Ryan Air Wiki

Company profile:
Background: Ryanair, Europe’s first and largest low fares’ airline started in 1985 and was set up the Ryan family with a share capital of just £1, and a staff of 25. Over the past few years the company has shown tremendous growth and now operates more than 1400 flights every day from 44 bases and around 1100 low fare routes across 27 countries which connect 160 destinations. The company now has approximately 73.5 million passengers in the current fiscal year. They provide air travel and travel related other facilities such as car hire, travel insurance, cheap hotel accommodations, airport transfer, cruise holidays, free roaming sim cards, campsite holidays and many more. All these are provided at very economical prices.

Current performance: Evolution of: Profit (Loss) before Taxation (2000 - 2009)

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Fame 2010

In 2010, Ryanair had a 204% increase in profits showing adjusted net profit of €318.8million. This was despite the economic downturn suffered throughout the country. Many competitors announced losses or bankruptcy but Ryanair had great profits. 51 new Boeing 737-800 aircrafts were purchased which made it 232 Boeing 737-800 in total. Negotiations of 200 aircraft order with Boeing was terminated. This will show a substantiate fall in capital expenditure over the next 3 years. Increased profitability shows rise in cash in hand by €535million to €2.8billion. The board proposes to return €500 of this cash as dividends. Also €550million may be available for return to shareholders either

(Ryan Air Holdings PLC 2011) 2. labour disputes and revenue losses from Iceland's Eyjafjallajokull's disruptive volcano ash.fuel. The EU Airport Charges Directive of March 2009 sets general principles that are to be followed by airports when setting airport charges . But European airline industry might still suffer a loss this year due to weak economies. such strategies cannot be expected to eliminate the impact on the Company of an increase in the market price of jet fuel”(Ryan Air Holdings PLC 2010:126). RyanAir also had to pay compensation to passengers based on EU261 reform.Alistair 2010) This can help RyanAir to deal with the new owners of Glasgow and Stansted airport which if sold. government has increased the Air Passenger Duty (APD) to £11 in 2009. capacity might fall by 16% in the period from November 1.K.(Ryan Air Holdings PLC 2010) 3. which represents 40% of total operating costs compared to .1 billion. IATA forecasts the net posttax profits in 2010 for the airline industry to be US$15. Due to weak U. Air traffic control strike: The repeated European government owned Air Traffic Control strikes can be a cause for huge loss for airline industry as recently such strikes caused Ryan Air to cancel huge number of flights.By the end of 2010. Europe’s largest passenger airline had a loss of €10m but revenues grew by 22% to €746m. BAA airport monopoly: Recently in October 2010. economy the Company’s decided to freeze growth at its U. in the medium to longer-term. 2010 to March 31. Ryanair faced problems due to the disruption of volcanic ash and almost incurred an approximate of €50million. bases (with the exception of launching a base at Leeds Bradford).The directive is to be transposed into national legislation throughout the EU by March 2011 which may lead to higher airport charges. depending on how its provisions are implemented and applied by EU member states and subsequently by the courts and thus affecting the costs of Ryanair. Current strategic position: Analysis of the external envioronment: The following current external factors can impact the performance of RyanAir: • The macro envioronment: PESTEL FRAMEWORK: Political and Legal: 1. (Ryan Air Holdings PLC 2010) Economic : 1. In addition the bank and sovereign debt crisis in Europe is forcing further measures that are expected to weaken a number of European economies.through share buy back or another dividend by year end of 2013.(Dawber.The average fares also rose by 15%. As per the 3rd quarter 2011 Financial results of Ryanair. UK Court of Appeal supported the Competition Commission’s recommendation and asked BAA to sell Stansted airport and either Edinburgh or Glasgow airports in the interest of competition and a better deal for consumers.K. 2011. to improve the traffic at Stansted which declined recently due to “BAA's high costs and mis management”. Recovery in global economy: As the global economic crisis is fading. as traffic increased 6% to 17m. Rise in oil prices: The rise in fuel prices is affecting the operating costs associated with the growth of the RyanAir. Air passenger duty and Change in airport charges: The U. As a result its total U.(Ryan Air Holdings PLC 2010) 2.K.K. Ryan Air currently handles the problem applying fuel-hedging strategy but they accept that “these hedging strategies can cushion the impact on Ryanair of fuel price increases in the short term. and reduce its London (Stansted) flights.

