Analysis of Ryanair

Topics: Strategic management, Porter generic strategies, Michael Porter Pages: 16 (4696 words) Published: May 23, 2009
Task A-
Ryanair Europe's Leading Low Fares Airline is an Irish airline with headquarters in Dublin and its biggest operational base at London Stansted Airport in the UK. It is Europe's largest low-cost carrier. As of 31 July 2007, Ryanair operates 516 routes across 26 countries from 26 bases. Ryanair has been characterised by rapid expansion, a result of the deregulation of the air industry in Europe in 1997. Ryanair is the third largest airline in Europe in terms of passenger numbers. Ryanair has grown massively since its establishment in 1985, from a small airline flying a short hop from Waterford to London, into one of Europe's largest carriers. Ryanair was founded in 1985 by Cathal and Declan Ryan (after whom the company is named), Liam Lonergan (owner of an Irish tour operator named Club Travel), and noted Irish businessperson Tony Ryan, founder of Guinness Peat Aviation and father of Cathal Ryan and Declan. The airline began with a 15-seat Embraer Bandeirante turboprop aircraft flying between Waterford and London Gatwick with the aim of breaking the duopoly on London-Ireland flights at that time held by British Airways and Aer Lingus. In 1986 the company added a second route – flying Dublin-London Luton in direct competition to the Aer Lingus / BA duopoly for the first time. Under partial EU Deregulation, airlines could begin new international intra-EU services as long as at least one of the two governments gave approval (the so-called "double-disapproval" regime). The Irish government at the time refused its approval in order to protect Aer Lingus, but Britain, under Margaret Thatcher's pro-free-market Conservative government, approved the service. With two routes and two planes, the fledging airline carried 82,000 passengers in one year. Passenger numbers continued to increase, but the airline generally ran at a loss, and by 1991 was in need of restructuring. Michael O'Leary was charged with the task of making the airline profitable. Ryan encouraged him to visit the USA to study the 'low fares/no frills' model being used by Southwest Airlines. O'Leary quickly decided that the key to low fares was to implement quick turn-around times for aircraft, "no frills", and no business class, as well as operating a single model of aircraft. O'Leary returned - convinced that Ryanair could make huge inroads into the European air market which was at that time dominated by national carriers which were subsidised to various degrees by their parent countries. He competed with the major airlines by providing a "no-frills", low-cost service. Flights were scheduled into regional airports, which offered lower landing and handling charges than larger established international airports. O'Leary as Chief Executive did a publicity stunt where he helped out with baggage handling on Ryanair flights at Dublin airport. By 1995, after the consistent pursuit of its low-cost business model, Ryanair celebrated its 10th birthday by carrying 2.25 million passengers. With plans to buy an additional 112 aircraft from Boeing the phenomenal growth is planned to continue. It is forecast that by 2008 Ryanair will have 118 planes in operation with an option to increase this number further. Vision:

-To be Europe’s Leading Low Fares Airline
-Number 1 For Customer Service

Strategic Fit
Strategy is about matching the activities of the organisation to the environment and to the organisation’s capabilities. Strategic fit focuses on optimising performance by identifying and understanding critical success factors, threats and opportunities in existing markets and then ensuring that resource capability matches critical success factors and enables taking of opportunities and protecting against threats in existing markets. The benefits of good strategic fit are cost reduction due to economies of scale and the transfer of knowledge and skills. The most important strategy of Ryanair is their low-cost, ‘no frills’ strategy,...

References: and Bibliography
1. Johnson, G, Scholes, K and Whittington, R (2006) Exploring Corporate Strategy: Text and Cases
2. Fottrell, Quentin. “The rise and rise of Ryanair”, June 6, 2004, at THE POST.IE
3. “Ryanair’s Half Year Profits Rise 24% to Record €408M”, Press release dated November 5, 2007,
4. Michael E. Porter (1985) “Competitive Advantage: Creating and Sustaining Superior Performance” pg. 33 the Free Press
5. Porter, M.E
6. Professor Alex Scott MA, MSc, Phd. Edinburgh Business School Heriot-Watt University. Strategic Planning (2003)
7. ARU Advance Strategic Management Lecture Notes
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