remain committed to their low cost high inventory turnover strategy in order to continue to offer consumers the lowest prices and achieve high inventory turnover. By taking these initiating the strategies summarized above, Costco will be able to maintain their position as market leader and continue to operate profitably in the discount membership warehouse segment of the retail industry. Business Model & Strategy Ryanair operates as a cost leader in the low cost...
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...the UK which was at the time dominated by large British companies such as British Airways and British Midland. The Company started with two leased airplanes and began operating from London Luton to Glasgow and Edinburgh In 1996 they began operating from Luton to Amsterdam and now in 2014, operate on 633 routes across more than 30 countries and own 217 Airbus aircraft. They employ over 8,000 people including 2,000 pilots and 4,500+ cabin crew and in 2013 they flew over 60 million passengers They now claim that “over 300 million people within a one hour drive of an EasyJet airport” (Easyjet About Us 2013) The obvious move for the airline for further growth may now be outside of Europe and India may be the best market to consider. PESTLE Analysis Political/Legal Up to April 1997 the European Airline Market was regulated strictly and each county controlled their own airline companies. After 1997 and deregulation the European market opened up for carriers and subsequently for example an Irish low cost carrier like Ryan Air was allowed to operate between two other European countries. Since then European routes have increased by140% ( Ingdahl W. “Flying has never been safer” Spiked 19 03 2014) This was followed by the EU/USA Open Skies Agreement allowing any airline of either the USA or a European Union country to fly freely between their countries. These agreements have increased travel and the ease of travelling across Europe and North America and the open...
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...Pricing strategies of low cost airlines Keith J Mason Air Transport Group Cranfield University K.Mason@Cranfield.ac.uk 1. Introduction Low cost airlines such as EasyJet, and Ryanair have developed quickly in the European market in the last five years. The UK market has seen the most dramatic development where by the summer of 2001, these carriers accounted for over 22% of the short haul capacity from London and were present in 58% of the 128 short haul routes operated from this city (source: OAG, 2001). During a five-year period from 1997, the seat capacity offered from London has risen by 17%, and virtually all of this rise (95.4%) was attributable to the low cost carriers. The low cost carriers have both penetrated and grown these markets, principally by garnering a consumer perception that the fares offered are very low. This perception has been developed in no small part by extensive advertising and effective use of public relations. For example, Ryanair has offered fares as low as one penny (plus taxes), and therefore it is not surprising that there is great media coverage of these carriers, which in turn generates more interest in the services. Both Ryanair and EasyJet have been very effective in using media coverage of their legal wrangles with traditional carriers such as British Airways and Lufthansa to promote their services and low fares. While the media has helped these airlines communicate their message of low fares to the public...
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...Ryanair – The low fares airline: Whither now? Main Problems Ryanair’s growth rate is affected by macroeconomic factors such as the recession, as seen in 2010 when Ryanair saw a 200% increase in profit and traffic growth, as the low fares became attractive for those suffering from the current climate. Uncertainty still remains regarding the economic climate; problems would arise if it continued, as passengers would reduce spending restricting the company’s passenger volume growth. If the economic climate was to grow, business and leisure passengers may choose to pay more and travel with a full service airline, this could consequently result in demand for low-cost flights to drop. One of the greatest concerns is fuel prices the ability to estimate future costs are limited due to unforeseen natural disasters and conflicts. Rising oil prices have had an impact on Ryanair, in 2008 Ryanair’s profit before tax was £439 million which fell down to £181 million the following year due to an increase in fuel costs by £100 million. As Ryanair’s declaration of ‘no fuel surcharge ever’, and its reliance on low fares limit its capacity to pass on increased fuel prices will inevitable result in low profits or ticket prices will have to rise. Ryanair faces stiff competition in Europe from a number of airlines including, BritishAirways, WizzAir, SkyEurope and EasyJet. In this competitive market airlines will need to adopt new strategies to avoid losing market share. Rivalry among existing...
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...EasyJet – SWOT analysis Strengths: * EasyJet is the primary provider of low budget air travel, employing an overall cost-leadership model. The airline operates services on 500 routes and carries more passengers than any other UK-based airline. * Recognises CO2 emissions and actively seeks to reduce emissions and support green schemes such as UN certified Perlabi Hydroelectric in Ecuador. * With rapid turnaround times of just 30 minutes, EasyJet is able to offer an efficient and reliable service whilst maximising asset utilisation. * The first low cost carrier to introduce 100% electronic retailing, reducing overheads and producing a highly convenient service for passengers. Weaknesses: * Undifferentiated service in relation to other cheap flight providers such as Ryanair etc * Easyjet does not offer schemes for customer retention and as a result there is no brand loyalty - customers choose the lowest priced flights. * As a result of extremely low operating margins, Easyjet puts itself in a sensitive position regarding any additional of taxes or charges that may be imposed on it by the government. Opportunities: * The withdrawal of several long-established airlines from the less traffic-intense routes offers an opportunity for expansion. This may include the introduction of alternative routes to major cities in Europe e.g. from Dublin to London. * Acquire small low budget airlines with different routes to add to its flight timetable ...
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...Chapter 1: Introduction Ryanair brings the lowest fare of air travel in Europe. According to them, they keep their cost low so that customers will also keep their cost low and also that they are committed on having an on-time flights among the competitors. Even having the lowest fare of air travel, they said that they do not compromise passenger’s safety, the “near-perfect” baggage handling and their efficiency in ‘green’ policy. Mission-Vision Statement The company does not have a clear Mission and Vision Statement but they answered the question: What is our business? It is, “to firmly establish itself as Europe’s leading low-fares scheduled passenger airline through continuous improvements and expanded offerings of its low-fares service. Ryanair aims to offer low-fares that generate increased passenger traffic while maintaining a continuous focus on cost-containment and operating efficiencies.” And what do we want to become? It is “To become Europe’s most profitable airline by rolling out proven low- fare, no frills service in all markets in which we operate to the benefit of passengers, people and stakeholders.” History of the Company Year Passengers Event 1985 5,000 Ryanair is set up by the Ryan family with a share capital of just £1, and a staff of 25. 1986 82,000 They obtains permission from the regulatory authorities to challenge the British Airways and Aer Lingus' high fare duopoly on the Dublin-London route. 1987 322,000 They acquire its first jet aircraft...