including limits on the number of hourly or daily operations or the time of such operations. Ryanair is currently the industry leader in terms of environmental efficiency and is constantly working towards improving its performance using the following strategies: 1.K.0 million in the 2010 fiscal year. primarily due to the impact of lower market interest rates. and an increase in the number of hours flown. To address any further requirement.In future fuel costs may also increase as a result of the depletion of petroleum reserves. thereby reducing the rate of fuel burnt and noise levels. The contribution of aviation to greenhouse gas emissions and thus to climate change. increased by 42% to €943. the shortage of fuel production capacity and/or production restrictions imposed by fuel oil producers. This scheme is a cap-and-trade system for CO2 emissions to encourage industries to improve their CO2 efficiency.35% in the prior period comparative.9m due to a higher price per gallon paid. 3. and any future expansion are: 1. Fluctuation in Interest rates: The fluctuation of interest rates in UK can affect both the income and expense of Ryan Air. 3. allowances need to be purchased in the open market and/or at government auctions.K.94 years which are aimed at minimizing drag. Ryanair provides direct services as opposed to connecting flights. (Ryan Air Holdings PLC 2011). indirect and cumulative impacts on the natural environment from existing and proposed air transport infrastructure and air traffic. dollar exchange rates against the euro during the 2010 fiscal year((Ryan Air Holdings PLC 2010)) Social: With the growth of globalization. 3. Ryan Air’s operations like the remote location of the majority of airports Ryanair operates from. in the 2010 fiscal year. This can directly affect the growth of travel industry in future. Environmental The main challenges for the natural environment posed by current aviation practice and infrastructure. RyanAir’s interest income and similar income decreased by 68. Certain airports in the U.(Ryan Air Holdings PLC 2010) Technology: . The adverse impacts on environment from increased aircraft noise. reducing fuel burn and emissions per journey. the European Council of Ministers added aviation to the EU Emissions Trading Scheme as of 2012. 2. The unit emission per passenger due to the inherent capacity increase in the Boeing 737-800 aircraft is also reduced. 2008. This is due to the strengthening of the U. The direct. airlines will be granted initial CO2 allowances based on historical “revenue ton kilometres” and a CO2 efficiency benchmark. 2. As per the legislation.(Ryan Air Holdings PLC 2010) 4. Reduces environmental impact CO2 Emission control: On November 19. Ryanair recorded foreign exchange losses of 1. people have become more open towards travelling be its regular business tours or student exchange programs. (including London Stansted and London Gatwick) and continental Europe have established local noise restrictions. Ryanair operates a single-aircraft-type fleet of Boeing 737-800 “next generation” aircraft with an average age of only 2. in order to limit the need for passengers to transfer at main hubs and thus reduces the number of take-offs and landings per journey from four to two. Foreign Exchange Rates: The fluctuations in currency rates can affect the revenue earned by Ryan Air. pound sterling and U. This can affect RyanAir's cost management based on the allowances to be needed in 2012. the absence of night operations etc. On the other hand Ryanair’s interest charges and similar charges decreased by 44.8% in the 2010 fiscal year due to lower market interest.S.7%.

