A brief history of Ryanair

A brief business relationship of RyanairA brief history of Ryanair is set out to rear a background of submissions.Ryanair is europiums overlargest unforesightful-f be air crinkle and based in Ireland.This is a public listed telephoner who are trade on Dublin, capital of the United Kingdom and forward-looking York (NASDAQ) Stock Exchange stocks.It is committed to low damage airfares and introducing competition to the europiuman flag respiratory tracts and air transport mart suppuration eachiance.It has the competency to picture passengers with the attentions final fare is dependent to a large extent, the low approach and high efficiency of the aerodrome.(RYANAIR LIMITED 2007)Ryanair, started operations in 1985, launched 15 shoots a daylight between turbine support and London Gatwick Airport Waterford.The beginning of the companys commitment to providing low-fare air travel to the Irish public contrast, oligopoly pricing is provided in succession for Aer Lingus and British Airways.Ryanair was the starting time European airline set up a special low fares and competition within the European short-haul routes.In the companies of first year, its 57 usageees carried just everywhere 5,000 passengers in this original route.In 1986, Ryanair routes into Dublin-London, which was jointly owned by the deuce countries, the airlines, which Aer Lingus and British Airways. In Dublin, London route has been stalled round 1 million passengers all(prenominal) year from 1975 to 1985, when some of the features the highest air fare per kilometer in Europe. Before Ryanair to join this route, the normal flight between Dublin and London in 1985 was 209 return. Ryanair began benefit on May 23, 1986, to introduce the launch of the fare 94.99 return. In its second full year of operation, Ryanair has just 120 employees to carried more than than 82,000 passengers on two routes.In the next three age (1987-1989), the rapid expansion of Ryanair routes opening up ga lore(postnominal) new Irish and British, and to improve its fleet. However, while customers continue to flock to Ryanairs low fares, the cost does non control, and the companys accumulated losses. By 1990, the company employs 350 people, operating 14 aircraft (4 different types), was carrying 600 000 passengers, plainly had managed to loss of 20 million in just 4 years. These losses are mainly due to over expansion and the inability to strictly control cost, the deregulation of the market, and these new cost control is essential to the ability to provide low-cost work of the profits.1994 overly saw the acquisition of Ryanairs first Boeing 737 aircraft used differentiates for six second-hand 737-200 series aircraft (130 set) was purchased directly from Boeing. In the next three years to buy fifteen 737-200 aircraft were to make the fleet to twenty-one 737-200s. In line with the expansion of the fleet, more new routes form Ryanair is to open up the Irish by the British, increas e frequencies, providing a jibe of all the routes, an the ticket prices were reduced even further. As a result in 1995, the airlines 10th anniversary, Ryanair has become the largest airline in Dublin-London routes, and they operate in distributively line on which it operated (in terms of traffic routes), total 2.25 million passengers per year and labor Now more than 600 people.after 1997, the EU air transport deregulation, the airlines was free for the first time open up new routes to continental Europe. Service was launched in Stockholm from London Stansted and Oslo businesslike secondary airports, as well as in Paris and Brussels from Dublin and efficient secondary airports. Similarly, Ryanair to enter these markets fare over 80%, respectively, visit than the approximately expensive week, and then by the flag carrier airline fares. Positive response and a large number of passengers low fares in these arrived in the European market for the first time. Ryanair was the first low -fare airlines to provide scheduled flights from Britain to Continental Europe and vice versa. 1997 also saw the Ryanair Holdings plc float in Dublin and New York (NASDAQ) stock exchange. At that time, the airline is the capital of IR300 million in the infrared market cheer and more than 3 million visitors each year to bring its network of 18 routes.Despite this success, Ryanair remains committed to lowering fares, increase service frequency, and to maximize the low-fare seats to the number of business and waste travelers. Ryanair was a direct competition with a lot of Europes largest airlines, including British Airways, S goatdinavian Airlines, Alitalia, Lufthansa, Sabena, Air France, Aer Lingus, but offer low fares unparalleled of The package, on-time flights, high frequency, and friendly in-flight service, Ryanair is keep to be successful, winning increasing public and customer support.In 1999, Ryanair announced an up to 45 new Boeing 737-800 series aircraft for the two billio n U.S. dollars next major investment plans. This is the latest and most modern Boeing aircraft. The first five aircraft to be delivered to Ryanair in 1999, and five more scheduled for delivery each year at that placeafter. Ryanair is the final in Europe and is to provide the latest and most modern air fares on Europe. Ryanair