Ryanair's Pricing Strategy Of Ryan Air

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

Cathal Ryan and Declan Ryan have started Ryanair since 1985. For nearly a year, Ryanair had operated a 14-seat turboprop between Waterford and Gatwick Airport on the outskirts of London. The airline targeted low-fare segment market. It initiated service from London’s secondary airports. In terms of competition, Waterford and Gatwick didn’t pose any challenges.

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)

Generally speaking, the launch strategy of Ryanair was not the best one for that moment in time. They began operations between Dublin and London, in a very saturated market, which was already served by two competing and very experienced companies owned by the governments:

In this report, we will start presenting the history of Ryanair airline. After this, we will discuss the competitive advantage of Ryanair, how they gain it and build it. And we will answer whether Ryanair was able to sustain its competitive advantage or not and why. Also, we will identify the competitive strategy that Ryanair pursued and we will list the

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

Ryanair airlines low fare concept was conceived by three Irish businessmen in 1984 who wanted to break up the duopoly of the major airlines between Ireland and England. The strategy was simple in nature; offer lower prices than any competitor on the same route. Ryanair began operations in 1985 with a single 15 seat turboprop aircraft operating one route between Waterford, Ireland to London, England. The fare was only €99 ($138), less than 50% of the two competitors at the time. Ryanair carried 5000 passengers during the first year. In 2012, the airline carried more than 79 million passengers. Ryanair has demonstrated consistent growth and profit with the exception of 1991 and 2001(Ryanair, 2013).

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

Prior to 1991, Ryanair had suffered from continuous losses from 1985 to 1989. The first reason that put it into this situation was that it tried to position itself as a low fare airline with the first rate services. It tried to keep low and unrestricted fare, while keep focusing on the best customer service and relationship. This mixed model was proven inefficiency. The low price could lure number of

To identify an appropriate strategy for a given industry one must look into the external and internal factors influencing the company. The following report will discuss these factors regarding Ryanair, which is one of the leading budget European airlines.

In spite of the cost deduction planning, Ryanair also has designed other plans to maximize its profit and expand the market share of the company. On 1st February 2003, Ryanair announced that it was acquiring Buzz, the loss making budget subsidiary of KLM, based at Stansted. Ryanair purchased the loss making company Buzz, as it was a golden opportunity to pick up a ready- made bundle of take -off and landing slots at Stansted Airport, where there is intensifying competition for space. This would not only increase Ryanair‟s share of slots in Stansted from 33 to 49.5 per cent but also produce profit by the fiscal year end of March 2004. Ryanair also aimed to increase its sales through ancillary services in conjunction with its core airline

Ryanair has always managed to come up with cost effective strategies which helps it to maintain a competitive advantage over its rivals. It also considers the present environment as the basis for formulating its strategies, for example, the airline made an effort to gain soccer fans as its customers by announcing a special return flight for all Arsenal fans from London Stansted to Barcelona Girona, so that they can watch the club’s vital champions league match in Barcelona on the 6 April, the flight would leave from London on 6 April at 8:30 am and

The aim of this report is to carry out a strategic analysis of Ryanair. This will involve investigating the organisation’s external environment, to identify opportunities and threats it might face, and its strategic capability, to isolate key strengths and any weaknesses that need dealing with. Finally, a SWOT analysis will be carried out to assess the extent to which Ryanair’s strategies are suitable to what is happening in its task environment.

In this essay, I will also be looking at the customer service of Ryanair. Ryanair is a low budget ‘no frills’ airline which offer domestic, inbound and outbound flights out of their hub which is Stansted. Ryanair have their headquarters in Swords, Ireland. First founded in 1985 by the Ryan family, with a share capital of just £1.00. They offered a 15 seated aircraft during the summer months from Waterford, which is in the southeast of Ireland to London Gatwick. In 2013 Ryanair saw 81,668,285 passengers, with over 300 aircraft in their fleet but with the added 180 aircraft ordered in 2013 they hope to see their fleet over 400 by the end of 2014, then a further increase to 500 by 2019. They currently fly to 183

But these contracts are not timeless and therefore airports could renegotiate their charges with Ryanair. Although Ryanair’s bargaining power will strengthen their position in the negotiations, it is not assured to win as favourable deals again and hence they could lose this important cost advantage. Furthermore Ryanair as well as any other Low-Cost Carrier is highly dependent on fuel costs. Due to the fact that the price for fuel has been fluctuating extraordinarily over the last years and in addition Ryanair’s fleet is older and accordingly less fuel efficient than the one of main competitor easyJet, a further increase of the oil price could cause significant problems for Ryanair’s cost structure. Unpredictable incidents like natural disasters and terror attacks could lead to a decrease in air travel. In addition there is always the possibility that air travel, especially in continental travel, is substituted by trains or cars. Finally an interesting question is whether the Low-Cost Carrier’s business model is transferable to long-haul operations. One problem is definitely the regulatory context on long-haul services, another one that neither food nor entertainment is provided what can be seen as major problem on a long transatlantic flight. Additionally Ryanair for instance would lose their competitive advantage of fast turnaround and high airplane utilisation. Moreover Ryanair