1. (Kamarulzaman Yusniza 2010)European Journal of Social Sciences – Volume 16. Global economy and rise in oil prices: Global economy is unstable and with the growth or fall of the economy. Use of GPS tools: Many airlines are starting to use GPS receiver to fly better and synchronize their operations into and out of congested airports. 4. to make it more customer friendly. CO2 emissions control: With the whole world becoming more and more environment conscious CO2 emissions control by EU Emissions Trading Scheme as of 2012 is important and its implications can affect the operating costs of Ryan Air. 2. Oil prices are expected to rise in coming years. Air passenger duty and airport charges: Increase in air passenger duty will increase the travel fare and passengers will be more critical in taking their travel decision. Use of internet: Internet is the most powerful tool available to travel marketers. Ryanair uniquely guarantees “no fuel surcharges” for any rise in fuel prices. . These enables to examine the profile of e-shoppers based on their demographic and geographic data as well as the purchasing pattern of travel services. 3. 2. many companies in the UK use Geodemographic tools to identify and understand consumers better in terms of the demand for products and services. The use of such tools can give RyanAir and its competitors a competitive advantage. Use of Geodemographic tools: Nowadays. Ryanair and also some of its competitors have their internet-based reservation system which helps to increase the number of passengers but again the ability to compare the prices of different travel options increases the competition. Number 2 (2010):196). Moreover as Europe’s lowest fare airline. Online reservation system: As maximum amount of bookings of Ryan Air is done through their online reservation system. the passenger volume might change affecting the revenue of RyanAir. proper maintenance and regular improvement of the system is needed. These intelligent and expensive tools can help any airline to fly safe and better way. (Lindsay. This can affect the passenger volume in Ryan Air. Airport charges are going to increase in 2011 and Ryan Air operating costs can get affected. 3. and also to compare the prices online. Though Ryan Air applies hedging for oil but rise in oil prices can increase operating cost of Ryan Air. It is used today to buy a travel ticket. Greg 2009) Key attributes and scenario: 1.

London but both the airlines target the European market. Threat of Substitutes: Substitutes in airline industry are the main challenge for any airlines especially in case of short haul budget airlines. Scholes and Whittington 2010). Though RyanAir uses hedging to control the rising fuel prices but the fuel price can be a threat in future. short haul travel in low cost. airports. and fuel suppliers. punctuality etc for attracting the customers. It is also to be noticed.Thus In budget airline sector the differentiation is low and people tend to focus on price and can easily switch between competitors on the basis of price. the big players like British Airways are also concentrating on their short haul model. the high speed trains in UK like Eurostar are the main competitors as these trains give almost same services in similar budget as that of RyanAir rather many a times the stations are nearer the city centre than the regional airports.(Johnson. any new entrant should have a differentiation to enter the market. RyanAir uses regional airports which have low bargaining power as they have minimum customers. the strategic group of RyanAir includes mainly the low budget. as cost and routes are the main differentiation. cars or ferries. the power of buyers will remain diminished even though there is practically no switching cost for the buyers. Moreover its robust route network helps it to access a large volume of passengers with cost efficiency. In UK. Though RyanAir has 7% growth in volume of passenger in third quarter of 2011 but they are not having good customer service feedback and this can be a threat in long term. Ireland and easyjet’s head quarter is at Luton airport.But as long as they can maintain focused on price the market is on their side. Easyjet is the main competitor of RyanAir. competetion pressurises on profit margin. As RyanAir and its competitors are already ruling the market with their low cost strategy.• Industry (or sector): POTER'S 5 FORCES FRAMEWORK: The attractiveness of the airline industry for RyanAir has been analysed using Porter five forces as given below: Threat of new entrants: UK airline industry is currently quite competitive for the short haul airlines and thus less attractive for new entrants. For a new entrant to enter the short haul market. Depending upon the price/performance ratio passengers of airline can opt for the land travel substitutes like trains. Ryanair should consider its other extracost factors like customer service. Competitive Rivalry: The low cost airline industry in UK is highly competitive. the prices of RyanAir between Paris and London are limited by charges of high speed trains like Eurostar for the same route.Boeing and Airbus are the only two players. short haul airlines in Europe. One of the main competitors of RyanAir is Easyjet which like RyanAir offers no-frills. RyanAir uses only single type of aircraft of type Boeing 737-800 and so faces high switching cost related to maintainability. There are not many aircraft suppliers available in the market. access to suitable airport and low cost bases is needed. For example. The power of suppliers: The suppliers for RyanAir include aircraft suppliers. In this case. In case RyanAir. though RyanAir has head quarter at Dublin airport. Easyjet and RyanAir operates in 49 routes and 43 routes respectively . Geographically. Due to more or less static or rather declining growth in the sector any growth is normally at the expense of the rival. • Competitors and market: Identifying Strategic group and market segment: Considering the scope of RyanAir’s organisational activities. no frills. The power of buyers: As the customer switching cost for short haul low cost airline is low. (BA annual report). Ryanair has consolidated its position in the market with a brand differentiation as low-cost airline.

