Essay on Analysis of Ryanair

Ryanair, originally an Irish low-cost airline and established by the Ryan family in the year of 1984 starting off with only 25 members of staff. Replicating the American Southwest airline business model and then officially relaunched in the year 1990. It has vastly grown from being a single-aircraft family operation into one of the world’s top leading airlines. Now Ryanair has reached 11,458 employees. The airline carries over 131 million passengers per annum on over 2,000 flights daily, from 86 different routes, flying to more than 205 destinations in 33 countries.

The transatlantic airline market between the United States and Europe is the single largest intercontinental market in the world, with rigorous competition between dozens of airlines. The transatlantic market consists of passengers, both seeking business and pleasure needs. Within the first year of offering transatlantic flights, higher income professionals travelling for business purposes will be targeted, along with families and students travelling on a J-1 visa. As the market is heavily competitive, targeted segments such as families and students will be relatively elastic to a change in price, with hope of finding the best deal. If Ryanair can replicate its hugely successful model, offering savings on landing fee

As low-fare airlines entered the market, their low prices affected the way consumers viewed airline prices. Consumers saw that they could fly from point A to point B at a much lower price if they were willing to give up some of the frills and extras that airlines traditionally offered. This affected their view of what the “right” price was for air transportation.

People in the Southeast Asian have low average incomes. The low average incomes should boost the cheap fares demands. In recent years, because of the government decreased the entry barrier of airline industry, more and more carriers entered the airline market. The Southeast Asian has very large populations; these carriers are attracted by the large number of potential travelers. This caused the Southeast Asian budget traveler increase very quickly. Otherwise, the fuel prices increased very quickly, and

Economy airlines suffer during down economies and reduce their orders, and the industry has become dependent on the Middle East and Asia in recent years to offset this (Crooks & Weitzman, 2010).

Situational Analysis The airline industry throughout the world and specially in Europe was facing hard time prior to the incidence of 9/11 with declining passenger growth rates and overcapacity was putting pressure on yields and margins. But afterwards budget airlines continued growth and profits as compared to increasing deficits of the mainstream airlines. European budget airline is

Ryanair done very well by manged to cope quickly to technological change. The increase power of internet in the last two decades, company developed a strong electronic market through internet and they are the Europe’s leading airline company to date (Ryanair, 2000).

Ryanair was founded in 1985 by the Ryan family, which was headed by Tony Ryan. It was the first budget airline in Europe, modeled after the successful US carrier, Southwest Airlines. It was founded to provide scheduled passenger airline services between Ireland and the UK, as an alternative to then state monopoly carrier, Aer Lingus. At the beginning, Ryanair was a full service conventional airline, with two classes of seating, leasing three different types of aircraft. Despite growth in passenger volumes, by the end of 1990, the company faced a great conflict, disposing of five chief

Ryanair’s average flight represents just 442 miles which is the equivalent of average length of passenger haul. This is a relatively small number that can be explained by the fact that Ryanair does not offer transatlantic flights, but focuses exclusively on routes between Ireland, the UK and Continental Europe. If one divides the number of employees at period end by the employees per aircraft served at period end one receives the number of airplanes, in this case 41,38 airplanes. Furthermore one can calculate the sectors each airplane flies each day. Therefore one starts with the sectors flown each year namely 90.124. This figure can be broken down to sectors flown each month (7.510) and each day (247). By now one divides the sectors flown

The social forces within the airline industry include demographics such as age, generation, and weight, as well as other factors like the weather and travel preferences of different generations. These factors affect customer wants, needs, and the size (growth/decline) of the potential market (customer base) available. The travel preferences of the different generations is a big factor, because this sets the bar for how many passengers will travel via the airline industry today, this year, and in the future. According to a report by the BCG group, millennials spend 13% more than non-millennials per airline ticket (Cederholm, 2015). If this is any indication that future

The fuel crisis is no stranger to the business world, especially to the airline industry. Many airlines were forced to adopt new approaches to this high cost issue in order to stay afloat. The realistic concern of the effect to the consumer has not only impacted the cost to travel, but the profits for the airline industry. The 2008 US economic recession has greatly impacted how often people are traveling. Most consumers’ disposable income is very little and they categorize travel, especially travel via airline, to be a luxury product. According to the U.S. Department of Transportation, the bulk of airline travelers, about 50%, are those who are going on holidays or vacation, 40% are traveling for business and the rest are categorized under other. Airlines are fearful that their majority of travelers will be affected by the raise in cost and choose other alternatives for satisfying their escape from reality needs.

In the business market it is clear to see that this market aims at providing a premium service which include luxuries, for example the use of airport lounges and bigger seats on the aircraft and people are willing to pay extra money for these luxuries. It is possible to assume that in times of recession and rising fuel costs that pricier seats, such as the seats in business and first class, would be less popular and harder to sell but that does not seem to be the case. IATA estimated that average ticket costs for business class flights have risen 8 percent in the first half of 2010. Business travellers make up 8 percent of overall passenger numbers but contribute 27 percent of ticket revenue, IATA said in its latest snapshot of the airline business. Premium travel has risen almost twice as far in percentage terms from its 2009 low as economy travel, but, such was the depth of the fall of the premium segment, current levels are still 10% below pre-recession peaks, whereas economy travel is now 5% above its pre-recession peak.

The demand for air travel is characterised by a very high income elasticity. Therefore, as the world economy grows, so the demand for air travel can be expected to increase too. The political situation in Iraq has helped to drive oil prices to a record high and for BA, the oil price rise might add £100 million to their costs. In response, the cost of fuel surcharges is always at risk (appendix 2). BA is in the business of transporting people to and from worldwide destinations for both business and pleasure. If the international economy slows down, business trades less and fewer business people will use planes. Equally, people may choose less 'exciting ' holidays. 3.1.3 Social Factors

The airline industry is a large and growing industry. Air travel plays a very important role in economic growth and world trade. It is expanding for either of the following reasons that is for business purpose or leisure travel. It helps in increasing the international investment as well as tourism. The airlines have made it more comfortable to travel from one place to another, and now are offering reasonable rates. Affordable rates encourage people to travel further to new places. As a result, people have started traveling to new exotic destinations. Billions of passengers are traveling every year by way of the airline industry. The airline industry is not only growing in developed countries but it is growing in developing countries also.

The changing travel habits of people have very wide implications for the airline industry. In a country like India, there are people from varied income groups. The airlines have to recognize these individuals and should serve them accordingly. Air India