...BUDGET AIRLINE- ‘RYANAIR’ Module Name: Management and Strategy (MBA INTERNATIONAL) Module Reader: Claire Devlin Student Name: Varghese Jacob Student Number: 8202730 Date: 16/03/2007 Introduction Air line Industry can be called as one of the biggest industry in the world. In that huge industry European Airline industries part is very high. European Airline industry consists of two sectors mainly Main stream and Budget Airlines. The budget airline sector is becoming a great threat to the main stream airlines in these days. Among the Budget Sector Airlines Ryanair is the most established one. Here the essay is mainly dealing with the reviewing of the management strategy of the budget airline giant RYANAIR. Essay includes not only the management strategies but also the main problems that Ryanair have to face in their entire business period. And also includes the analyses of European Airline Industry in relation to Ryanair. ANALYSIS OF EUROPEAN AIRLINE INDUSTRY European Airline industry can be called as the world’s biggest airline industry. Europe’s main stream airlines industry includes British airways, Lufthansa, Scandinavian Airlines and BMI. Before the establishment of the budget airlines they were the kings of European airline industry. The Budget Airline or the Low frae airline includes Easyjet, Virgin Express, Aer Lingus, bimbay My TravelLite and last but not the least Ryanair. Among these budget airlines and...
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...To what extent has Ryanair met the critical success factors for the sector in the last five years? 1. Loyalty: The most important factor for being successful in service industry is loyalty. Quality of service, communication with the current and potential clients as well as promos and discounts can help airline companies to attract more travelers. As Ryanair is a low-cost airline, they do not invest in any particular loyalty program, like majority of full-cost airlines do. The attitude for the low-cost airlines could be described as ‘you get what you paid for’. Looking for other big companies, it is essential, that a properly working loyalty program needs big investments and proper, continuous management that would essentially increase costs of operation for Ryanair. Despite this fact, during the research it was investigated, as Ryanair is one of the leading European low-cost airlines, it already has a base of loyal customers, mostly because of simplicity (a lot of destinations offered, cheap prices, and relatively new aircrafts). 2. Access: Airports are usually out of the cities. Passengers are spending a lot of time in traffic jams on the way to and from the airport. In addition, passengers are spending a lot of time in the airport, as usually they must check-in in advance. Reducing advance time and developing transportation can reduce the overall time of the trip. Access factor for Ryanair a is topic for discussion, as majority of airports they operate in are very far from...
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...How did the deregulation of air transportation in Europe foster entrepreneurial behavior and innovation in the European airline industry over the last twenty years? Case studies: SAS Airline & Ryanair Master Thesis in Entrepreneurship and Dynamic Business Contexts Spring 2007 Supervisor: Håkan Bohman Entrepreneurship Master Program Authors: Gilles Helterlin and Nuno Ramalho Acknowledgements We would like to express our gratitude to all who have contributed to the realization of this Master Thesis. A warm thank to our supervisor, Håkan Bohman from USBE (Umeå School of Business), for his guidance, his precious help and his advises during the last months. To Mr. Lundvall, from LFV (Luftfartsverket), Mr. Valinger from Scandinavian Airline and Mr. Wilsberg from SAS Braathens, Jessica Eriksson and Thomas Pettersson from USBE, thank you for your availability, willingness in answering our questions and for their so precious collaboration with interviews, comments and suggestions. Thank you also Sweden for the wonderful moments we have spent here. We will never forget your nature (your elks), your cold winter (-30°C), your long nights in winter and your short nights in late spring!! It has been a great experience and adventure up there in Northern Sweden!! We will miss you… Finally we would like to thank particularly the Studentexpedition for its kindness, without forgetting our family and friends (from Sweden, France, Portugal and Greece) for their everlasting daily support...
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...Assignment 1: Case Study European Airline Industry Strategic Management Contents |Main Body |4-10 | |1 Introduction |4-5 | |2 Summary of macro-environment analysis |5-7 | |3 Summary of industry environment analysis |7-8 | |4 Other critical factors for the airline industry |8-9 | |5 Future directions/recommendations |9-10 | | | | |Appendices |11-26 | |1 Macro-environment analysis |11-16 | |2 Industry environment analysis |17-26 | Reference List 27 Main Body 1. Introduction The European airline industry is a vigorous industry with changing trends that relate to the overall European economy. Traditionally, the European airline industry was mainly comprised of full-service carriers, such as Lufthansa and British Airways. Nevertheless, this situation changed quite swiftly (Datta & Chakravarty n.d.). Government deregulations freed European airline markets from restrictions...