As of December. Ryanair earned about 22. Strong operating strategy: Ryanair provides no-frills. perform higher rates of on-time departures and reduce turnaround time.2010 the operating profit increased by 20% compared to previous quarter. providing accommodation services etc. Faster turnaround times help in maximum utilization of aircrafts by Ryanair (Datamonitor 2010). The rising fuel charges and fluctuating currency rates have been controlled to an extent by hedging. Cost efficiency: Ryanair's continuous effort in cost reduction helped in its better performance. comfort during travel. However. The main cost control policies are: • • The costs of airport charges have been reduced by operating from low cost secondary and regional airports and using low cost terminals.'In the 2010 fiscal year.ebscohost. 2. Analysis of the internal envioronment: SWOT ANALYSIS (Strength and weaknesses): To analyse the internal environment of RyanAir using SWOT framework. strength and weakness of the airline has been identified below: Strengths: 1. The promotion and implementation of on-line reservation system helped to eliminate travel agent commissions whereas on-line check in system helped to reduce the passenger handling charges. 3. there is very low differentiation among the players.among the top 100 European routes. Incidentally Easyjet operating routes are mainly between primary airports whereas RyanAir operates mainly in secondary airports. • • . video etc.com/ehost/pdfviewer/pdfviewer? hid=112&sid=0f28f1b5-1899-48e6-af14-c7aa892c2dbe%40sessionmgr112&vid=4. They are adding more routes to business destinations and operating frequent flights during the peak times of the day. offering advertising spaces in its website. The labour cost is controlled by continuous improvement in productivity and productivity based pay incentives which includes commissions for on-board sales. snacks etc in the flight. Low cost: The main customer value for the target market segment is mainly low cost. better handling by the crew. As budget airline. RyanAir promotes their online booking systems intensely and internet bookings are usually more attractive to leisure travellers as they look for low-cost carries more than the business travellers(Harvard business review http://web. 2. As a result customers expects and look towards providers with better customer service which includes punctuality. Safety: Safety is an important factor for the low budget airline industry and a serious accident by any budget airliner can affect all other budget carriers(book). proper treatment during crisis etc. These customers can compromise frills as they are travelling short distance.2% from its revenue ancillary services like selling different goods. Customer service: As no frills are offered by the low budget airlines like Ryanair. which are usually not expected by short distance travellers. movies etc. In 2010 the rate of on-time departure was 88%(RyanAir Holdings PLC 2010). Ryanair flew an average route length of 661 miles and an average flight duration of approximately 1.55 hours' (RyanAir Holdings PLC 2010). strategies to fight low-cost rivals by Nirmalya kumar) Identifying the critical success factors: 1. point-to-point services on short haul routes.The source-to-destination service cuts down extra service charges on connecting passengers and baggage transfer and also occurrences of baggage loss are reduced. both EasyJet and RyanAir target similar market segments comprising of the short distance travellers with low budget who will not expect extra facilities like snacks. But easyjet is more focussed towards attracting business travel market. The selection of short-haul routes allow Ryanair to offer its low fares as it can cut down the unnecessary frills like meals.The selection of secondary and regional airports helps it to avoid congestion.

