...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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...Case study 4: Ryanair and the revolution in low-cost air travel The low-cost airline, pioneered by Southwest Airlines in the US, offers the passenger a ‘no-frills’ service at a lower price than the traditional service with food and entertainment which has been the mainstay of the major airline companies. The two companies which have developed the low-cost model most successfully in Europe have been easyJet and Ryanair. Both have enjoyed phenomenal growth, building market share at the expense of the major flagship carriers such as British Airways (BA) and Lufthansa, in effect revolutionizing air travel within Europe. Low-cost travel now enjoys a market share of over 10 per cent of intra-European air travel. Of the two companies, Ryanair has been the more radical in its low-cost strategy, charging as little as under 10 euros for a flight. But how sustainable is this strategy in the long term? Ryanair relies on high volume, filling as many seats as possible on each flight, and also adding capacity to its network, which it has rapidly built up. Michael O’Leary, the CEO of Ryanair, says: ‘This is Tesco. How is Tesco cheaper compared with other stores? They buy more and sell it at low prices’ (Felsted, 4 November 2003). Ryanair flew 11.3 million passengers in 2003, 45 per cent up on 2002. ‘Load factor’ is the number of seats sold as a proportion of those seats available on each flight. Ryanair’s load factor fell from over 80 per cent in 2002 to 77 per cent in 2003 (which is still...
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...fThe Low-cost Orange Flying Machine: The Case of easyJet Introduction The colour orange is increasingly becoming synonymous with the firm easyJet as it has become one of the world’s most profitable low-cost airlines (Alamdari and Fagan, 2005). This paper examines the basis of their success and argues firstly, that easyJet from its inception essentially adopted and stayed with the original low-cost model that was pioneered by Southwest airlines in the USA. Moreover, this is a model that has served them well, resulting in sustained business performance and growth over a decade. However, our second point is that with this growth, and increased competition, there are signs of the need for a change. Accordingly, in what follows, we examine in turn: the historical origins of easyJet, emphasizing its values and the influence of the Southwest airlines model; the essential features of its business model; and some indication of its business performance over time. Historical Origins: Personality, Values and the Southwest Way EasyJet was conceived in 1995, with its first flight occurring in November of that year. There are numerous descriptions of the early start-up days, but one of the most vivid is surely the following (Calder 2006: 113): The entrance to the average airline’s headquarters is an impressive affair, intended to impress visitors. But the HQ of Britain’s most successful low-cost airline is far from average. For a while, the modest foyer of easyland – the huddle...
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...Marketing 2004, Tenth Edition, New Jersey Pearson Education Inc.). T he Elements of Marketing or Marketing mix which is f amously known as the “4P’s of Marketing”( stated by McCarthy in 1960) which include Product, Price, Placement or Place and Promotion. When these elements of marketing are analysed with the Easyjet case study, it gives a good example as how the 4P’s help an organization scale to new heights with increased sales and customer base. T hey are; Product:- In the respective case study as Easyjet is a airline industry, its main f leet consists of Airbus A320200, Airbus A319 and Boeing 737-700. Easyjet is a budget airliner and intended to attract business customers and leisure travelers spending lesser time travelling between destinations. T he company does not provide complimentary meals or ref reshments on board to reduce costs and increase space to accommodate more customers, whereas customers can buy items on board by using Easyjet Bistro (buy on board programme). T he onboard programme also helped the airliner to increase its revenue. Easyjet has also got other value added services like Eastcars, Eastjet holidays and Easyjet Hotels. With these services Easyjet can provide one stop shop f or its customers, both Business customers as well as travelers on holiday. Price: In generally it is a conception that if a company lowers the price of its product, the organization would have expanded sales. Practically it is an invalid argument as the customers do not decide on...
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...(average annual growth of 9.4% for leisure travelers between 1996 and 2003 [11], Figure 2), the industry has experienced rapid growth since then. Most notably, Irish airline Ryanair, formed in 1990, and British company EasyJet, formed in 1995, were able to shape the European market (Figure 3). Germanwings and Air Berlin are additional major players in the low-cost carriers (LCC) market throughout Europe. PEST Analysis The evolvement of the LCC industry in Europe was only possible through one major political decision in 1997 – the deregulation of the European flight market. Before, the market for flights was largely controlled by the governments of European countries, trying to secure their respective national carrier’s market share. This led to high prices for European flights – airfares were roughly twice as much as those for comparable distances in the U.S. [1]. After lifting most restrictions and enabling European carriers to offer routes between any points in the European Union, fierce market competition developed, leading to a sharp drop in prices. The outreach of cheap airlines is extending continuously. Initially providing competition for traditional, often overpriced and government-subsidized carriers, they are now competing with other forms of ground transportation like busses and trains. In many cases it...
