Opportunities Ryanair

Ryanair was established in the year 1985 by the RYAN family and has grown from a small airline flying a short hop from Waterford to London, into one of the Europe’s largest carriers. The company expanded and within 4 years it had 350 employees, 14 aircraft, and carried 600,000 passengers a year. It is currently serving to 26 European Countries with 148 destinations. It operates on 794 different routes daily serving by more than 1050 flights in a day. It has totally 169 aircrafts running for different routes with 5986number of employees working in it However, Ryanair’s costs rose drastically and it recorded losses of £20 Million sover four years despite its growth. Although consumers were continuing to fly Ryanair

The strategic plan of Ryanair has been to establish itself as Europe’s leading low-fares airline.” Ryanair aims to offer low fares that generate increased passenger traffic while maintaining a continuous focus on cost-containment and operating efficiencies.” (www.ryanair.com)

Since Ryanair is looming their highest return-on-capital route, it was expected that, not to lose the passengers volumes, both airlines will start to offer lower fares and greater frequency of flights. It is not likely that BA and AL will try to match the exact prices of Ryanair because they have other factors that would influence their customer base to remain loyal. Also, the majority of their costs are fixed, making it difficult for them to quickly reduce their operating expenses without significant financial losses. Not only will BA and AL have to figure out ways to lower their costs, they will also need to reassess the limitations they have on their tickets. Ryanair is offering tickets without any restrictions, so even if BA and AL came close to their price, the customer may still choose Ryanair if the others do not make policy changes. They offer a variety of classes of service, from first to economy, while Ryanair has less complicated offer - one class on one type of plane. BA and AL were assuming that the deregulation of the airline industry, particularly in the United Kingdom, will allow them to expand their routes and cover more of their significant overhead. Some expected

Ryanair airline has been characterized by its rapid expansion and this is the result of the deregulation of the aviation industry in Europe in 1997 and the success of its low-cost business model.

Low fares- This is a result of lower costs, enabling Ryanair to offer lower costs than their competitors. If Ryanair can replicate their current cost model which has proved so successful in the European market and transfer it into transatlantic routes, they could offer flights at a significant amount less than Delta and BA.

Ryanair is one of the largest airlines in terms of passenger numbers (REF) and has continuously grown in size and value over time as shown above. The extent of such an expanding firm is conveyed over the last eight years as Ryanair’s profits have more than quadrupled. However, there have been drops in profits in 2004 and 2008. In 2004, the airline was hugely affected by the conflicts in Iraq, the renewed threat of terrorism and endless increasing oil prices. However, in this same period, Ryanair managed to launch new bases in Rome and Barcelona, launch 73 new routes, takeover their competitor Buzz for a knock-down price and carry more passengers than BA in the European market. The reason for the decrease in profits in 2008 was due to increases in fuel prices and significantly increased airport charges, particularly at their largest bases at Stansted and Dublin.

Services such as safety, on-time reliability, in-flight services, frequency of departures, and customer service are all a part of the airline product. According to Wensveen 2011, the airline with the most frequent service times will capture the largest market share. Ryanair has utilized their product by increasing the number of flights available over their competitors while maintaining an average of 80% capacity throughout the past five years (Ryanair, 2013). Ryanair is the only EU airline that does not overbook and has no alliances with other airlines and in my opinion; this assists them in maintaining capacity above their break-even point of 70% (Ryanair, 2013).

As Ryanair considers its expansion in pursuit of achieving its goals of making air travel free it must ensure that it is able to keep its core brand values. This is because it is them that create Ryanair’s brand

According to Ryanair official website, Ryanair operates with an ultra low cost carrier strategy that is lowest fares

From the analysis, Ryanair should maintain its current position. However, it is strongly recommended to provide the check-through baggage for connecting flights for other airlines. This could increase number of passengers who have to transit via a route that Ryanair provided. Moreover, it should increase ancillary services by offering referral program to car rentals, hotels, and travel agencies. By doing this, it could generate more revenue to provide more services in other parts.

Not only does Ryanair have to compete against existing budget airlines, but they also have to compete against chartered airlines and mainstream airlines such as British Airways and Luthansa. Due to the competitive nature of budget airlines, companies generally would rather return lower profits but obtain the majority of market power.

However from an investment perspective one should think twice before investing in Ryan Air just because it’s profitable, because of its financial gearing it is possible that given an unfavorable turn of events in the European economy Ryan Air may not do so

Ryanair incorporated at no-frills, low-cost, quick to reach consumers destinations in a much modernized aviation industry. For instance, it is more cheaply, and more reliable, than any other airline including British Airways. They do not compromise on safety, top-drawer punctuality, near perfect baggage handling and efficient ‘green’ policy. The target markets of this particular airline are those who compromises on comfort and fare conscious customers. For example: Students, low-income earners, busy businessmen, and family (Ryanair.com). On the other hand, British Airways strategy is to become the world’s leading global premium airline by making cost that is base more efficiently and focus on outstanding customer service, which is a critical part of their strategy. The 5 strategy goals are to be the airline of choice for long haul premium customers, deliver and outstanding service for customers at every touch point, grow their presence in key global cities, build on the leading position in London and meet customers’ needs and improve margins through new revenue streams (British Airways PLC .com). The target market of British Airways is leisure travellers, consumers who want comfort and cost is not an issue (marketingmagazine.co.uk). Both aviation companies are customers based but they do differ from each other in their operation strategy.

Ryanair is Europe’s largest low-fares, no-frills short-haul carrier. The organisation was founded in 1985 as a conventional airline but re-launched itself in 1990/1991 as a low-cost carrier, replicating American Southwest Airlines’ business model. Since then Ryanair has grown

The low threat of new entrants has provided RA an opportunity to grow and focus on the existing customers. Ryan Air has consolidated its position in the market with a brand differentiation as low-cost