...Company Ryanair started in year 1985 with only 57 staff members and with one 15 seater turboprop plane from the south of east of Ireland to London-Gatwick which carried 5000 passengers on one route (Harrison, 2002). In 1986, inspired from the story of David and Goliath the company go after the big guys for a slice of the action and end up smashing the Aer Lingus or British Airways high fare cartel on the Dublin-London route. The staff increased from mere 57 to 120 staff members and the plane carried for about 82,000 passengers on two routes. In 1989, the company employed 350 staff and their average maximum passengers increased to 600,000. In 1990-1991, the company has 700,000 passengers. However, despite of the increase of passengers, the company is not so good in managing cost that the company has lose its money. A new management team is brought in to sort it out and re-launch as a “low fares or no frills” airline, closely modelling the Southwest Airlines model in the U.S. And in 1994, Ryanair bought its first Boeing 737 aircraft which carried over 1.5 million passengers. In 1995, Ryanair is the biggest passenger carrier on Dublin-London route, the largest Irish airline on every route being operate and carried 2.25 million passengers in the year (Harrison, 2002). In 1997, the EU air transport deregulation allowed the airline for the first time to open up new routes to Continental Europe with over 3 million passengers on 18 routes carried. Ryanair launched services...
Words: 1285 - Pages: 6
...------------------------------------------------- ------------------------------------------------- Ryanair Q1. The business model framework is composed of several items; the price, the services, the distribution/the communication, human resources, organization/management, and operation/processes which should all be serving the strategy that the firm wishes to pursue. The following explains how Ryanair has been able to offer low fare tickets in Europe, using the above mentioned elements in the framework. The core business of Ryanair is to be a budget airline, and its strategy in order to achieve competitive advantage in that market is, regarding pricing, focused on keeping them as low as possible by cutting all extra expenses. Ryanair manages to offer lower prices than its competitors by sticking to only offering the basic service- which is the air transport from one city to another. All the extra services that are usually included in the price of other conventional airplane companies are charged as extra-costs by Ryanair. For instance, Ryanair’s clients have to pay for checking in luggage, as well as food and beverages inside of the airplane. In relation to Ryanair’s product offer, its service, the firm pursues the following to keep prices low. In order to limit the number of ground staff at the check in desk, Ryanair’s customers are increasingly encouraged to check in online. Furthermore, Ryanair does not offer its customers the ability to reserve seats, but instead a priority ‘check...
Words: 1917 - Pages: 8
...Ryanair has thrived since the early 90’s due to a number of factors were luck was on their side but also through innovative and creative ideas. Ryanair’s strategy was to become the first European budget airline. Ryanair made key strategic decisions regarding the long term direction of the company and the scope of their activities while considering the external environment in order to achieve strategic fit. The first strategic move in order to become a successful low-cost airline was to recruit Michael O’Leary in 1992. O’Leary introduced many changes to Ryanair by implementing a strategy similar to that one of Southwest airlines from the USA. First of all, O’Leary aimed to increase the number of cheap flights on Ryanair’s offer. The next step was to decrease the age of Ryanair’s aircrafts from 7 to 2.4 years. Thus, Ryanair was able to save costs as the new aircrafts produced 50% less emissions, 45% less fuel burn and 45% lower noise emissions per seat. This way Ryanair was able to offer cheaper prices than the competitors, but at the same time still be environmentally friendly. Another source of competitive advantage is the strong branding. Ryanair was claimed to be the largest travel website in Europe and the fifth most recognized brand on Google (case, p. XX). The exceptional branding was a great opportunity for Ryanair to enter the e-commerce market where it receives revenue from advertising car rentals and hotels. Ryanair’s most important stakeholder is their customers...
Words: 393 - Pages: 2
...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...
Words: 1710 - Pages: 7
...Case Study: easyJet and Ryanair Flying High with Low Prices Toifl Edith, Maike Klement Hamiyet Karaman, Tsolmonzul Erevgiylkham FK ABWL Marketing 040177/1 WS 06/07 Story - easyJet Founded in March 1995 by Stelios HajiIoannou - the family remains the major shareholder The airline is based at easyLand, at Luton airport 2 Concept - easyJet Reduction of costs through: - reduction of distribution costs No free lunch Efficient use of airports (fast turnaround terms - 30 min)) - Operations out of secondary airports main target group: business travelers 3 Story - Ryanair 1985 founded by the Ryan Family (with a share capital of only £ 1 Million) First route from Waterford in Ireland to London Gatwick 4 Concept - Ryanair Cheap point-to-point flights from secondary airport Single aircraft policy Fast turnarounds Main target group: leisure customers 5 1. How do easyJet and Ryanair achieve success using low-price strategies? 1. How do easyJet and Ryanair achieve success using low-price strategies? A new system allows airline seats to be priced according to supply and demand and achieve high occupancy. - how does it work? They start with low ticket prices, and raise it according to demand. Stelios from easyJet calls this system „yield management“ 7 1. How do easyJet and Ryanair achieve success using low-price strategies? Examples: Ryanair: Linz Stansted flight: 08.12.06 € 59.99 flight: 08.04.07 € 39.99 easyJet: Munich Stansted...
Words: 758 - Pages: 4
...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...
