Pricing Strategy for Ryanair

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STRATEGY

Ryanair’s objective is to firmly establish itself as Europe’s leading low-fares scheduled

passenger airline through continued improvements and expanded offerings of its low-fares

service. Ryanair aims to offer low fares that generate increased passenger traffic while

maintaining a continuous focus on cost-containment and operating efficiencies. The key

elements of Ryanair’s strategy are:

Low Fares. 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 charged on flights with

higher levels of demand for bookings made nearer to the date of departure. Ryanair’s Dublin to

London (Stansted) route is its largest route in terms of passenger volume, with fares ranging from

[pic]0.99 to [pic]199.99 (excluding government taxes and passenger service charges). Ryanair’s

competitors generally do not operate a one-way pricing policy, so direct comparison is not

possible, but current round-trip fares on Aer Lingus, Ryanair’s largest competitor on the LondonDublin route, for travel in September 2004 were [pic]82.27 for economy restricted return tickets,

[pic]218.27 for economy flexible return and [pic]353.75 for business class tickets. In July 2004, Ryanair

launched a fare promotion offering a total of one million seats on certain routes for “[pic]0.99”

(excluding government taxes and passenger service charges) for travel during the period between

September 7, 2004 and January 31, 2005, and launched a similar fare promotion in August 2004

offering a total of 900,000 seats on certain routes for “[pic]0.90” (excluding government taxes and

passenger service charges) for travel during the period from September 2, 2004, and February 10,

2005.

Customer Service. Ryanair’s strategy is to deliver the best customer service performance

in its peer group. According to reports by the Association of European Airlines and the airlines’

own published statistics, Ryanair has achieved better punctuality, fewer lost bags and fewer

cancellations than all of the rest of its peer grouping in Europe. Ryanair achieves this by focusing

strongly on the execution of these services and by operating from uncongested airports.

Frequent Point-to-Point Flights on Short-Haul Routes. Ryanair provides frequent

point-to-point service on short-haul routes to secondary and regional airports in and around major

population centers and travel destinations. In the fiscal year ended March 31, 2004, Ryanair flew

an average of approximately 1.83 round-trips per route per day with an average route length of

491 miles and an average flight duration of approximately 1.2 hours. Short-haul routes allow

Ryanair to offer frequent service, while eliminating the necessity to provide “frill” services

otherwise expected by customers on longer flights. Point-to-point flying (as opposed to hub-andspoke service) allows Ryanair to offer direct, non-stop routes and avoid the costs of providing

through service for connecting passengers, including baggage transfer and transit passenger

assistance costs.

In choosing its routes, Ryanair favors secondary airports with convenient transportation

to major population centers and regional airports. Secondary and regional airports are generally

less congested than major airports and, as a result, can be expected to provide higher rates of ontime departures, faster turnaround times (the time an aircraft spends...
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