Raynair Business Model

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Ryanair’s Business Model 2011
A peek into the airline’s recipe for success

September 2011

RYANAIR’S BUSINESS MODEL 2011

AIR SCOOP

SUMMARY
In November of last year, Air Scoop published its first ever report on Ryanair’s Business Model. The report was based on extensive research into the underlying mechanics of the most disruptive lowcost airline in Europe. It was also an attempt at drawing an exhaustive picture of the airline’s development up until 2010, meant to serve, for years to come, as a reference work. This year, Air Scoop is publishing an updated report on Ryanair’s Business Model, with a new task in mind. Starting from what was built last year, the 2011 Ryanair report has been conceived with a double objective in mind: to provide readers with a brief, compelling, synthesis of Ryanair’s business model and highlight new elements and evolutions in Ryanair’s skies. In no way is that report intended as a replacement of the one published last year, rather as a complement that should provide anyone interested in the European low-cost industry with a wealth of information on the market’s most important company. Conceptually, the 2011 report was elaborated along two different axis of analysis. In a first part, the report starts by taking a look at Ryanair’s revenues and expenses. According to the company itself, if Ryanair has grown so fast, it is thanks to an efficient mix of ever increasing sources of income and ever wider cost-cutting measures in all services. For this reason, the 2011 report looks, item by item, at Ryanair’s cost-cutting, profit-maximising strategies. From the most discussed to the lesser known tactics, the goal is to show how Ryanair has managed and still manages to constantly extract increasing income from its passengers while maintaining rock-bottom prices, through a relatively complex fare system and a slew of ancillary services. The report also investigates Ryanair’s largely misunderstood relationship with its own assets and how the airline managed to practically neutralise costs usually associated with aircraft and human resources, even turning airports into direct sources of revenues. The second part of the report is dedicated to a more analytical approach of the airline’s structure, providing the reader with an analysis of what Air Scoop judges to be the three main strengths of the airline. Namely, Ryanair’s legal strategy, whose dominant feature is an extremely proactive stance towards anything even remotely menacing to the airline, deterring irate customers from engaging legal action and submerging European regulators with complaints. Second, and perhaps most important, is Ryanair’s financial structure itself, through which the airline has optimised every part of its business, taking advantage of varying legal and fiscal frameworks all around Europe. Third is the most visible, but also possibly the least understood, part of Ryanair’s package for success, its communication. The airline, mainly through its hyper-charismatic CEO, Michael O’Leary, has managed to be present in every form of media outlet almost daily. Whether it be in good or bad terms, Ryanair is being talked about, and gets into customers’ minds and on every newstand in Europe. Through this multi-faceted analysis, Air Scoop aims at providing the reader with a compelling view into the business of the hottest low-cost airline in Europe. By putting forward the airline’s most public and hidden strengths as well as its most obvious and lesser known weaknesses, Air Scoop hopes to provide readers with a valuable insight into Ryanair’s situation in 2011.

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RYANAIR’S BUSINESS MODEL 2011

AIR SCOOP

TABLE OF CONTENTS
SUMMARY ..................................................................................................................................... 2 TABLE OF CONTENTS .................................................................................................................... 3 PART 1: How Ryanair...
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