Case Study Topic for Assignment 1
Ryanair is today one of Europe's largest and most successful low-cost airlines (LCAs). Operating its low-fare, no-frills formula, its over 1000 employees and growing fleet of Boeing 737 aircraft provide services between over 30 cities around Europe. Operating from its Dublin headquarters, it carries around six million passengers every year. But Ryanair was not always so successful. Entering the market in early 1985, its early aim was to provide an alternative low-cost service between Ireland and London to the two market leaders. British Airways and Aer Lingus. Ryanair chose this route because it was expanding in both the business and leisure sectors. However, the airline business is marked by economies of scale and Ryanair then, with a small fleet of all old-fashioned aircraft, was no match for its larger competitors. The first six years of Ryanair's operation resulted in a IR£20 million loss.
In 1991, Ryanair decided to rework its strategy. Inspired by the most successful LCA, Southwest Airlines in the United States, it adopted what has become the operations strategy formula for LCAs.
o First, the service offered is 'no frills', there are no free snacks or drinks served and no pre-booked seat allocation. This saves material (peanuts. drinks etc) and labour (nothing to be served) costs.
o Second, turnaround time at airports is kept to a minimum. This is achieved partly because there are no meals to be loaded onto the aircraft and partly through improved employee productivity.
o Third, all the aircraft in the fleet are identical. This gives savings through standardization of parts, maintenance and servicing. It also means large orders to a single aircraft supplier and therefore the opportunity to negotiate prices down. o Fourth, the company will often use secondary airports who charge lower landing and service fees.
o Finally, the cost of selling its services is reduced where...
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