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...Master’s thesis M.Sc. in EU Business & Law An analysis of the European low fare airline industry - with focus on Ryanair Student: Thomas C. Sørensen Student number: 256487 Academic advisor: Philipp Schröder Aarhus School of Business September 13, 2005 1 Table of contents 1. Introduction 1.1. Preface 6 1.2. Research problem 6 1.3. Problem formulation 7 1.4. Delimitation 7 2. Science and methodology approach 2.1. Approaches to science 2.1.1. Ontology 2.1.1.1. Objectivism 2.1.1.2. Constructivism 2.1.2. Epismotology 2.1.2.1. Positivism 2.1.2.2. Hermeneutics 9 9 9 9 10 10 10 2.2. Methodology 2.2.1. Types of research 2.2.2. Types of data 2.2.2.1. Quantitative data 2.2.2.2. Qualitative data 2.2.2.3. Primary and secondary data 11 12 13 13 13 14 2.5 Reliability and validity 15 3. Theoretical framework 3.1. The structure of this thesis 16 3.2. Theory on strategy and competitive advantage 3.2.1. The Positioning School 3.1.1.1. Theory on Porter´s Five Forces model 3.2.1.2. Theory of Generic Strategies 3.2.2. The Resource-based School 3.2.2.1. Theory on SWOT analysis 18 24 20 23 25 27 4. The low fare airline business model 4.1. Introduction 28 4.2. Differences between the LFA model and the FSA model 4.2.1. The service factor 29 29 2 4.2.2. Turnaround times 4.2.3. Homogenous fleet 4.2.4. Point-to-point travel vs hub-and-spoke travel 4.2.5. Higher seat density 4.2...
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...STRATEGY Compulsory formative assignment RYANAIR – THE LOW FARES AIRLINE CASE STUDY SummaryThe study case invites us to assess the success of Ryanair’s strategy in a highly competitive environment. For this purpose, we will successively evaluate its competitive positioning, its internal competencies, and its sustainability. We will conclude that Ryanair had followed until 2009 a low cost strategy, that its key resources and competences did satisfy such strategy in 2009 and that its principal competitive advantage, namely its position of leader of the low cost airline market, can be regarded as sustainable. | 1484 words (excluding tables) Introduction Ryanair was created in 1985 by Tony Ryan as a conventional airline company aiming at operating flights between Ireland and London. In 1991, financial difficulties led to its transformation into a low cost carrier, with Southwest Airlines as a model. Michael O’Leary was appointed as the Chief Executive Officer of the company soon after. Since then, the company has experienced rapid expansion. It was floated on the Dublin Stock exchange in 1997 and quoted on the NASDASQ in 2002. In 2009, traffic reached 66,5m passengers with a fleet of 232 Boeing 737-800, 41 bases and profit was over €318 m. The study case invites us to evaluate the success of Ryanair’s strategy in a highly competitive environment. For this purpose, we will successively assess its competitive positioning, its internal competencies, and its...
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...This report analyses and evaluates the potential for EasyJet to continue to be competitive in the UK and Europe but also the opportunity to expand into India INTRODUCTION – THE COMPANY AN OVERVIEW Easyjet Airline was established in 1995 by Sir Stelios Haji-Ioannou a Greek Cypriot as part of EasyGroup Holdings Ltd. He envisaged it as a low cost airline which could impact on the existing domestic market in 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...
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...* Word count or equivalent: 1000 (500 per answer) * Assessment criteria: * To identify the nature of operations management * To analyse the processes of operations management * To analyse management approaches to operations management * To apply operations management to gaining customers and competing * To examine the operational processes and life cycles * Knowledge/understanding of concepts (40%) * Ability to collect, synthesise and apply information (20%) * Ability to generate appropriate conclusions (10%) * Logical structure (10%) * Communication of information/literacy (20%) Introduction * What the question going to be answered is about * This essay aims to answer… and will refer to… and apply examples from the… industry * Body * Begin each paragraph with the main idea/ topic sentence * This tells the reader what the paragraph will be about * Make sure your reader understands the main idea by EXPLAINING or giving a definitions How to.. * Give some EVIDENCE to support your main idea – the evidence should be a direct quotation or paraphrase and supported by a REFERENCE. * CONCLUDE your paragraph by either * linking back to your main idea * linking forward to the main idea in the next paragraph Conclusion * Conclusions are often hard to construct as you want to do more than just repeat everything you have just answered. * Ensure that you reach an overall conclusion...
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...QUESTION 1 Which developments in the global airline industry made possible the creation of S.A. ? The creation of Star Alliance had first been considered to remedee a situation of radical change in the airline industry’s financing sources. For decades, world governments overpassed the consequences of a substantial cash investment in their National Airline. At the time, State incentives to possess its own flag carrier were numerous. It was question of national pride as well as a sign of economic prosperity and power. But times have changed. As State capital investment became the norm rather than the exception, most of the developped countries had been able to run their own Airline, making it the norm. If governments had been burying their hands in the sands up to this point, they suddenly started questioning the worthiness of the investment. By cuting subventions, they would let airline companies face the harsh reality of competition. Both the government-owned carriers and those who had long been operating under a situation of false profitability filled for bankrupcy (i. e. Sabena, Swissair). Other, more solid carriers (i. e. Lufthansa, United, British Airways, American) were left with no other choice but to form alliances. 2 In addition, the phenomenon of deregulation forced leading carriers to take strategic decisions in order to avoid significant loss in market share. With the signature of open skies agreements that liberalized the rules of the international...