announced in 1999, some other record performance, operating 35 routes to 11 countries, the carrying almost of the nearly 600 million passengers. Ryanairs customers to enjoy high-fare competition is the flag carrier airlines from Europe collected 300 million pounds worth of savings. At that time the company employs were more than 1,200 people.Ryanair launched in early 2000, Europes biggest travel website at www.ryanair.com, which launched within 3 months has taken over 50,000 bookings per week, by offering low airfares which start from as little as 1 return taxes on Glasgow London plus tax and 9 return plus taxes on Dublin-London route.In February 2000, Rya nair announced 10 new European routes for the summer of 2000, the service from London (Stansted) to Malmo in Sweden Hamburg (Lbeck) in Germany Verona (Brescia), Sardinia (Alghero), and Lamezia in Italy Provence (Nimes), and Perpignan in France, and Shannon in Ireland. The airline has also introduced two new low fare services from Frankfurt (Hahn) Shannon in Ireland last summer, and to Glasgow (Prestwick) in Scotland.So far in 2001, Ryanair has launched seven new routes in the UK and to increase the capacity on number of vivacious lines. In February of this year, Ryanair announced that its first mainland Charleroi in Brussels, the European base would initially be open from its seven destinations in the provision of services. Ryanair go forth build the airport in Ireland, the base has been the basis of the cost of more competitive and cost-oriented regulation of airport / facility. This year, Ryanair will offer 36 Boeing 737 aircraft fleet and will be about 9 million passengers. Unf ortunately, only about 18% will come from the traffic in Ireland as in the regulation of the airports competitive cost and wasteful infrastructure.It have be clear from the background that Ryanairs rapid growth of routes and traffic will continue to focus on low-cost, high efficiency of the airport, in order to minimize costs and ensure that the airports rapid turnaround time and maximum efficiency of the aircraft. This is a major factor in Ryanairs ability to guarantee the lowest fares in Europe.( RYANAIR LIMITED 2007)2.Environmental and European airline persistence analysis2.1 External analysis PESTLEPESTLE analysis is a short form for political, economic, social, technological, environmental and legal (Channon, 1997). PESTLE analysis hasprovided a comprehensive detailed list, possibly affects successful or the defeat, especially strategy(Johnson and Scholes, 2007).Political close to countries grant discriminatory treatment to companies from their own country. From the case st udy also pointed out that the French government attempted to protect Air France-KLM by forcing easyJet and Ryanair to move the staff they employ on French s embrocate from British cuts to more expensive French onesEconomicFuel prices, because they increase the problems caused a major airline industry, if they do non hedge they had to cut corners to save costs in other areas. All the airlines are working to reduce costs and increase their profit margin, they reduce the cost of the effort will have a negative affect on the pilots and staff because as they may have low wages of lack benefits that would differently have been there. There are problems, the market increasingly competitive, as in emerging and developing countries have more people hope that have more airlines, so in order to adapt to this, by reducing industry profits. With the current economic crisis may be the demand for flights in the fall, because we are in recession, layoffs and people therefore have less disposable income means that they plundernot leave. This may be a favorable low-cost aviation industry for people who bottom of the inning still afford the holiday will be looking for cheaper alternatives.Social-culturalPassengers are now not only need the cheapest fares, they also need a well-off chair, safety and never lose their luggage, and the best facilities and etc.TechnologicalTechnology has improved, which means that the industry is changing, becoming more environmentally friendly and efficient. More hard-hitting infrastructure of airports are means that many airports of the airlines can charge more fall from the sky.EnvironmentalThere are new laws that say that the airline industry has to be more environmentally friendly therefore the manufacturers, designers and airline companies have to combat this together in order to decrease carbon emissions and make the industry less harmful to the environment in order to comply with EU regulations.LegalThe whole industry is very strict co ntrol laws, but also because they have to constantly adapt to new changes in law, i.e. not allowing the liquid on board. These contracts to the industry has their pilots did not seem to benefit the workers as it contributes to the company curtly which may change soon and the company will have to adapt to this.2.2 Internal analysis five forces frameworkPorters five forces is an important tool for analyzing the organizational structure of the process of strategic industries. It is used to understand the strategic business opportunities and threats should be consistent with the organization of the external environment (Dagmar Recklies, 