Review Case Study
Dogfight over Europe : RyanAir
1. Overview of RyanAir
RyanAir was founded in 1985 by Tony Ryan who former has been worked in Aer Lingus. It established to provide schedule passanger airline services between Ireland and UK as an alternative flight to the state monopoly carrier, Aer Lingus. Initially, RyanAir was a full-service conventional airline, with two classes of seating and leasing three different types of aircraft.
RyanAir’s objective was to maintain its position as Europe’s leading low-fare airline, operating frequently point to point flights on short-haul flights, mainly out of regional and secondary airports.
Its strategy was based on providing a no-frills service with low fare designed to stimulate demand, particularly from budget-conscious leisure and business travelers who might not have travelled at all.
Ryanair aims to offer low fares that generate increased passenger traffic while maintaining a continuous focus on cost commitment and operating efficiencies.
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 is committed to bring customers the lowest fares and most on-time flights out in comparison to all competitors. Most importantly are safety issues, punctuality, near-perfect baggage handling, and the green policy.
Ryanair plans to increase efficiency and lower costs even further in comparison to industry rivals. The company wants to become the 2nd largest international airline.
2. Internal Analysis
Ryanair’s success was based on a skilful adaptation of the Southwest Airline model focusing on the cost leadership. It benefits from the first mover advantage as it has implemented the budget model first in the European market by negotiating best rates possible with secondary airports. Ryanair has established a single type aircraft fleet that saves on training costs, point-to-point flights that enable fast turn-around times and flights to secondary airports that save airport fee costs. All of them enable Ryanair to keep its operations extremely efficient. Furthermore, Ryanair sub contracts employees on temporary basis, which again saves the company huge expenses making it flexible and adaptable to environmental changes. Figure A2 illustrates all the key points as a summary. Further savings are generated through Ryanair’s website where no advertisement is necessary. Through ancillary revenues as e.g. on-board gaming and car renting Ryanair manages to generate highly satisfying 20% of its revenues. The low-cost business strategy has been successfully integrated into the Porter’s Value Chain. The Resource Based View Model shows the internal analysis as a summary.
3. External Analysis
PESTLE Analysis is a suitable tool in order to analyse the external environment. It summarises all the external factors, which might create opportunities or cause significant threat to Ryanair’s operations.
The political institution European Union affects Ryanair’s strategy and operations by establishing regulations and restrictions in the airline industry. For example, the regulation setting a ceiling on flying hours in order to prevent pilot’s fatigue forces Ryanair to hire more employees. In addition, the EU demands to refund air passengers in case of delays or cancelled flights. Also, the EU might increase the emission fees. All those EU regulations must be considered and Ryanair’s strategy has to be accordingly adjusted in order to avoid a negative impact on the business. In addition, Ryanair should be aware of regional distinctions as the Irish tourist tax and national government laws acting in favour of national airlines that increase Ryanair’s costs, e.g. national employees contracts in other countries have different terms and conditions that must be applied and are more expensive.
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