It has also been criticised for extra luggage allowance and higher credit card fee per passenger. Issues with unfunded pension contribution: Ryanair has unfunded pension obligations which reported to around $40 million in 2009 but assets were $25. In 2010 fiscal year. But. In different customer satisfaction surveys.100 routes'(RyanAir Holdings PLC 2010:33). 2011. The reasons for this often includes unfriendly staff. Brand value: RyanAir’s brand has already been established as low cost.5 million. short haul airline. 'As of June 30. can cover long distance without refuelling. Campbell and Stonehouse 2003) Strategic capability: 1. uncomfortable seats.Its safety measures include high quality training to its pilots and crew menbers and proper aircraft maintenance and repair services. hidden costs. fines. ancillary services accounted for 22. 3. they also have lower emissions. Proper route policy: The route network of Ryanair is very strong.2% of Ryanair’s total operating revenues. with an operating fleet of 250 aircraft flying approximately 1. This continuous growth in route network enhances passenger volume by enabling the company to get access to the new markets as well as improves the quality of service.Currently Ryanair is under investigation by European Commission for the issue the agreement between Ryanair and other airports such as Brussels (Charleroi) and Frankfurt (Hahn) was illegally stated.300 scheduled short-haul flights per day serving 155 airports throughout Europe and Morocco. 2010. bus ride.9 years.Incidentally. This regular involvement in legal issues can earn Ryanair with bad reputation as well as huge financial penalties.(Evans.This brand value is not easily imitable.(Harry 2010)Recently RyanAir has accused for charging for charging passengers for boarding pass. 2. 3. It remained the cheapest airline in Europe as of January.• Aircraft acquisition and maintenance cost is controlled by using single type of aircraft Boeing737-800 with average age of 2. Michael O’Leary. it is very clear to the customers either by different promotions or due to different controversial statements by CEO. with large seating capacity. penalties etc . safety etc. Ryanair has been voted among the bottom players.At the same time it effectively used different ancillary services to earn profit.Its punctuality and safety measures have added to its customer value. Legal proceedings: Ryanair is crowded by different legal proceedings which involve damages. the Company offered approximately 1. Airport Location: The use of secondary airports can be a source of problem as these airports are usually far from the city centres and travelling to these airports might be a cost overhead for the passengers. 4.RyanAir maintained 88% punctuality in 2010.e the secondary airport Hahn is 60 miles away from Frankfurt and requires1 hr.The capability to offer customer such low fare is their cost leadership by which it managed to control cost efficiently with the changing environment . fuel burn and noise emission.RyanAir never faced a fatality till now. Customers considering about budget airline will always first think about RyanAir though their brand loyalty might not be strong. Moreover. RyanAir says that it flies to Frankfurt but the RyanAir's base airport i. This will pressurise the company to improve its liquidity position in coming years to cover the gap. Weaknesses: 1. This can be a possible threat to the passenger volume for RyanAir. Strategy and vision: RyanAir uses low cost/low fare model in the airline industry to survive and to attract its customers. These aircraft. For example. 2. . Customer service: RyanAir has poor public image and often dissatisfies customers.

earning ancillary revenue. Innovation: RyanAir has always shown a capability to be innovative. point to point service added to its brand name as low cost airline can give it a . Moreover Ryanair with its strong operating strategy.. Using this strength Ryanair can enter the long haul market with its low cost strategy and its other operating strategy like using of secondary airports.At one hand it has shown innovation in advertising on the seat back and extensively on its website. on the other hand innovative ideas to save like fuel SWOT analysis OPPORTUNITIES STRENGTHS Using low budget model in long haul market Strong operating strategy Cost efficiency Proper route policy + Growth in European airline industry + Growth in tourism market THREATS Intensive competition EU regulations + + + + + + + + + + + WEAKNESS Customer service Legal issues Unfunded pension obligations + - + - + - - IATA is now estimating the industry will post net profits of $9.3. Ryanair has already established a strong base in cost efficiency. This is an opportunity to attract higher rate passenger volume as the demand in low cost airline will remain. cost efficiency and continuous expansion of new routes and establishing new bases in EU can grow rapidly in future.1 billion in 2011 but the growth in European market will remain supressed.

