Airline Pest Analysis

Topics: Airline, Flag carrier, Low-cost carrier Pages: 8 (2684 words) Published: March 15, 2006

Ryanair is headquartered in Dublin, Ireland and operates a low-fare, no-frill scheduled passenger airline. Ryanair serves short-haul, point-to-point routes between Ireland, the United Kingdom, and continental Europe, making Ryanair Europe¡¦s largest low-fare airline. It has destinations in 13 countries with 76 low-fare routes. Its fleet consists of 21 Boeing 737-200s and 21 737-800s. Launched in 1985, Ryanair¡¦s growth has been extraordinary. Ryanair currently employs a team of 1500 people and will carry over 13 million scheduled passengers in the current year (2002). In 1986, Ryanair broke the high fare cartel, which was then operated by the two state airlines Aer Lingus and British Airways in the Dublin-London route. The first four years Ryanair was carrying 600,000 passengers annually, but had managed to lose 20million pounds.

Under a new management team, headed up by Michael O¡¦Leary, a major overhaul of the airline was undertaken in 1990/91. With Ryanair re launched as the very first new breed of ¡¥Low-fare, no-frill¡¦ airline, adapting the formula so successfully pioneered by south West Airlines in the U.S, non profitable routes were eliminated, the network was cut back from 19 to just 5 routes and air fares across the remaining network were substantially reduced. For example, on Dublin-London route, a new promotional fare of just 69 pounds returns was launched which stimulated a whole new era of growth for Ryanair. The company¡¦s goal was to be profitable on new routes from their inception, by pitching their fares to be low enough to attract new customers but high enough to provide a satisfactory operating margin. By 1991 Ryanair recorded its first ever profit despite the damage done to the Airline industry by the Gulf war in 1991. Over the next couple of years Ryanair substantially slashed its fares further and managed to open up many new attractive routes.

The new formula effected a turnaround in the fortunes of the company, and by 1997 the company was floated in an IPO on the Dublin Stock Exchange and on NASDAQ. Last decade Ryanair launched an average of 10 new destinations every year. Despite this success, Ryanair remained committed to driving down airfares. Ryanair was competing head to head with many of Europe¡¦s biggest airlines including British Airways, SAS, Alitalia, Lufthansa, Air France, and Aer Lingus, by offering an unbeatable package of low fares, on-time flights, high frequencies and friendly in-flight service, Ryanair was continuing to succeed and win increasing public and customer support.

Dubai based Emirates Airlines is one of the fastest growing airlines in the world and has received more than 200 international awards for excellence since launch in 1985. Emirates, from a humble beginning in 1985, till now, the growth has been remarkable. Of course, all with the full patronage of the Government of Dubai. Emirates were successful in planning and building up excellent supportive systems by formation of many sister companies. For example, DNATA (Emirates own travel agent), Abela Airline Catering, Dubai Duty Free etc. Emirates now flies to 58 destinations in 41 countries in Europe, the Middle East, the Far East, Africa, Asia and Australia. Emirates prominence in the world travel market is increasing rapidly due to the efforts put forward by the Government of Dubai to make Dubai a lucrative destination for tourism and travel. Dubai plays host to many attractive world class events like, The Dubai Desert Classic, The richest race in the world ¡V Dubai World Cup, Dubai Shopping Festival, Dubai Summer Surprise etc. Dubai also takes pride in the making of the first seven star hotel in the world ¡V the Burj Al Arab. Known as the ¡¥City of Gold¡¦, Dubai is the leader in commerce and tourism in the Middle East.

Scenario Analysis of the World Airline Industry.

With the world in an official recession, 2001 was already a difficult year for the airline industry. But the tragic...
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