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Ryanair – The low fares airline: Whither now?

Main Problems

Ryanair’s growth rate is affected by macroeconomic factors such as the recession, as seen in 2010 when Ryanair saw a 200% increase in profit and traffic growth, as the low fares became attractive for those suffering from the current climate. Uncertainty still remains regarding the economic climate; problems would arise if it continued, as passengers would reduce spending restricting the company’s passenger volume growth. If the economic climate was to grow, business and leisure passengers may choose to pay more and travel with a full service airline, this could consequently result in demand for low-cost flights to drop.

One of the greatest concerns is fuel prices the
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If it were to be successful Ryanair would have to change their strategy, as it would not be able to keep low costs, as passenger on long haul flights would want the additional add-ons at no extra price. This would result in increased price and pose a challenge for Ryanair to maintain cost leadership.

Possible Solutions

Ryanair should expand in the EU, by increasing flight frequency and flights expansion especially in Eastern Europe. One way they can do this is to purchase WizzAir, an airline that already has major bases and routes in Eastern Europe. This would gain an advantage over competitors such as easy jet who currently have no bases there, thereby maintaining cost leadership.

Strategic alliances should be put in place so Ryanair can achieve an extensive geographic network, with bases placed strategically around Europe airports. By consolidating with Norwegian airlines and creating a strategic partnership, with a percentage in each other’s shares would allow for greater scope and assurance from the unpredictable economic conditions.

Swift market responses need to be made by Ryanair, such as capitalising on the failure of other European airline by opening new routes on their existing failed ones, this will achieve greater economics of scale and thus costs fall. Ryanair should continue to look at the many airlines that have a limited geographic area

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