co.Cherry (2009) Cheap Airfare – Promoting Cheap Student Travel in an Inexpensive Way[Online] available from<http://www..html> Ford.independent.ryanair.articlesbase. In that case.com/travel-articles/cheap-airfare-promoting-cheap-studenttravel-in-an-inexpensive-way-1021944. Moreover.ece>[7 February 2011] Emery. it is very important to continuously discover efficient strategy to generate revenue.co. Moreover Ryanair guarantees not to add any fuel surcharge in its fare.Richard (2010) Exploring Corporate Strategy.timesonline. Moreover different EU regulation like compensation for travels for delay.competitive advantage.Richard (2010)‘No-fly’ lists. But as the UK airline industry is becoming more and more competitive with EU linearization.Kevan. for Ryan Air it is important to strengthen its customer loyalty by improving customer services and provide differentiation using there operating strength.com/en/investor/download/2011>[7 February 2011] Johnson. Ryanair is also provides accommodation through Booking. it can consider central and eastern Europe for its expansion through new bases and routes.3% per annum for the period 2008–17.As a part of ancillary services. even premium airlines thrashing prices. The global tourism industry is expected to grow by a rate of 4.Gerry. scanners and ban on flights from Yemen to tighten air security’ The Sunday Times [Online] 21 January available from <http://www.. Edinburgh:Pearson education.uk/news/business/news/court-of-appeal-tells-baa-to-sell-stansted-and-ascottish-airport-2106069. it can be said that RyanAir has already established itself as leading low cost airline. Dawber. This might be difficult to sustain if the price war starts between low cost airlines. cancellation of flights. It has maintained its position by using different operating strategy and controlling cost efficiently. RyanAir can use its experience in cost leadership in long haul market and might consider the opportunity to establish as comparative low cost model in long haul market. Another threat is the rising fuel prices which is expected to increase in future. But as the low cost market is highly competitive and customer values the price most.com/en/investor/download/2010> [7 February 2011] Ryan Air Holdings PLC (2011) 3rd Quarter Results 2011[Online] available from <http://www. Conclusion and recommendation: After doing the external and internal analysis.Scholes. Ryanair currently handling it with its hedging strategy but in long term it might be difficult.uk/tol/news/uk/article6995224.html>[7 February 2011] . References: Ryan Air Holdings PLC (2010) Annual_report_2010 [Online] available from <http://www. regulation with CO2 emission etc can have adverse effects in the operating cost of the airline and RyanAir should use their cost leadership to overcome such challenge. RyanAir should control its cost more efficiently otherwise it might have to increase its fare.ryanair.Alistair (2010) ‘Court of Appeal tells BAA to sell Stansted and a Scottish airport 24 October 2010’ The Independent [Online] 24 October available from<http://www. So. Moreover. customer loyalty plays important role in this case and RyanAir should improve its customer relationship by being more transparent and providing occasional low cost promotional offers. control cost and increase profit margin.com.and Whittington. Acquisition and merger will also help to strengthen its position. Ryanair can themselves invest in this business as they are already growing in different routes and promote their business through their website and aircrafts.

(2010) 'Ryanair and Thomas Cook worst short-haul airlines.uk/books? id=X0zpJ4DCyj8C&pg=PA377&lpg=PA377&dq=The+secondary+airports+used+by+RyanAir+are+far+from+c ity&source=bl&ots=xcydv5orpS&sig=jc5O3T5CZgSjGUvBUmQCjG95s3w&hl=en&ei=aYdVTbJNZKHhQegsMTqDA&sa=X&oi=book_result&ct=result&resnum=10&ved=0CGkQ6AEwCQ#v=onepage&q=s econdary%20airports&f=false>[7 February 2011] Harry.uk/travel/travelnews/7849481/Ryanair-andThomas-Cook-worst-short-haul-airlines-Which-says.ebscohost.Wallop.org/whatwedo/Documents/economics/Industry-Outlook-Dec-10.naturalengland. Which? Says' The telegraph [Online] 23 June available from <http://www.org.co. George Stonehouse(2003)Strategic management for travel and tourism [Online]available from<http://books.Financial Forecast [Online] available from<http://www.iata.com/ehost/pdfviewer/pdfviewer?hid=7&sid=f79647f6-34cd-44a9-b57fd88fcd1b291f%40sessionmgr10&vid=7>[7 February 2011] .uk/Images/05-012010%20Aviation%202040%20_tcm6-20399.html> [7 February 2011] Datamonitor(2010) Ryan Air Holdings PLC[Online] available from<http://web.google.telegraph.Natural England (2010) Aviation 2040 – Future Scenarios for Aviation and Airport Infrastructure Consultation paper [Online] available from<http://www.com/en/about/ryanairand-the-environment>[7 February 2011] IATA(2010).ryanair.pdf>[7 February 2011] Ryanair's environmental record (2006)[Online] available from<http://www.pdf>[7 February 2011] Nigel Evans.co. David Campbell.

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