i

Acknowledgement

No one walks alone on the journey of life. First and foremost, we would

like to thank to our lecturer Mr.D.N.N.Rohan, for the valuable guidance and

advice for this analysis of Ryanair. He inspired us greatly to work in this case

study. His willingness to motivate us contributed tremendously to our group

work. Finally, an honorable mention goes to our friends for their

understandings and supports on us in completing this group work. Without

helps of the particular that mentioned above, we would face many difficulties

while doing this.

.

ii

Table of Contents Introduction .................................................................................................................... 1

Overview of Ryanair ...................................................................................................... 2

External environment analysis ....................................................................................... 3

PESTEL Analysis of Ryan Air ...................................................................................... 4

Ryanair - Porter‟s Five Forces Analysis ........................................................................ 6

Strategic group analyze .................................................................................................. 8

Evaluating the strategies of other airline company in market .................................... 8

Strategic group map analysis in European airline industry ........................................ 9

Evaluate the strategic leadership of Michael O‟Leary ................................................. 14

Competitive strategies .................................................................................................. 15

Business Process Reengineering to maintain the competitive strategy through

Information Technology and Information System ................................................... 16

Resources and Competencies ....................................................................................... 17

Main Resources and Capabilities ............................................................................. 17

Ryanair‟s Resources ............................................................................................ 17

Ryanair's Competencies ........................................................................................... 18

Innovative cost cutting method: ........................................................................... 18

Alternative revenue generation method: .............................................................. 18

Critical Issues ............................................................................................................... 19

Conclusion and Recommendation ............................................................................... 20

Conclusion ............................................................................................................... 20

Recommendation ..................................................................................................... 21

References .................................................................................................................... 22

iii

Table of Figures

Figure 1: Porter's five forces model.................................................................................................. 6

Figure 2:Operating cost strategic group analyse ............................................................................ 10

Figure 3:Customer complain 2002/2003 ........................................................................................ 11

Figure 4: Airline Ratings ................................................................................................................ 12

Figure 5: Strategic group map ........................................................................................................ 12

Figure 6: Relationship between analytical tools ............................................................................. 20

1

Introduction

Ryanair is the first budget Airline in Europe inspired by the U.S Budget Airline, Southwest

Airlines. The report is based on the case study by Eleanor O‟Higgins, University College

Dublin, and Republic of Ireland in 2007.

The case by Eleanor O‟Higgins is based on the Strategy of Ryanair against the backdrop of

the European airline industry and the burgeoning budget sector. The case discusses the

opportunities and challenges faced by the industry and the firm. Leadership of Ryanair‟s

CEO, Michael O‟Leary is highlighted.

According to the case study of Ryanair we group number 04 conduct a strategic analysis of

the environment, the industry, company in order to get knowledge of identifying and

applying Business Strategy course theories and concepts based on the case study.

Therefore an environmental analysis consisting of a macro environment analysis carried out

initially in order to conduct detailed strategic analysis and provide recommendations in the

future.

2

Overview of Ryanair

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. Initially, Ryanair was a full-service conventional airline, with two classes

of seating, leasing three different types of aircraft.

Ryanair‟s objective was to maintain its position as Europe‟s leading low-fares airline,

operating frequent point-to-point flights on short-haul flights, mainly out of regional and

secondary airports. The heart of its strategy was based on providing a no-frills service with

low fares designed to stimulate demand, particularly from budget-conscious leisure and

business travelers, who might otherwise have used alternative forms of transportation, or who

might not have travelled at all.

Company Vision- “To firmly establish itself as Europe‟s low fare, schedule passenger airline

through continued improvements and expanded offerings of its low fare service”.

Company Mission- “To become Europe‟s most profitable low cost airline by rolling-out

proven low fare, no-frills service in all markets in which we operate to the benefit of

passengers, people and stake-holders”.

3

External environment analysis

External Environment analysis in conducted to analyze the nature of the environment the firm

operates in. It identifies the forces in the environment affecting the firm and its degree of

impact. It also identifies the opportunities, threats and challenges faced by the company.

