Case Study - Ryanair: The Low-fares Airline, Future Directions
Overview of Ryanair: In July 2012, Ryanair operates 1500 flights per day from 51 bases on 1500 routes in 28 European countries, which is connecting 165 destinations. It is operating a fleet of 294 new Boeing 737- 800 aircraft, and over the next year 11 aircrafts required to be delivered. Ryanair was founded by the Ryan family in the year 1985. It was providing scheduled passenger services between Ireland and the UK. In starting, the company was providing a full-service carrier with two seating classes and leasing three types of aircraft. The customer base of the company was growing, though it disposed of its five chief executives and bear losses of 20 million euros.
In a single flight, the company provides other ancillary services such as in-flight beverages, food and merchandise, console entertainment sales and internet services. Even the website of the company provides accommodation, travel insurance, and car rental services. All these services are provided to generate extra revenue.
Ryanair shares reached a higher notch of 6.30 euros in April 2007. The policy of the company was to retain the earnings for expansion of existing services and acquire additional aircraft. In June 2012 the company declared a special dividend of 0.34 euros per share, which is equivalent to 500 million euros' o shareholders.
Ryanair’s Operational Approach
The company has decreased its cost and adapt the model to the European arena and changing conditions. The company used it as a competitive advantage in Southwest Airline's prototype and differentiate Ryanair and EasyJet, which is the biggest rival of the company.
The Ryanair Fleet
Ryanair maintained its fleet commonality policy using 737 Boeing planes to train the staff and minimize the maintenance cost as much as possible. The company has taken one more initiative to buy environment-friendly aircraft, which produces 50% less emission, 45% less fuel burn and 45% less noise pollution.
Staff costs and productivity
Ryanair does not follow the guidelines and provisions of trade unions and negotiate with ERC i.e. Employee Representative Committee. The staff of the company has been decreased by 230 in 2012 as compared to 2011 due to layoffs. But the company had to incur more cost about 10.3% because of fewer operations and high training provided to the crew members.
To cut down the cost and better luggage handling, the company pioneered some yield enhancing measures. Which requires web-based check-ins and checking of bags with automated machines to reduce the cost and enhance the speed of operations and boarding.
Airport charges and route policy
Ryanair has adopted a new strategy to increase the throughput of passengers form secondary and regional destinations to avoid congested main airports.
To attract more people Ryanair has adopted intensive marketing strategies and promote the website of the company through newspaper, radio, television and internet marketing modes. The controversial and topical marketing strategy of the company has lower down its marketing cost.
Risk and Challenges
• In 2012 a company has faced many challenges related to the aviation industry, which are as follows:
• High fluctuations in fuel cost.
• The risk associated with the breakup of the Euro due to the extensive route system.
• The impact of the global recession of 2018 created unfavorable economic conditions, high unemployment rates, constrained credit market.
• Access of suitable airports, airport charges and government taxes.
• Passenger compensation.
• Industrial relations.
• Environmental concerns.
• Customer service and perception
• Unexpected disasters
Ryanair’s competitive space
Ryanair is the market leader having dominant powers in the airline's industry of Australia. The biggest competition of Ryanair is EasyJet.
Leading Ryanair into the future
The company is motivating and energizing people to perform incredibly hard and achieve higher goals.