Ryanair Case
Although Ryanair inspired its strategy from the low cost model Southwest has created, we can easily notice that there is now major differences between Ryanair and Southwest Airlines.
1. They are not targeting the same market. In 2009 Ryanair had over 850 routes across 26 countries in Europe, while Southwest is only focused on the domestic market (except from Mexico and the Caribbean, after its acquisition of AirTran Airways). Even if Ryanair considered the opportunity to go overseas, they dropped this idea and should not enter the American market (we will get to that point later).
2. Ryanair’s strategy is 100% cost-leadership, as opposed to SouthWest Airlines. Southwest is making constant efforts to reduce its costs in order to offer low-cost tickets, but it tries to maintain a certain quality of service (free snacks for example). Southwest doesn’t compete with Ryanair because they do not address the same clients. Even though they are both considered low cost, there is a difference between classy cheap and plain cheap.
Ryanair’s greed has no limits
To reduce the company’s electricity bill, staff are banned for charging their own mobile phones at work;
“fat tax”
They forced a disabled man to pay 36£ to use a wheelchair
They planned to charge for the use of the lavatory.
They create an abusive working environment for its employees and it is not an ethical way of doing business. This strategy, clearly assumed by the company, targets passengers willing to pay less fully knowing that the service will be at the extreme minimum. A guideline that Southern Airlines is not willing to cross.
“If you want a quiet flight, use another airline. Ryanair is noisy, full and we are always trying to sell you something. Michael O’Leary, CEO of Ryanair”
Ryanair
Southwest
Operating Margin 2008-2007
~20%
~4%
CASM 2008-2007
~0.05 €
~ 10.5$
1. They are not targeting the same market. In 2009 Ryanair had over 850 routes across 26 countries in Europe, while Southwest is only focused on the domestic market (except from Mexico and the Caribbean, after its acquisition of AirTran Airways). Even if Ryanair considered the opportunity to go overseas, they dropped this idea and should not enter the American market (we will get to that point later).
2. Ryanair’s strategy is 100% cost-leadership, as opposed to SouthWest Airlines. Southwest is making constant efforts to reduce its costs in order to offer low-cost tickets, but it tries to maintain a certain quality of service (free snacks for example). Southwest doesn’t compete with Ryanair because they do not address the same clients. Even though they are both considered low cost, there is a difference between classy cheap and plain cheap.
Ryanair’s greed has no limits
To reduce the company’s electricity bill, staff are banned for charging their own mobile phones at work;
“fat tax”
They forced a disabled man to pay 36£ to use a wheelchair
They planned to charge for the use of the lavatory.
They create an abusive working environment for its employees and it is not an ethical way of doing business. This strategy, clearly assumed by the company, targets passengers willing to pay less fully knowing that the service will be at the extreme minimum. A guideline that Southern Airlines is not willing to cross.
“If you want a quiet flight, use another airline. Ryanair is noisy, full and we are always trying to sell you something. Michael O’Leary, CEO of Ryanair”
Ryanair
Southwest
Operating Margin 2008-2007
~20%
~4%
CASM 2008-2007
~0.05 €
~ 10.5$