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...Question 4 The European Union proclaimed that during time of 1990 and 2006, the carbon emissions from international aviation were increased by 100% although the total greenhouse gases emissions was fallen by merely 3% in the European Union. Provided by the European Commission the average carbon emissions between 2004 and 2006 were about 218 million tones, without any adequate regulations, it would expected to be 400 million after ten years which is 2020. It indicated that the aviation industry has contributing to the global climate change which is going to increase hereafter. It is acknowledged that reducing climate change is a moral support of protecting our living atmosphere. Currently, the airlines in European Union are belt-tightening in order to reduce emissions, however, the outcome is not satisfactory at present, for instance, there is problem on the emission trading scheme. Thus, creating more environmental regulations for airlines in the European Union is necessary as to tackle the emission problem more effectively. Data from the Guardian UK shows that the plane industry occupied the second place in the National Carbon Calculators which takes 4,375 per person per year in average. Despite there are environmental policies regulating the carbon emissions by the airbus within the European Union, such as setting levels of carbon emissions for airlines, it is not well-performed. Under the regulations, those airlines could reduce their emissions could sell their surplus...
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...essentially grew up in the airline world. At this time, the company had already been operating for a year, flying between Ireland and London with their 14 seating plane. In terms of competition, these two locations did not pose a challenge. However, the Ryan brothers recognize the competitiveness and complicated industry as they attempt to enter the European aviation business world. The European aviation business environment has been heavily impacted by the European national government. Following World War I, several private commercial airlines arose carrying the flag of their nations. These “flag carriers” and other airways gradually became owned by or subsidized by their national governments. Governments began focusing on international routes from their respective capital to colonies and other areas of national influence. World War II brought several advances in the airline industry as air travel became increasingly economical for the average individual. The war also brought the threat of American dominance in the airline industry as efficient and privately owned carriers of the United States would have captured a large portion of the international market. As time passed, European governments continued to consolidate airlines, impose further restrictions on international routes, create pooling arrangements, and strictly regulate intra-country services. European regulation began to crumble under the weight of disparate national interest as the airline industry became fragmented. The...
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...Ryanair Strategic Analysis Introduction Ryanair is one of the biggest airlines of Europe that offers the lowest fares, and has set up 729 courses from 32 bases. It is the largest airline globally with regard to passengers internationally, but not in terms of profits. A significant growth has continued since its inception Ryanair, which was approved by the European aviation industry liberalization in 1997 for him. The Stansted Airport in London his main base but the headquarters of the company are located in Ireland at Dublin Airport. In the year 2009, The Michael O'Leary leader of the body began to provide technology for mobile phones in their plane. This allows passengers to use their phones on airplanes, but at higher cost. Ryanair has tried to buy Aer Lingus twice, in 2006 and 2008, but failed both times. This paper discusses the Ryanair's sustainability strategy and how it impacted the company in the near-term future. Ryan air's Current Strategy The purpose of Ryan Air is to establish itself as the leading low-fare airline in Europe, willing to travel by improving and strengthening the offers by starting its low fares services. Ryanair aims to offer preferential tariffs to develop expanded traffic, while at the same time maintaining the relentless focus on cost containment and operational efficiency. Ryanair offers cornerstone of a sense, therefore, the elimination of the smallest of all obligations of the host of tourist services to Ryanair, despite the tariff...
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...Prior to 1984, the European airline industry was highly regulated where a large presence of state-owned carriers existed. This led to the industry being operationally inefficient where many airlines were running unprofitable businesses within Europe. At the same time, the European governments were playing a part in developing these airlines by providing them with financial support, negotiating bilateral agreements with other European countries, and imposing government mandated monopolies. By the mid 1980s, several countries started to deregulate their airline industries with the United Kingdom being one of the most aggressive to do so and the European Commission proposing the abolishment of price fixing, government subsidies and pooling arrangements. Many state-owned enterprises were privatized allowing competition within these airline industries. When Ryanair started out in the airline industry, the United Kingdom airline industry was less regulated where the entry by new airlines was not longer discouraged and competition was present in the market. Moreover, the license which Ryanair gained to operate between Dublin and Luton was one that was seen as lucrative, allowing the company to have a reasonable return on investment . However, with British Airways (BA) and Aer Lingus (AL) already operating on the same route, it was instrumental for Ryanair to develop a unique strategy to compete with these established companies and to ensure its survival in the tough market. It...