Words: 1719 - Pages: 7
...Ryanair’s implementation of low cost strategy………..6 Recommendations………………………………………….6 Conclusion…………………………………………………...7 Reference List……………………………………………….7 Appendix………………………………....…………………..8 12.1 Presentation’s slides…………………………………8 Word count 1,744 (excluding reference list and appendix) 2 Besmir Lika 1.0 Introduction Strategic Management Individual Report Richard Jump The notion of 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...
Words: 3061 - Pages: 13
...coursepaper.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...
Words: 993 - Pages: 4
...Table of Content RYANAIR THE COMPANY 3 Section A 4 Slow Growth 4 The impact of slow growth on the industry 4 Taxation 4 ECONOMIC FACTORS 5 Unemployment 5 GNP trends 5 Inflation 5 Exchange rates 5 Interest rates 6 Security Factors 6 The Threat of close substitutes and rivals 7 HIGH FIXED COSTS; 7 AIRPORTS 7 PORTER’S FIVE FORCES 9 Threat of new entrants 9 Suppliers: 9 Buyers: 9 Substitutes: 9 Competitive rivalry: 9 Section B 10 Firm Infrastructure 10 Human Resource Management 10 Technology Development 11 Procurement 12 Inbound logistics 12 Operations 12 Outbound logistics 13 Marketing and Sales 13 Service 13 Margin 14 Joint Venture 14 SECTION C 15 Ryanair Business Strategy 15 Low Fares: 15 Customer service: 15 Frequent Point-to-Point Flights on Short-Haul Routes: 15 Low Operating Costs: 15 Taking Advantage of the Internet: 16 Commitment to Safety and Quality Maintenance: 16 Enhancement of Operating Results through Ancillary Services: 16 Analysis of the airline business models 16 Ryanair’s strategy in future: 17 Focused Criteria for Growth: 17 New Aircraft-markers: 18 New design ‘standing seats’ 18 SWOT Analysis 19 Strengths 19 Weakness 19 Opportunities 19 Threats 19 BIBLIOGRAPHY 20 RYANAIR THE COMPANY The company was incorporated in 1995 and became Ryanair limited, and in 1996 it changed to a holding company for Ryanair limited. Registered...
Words: 6162 - Pages: 25
...Case study A : Ryanair Part 1 In November of 2006, the Irish Airline company Ryanair announced a record half-year profit of 326 million euros. In order to understand how they managed to reach such profitability in the overloaded European Airline industry, we will use the business model framework. First, Ryanair’s customers benefit from low fares and punctuality. Offering the lowest fares in every market is the company main goal. As no competitors manage to outperform Ryanair in terms of price, we can say that their value proposition is superior. The second step of the business model framework is to emphasize the architecture of the business and how it enables the company to achieve its aims. Let’s focus on each of the six components of the company infrastructure. ✓ Ryanair aims at offering the lowest prices of the market. Low fares are the main competitive advantage of the company, so whatever the context is they try not to raise prices. Even when fuel costs soared, the company CEO, Michael O’Leary declared that they would be “no fuel surcharges not today, not tomorrow, not ever”. ✓ Ryanair’s flights are point to point only, in order to reduce costs (fuel charges, airport cost…). On those flights, there is no business class. Moreover, the company chose secondary airports as airport charges are lower than in main airports. We can Ryanair also offers ancillary services including non-flight services such as hotels or car rental...
Words: 1880 - Pages: 8
...Ryanair Marketing Mix Ryanair is the European low cost airline. Low cost or no frills marketing strategies are of great interest to marketers since the marketing mix employed tends to run in opposition to what makes a great brand - and Ryanair is a great brand and a very successful business. In a nutshell Ryanair sells the cheapest tickets that you can buy (on most occasions). If you'd like to learn more about this topic then take a look at our marketing mix lesson. Otherwise please read on. Its charismatic boss Michael O'Leary has a business model with a central focus on cost reduction (and making money of course!). In around 20 years he has taken Ryanair from a single plane company to become the largest airline in Europe. He had a vision and achieved it through masterful leadership. So how did he do it? How does Michael O'Leary retain his narrow cost focus niche strategy in the face of intense competition? The business simply has lower costs and those costs are passed on to their passengers in the form of low fares. The branded airlines argue that passengers are willing to pay more for a better level of service. You can pre-assign seats. You get food and drink onboard, and can choose a higher level of service e.g. business class. However the large flag carriers have taken notice of the low-cost model and have employed it as part of their own more differentiated business model. In 2009 the company settled for 30% of its local Irish rival Aer Lingus after a prolonged...
Words: 1270 - Pages: 6
...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...
Words: 5758 - Pages: 24
...Low cost airlines Definition of low cost airlines Ryanair is a low cost carrier, well-known in Europe which started in 1991 as a ‘no-frills’ service airline between Ireland and the UK. By 1995, Ryanair spread to more European countries. Nine years later it carried 20 million passengers and 10 years after that, in 2010, the number of passengers doubled to 45 million. This low-fare short-haul airline was no\t the first airline was not the first airline with these characteristics. It was Southwest Airlines, an American airline which was introduced in 1967 and still going strong in 2016. (Quintano, 2015) Low cost airlines can be defined as being practical in a way that different low cost airlines offer different services. Some low cost airlines...
Words: 2299 - Pages: 10
...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...
Words: 5207 - Pages: 21
...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...
Words: 1708 - Pages: 7
