The Low Fares Airline---Ryanair
By Kuan Li
Chief executive Michael O'Leary blamed weaker exchange rates, greater competition and the continued impact of austerity measures in Europe for decline. However, sources at other airlines queried Ryanair's statement, saying they had yet to see similar signs (Thomas, 2013).In other words, that means the environmental impact of Ryanair is less than other airlines. At the same time also can know that Ryanair has strong actual strength. The company recorded revenues of $6,051.5 million during the financial year ended March 2012, an increase of 21% over FY2011. The operating profit of the company was $941.7 million during FY2012, an increase of 39.9% over FY2011. The net profit was $772.5 million in FY2012, an increase of 49.6% over FY2011 (Marketline, 2013). However, yet as Europe's economic slump grinds on, even Ryanair is starting to feel the pinch of weakening travel demand. In September, the airline warned investors that net profit for its current financial year could fall below last year's record $773 million as it scrambles to fill unsold seats. That would be the Ryanair's first earnings decline in a decade (Clark, 2013). Therefore, the purpose of this report is to research the environment of Ryanair by doing a PESTEL analysis and Porter’s 5 forces analysis, and put into effect a marketing strategy to address the problems of Ryanair. At last, stakeholders and customers should be considered into the strategy and how they apply to Ryanair. Main body:
1. The Background of Ryanair:
Ryanair is Europe’s only ultra-low cost carrier (ULCC), operating more than 1,600 daily flights (over 500,000 per year) from 57 bases, across 1,600 low fare routes, connecting 180 destinations in 29 countries and operating a fleet of 303 new Boeing 737-800 aircraft. Ryanair currently has a team of more than 9,000 highly skilled professionals, will carry over 81.5 million passengers this year and has an outstanding 29-year safety record (Ryanair, 2013). 2. The PEST Analysis on Ryanair:
PEST analysis is concerned with the environmental influences on a business. It is a useful way of summarizing the external environment in which a business operates. Political
(1)There is trade union pressure on the airline industry, the government can either promote or reduce costs. (2)Different countries have new taxes and different tax policies; this changes the efficiency of the industry. (3)Tourism has increased and will work in favour of smaller airline companies. Economical
(1)There is a threat of new substitutes. For example, high speed trains. (2) Increase in taxes and in interest rates. (3) Increase in oil prices. (4) Energy costs and fuel costs could rise Social
(1) People may be wary or too scared to fly due to the safety problems. (2) Due to the recession less people are going on holidays. Technological
(1) Government is spending on new ethical research, renewable energy, and carbon emission levels. (2) Noise level controls. (3) Effect of Global warming. 3. Porter’s 5 forces
Porters 5 forces show threats of buyers, suppliers, new entrants and also the competitive rivalry in the airline industry. There are at least 20 different airline companies making it very competitive. New entrants are finding it hard to enter due to high marketing and set up costs. There are substitute facilities such as trains, buses and cars. (1)Competitive rivalry
-Due to deregulation, there has been an increase in competitive rivalry. There have been new routes built for different and bigger airlines. Airlines have strategically merged together to form an alliances (Mergers and Acquisitions) E.g. Scheduled Airlines such as British Airways and Iberia. -Airlines such as British Airways can increase the number of customers, by information kept on their databases. They give frequent flyer programmes to customers who fly with them, giving them special offers and additional free perks. This creates customer loyalty as...
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