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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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...ENTERPRISE AFFAIRS COMPETITION COMMITTEE DAF/COMP(2014)14 Unclassified AIRLINE COMPETITION -- Background Paper by the Secretariat -18-19 June 2014 This document was prepared by the OECD Secretariat to serve as a background note for Item IX at the 121st meeting of OECD Competition Committee on 18-19 June 2014. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Organisation or of the governments of its member countries. More documents related to this discussion can be found at http://www.oecd.org/daf/competition/airlinecompetition.htm. English - Or. English JT03358883 Complete document available on OLIS in its original format This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. DAF/COMP(2014)14 TABLE OF CONTENTS Introduction ................................................................................................................................................. 3 1. Features of the airline industry ............................................................................................................. 4 1.1. Liberalisation of the air transportation industry .......................................................................... 4 Business models and industry consolidation.............................................................
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...Budget airline industry has been profitable during last decade, and particularly Ryanair, as the largest European budget airline company has been vital in this area. Its success in past, issuses nowadays and importantly the sustainablility has drawn significant attention and offered a great oppourtunity for research. This case study will analysis the budget airline through its business model, evironment and industry and finally focus on Ryanair’s strategy position in order to explore its sustainability in future. The framework is briefly illustrated by following figure. Figure 1: Brief Framework of this Case Study The budget airline business model The first company in history to suggest the budget airline business model to the world was Southwest Airlines (SWA) in Texas, USA. At the beginning of 1970s, this company have launched first flights between three major cities in Texas i.e. Houston, Dallas and San Antonio at a price of 20 dollars, which was initiative at that time. It marked itself as budget airline and initiates a business model allowing it to offer scheduled flights service at a very low fare. It would focus on short-distance flights of typically 600 km or one hour with high traffic efficiency. Many strategic approaches of budget airline business model’s operations differ from the more traditional of full service airlines model. 6 main factors can be identified, which are illustrated in the table below: Budget airline | Full service airlines | ...
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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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...The current economic climate has had a direct impact on the Irish airline industry. People have less disposable income and as a result Dublin airport has witnessed a decline in passenger numbers since 2008. Figures released by the DAA show a significant decline in passengers from 23.5 million in 2008 to 20.5 million in 2009; a decrease of 13% and it s expected that numbers will fall even further in 2010 to 19 million passengers. Ireland is one of the few European countries to impose a 10 travel tax on tourist travelling to Ireland. This along with the 40% increase in airport charges (which is being used to pay for Terminal 2) is considered to be one of the main reasons in the decline of seat capacity which dropped by 140,000 in April 2010 alone and the fall in Irish air traffic by 13% so far this year. Growth has returned to countries which have ditched this travel tax and reduced its airport charges. According to Canadian energy economist Jeff Rubin the maximum an airline company can pay for a barrel is $80 dollars, any higher and the company cannot make a profit, $80 dollars is the breakeven point. Oil prices have been steadily rising since January 2009 and economists have predicted that this year the price of oil will rise to $80 per barrel which could prove detrimental to the profitability of the airline industry. In April 2010 the eruption of an Icelandic volcano caused Irish air traffic to come to a halt. The closure of Irish airspace caused a sharp decline in trips to...
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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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...company’s products and services. Mission, vision and values of the airline will be also explained. It evaluate company’s current strategy and the management of that strategy. It also gives a brief evaluation of Ryanair’s financial structure as well as an environmental analysis of the European airline industry and how this affects Ryanair. Each section of the following report represent the key findings. Introduction to company section includes Ryanair’s background, mission and vision statements, Corporate Social Responsibility policy, company’s stakeholders. External environment section include SWOT analysis. This analysis explain Internal (Strengthens and Weaknesses) and External (Opportunities and Threats) factors. Furthermore, PEST analyse is described. In order to understand company’s profitability in relevance to the competitors, the Porter’s Five Forces framework is used. In Financial sector the turnover , profit margins, operating profit, current ratio, solvency ratio, gearing ratio and the comparability of these during 2006-2008 period is explained. Using the Ansoft’s growth matrix the main strategic direction that Ryanair follow was indentified. The methods of development such as low cost, no- frills model, finding new markets for existing products, opening new routes are outlined and analysed. Conclusions and recommendations was explained using a SPACE . Introduction to Company 4.1 The largest low-fare European company Ryanair was set up in 1985 by Cristy and Tony Ryan...
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