...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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...Schrade MGT 6753 Industry Analysis Low-cost carriers in Europe Industry Overview The market for low-cost carriers first emerged in the US with Pacific Southwest Airlines, pioneering the concept in 1949. The European market did not really develop until aviation deregulation came into effect in the 1990’s, making flights affordable for a wider range of customers. Building on the inclining demand for cheap flights mainly by private individuals (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...
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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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...Meng Sun 860983816 Case study 1-EasyJet EasyJet, one of Europe’s leading low-cost airlines, has competitive advantages because it adopts an efficiency-driven operational model, creating brand awareness, and maintaining high levels of customer satisfaction. Also, it is important that easyJet was the first mover. Now easyJet is one of the leading low-cost airlines in Europe. All of the competitive advantages are sustainable. As its mission statement writes, “To provide our customer with safe, low-cost, good value, point-to-point air services. To offer a consistent and reliable product at fares appealing to leisure and business markets from our bases to a range of domestic and European destinations. To achieve this we will develop our people and establish lasting partnerships with our suppliers,†easyJet is doing the best it can to satisfy its customers. Stelios Haji-Ioannou founded EasyJet in 1995. He was inspired by American low-cost carrier Southwest Airline and he modeled after Southwest Airlines but also added his own twists: avoid using agents and tickets, provide no-frilled travel and use brand new Boeing 737s. Stelios started with £5 millions that he received from his father. He operated two leased airplanes and one staff and chose Luton airport that was cheaper but still close to London downtown. The first easyJet flight was very successful because of its low price of £29 and extensive public relations and advertising. During 1995 to 1999, easyJet was expanding...
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...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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...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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...EasyJet underlines advantage over budget competitors as profit soars EasyJet underlined its growing advantage over budget rivals, reporting annual profit at the top end of forecasts and returning cash to shareholders. The upbeat assessment is in contrast to that given by Ryanair, Europe's biggest budget airline, which this month cut its annual profit target for the second time in two months and admitted it needed to improve customer service. Rival airlines have been struggling with high fuel costs and weak consumer confidence, sending some smaller carriers out of business while the likes of British Airways owner IAG and Air France-KLM have cut routes, leaving gaps that low-cost airlines have been quick to exploit. Over the last three years easyJet has added flights on routes where rivals have cut back, and introduced more flights between top business destinations. It has also added flexible ticketing to allow passengers to change their flight up to two hours before scheduled departure time, and allocated seating in an attempt to steal corporate customers. EasyJet proposed a full year dividend of 33.5 pence a share, 55.6pc up on last year, and a special dividend of 44.1 pence per share, making a total payout to investors of £308m. It said forward bookings were in line with last year but that its first quarter would be impacted by tough year-on-year comparisons due to strong post-Olympics demand in the UK and travel restrictions to Egypt. However, EasyJet still expects to...
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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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...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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...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...
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...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 * Offer additional services such as pods in the airport...
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...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...
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...Fuerzas competitivas de Porter en el sector aéreo de España Las fuerzas competitivas de Porter constituyen un elemento esencial para el análisis del grado de atractivo de un sector. Estos factores que rodean a la empresa son cinco: Poder negociador de los proveedores. Los proveedores son elemento clave en la empresa puesto que suministran las materias primas. Por ello, tienen poder negociador sobre la empresa en función del número de proveedores, de los productos sustitutivos, del nivel de importancia del producto para la empresa, de la diferenciación del producto del proveedor y de la amenaza de integración hacia delante. Poder negociador de los compradores. Los compradores tienen poder cuando están concentrados, el producto está estandarizado o pueden cambiar a otro producto a un coste más bajo. Posibilidad de competidores potenciales. Las posibilidades de competidores potenciales se miden a través de las barreras de entrada. Existen dos tipos: las legales, como son las normativas del sector, patentes, licencias, etc.; y las económicas, elevadas inversiones o inversiones específicas, el acceso privilegiado a materias primas que puedan tener las empresas instaladas así como las ventajas de diferenciación, las ventajas en costes y las represalias. Grado de rivalidad de un sector. La competencia dentro de un determinado sector depende del número de competidores que existan, de lo diferenciados o no que estén los productos, de la demanda de bienes y también depende...
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...Project Report The Jomera Hotel March 2013 Project Report TABLE OF CONTENT PAGE NO. 1. About the project, Tourism in Galway 3 2. Location Advantage, Business in Ireland 4 3. Competitive analysis, Advertisement 5 4. Transports to Galway, Investment 6 5. Our service, Wedding Package 7 6. The profits, The prices 8 7. Security and Safety 9 8. Bibliography 10/11 About the project To set up a Hotel in an area of 20 acres, having the entire modern facilities and we going to name it The Jomera Hotel. Tourism in Galway Galway is the fastest growing and the fourth largest city in the Republic of Ireland and the only city in the province of Connacht in Ireland. The city is located on the west coast of Ireland. The population of Galway City is 72,729 (based on the 2006 census carried out by the CSO), if the current growth rate continues; the population of the city will hit 100,000 by 2020. Galway has a strong local economy with complementary business sectors including manufacturing industry, tourism, retail and distribution, education, healthcare and services that include financial, construction, cultural, and...
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...Dogfight over Europe: Ryanair (A) Case In 1986, Ryanair announced that it would begin flight service between Dublin and London. The founders of Ryanair are brothers Cathal and Declan Ryan who 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...
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