2001).Threat of first appearance Some barriers to entry High capital investment limited availability of slots to make them more difficult to find the suitable airport. instant price wars if erode the active LCC route. Need low-cost basis Flight AuthorizationsIn Europe, low-cost carriers were increase in 2006. Although expressed in the European airli ne industry is a large number of entrants and competitors, but as many as 50 have gone bankrupt, been taken over, missing or had never left the ground. Therefore, the threat of entry Ryanair face is media.Threat of substitutes Customer are No brand loyalty No close customer relationships No switching costs to customers Other modes of transport, such(prenominal)(prenominal) as Eurostar, high-speed trains, Eurolines, ships, cars, etc.Passengers will choose the train, because do not want to face the inconvenience and cost of checking baggage, spend more extra time in airport security line. The train is the only alternative of airline to the threat of an alternative airline of Ryanair is low.Bargaining Power of Customers Customers are Price- irritable Switch to another airline is relatively simple and does not involve high costs (internet, all airlines are online) Customer understand about the cost of providing services No loyaltyAlthough the customers complaints, they feel disturbed ab out Ryanair has been trying to sell them something of the aircraft. Although some passengers, they need comfortable seating, security will never lose their luggage, the best such facilities and Ryanair has been graded as the worlds most disliked airline in the survey of Ryanair, but they do not want to change and continue to focus on cutting costs, to provide low fares. Therefore, the buyer bargaining power is low.Power of supplierBoeing is a major supplier of RA Only two dominance suppliers of aircraft Boeing and Airbus Switching costs from one supplier to another is high, because all the mechanics and pilots mustiness be retrained. Aviation displace prices is directly related to the cost of anoint (Ryanair control these through and through the hedge). Regional airports have little bargaining power because they rely heavily on an airline A larger airport, where Ryanairs competitors operate with greater bargaining powerThe actual purchases of aircraft, give notice supply, are the two major suppliers of the aviation industry. The supplier cannot control the fuel prices, although Ryanair is so sensitive and cannot affect the fuel suppler to Ryanair. On the actual purchase of the aircraft, Ryanair has a very healthy relationship with the main supplier of the aircraft, the Boeing Company (Brophy and ST. George, 2003). Suppliers cannot bring great results to RyanairCompetitive Rivalry intemperate competition in the LCC market Most of the cost advantage can be copied immediately The current low level of competition as the two major low-cost airlines to avoid a direct face to face competition by choose different routes to service However, if a company does make up ones mind to compete on the same basis, as Ryanair has a heavy pressure on prices, profit margins and thus profits there is not much inequality between the services. The main difference is the price factorIn the highly competitive aviation industry competition is high. Although Ryanair is a pioneer who performed low-cost airlines, but competitors has also the implementation of low-fare. Beside, they also copied a number of Ryan strategic. For example, Aer Lingus and FlyBE airlines have also introduced charges for hold luggage after Ryanair perform it.2.3 Scenario analysisWorst campaign enlarge of SalariesIf the employee be successful, unions can represent the experience of Ryan, to increase wages.No. Increase of other staffNew employees need in marketing, European Union regulations (such as safety regulations require additional clustering on each flight.) Accounting, information technologyIncrease of Airport ChargesAirport charges could increase in many regime owned airports. It may be are 100% increase.Increase of Fuel PricesFuel prices may rise by 1% per annum. There may be another war to increase the oil prices.The increase in ordinary flight distanceThe new destination may result in the fair flight distance increased by 10% for two years and 5% for three years, follo wed by 0% per annumIncrease of Marketing Costs such of the competition may increase in some routes may need to launch marketing campaign for Ryanair. Eastern Europe may not be a favorite route is expected, and may require additional advertising. Low price does not mean low quality. This idea needs to communicate.Best CaseIn this case, this situation will be re-considered the most optimistic assumption that all possible outcomes into account.Future energy prices will remain at todays prices, in the best situation.The euro is still better than the U.S. dollar against the U.S. dollar.Load factors will remain stable at a high level for many years benefited from the growing number of passengers to use the entire fleet.The marketing costs should support the continuous increase of passengers, and should cover the new routes.Revenue should be increased in the planes flight as a better offer / services to enable passengers to spend a few euro on average for each flight.3.Ryanairs strengths and weaknesses.