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...Case study: EasyJet: The Web’s favorite airline Introduction In modern world, easyJet is becoming one of leading airline companies in Europe. When people want to buy cheapest airline tickets, they always consider easyJet. This essay will have three sections. Firstly, analyze the structure of the industry in which easyJet competes. Secondly, talk about the industry attractive after later 1990s. Lastly, some evidence will be provided to suggest that easyJet has competitive advantage. Structure of the industry analysis - five forces model The business structure was influenced by industry competition; the industry competition depends on five basic competitive forces which were threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitute products or service and rivalry among existing firms (porter, 1980). Threat of new entrant: EasyJet airline belongs to airline industry, new entrants want to go into this industry need enough capital and the equipments in this industry were all expense. In order to build up an airline company, the founder needs to have enough money to buy or lease some planes. So the new entrants have a high cost of entry. In addition, the new potential entrants also need some extra capital to pay for the losses due to less of experience. Low-cost tickets in EasyJet were the significant competitive advantage. The new entrants were hard to exceed EasyJet. So the threat of new entrant has low competitive to EasyJet...
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...MARKETING CASE STUDY Table of Contents 1. Introduction and History 2. The Mission Statement of easyJet 3. Competitive Analysis (Porters five competitive forces) 4. Marketing Mix 5. SWOT Analysis 5.1 Internal Analysis – Strengths and Weaknesses 5.2 External Analysis – Opportunities and Threats 6. Situational Analysis 7. PEST Analysis (Marketing Plan) 8. Conclusion 8.1. Strategic Issues facing the airline Industry 8.2. easyJet’s future 9. Appendices 1. Introduction and History A successful example of a European no frills airline is easyJet. Stelios Haji-Ioannou (Greek) founded the company in 1995. It is based on the low-cost, no-frills model of the US carrier Southwest. The concept of easyJet is based on the belief that demands for short-haul air transport is price elastic. That means, if prices for flights are being reduced, more people will fly. Traditionally airline concepts are based on the assumption that airline traffic grows in line with the economy and that cutting prices will only lead to a decrease in revenues. With the introduction of the ‘no-nonsense’ concept to the European market, after its deregulation in 1992, easyJet has proven this theory wrong and goes from strength to strength by actually increasing the size of the market and more recently by taking away passengers from the majors (see www.easyjet.com for passenger...
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...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...
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...The Low Cost Airline: AirAsia A study of opportunities, challenges and critical success factors LGT 3007 Air Transport Logistics [pic] Introduction History of low cost airlines The low-cost concept became a moneymaker in the United States, where it was pioneered in the 1970s by Southwest Airlines, the model for budget carriers elsewhere like Ryanair and easyJet in Europe. Definition of low cost airlines A low cost airline generally has many features that differentiate it from the traditional carriers. These features include ticketless travel, online ticket sales, no international offices, no frequent flyer points, no free food and beverages, no inflight magazines, no club lounges, use of secondary city airports. Not all low cost airlines have these features, and not all airlines that have some of these features are low cost airlines. For example, Virgin Express is a low cost airline, but it still offers complimentary coffee and inflight magazine, and they are based at Brussels primary airport. Case Study—AirAsia Story of AirAsia Air Asia, as the second Malaysian National Airline, provides a totally different type of service in line with the nation's aspirations to benefit all citizens and worldwide travellers. Such service takes the form of a no frills - low airfares flight offering, 40%-60% lower than what is currently offered in this part of Asia. Their vision is "Now Everyone Can Fly" and their mission is to provide 'Affordable Airfares' without...
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...Airline Cost Performance IATA ECONOMICS BRIEFING No 5 An analysis of the cost base of leading network airlines versus no-frills, low-cost airlines (LCCs) IATA Economics Briefing No 5: AIRLINE COST PERFORMANCE Mark Smyth Brian Pearce IATA, July 2006 Contents 00 Executive Summary 01 Introduction 02 The Low-Cost Challenge 03 Airline Cost Performance for US Airlines 04 Airline Cost Performance for European Airlines 05 Airline Cost Performance in Asia and South America 06 The Cost Efficiency Challenge 07 Service Quality – The Other Side of the Equation 08 Conclusions 09 Foreword by Giovanni Bisignani page 03 page 04 page 10 page 12 page 16 page 22 page 28 page 32 page 36 page 40 Appendix A Appendix B 00 Foreword Every airline is now a lower-cost airline. The worst financial crisis in the industry’s history over the last five years has forced all carriers to achieve cost efficiencies and higher productivity if they are to survive. Significant progress has been made in reducing non-fuel costs and in improving the efficiency of fuel use, but the challenge is on-going and central to the future prosperity of the industry. While network airlines have made significant progress in restructuring their cost base, they are often faced with a moving target. Low barriers to entry to the industry, combined with national or regional deregulation, have seen 1 new or restructured no-frills, low-cost operators...
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