...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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...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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...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...
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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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...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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...Case Study – Dogfight over Europe: Ryanair Business Landscape Item | Description | Impact | Government Intervention | Market Deregulation: * Free to set fares * European airlines to fly any route between EU countries * Any intra-country route between two European cities | Open for new competition | | European Union eliminated duty free sales on intra-EU flights | Has to pay duties | Ryanair Challenges & Strategy Description | Cashflow problem, Funded by Ryan Family | Strategy | Low cost carriersCost side: * Cut loss-making routes * Eliminate in-flight amenities (such as: free coffee and snacks) * Renegotiate labor contract (e.g: flight attendants pay is a function of duty-free sales and the number of flights they flew, “Luv” – pay based on productivity) * Stop distribution of meal vouchers to travelers whose flights delayed by bad weather * Stop using “air bridges” that linked parked planes to airport terminals * Reduce travel agents commission from 9% to 7.5% * Serve at secondary airports * Use other parties to handle ground operations * Not allow check baggage throughRevenue side: * Ticket, in-flight sales, car rentals, charter sales * In-flight duty-free sales, beverage, and snacks * Lease space behind seat-back trays and headrest to advertisers, exterior of plane with a corporate logi, in-flight magazine published with full advertisement | Routes | * 150 flights per day, 13 locations in UK, 4 locations in Ireland, 16...
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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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...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 name is derived from the Irish 'long' meaning 'ship' and is therefore translated as 'Air Fleet.' On 27 May 1936, Aer Lingus made its maiden voyage from Baldonnel Aerodrome in Dublin to Bristol (Whitchurch airfield) in the UK. A six-seater De...
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...third lower than that of easyJet. Excluding fuel costs, the difference is even starker, with Easyjet’s cost per passenger 67% above that of Ryanair. This unit cost advantage against easyJet stems mainly from airport and handling charges. This, in turn, comes from Ryanair's use of smaller, lower cost airports with fast turnaround times, its bargaining power with airports and the impact of bag and check-in fees on lowering handling and check-in costs at airports. Costs per passenger (EUR, ex fuel) | Ryanair | easyJet | Norwegian | Air Berlin | Spirit | Southwest | Staff | 5 | 8 | 15 | 14 | 16 | 33 | Airports & Handling | 8 | 18 | 8 | 26 | 15 | 22 | Route Charges | 6 | 6 | 13 | 8 | - | - | Aircraft O’ship & Maint. | 6 | 8 | 17 | 20 | 16 | 17 | Sales & Marketing | 2 | 6 | 12 | 31 | 4 | 2 | Total | 27 | 46 | 65 | 99 | 51 | 74 | % vs Ryanair | - | +67% | +137% | +262% | +86% | +170% | Source: CAPA - Centre for Aviation and latest available accounts via Ryanair presentation 28 January 2013 Another important source of unit cost advantage is its labour force, which is more productive and flexible (around 50% of flight crew are contractors employed only when required). It also benefits from high seat density (189 seats per aircraft, compared with easyJet’s 156 on A319s and 174 on A320s), high load factors (82% for Ryanair in the year to December 2012 versus just below 80% for AEA carriers), a point to point strategy that allows high aircraft utilisation, a...
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...airlines such as Easyjet as well as main stream international airlines such a British Airways. I will also be looking at how Ryanair has gone from nothing to being the No.1 low cost airline. Introduction Ryanair was founded in 1985 by Tony Ryan who in 1994 past it over to his deputy chief executive Michael O’Leary who has been there to this day. They had their initial public offering in 1997 when they introduced Ryanair Holdings plc on Dublin and New York (NASDAQ) Stock exchanges. They listed on the United Kingdom a year later. Ryanair joined the NASDAQ Top 100 in December 2002, reflecting the phenomenal increase of Ryanair's value and the commitment of its 1,800 staff. There plan was to become “Europe's largest airline in the next 8 years to come.” Their basic plan to achieve this was to have “low fares and friendly, efficient service” and to do this they would have “Superb cost management” and they would land in airports “that don't rip you off.” Ryanair flies strictly to 'secondary' airports up to 60 miles from the real destination, where fees are low or the airline is even paid to fly there. Also Free seats when they were feeling generous and no frills on flights but they would sell food, drink and gifts. They also had punchy advertising that sometimes got them in trouble, and they took cheaper routes to different destinations. What Ryanair have done over the years Over the past ten years they have increased their annual traffic from under 700,000 to over 15...
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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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...BIRD’S EYE VIEW SWOT TEAM SWOT Analysis of Ryanair 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 ope-ned 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, low-cost 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 con-nections. One of the strongest characteristics of the no-frills busi-ness model is the ability to adapt rapidly to circumstances. Cost savings of the no-frills business was achieved by ef-fectively 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 im-pact LCC have had on Europe. Ryanair and easyJet are the leading low cost players ow-ning around 50% of the share in the European LCC mar-ket. Ryanair is an Irish airline headquartered in Dublin. Its biggest operational base, however, is at London Stansted...
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...history of the budget airline industry and their consumer targets. As well as analyse what marketing strategies they use that have allowed them to grow so much. A low cost carrier is an airline category defined primarily by low fares but also by a focus on reducing operating costs by eliminating complexity and charge for product elements which go beyond the basic product: the flight. The first budget airline company Southwest Airlines was launched in 1971 in Dallas Texas and turned profitable in 1973. According to the e-magazine Airline Business (2012) research, Southwest Airlines is the biggest domestic airline in USA and is the biggest budget airline in the world by revenue. Ryanair is the second largest low cost carrier with its launch in 1990 In the UK followed by EasyJet and Virgin. In 2001 Ryanair and Easyjet started to offer connections between two airports outside their home which was only possible due to a political decision allowing airlines to turn from more governmentally controlled transport providers to private companies on a free market. LCC became popular since the 1990s because of the low-fares and no-frills service. Compared to the full cost carriers (FCC), more people chose to fly with low cost carriers because they can fly domestically and to more countries. Furthermore, LCC tend to have scheduled flights and most of them would use secondary airports for departure and landing. Low cost carriers’ markets mainly are the business and leisure market although...
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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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