- SWOT analysisStrengths station Name Ryanair, through its 14-year in LCC market has developed a very good recognized brand name. Benefit from the low airport charges These low-cost help benefits based on Ryanair. The first advantage of the regional airports (such as Charleroi) As a market entry barriers Internet sites (94% reservation) reducing distribution costs as through the phone booking is more expensive. Eliminates the need of travel agents. High-density seat All of the Boeing aircraft a unified fleet saving on maintenance and procreation cost. Fast turn around High service performance Punctual, flight speed the completion of the high rate and low loss of luggage, these give a good image of the companys reliability. Modern fleet which resulting in lower maintenance costs will become more uniform, with only one model (737-800), also a relatively new aircraft will require less maintenance. High aircraft utilization Ryanair Airlines planes to fly longer to gene rate more income from its assets. Fuel and other endangerment hedging. Small headquarters Low on overheads Point to Point No hub and wheel spoke, lower cost because not passed the required servicesWeaknesses Easy to Bad intelligence Ryanair was considered arrogant and the slightest incidents have been a lot of news stories. Niche market the possibility of limited expansion Distance of some regional airports from the advertising objectives After a period of customers may feel that this is a big inconvenience. Poor quality of services interpersonal skills. Ryanair is extremely sensitive to changes in charges (increase in value of the fare)Opportunities EU enlargement will open many new destinations Significant potential to capture market share In the LCC market share will more than double Benefit from less exposure to geopolitical risks As the only real business in Europe Ryanair economic slowdown in truth helps to change the corporate culture, stealing customers from traditional c arriers as they seek lower fares.Threats Dependent on the oil market fuel cost depends on the oil market. Dependent on the economic cycle Increase of Low fares competition European Court of Justice ruling It may make more difficulties and costs of future expansion. Limited growth of the southern European market Regional airports gain bargaining power for second round Customers are very sensitive of price Ryanair and Easy Jet limit each others growth rout wise, need to live peaceful coexistence, or is likely to become the battlefield of the line (such as London- Rome)- Face increase in air traffic control charges. As more planes fly in the sky. Inability to prevent the introduction of fuel tax and environmental fees this will reduce their growth potential because it depends on the price of the stimulus.4.Evaluation of Ryanairs strategyRyanair aims to establish itself as Europes leading low-fare scheduled passenger airline through continued improvement and expansion of low-cost servic es to their products. Ryanair aims to offer low fares, thus increasing the passenger traffic. A continued emphasis on cost control and operational efficiency is a very important part of the Ryanair way of doing things. Here are the key elements which make up Ryanairs strategyLow fare This is used to stimulate demand, their goal fare conscious leisure or business travelers who do not go, otherwise it will all or use other transport modes, such as car, coach or train. Ryanair to sell seats on the basis of one-way unlike most traditional carriers this change take effect in November 2001. Ryanair set fares based on demand for flights and with reference to the remainder of the scheduled departure date. 70% of the seats are the lowest fares in the sale of tickets can be assigned routes, once the full price of each seat. Ryanairs Dublin to London (Stansted) is the most ordinary passenger route in terms of passenger volume with fares from 19.99 to 169.99 (available in the lower special pro motions).In September 2003, Ryanair launched a fare promotion offers a total of two million seats on certain routes for free (excluding government taxes and passenger service charges) for travel period from September 2003 to 17th December 2003. These movements are very useful to consolidate Ryanairs low fares image. (M. Michel Alle ,Ryanair Plc. 2004)Frequent point-to-point short-haul flight routes. Ryanair provides frequent point-to-point service in the short-haul routes, airports and major population centers in the surrounding areas and tourist destinations. An average of 1.1 hours flying time has been an average line length of 746 kilometers, in 2003. Ryanair flight an average of 1.94 round per day from each line. Short-haul flights only option to allow Ryanair to provide frequent service, while eliminating the need to provide frill service customers, or they will no longer flights. Point-to-point flying (as opposed to the service center and spoke the traditional operators used) to avoid the cost of Ryanairs passengers to connect through service providers, including baggage transfers and transit passenger assistance costs. This is one of the key differences between Ryanair and traditional carriers. (M. Michel Alle, Ryanair Plc. 2004.) perpetration for safety