The external environment analysis for Ryanair consists of a macro-environment analysis,

industry analysis and external factor analysis.

The macro environment scans and indentifies the general environment factors that can have

an impact on the organization whereas the industry analysis focuses on the competitive

situation of the company.

Macro Environmental Analysis

The macro-environment is composed of major external and uncontrollable factors that

influence an organization's decision making, and affect its performance and strategies. These

factors include the Political, Economical, Social, Technological, Environmental and Legal

forces (PESTEL). These forces do not change frequently, but when it does, it has a major

impact on the organization. The PESTEL analysis looks at the general environment in which

the organization is operating in and helps to realize the risk associated with the market

growth or decline.

Industry Analysis

The second stage of the external environmental analysis is to assess the industry environment

and the aim of this analysis is to identify those factors that could contribute to or affect the

industry profitability. To aid in the industry analysis, Porter‟s Five Forces Model will be

used.

Porter developed a technique analyzing five forces that affect industry profitability known as

“Five Forces Model”. These forces shape the industry and increase the intensity of

competitiveness, and therefore, the profitability and attractiveness of the industry. This model

helps to identify the dynamic factors of the industry and the market to compete effectively.

.

4

PESTEL Analysis of Ryan Air

Ryanair PESTEL analyses are those external factors that could hinder their operation which

would be analyzed based on the case study by Eleanor O‟Higgins.

Political: As a big political factor European Union expansion affect the direction and strategy

planning of Ryanair. The enlargement is positive as it increases the flow of migration, thus

increasing the company passengers. Also, the tighten security may have increased their

security system. This could increase costs because it has to be regularly monitored and

maintained.

Economical: For Economic factors, there is unstable fuel price that could affect the company

operating costs. It can be said that, the biggest costs for any airline is fuel. The rise in fuel

prices means that operation costs would increase therefore pushing prices to increase and

relatively affecting the company growth and profitability. This situation was badly affected to

the Ryan air while they are run for least price. Also the depreciation of US Dollar, availability

of efficient substitute transport methods and also reduction in distribution costs from

customers adapting to online check-ins where identified as the factors that has high influence

regarding the economical influence.

Social: Social factors link with political and economic in terms of stable development that

would allow a more sociable lifestyle. The enlargement of EU for instance has increase the

number of people moving from region-region to work, for graduation trips, backpackers, or

leisure. The enlargement (EU expansion) has affected Ryanair by providing the bases to

attract a wide demographic of prospect. The effect of this capacity on Ryanair is that, it could

increase their operating market, segmentation and productivity. Also, the company low-fares

strategy means they can fly frequently because there is demand.

Technological: Technology expansion has enabled the company change their market focus

from third-party agents to on-line bookings. This has increased the competition level between

airlines, consequently driving Ryanair to further reduce costs in order to remain competitive

in the aviation industry. Ryanair admitted that in order to keep costs down all aircraft are

made by Beoing. Availability of satellite Television and Internet services on flights for a fee

increased their revenue in order to enhancing the revenue through ancillary services.

Environmental: Environmental factors for Ryanair include noise level controls, global

warming, green house gas effects and corporate social responsibility policies and

environmental protection laws. There is evidence of the company implementing certain

policies to reduce pollution. Despite their environmentally friendly strategy, the company has

been diminished by bad publicity. Thus Ryanair should adhere to good business practice for

sustainability and high performance.

5

Legal: Legal factors can affect the company's image and reputation. In August 2003, Ryanair

ceased operations at strasbourg after losing a court case brought by Air France. Also the EU

had devised new rules to cover overbooking that result in boarding denials to passengers by

airlines. Before to the EU decision at the Central London Country Court, a disable man won a

landmark case against Ryanair after it charged him €18 for a wheelchair he needed at

Standsted to get from the check-in desk to the aircraft. The passenger awarded €1,336 in

compensation from Ryanair.

