This report focuses on the basic business model of the low cost airline industry globally, and analysing their competitive strategies, and their future prospect in the Europe airline industry. INTRODUCTION
Airline is a large and growing industry, and it is also the most fiercely competitive sector. It facilitates international trade, world economy growth, tourism and international investment. Therefore it becomes one of the major industries in the world. However, airline is a fast growing industry, which has significant relevance with external environment and could directly affect the profitability and operation. PESTEL analysis gives a certain overview of the different Macro-Environmental factors that the company has to take into consideration. Overview of low cost European Airline industry
Ryan air is Europe's original and largest low fares airline. Ryan air’s steady growth is being achieved in the most environmentally friendly and sustainable way by investing in the latest aircraft and engine technologies which have reduced fuel burn and CO2 emissions by 45% over the past 10 years and the implementation of certain operational and commercial decisions that help to further minimise environmental impacts by an additional 10% between 1998 and 2008. Ryan air is currently the industry leader in terms of environmental efficiency and it is constantly working towards further improving its performance. Ryan air is investing some €17bn on its fleet replacement and expansion programme, which commenced in 1999. All of Ryan air’s older Boeing 737-200 aircraft have now been replaced with brand new Boeing 737-800 Next Generation aircraft and Ryan air currently operates the youngest and most fuel efficient aircraft fleet in Europe. Ryan air’s current fleet of 166 Boeing 737-800 Next Generation aircraft have an average age of just over2.5 years against the average world fleet age of around 11 years and future growth plans provide for the acquisition of a further 140 brand new aircraft of this type. Ryan air has minimised and continues to reduce fuel burn and CO2 emissions per passenger kilometre. This has been achieved through the combination of: numerous fuel saving measures including the use of the latest aircraft and engine technology, e.g winglets and commercial measures aimed at maximising passenger numbers per flight in order to spread the fuel use and CO2 emissions over the greatest number of passengers efficient seat configuration and high load factors. Other characteristics of Ryan air’s low-cost business model include, for example: the use of secondary airports and point-to-point services, which help to increase fuel efficiency and limit emissions. Ryan air avoids long taxiing times and holding patterns at congested primary airports, and delivers passengers to their destination directly on one flight "point-to-point", as opposed to forcing passengers onto connecting flights through congested main hub airports, which require two take-offs and two landings. The combination of these operations and commercial initiatives and Ryan air’s substantial investment in new aircraft has led to an overall reduction in fuel consumption and emissions of over 55% between 1998 and 2007 (see chart below). This is far better than, for example, British Airways' 27% improvement in fuel efficiency between 1990 and 2005. Ryan air’s fuel burn per 100 revenue passenger kilometres (RPKs) is currently less than 3.5 litres and is expected to decrease further due to fuel saving measures currently being implemented. For example, the fleet-wide installation of winglets on all Ryan air’s aircraft reduced fuel burn and CO2 emissions by up to 4%.
source (www.ryanair.com) fig.1 Ryan air’s low-fare low-cost business model does not include offering "free" meals, drinks or newspapers to passengers, and thus results in a substantial reduction in the amount of waste generated by Ryan air flights, compared to...