Essay on Analysis of Ryanair

The airlines can be affected if the fuel price will rise, for example due to inflation during economic crisis, the rate of the currency can fall and that can cause the fuel prices to go up. In this case the airlines have to raise their flight prices and that wold affect customers in negative way. They will reduce the spending power and this would cause the cuts to the airline companies profits. (Tiernan & Morley, 2013).

In April, 1986, the upstart Irish airline Ryanair announced that it would soon commence service between Dublin and London. For nearly a year, the new airline had operated a 14-seat turboprop between Waterford, in the southeast of Ireland, and Gatwick Airport on the outskirts of London. The founders of Ryanair, brothers Cathal and Declan Ryan, felt that service on that first route had developed well. They knew, however, that the Dublin-London route would pose new challenges. For the first time, they would face Aer Lingus, British Airways, and other established competitors on a major route.

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 airline industry suffers from oversupply as well as fixed costs which served as the foundation for low fare carriers who offer no frill flights in return for discounted fares. This approach effectively pulled the casual traveler and spread to frequent travelers and some classes of business travel for companies seeking to cut costs. Buyer demand is re-shaping the airline industry as a result of these options.

In the government sector Ryanair has the advantage of having most of its operations in Europe. This is a politically stable region with common flight regulations which makes it easy for Ryanair to be familiar with them.

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.

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).

A pioneer in European discount air travel, Ryanair Holdings offers low-fare, no-frills air transportation via its main subsidiary, Ryanair. The carrier flies to about 160 destinations, including more than two dozen in Ireland and the UK; overall, it serves more than 25 countries throughout Europe, plus Morocco. Ryanair specializes in short-haul routes between secondary and regional airports. It operates from more than 40 bases, including airports in Belgium, France, Germany, Italy, Spain, and Sweden, as well as in Ireland and the UK. The carrier maintains a fleet of about 270 Boeing 737-800s. Ryanair holds a 29% stake in Aer Lingus and has launched several unsuccessful bids

Economic turbulences can cause an airline business to deteriorate or even get closed. In case of financial crisis in the world, airlines are borne to losses like any other business. Economic cycles such as Boom, recession, depression and recovery can determine which business an airline is leading. Aviation industry contributes to the GDP of any country, so when a country is a boom state the airline is making more revenues and raising GDP. Airlines also face the biggest threat when an economic crisis occurs. One of the most apparent actions during an economic crisis is layoff of employees to reduce the airline’s labor costs. During any economic crisis the demand for air transport reduces causing airlines to lose millions

The air travel in the United States grew fast until 2001, which expanded to approximate 642 million passengers compared with 172 million in the 1970s, however, with the combination of the September 11, 2001 event and an economic recession, the total traffic reduced to 1996 levels (Air Transportation, 2006). Today, the United States airline industry shows strong passenger demand since the 2008 economic recession, especially during peak period - holidays, in the contrast, non-peak

Aviation is an industry where the health of the global economy is directly tied to success and crucially, profitability. On both a national and international level, the performance of airlines is often used as a barometer for the wider economic climate – this is possible as the number of passengers, and their relative willingness to pay, from both business and leisure sectors, gives a direct insight into the public’s spending on luxury goods and international businesses need to travel. Perhaps this link is unsurprising however, as while the global economy is often tested through the dollar price of a barrel of Brent crude oil, so too does this commodity dictate the price of aviation jet fuels – by far the largest overhead facing commercial airlines. The benefits of almost a full year in falling oil prices – and with them the cost of fuel – have not yet necessarily been felt in the consumer market however.

The airline industry has exhibited high grow throughout 2016. In 2016, passenger demand grew by 6.3% - above the 5.5% 10-year average annual growth. In North America, demand rose by 2.6%. Alexandre de Juniac, CEO of IATA, said that “air travel was a good news story in 2016. Demand for air travel is still expanding” (“Another Strong Year”, 2017). In the first half of 2017, Juniac’s prediction already came true. In June, the airline market has demonstrated a substantial upward trend. Demand rose by 7.8% with ASK, or ASM, capacity increasing by 6.5% (“Strong Demand Growth”, 2017). Given the expectation of growing demand, the airline industry continues to appear more attractive and

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

It is easy for people nowadays to travel around the world because the Airline industry can provide fast and convenient service for the passengers. However, in the world with a lot of competition, it is not easy for the business to survive.

Like any industry, the Airlines industry is influenced by outside environmental forces. These forces can include Political, Environmental, Social, and Technological, or “PEST.” The “PEST” forces impact supply, demand, and competition differently in all industries and all firms. Based on the “PEST” analysis performed we will be able to better understand what external forces drive and influence competition in the airline industry today. This analysis will help provide more information on the opportunities, risks, and threats within the industry. Firms frequently have to alter business plans, pricing, cost structures, etc. to suit their customers constant changing needs in