Swot Ryanair

In: Business and Management

Submitted By arianette1
Words 340
Pages 2
STRENGTHS * A low cost company. Plus, operating costs per passenger were cut by 4 per cent and average fares fell * A partnership with Boeing in order to guarantee low maintenance costs. * Anew management team, led by Michael O’Leary who is very ambitious and firm. * “most profitable airline in the world” * Reduction of fuel consumption * Leader of opinion : permanent innovation copied by other low cost companies * High productivity of the staff * Emphasizes on Internet use | WEAKNESSES * The company is ready to sacrifice it all for growth. Indeed, Ryanair has a specific strategy that consists in transferring the costs to the passengers (the company has always tried to find ways of charging passengers for services once considered intrinsic to an airline ticket). * Ancillary services can annoy passengers * Bad reputation (misleading publicity, fat tax, toilet costs…) * Secondary airports which are sometimes far from cities) * Expensive manpower (high salaries) * Poor working conditions * Legal trouble |
OPPORTUNITIESEnvironmental : newer aircrafts that produce 50 per cent less emission, 45 per cent less fuel burn and 45 per cent lower noise emissions per seat. * The company is expecting a reduction in fares in order to beat its competitors who will be unable to follow Ryanair in this “bloodbath” * An increase in market share thanks to the demise of several carriers * The European market (the EU enlargement) * Launch of new routes : the company planned to open 146 new routes in 2010 * Ancillary services which can generate money | THREATS * The industry is not in very good shape (global economic recession, oil prices) * Competition (EasyJet) * European laws * Airbus doesn’t want to deal with Ryanair * Airport charges and government taxes * Passenger compensation (delays, cancel flights) |

SO : Overcome the image…...

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...Porter’s 5 Forces Low Threat of Entry Ryanair benefiting from large economies of scale and have massively reduced long run average costs. They have struck deals with Boeing and Airbus for reduced prices (1/3rd of listed price) on 737 aircraft in bulk buying therefore new entrants to the market will not get these reduced prices as they do not hold a similar relationship and they will not be able to order in bulk. Ryanair have struck deals with many local airports over flight paths and air-time, Ryanair therefore aren’t charged with air traffic time, but in return, promise these local airports a set amount of passengers to enter that airport each year, which leads to passengers spending money in these airports. These deals have seen Ryanair further reduce costs, as well as restrict suitable air traffic slot availability to the airport as there are limited routes. Ryanair operates in 180 airports over 29 countries, flying 1,611 routes with over 1,500daily departures whilst easily outstripping competitors and increasing barriers to entry. Increasing global fuel costs will not hit Ryanair’s profits as their costs elsewhere are the lowest in the flying industry. As a result of these low costs, Ryanair have been able to charge the lowest average fair of any low carrier airline in the UK, further increasing barriers to entry as new firms will not set those prices seen below. Despite Ryanair recording 18% profits on capital return, in a very profitable industry...

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...Definition of pricing strategies is the element of a firm’s decision-making concerned with the setting of process that will attract the target market and allow profit objectives to be met. Ryanair’s objective is to firmly establish itself as Europe’s leading low-fares scheduled passengers’ airline through continued improvements and expanded offerings of its low-fares services. Ryanair aims to offer low fares that generate increased passenger traffic while maintaining a continuous focus on cost-containment and operating efficiencies. A good pricing strategies had help Ryanair to achieve the objective and aims. Ryanair’s low fares are designed to stimulate demand, particularly from fare-conscious leisure and business travelers who might otherwise have used alternative forms of transportation or would not have traveled at all. Ryanair sells seats on a one-way basis, thus eliminating minimum stay requirements from all travel on Ryanair scheduled services, regardless of fare. Ryanair sets fares on the basis of the demand for particular flights and by reference to the period remaining to the date of departure of the flight with higher fares charges on flights with higher levels of demand for bookings made nearer to the date of departure. Ryanair’s tight cost control was the backbone of its low-price strategy. As a result of this cost focus, Ryanair had by far the lowest costs in Europe, about 40% lower than its closest competitors. One of the elements of Ryanair’s cost...

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