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...9-106-003 REV: MAY 15, 2006 MARK T. BRADSHAW Ryanair Holdings plc Ryanair is a low-cost, low-fare airline headquartered in Dublin, Ireland, operating over 200 routes in 20 countries. The company has directly challenged the largest airlines in Europe and has built a 20-year-plus track record of incredibly strong passenger growth while progressively reducing fares. It is not unusual for one-way tickets (exclusive of taxes) to sell on Ryanair’s Web site for less than €1.00. See Exhibit 1 for an excerpt of Ryanair’s Web site, where fares between London and Stockholm, for example, are available for 19 pence (approximately US$0.33). CEO Michael O’Leary, formerly an accountant at KPMG, described the airline as follows: “Ryanair is doing in the airline industry in Europe what Ikea has done. We pile it high and sell it cheap. . . . For years flying has been the preserve of rich [people]. Now everyone can afford to fly.”1,2 Having created profitable operations in the difficult airline industry, Ryanair, as did industry analysts, likened itself to U.S. carrier Southwest Airlines, and its common stock has attracted the attention of investors in Europe and abroad. Low-Fare Airlines Historically the airline industry has been a notoriously difficult business in which to make consistent profits. Over the past several decades, low-fare airlines have been launched in an attempt to operate with lower costs, but with few exceptions, most have gone bankrupt or been swallowed up by larger...
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...History: 4 Primary Source - Questionnaire: 5 Quantitative: 7 Qualitative: 9 Secondary Data: 10 Partners in focus 10 Strategy: 12 Routes Operated by Aer Lingus: 14 SWOT Analysis: 23 Conclusions & Recommendations: 25 Bibliography: 26 Introduction: The aims and objectives of this marketing research investigation are to analyse how the airline is currently competing in this business area. There are a number of factors in which we can examine to determine this: 1. Find the main source market profiles? * To get this result I will be using Primary Source information by sending a questionnaire. 2. How is the company continually expanding? * Quantitative paragraph researches how Aer Lingus has progressed over the last 10 years and how the new focus today is for an ever expansion of its long haul flights. 3. What differs Aer Lingus to other airlines? * Qualitative we have a look at the service levels that make this airline unique. * Secondary Data shows who Aer Lingus is partnered with to connect Ireland with the rest of the world. * Strategy specifies why Aer Lingus cannot be a Ryanair. * Routes Operated by Aer Lingus is more central to the peripheral airports offered by Ryanair. * SWOT analysis goes into further detail on how this airline is distinctive from others. History: Aer Lingus was founded by the Irish Government in 1936 to provide air services between Ireland and the UK. Its...
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...2. Identify the value stream 3.0.3. Make the value flow through the value stream 3.0.4. Pull the value from the value stream. 3.0.5. Strive for perfection. 3.0.6. The ten rules of lean production. 4.0 The Tools of Lean. 4 4.0.1. Kaizen. 4.0.2. Jidoka. 4.0.3. JIT or Just In Time. 4.0.4. Heijunka. 5.0 Recommendations. 6 6.0 Conclusions. 6 7.0 Bibliography. 7 8.0 Web links. 7 1.0 Summary. In this exercise I have tried to convey the meaning and value of strategy and its importance while constructing a strategic analysis using SWOT, STEP and Porter’s 5 forces. I have also used Porter’s generic strategies model to establish what business we want to be in and have articulated this business model in a vision and mission statement. The target company’s I have used in my exercise is predominantly Ryanair plc. 2.0 Introduction. What is strategy? The term strategy is a military concept and comes from the ancient Greek word “strategia” meaning “office of the general “ or “generalship”. Many of the concepts of strategy have been borrowed from the military and adapted for business. In many ways a business strategy is its battle plan to provide that business with clear objectives and long term goals to ensure the business has a competitive advantage against its business rivals. We’ve often heard the term “everybody likes a good plan”, well strategy is the process of devising and executing a careful...
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...BIRD’S EYE VIEW SWOT Analysis of Ryanair SWOT TEAM Air Scoop launches a new range of articles called ‘SWOT Team’. Each month, we will publish a SWOT analysis of an European low-cost carrier. In this issue, we start with a global SWOT of the market. The no-frills carriers have created new markets, and opened up air travel. A greater proportion of their passengers are people who previously were using other modes of transport for travel, while a certain proportion are from traditional carriers. Relying as they do on linking region to region and by-passing ex¬pensive big-city hubs, lowcost carriers have caused rise in local employment. There is parallel growth in tourism; a rise in property investment and new businesses credited to good, cheap logistic connections. One of the strongest characteristics of the no-frills business model is the ability to adapt rapidly to circumstances. Cost savings of the no-frills business was achieved by effectively supplying a single standard service on all routes and improving both labor and aircraft productivity. Ryanair’s Chief Executive, Michael O’Leary’s, once claimed that “Low-cost airlines are the new Europe». This seems to have been amply proved by the tremendous impact LCC have had on Europe. Ryanair and easyJet are the leading low cost players owning around 50% of the share in the European LCC market. Ryanair is an Irish airline headquartered in Dublin. Its biggest operational base, however, is at London Stansted Airport. It is Europe’s...
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