Ryanair Ltd is Irish low-cost airline company. Its headquarters is located in Dublin Airport, Ireland and it has another secondary base in London Stansted Airport. There are many reasons for the success of Ryanair but the most prominent aspects are low cost ticket prices and easy convenience to fly to most destinations in Europe. The low cost airlines are highly competitive market. Furthermore, Ryanair is one of the market leaders and most profitability in this market sector. It has gained a huge market share because of them build up a long-term relationship with customers through exceeding in customer service and satisfaction. Ryanair’s aims are to become the market leader of low-cost airlines, to attract new potential customers from smaller and bigger airlines and to sustain its low cost policy and value.
In this report, it aims to identify Ryanair’s positions and its competitive advantages within the market. And suggest a scenario planning to face the future external environment to let Ryanair can maintain their positions and success in future.
Analysis of the external macro-environment
(Refer Appendix 1)
The political aspect has represented a considerable advantage for Ryanair, since the European Union (EU) is a completely political stability, so Ryanair does not encounter problems with governmental instability in Europe as a concern regarding passenger volumes or flight destinations. And then the EU integration has allowed the carrier to expand its activities and routes. The expansion of EU provided a large potential market for Ryanair to expand in. For example, the French Government support for national carriers to build up the new routes at different airports.
On the other hand, Political and legal actions can have a decisive influence on Ryanair’s profitability. For example, the Irish government has made new solutions on security measures & restrictions at airports. This could cost airlines to increase costs in the service in security sector. If different countries have new taxes and different tax policies, this changes the efficiency of the industry as the new route charges.
Since the recession of 2008/09 created unfavorable economic conditions such as high unemployment rates and restricted credit markets, it indicates the leisure and business passengers to reduce spending in this aspect.
The fuel prices increased, it leads the energy costs and fuel costs could rise. It will lead the operating costs become heavily and will affected the company’s revenues. According Ryanair operates globally, the exchange rates are very important in determining what prices can be charged within each country it operates.
In the annual report of Ryanair in 2009, it represented its first loss in 20 years of enduring success, which was influenced by the credit crunch, a 60% increase in fuel and oil charges. This pointed out that Ryanair’s profitability is subject to economic conditions. And then it also has another serious threat is that several of Ryanair’s expenses and assets are denominated in UK Pounds and particularly some costs for operations are paid in US dollars. The adverse effects of currency fluctuations (e.g. the depreciation of US dollars) are therefore already conceivable.
Regard the socio-cultural factors, it based on the changes in consumer trends and customer behavior. But the changes are continuous.
For example, due to the recession, it will let the people less going on holidays or the consumer may choose another substitute to travel to other countries such as cars or high-speed trains which is cheaper than the aircraft. The people may be wary or too scared to fly due to the unpredictable incidents such as air accidents or terrorist attacks (911 Attacks). It will decrease the customer demand. The changes in the consumer trends will lead the customer behavior to change. Social trends such...