and quality of maintenance. Ryanairs commitment to safety is the most important priority for the company and its management. This commitment begins with hiring and training of Ryanairs pilots, flight attendants and maintenance staff, and includes a policy to honor its aircraft in accordance with the highest European airline industry standards. Ryanair has not been a single incident or significant damage to passengers or flight crew in the 19 years of operating history. Although Ryanair aims to operate its fleet in a cost-effective manner, management does not seek to extend Ryanairs low cost operating strategy of the regions security, maintenance, training and quality assurance. Routine maintenance and repair of aircraft carried out in-house, and the present contract airframe maintenance, engine overhaul services and routing of the maintenance contractor, these contract will be under reviewed.(M. Michel Alle ,Ryanair Plc. 2004)Ancillary Services Ryanair offers a range of ancillary, revenue-generating services, including on-board merchandise, beverage and food sales, accommodation booking service, advertising, travel insurance, car rental and course and bus tickets. Ryanair distribution of car rental, accommodation and travel insurance through its Web site and traditional telephone reservation offices. Management believes that providing these services through the Internet to allow Ryanair to increase sales, while at the same time, reduce cost per unit basis. Ancillary revenues, not including charter flights, increased by 68.1% (2002 44%) and now accounts for 11.7% of total revenues compared to 9.4% in 2002.Customer service. Ryanairs strategy is to provide the best customer service performance of its peers group. According to reports by the Association of European Airlines and the airline announced its own statistics, Ryanair has made good on time, luggage lost less and less to cancel all of the rest group than their European counterparts. Ryanair cognize that the strong focus on the implementation of these services and the operation of non-congested airports.5.passportTo have the largest amount of routes, the lowest fare airline in Europe without any agree Ryanairs business model, beyond all the other operators in all aspects, including quality of service. I hypothesise Ryanair is also eager to adhere to high growth.I think Ryanairs strategy has become a key factor in its great success. Therefore, in the end I applied all of these designed of recommendations to improve their business. The Recommendation of Ryanair are as followingContinue to look for ways to reduce costsAlthough Ryanair has the lowest cost base of any competitor, I believe Ryanair can con tinue to reduce its cost base, because it although at a lower pace of growth.Increase the frequency of existing routesEuropean low-cost airline (LCC) market is not exhausted. Ryanair currently has a average 3.88 fights per capita daily of flight routes. This figure compared with Easyjet airlines and traditional carriers, is very low. This means that, Ryanair is the loss of business passengers who need a more bendable schedule. Ryanair added that if the frequency of some of their routes, they can effectively steal some passengers from the traditional carriers in order to increase market share.The development of smaller bases in the Continental Operating BasesWith the low cost market saturation from London, Ryanair must to look at their other business base to expand their network. Dublin, Brussels, Hahn, etc can be developed. Although there is not the same demand, outside London there is sufficient demand to make considerable profitsOpen up new routes in EuropeThere are many possibl e routes are still not served by low-cost airlines. To make a viable way there must to at least 32,000 people each year. Research is needed to find out a feasible route before the competition. And the opening route to un-served destination, Ryanair can also open routes where the competition is more expensive traditional carriers to attract customers to the cheaper, no-frills choiceExtended to the Central / Eastern EuropeEastern Europe is rapidly becoming a hotspot for tourist and business travelers continue to expand as the E.U., but Ryanair does not meet any of the more popular destinations. Other low-cost airlines has been established there, such as Sky Europe, but not all routes have been exhausted. There are still have many opportunities in this field.To actively seek market share from the Charter MarketThe Charter is a huge market of represents 25% of the total traffic in Europe. Ryanair must be aggressive in this market by vigorously promote DIY holidays, rather than group tou rs. With the increasing popularity of the Internet and the popularity of lower travel agents, which is the market cannot be ignored. Ryanair should be provided to small package destination and aim to strengthen the side of the business.Customer Service OverhaulRyanair has a remarkable performance as tangible customer service (punctuality, time to complete the flight, etc.) views, but in the softer side of the customer service is not always good and have a lot of bad news. With this in mind Ryanair Airlines, while maintaining its strict rules and regulations, must to be adjusted on this area.