Running Head: RYANAIR ANALYSIS

RYANAIR: SWOT AND PESTLE ANALYSIS

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RYANAIR: SWOT AND PESTLE ANALYSIS

INTRODUCTION

Based in Dublin Ireland, Ryanair is a well-established and popular Irish airline founded

in 1984. Due to carrying the largest passenger volume in the year 2016, Ryanair has become the

largest European carrier. The company is particularly successful due to the effective

implementation of a low cost business model. This document discusses the SWOT and PEST

analysis of the company as well as the current political and economic factors that may impact

Ryanair.

SWOT ANALYSIS

SWOT analysis s basically a very useful technique in understanding the internal capabilities as

well as the external environment that affects the organization. The S stands for strengths, the W

stands for weaknesses, the O stands for opportunities and the T stands for threats. Strengths and

weaknesses are the internal factors that make t possible for a company to keep its operations

moving and to take advantage of any opportunities that popup n the external environment. With

the use of the external opportunities a company s able to overcome its weaknesses. And by using

the strengths of the company the organization is able to deal with its threats. Ryanair has

extensive coverage of destinations and air routes. According to the latest reports, company

carries passengers to over 200 destinations and has access to over 1800 air routes.

Using this major strength the company aims to overcome the threats of substitutes that t

faces in the market. The company’s financial position is strong with low debt and provides

consistent returns to its shareholders. SWOT analysis is a very important indicator of the internal
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capabilities of any organization because this matrix shows how competent the company s n

dealing with its external problems that are out of the management’s control. Labour union

relations and change in laws regarding compensation paid to employees can greatly affect the

company by increasing its costs. If the company continue to expand its air fleet, it might suffer

from over capacity in the foreseeable future.

PESTLE ANALYSIS

PESTLE analysis is the major analysis of the external environment which contains factors that

the management cannot control altogether but can design strategies to cope with. P stands for

political, E stands for economic, S stands for social factors, T stands for technological factors, L

stands for legal factors and E stands for environmental concerns. The uncertainty that has

surrounded after Brexit is still present and can pose challenges for the airline. Using the pestle

analysis Ryanair can come to know of the factors in the political environment of the country that

can create problems for Ryanair.

After the much needed information has been collected any firm s able to formulate and

implement strategies that can help deal with any uncertainties in the environment. Increased

number of terrorist attacks has had a negative impact on air travel in Europe. In case of complete

Brexit, the earning of Ryanair in Britain will be negatively affected. The prices may have to be

dropped. Fuel prices are expected to remain constant so costs will remain low. (O’Connell, and

Williams. 2005). Rising temperatures due to heat waves, may require the airlines to formulate a

new strategy to inculcate climatic changes. Using low cost fuel can lead to excessive carbon

emissions which leads to air pollution (Graham and Guyer, 2015).

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CURRENT POLITICAL AND ECONOMIC FACTORS AFFECTING THE

BUSINESS

In the past few years, the trade unions have started putting increased pressure on the

industry for better governance and compliance to laws and standards (Carballo-Cruz & Costa,

2014). The level of security at airports have increased to the rising terrorist attacks which have

led to several incidents of political unrest. Due to increases costs due to political pressure, the

airline experiences a rise in the overall costs and therefore passes on the costs over to the final

customers. The resultant is rising air travel fares. The fact that all of the European countries

promote their own national carriers which makes it difficult for Ryanair to expand its profits

(Malighetti, Paleari and Redondi, 2009). The strategy that Ryanair has implemented to cope with

this issue is that it has developing new alternative routes which do not let its profits sink low.

The operations of the company in terms of pricing is complex because of varying tax

regimes implemented in different countries of EU where Ryanair operates. To inculcate the

effect of these tax regimes, the airline has to develop different pricing strategy for different

countries (Muller, 2011). Overall, the countries in EU are all promoting tourism which creates

growth opportunities for low cost airlines like Ryanair. Globally, the airline industry has seen a

decline in profits due to declining trend in air travel and availability of better alternatives for

short distance travelling.

CONCLUSIONS

Ryanair operates in an environment that is affected by several external factors and is filled with

competition. Due to alternatives available, customer now have the choice to choose from a
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variety of alternatives. Ryanair’s success and profitability depends on how effectively it uses the

external factors to its advantage and how well it formulates strategies to cope up with threats.
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References

Carballo-Cruz, F. & Costa, V., 2014. Success factors of regional airports: The case of Oporto

airport. Tourism and Management Studies,  6(10), pp. 37-45.

Graham, B. & Guyer, C., 1999. Environmental sustainability, airport capacity and European air

transport liberalization: irreconcilable goals?.. Journal of Transport, 7(3), pp. 165-180.

Malighetti, P., Paleari, S. and Redondi, R., 2009. Pricing strategies of low-cost airlines: The

Ryanair case study. Journal of Air Transport Management, 15(4), pp.195-203.

Müller, C., 2011. Ryanair case study and strategic analysis.

O’Connell, J.F. and Williams, G., 2005. Passengers’ perceptions of low cost airlines and full

service carriers: A case study involving Ryanair, Aer Lingus, Air Asia and Malaysia

Airlines. Journal of Air Transport Management, 11(4), pp.259-272.