The development and future strategy of Ryanair
Ryanair became in 2009 the airline company which carry the most passengers in Europe. That is the result of its strategy which is based on a ‘no frills’ service in order to offer the lower prices. The business model of Ryanair is different from the classic carriers’ in the way that 20% of its revenue is generated from ancillary revenue, such as its “buy on board” program or extra fees for luggage. As we have seen above, the airline industry is very dynamic, and the apparition of alliances within the market forces Ryanair to stay competitive in its environment. Until now, the company did it very well by being emergent, its flexible structure and culture allowed Ryanair to be the number one
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However, Ryanair has many opportunities to expand its routes:
- Developing routes in Central and Eastern Europe, and benefit from the development of tourism and the uniformity of legislation due to the continued expansion of Europe
- Going to North Africa, as both tourists and North Africans immigrants in Europe are demanding for these flights. Today, there are no real low-cost flights for these destinations so Ryanair can capture market shares there.
- Increasing the frequency of its existing European routes. Ryanair is the airline with the highest fill rate on board of its flights (98% in 2009). Increasing the number of flights by route could change the mind of classic carriers’ passengers who need more flexible timings.
- Creating new routes in Europe, as many routes are still un-served by the low cost carriers, or served by only one low-cost airline. More and more passengers are attracted by the cheap and no frill option proposed by Ryanair.
- Connecting airports within its existing route network (“triangulation”)
Pushing the cost reduction
Ryanair is a pioneer of innovative cost reduction methods, such as its no refund policy and its choice to fly in secondary airports instead of the expensive primary ones. They constantly try to cut the costs of their operations, and some of the key factors of cutting the costs are:
- The common Fleet with the same Boeing 737
- Contracting out
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)
Summary: Ryanair was founded in 1985 by the Ryan family to provide scheduled passenger airline services between Ireland and the UK, as an alternative to the then state monopoly carrier, Aer Lingus. It started out a full service conventional airline, with two classes of seating and leasing three different types of aircraft. However, despite growth in the passenger volumes financial problems were of a growing concern.
Ryanair is the most successful and profitable airline in the world. It achieved this by adopting various practices that gives it a competitive advantage over rivals. Ryanair aims to offer air travel services at low rates and this attracted many passengers while at the same time it maintains a continuous focus on cost reduction, operating efficiencies and continuous improvements.
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 has always been a fiercely competitive sector. Since the invention of low-cost carriers, also known as no-frills or
Ryanair is an Irish based airline company, headquartered in Dublin airport, Ireland. It was established in 1985, and since Ryanair has expanded from a small airline to serving 90.6 million passengers. It operates 1,800 flights a day connecting 200 destinations. (Ryanair Annual Report, 2015; (Ryanair)).
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.
Set up in the year 1985 at a capital of 1 pound with a staff strength of 25, Ryanair is today the World’s favourite and most commonly used airline which operates more than 1,400 flights per day from 44 bases and 1100+ low fare routes across 27 countries, connecting 160 destinations. Ryanair operates a fleet of 250 new Boeing 737-800 aircraft and is expected to increase it by another 64 in 2 years. Ryanair currently has staff strength of more than 8,000 people. Its passenger base has been increasing
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
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
1. In-depth environmental analysis of the European Airline industry and discuss the implications for the budget sector and especially for Ryanair. 2. An integrated understanding of the functioning of a company – its human and technical operations, leadership, customer relationships and financial structure. 3. Implications of the internal functioning to create viable strategic positioning and discuss any changes to Ryanair’s approach to ensure an improved sustainability 4. Evaluate the strategic leadership style of Michael O’Leary
Ryan air, an Irish airline started in 1985 by Ryan family with a capital share of £1 and a staff of 25. Over the past few years the company has shown tremendous ontogeny. Indeed it is Europe's largest low cost carrier and fastest growing airlines. Currently it’s operating more than 1,500 flights every day from over 50 bases and around 1400 low fare routes across 28 countries which connect 165 destinations.
We will see how Ryanair was successful as world’s one of the most favoured low-fare airline and how did it apply each of this mix by putting in the