Background in Brief
Ryanair was established by the Ryan family with a staff of 25. Its first route was launched in 1985 with a 15-seat aircraft ferrying passengers between Waterford in Ireland and London. In 1986, Ryanair launched its route from Dublin to London to challenge British Airways and Aer Lingus, the two dominant airline carriers on that route, by offering fares at lower prices. With two routes in operation, Ryanair carried 82,000 passengers in its first full year of operation. By 1993 Ryanair has carried over 1 million passengers. In 1995 Ryanair overtook Aer Lingus and British Airways to become the biggest international scheduled route carrier in Europe.
The Organization Today
Ryanair now operates more than 1,500 flights per day from 57 bases on 1,500 low fare routes across 28 countries. It connects 178 destinations and operating a fleet of 305 new Boeing 737-800 aircraft. In 2012, Ryanair had a team of more than 8,500 employees and carried over 78 million passengers. Ryanair’s main business is to provide “low-fare-no filling” airline services. Ryanair also offers various ancillary services including in-flight sale of beverages and food, car hire services, internet-related services etc. To expend its network, Ryanair, which already owns 29.82% of Aer Lingus in 2012 announced its intention to acquire Aer Lingus by making an all cash offer of €1.30 per share for its entire share capital.
Ryanair recorded a profit of €503 million in 2012 fiscal year, increased 25% compared with year 2011 despite a €367 million rise in fuel costs. Revenues rose 19% to €4325 million as traffic grew 5% to 75.8 million passengers. Ryanair’s return on equity (ROE) is increased from 12.7% to 16.9% in fiscal 2012. In addition, the company’s free cash flow is increased from €-610.9m to €702.7m due to high net income and reduced capital expenditure.
Ryanair' mission is to “become Europe’s most profitable lowest cost airline by rolling out our proven ‘low-fare-no-frills’ service in all markets in which we operate, to the benefit of our passengers, people, and shareholders”. To emphasis its focus on low fares, low frills, the CEO has stated, in response to criticisms of Ryanair's sub-standard customer service, that “any worthwhile passenger service commitment should involve commitments to low prices and high punctuality”. Ryanair has the cost minimizer's aim of generating the most benefit to both its shareholders and its passengers through offering the lowest fare service. It offers customers the choice of exactly which services they want to pay for rather than forcing them to pay a high price for the bundle of services the airline wants to offer, as legacy carriers usually do. Passengers benefit from paying less money by selecting and purchasing only the services they need. As a result, Ryanair is able to attract more customers, which helps Ryanair to grow its market and profits.
Goals and Objectives
• Generate greater passenger traffic through offering low fare services. • Expand the air passenger market and network by opening up new bases and routes. • Capture a larger market, such as by entry to the US airline market. • Gain additional profits through increasing passenger traffic while keeping its cost base low. • Maintain its low cost leadership position through continued cost efficiencies.
There are many stakeholders involved in Ryanair’s business. As Table 1 shows, they have different expectations toward and demands on Ryanair.
TABLE 1: Organizational Stakeholders
|Stakeholder Group |Group Demands / Attributes | |Product Market | | |Competitors |They want to carry more...