6

Ryanair - Porter’s Five Forces Analysis

Porter‟s Five Forces analytical tool assists in analysing competitive environment for

Ryanair.

Figure 1: Porter's five forces model

01. Bargaining power of suppliers.

Boeing has been traditionally Ryanair‟s main supplier, as well as increased level of efficiency

associated with energy consumption. This fact signals about Ryanair‟s increasing bargaining

power towards its main supplier, Boeing.

However, the supplier switching costs for Ryanair is extremely high due significant amount

of expenses involved associated with pilot retraining needs. Because there is no abundant

supply of highly qualified and experienced pilots. Nevertheless, Ryanair enjoys rapidly

increasing power towards a different category of its suppliers.

02. Bargaining power of customers.

Ryanair customers enjoy high bargaining power because switching to another airline is

simple and not associated with additional expenses. Increased level of price sensitivity of

Ryanair customers is another factor that contributes to their bargaining power.

03. Competitive Rivalry.

The competitive rivalry in Ryanair is increasing due to deregulation, more competitors on

more routes creating overcapacity and growing power of buyers. Potential trend among some

competitors to add some „frills‟ and flexibility, e.g. Virgin Express adds comfort, easyJet

adds flexibility.

Barriers to

Entry

Supplier

Bargaining Power Customer

Bargaining Power

Existing

Competitive

Rivalry

Substitute

7

04. Threat of substitute products and services.

A substitute is a product or service of another industry, which creates an equivalent value for

the customer.The threat of substitute products or services is a major factor upon the level of

profitability of an industry.Substitute services for airline industry in general and Ryanair in

particular include railway networks, sea transports, coach transport, as well as, car rental

firms.

The threat of main substitute, trains are occasionally addressed by Ryanair in a proactive

manner through providing price comparison prices of Ryanair services with train services on

the company website and other sources. Nevertheless, it is fair to state that the threat of

substitute products and services for Ryanair is insignificant compared to many other

industries in the marketplace.

05. Threat of new entrants.

The threat of new entrants is low for Ryanair due to the significant entry barriers associated

with entering airline sector that include economies of scale, capital requirements, access to

distribution channels etc.

Moreover, significant capital requirements associated with entering airline industry include,

but not limited to obtaining physical facilities, dealing with inventories, engaging in

marketing activities and attracting qualified workforce represent another significant barrier.

Difficulties associated with gaining access to distribution channels is another considerable

barrier faced by new entrants in airline industry. Local and international airports may not be

able to create additional slots in their platforms in order to serve new entrants into the market.

8

Strategic group analyze

In the European airline industry consist with the airline service providing companies.

In the strategies perspective we can identify their same strategic dimensions as Extent of

technological leadership, Product quality, Pricing Policies, Distribution channels, Customer

service and etc. This Help identify barriers to mobility that protect a group from attacks by

other group, competitive position, chart the future directions of firms‟ strategies, assess the

implications of industry trends for the strategic group as a whole.

Evaluating the strategies of other airline company in market

The next stage in industry analysis is the evaluation of those competitors that

compete in the same arena as Ryanair. This evaluation helps to predict the actions of

individual competitors and the impact of those actions on Ryanair. Again, the websites of the

individual competitors detailed above should be sourced Easyjet, Aer Lingus and Ryanair are

in the same strategic group and so compete closely. When the group analyst we can identify

the main competence airline company in the European market. When we consider the

individual organization their main strategic can be mention as given.

Aer Lingus:

legacy rival of Ryanair, full service Irish national carrier, 100% government owned,

but government hoping to sell off; subject of MBO bid in July 2004;

traditionally high cost, almost completely unionized;

reinvigorated after near bankruptcy in 2001/02; recovery thanks to cutting one-third

of staff and severe cost-cutting plan;

styled as a no-frills low-fares airline on many European routes, although still uses

seat assignments, primary airports;

a direct competitor to Ryanair on some routes out of Dublin and out of the

UK,London generically;

member of One World strategic alliance;

EasyJet:

most direct rival to Ryanair; inherited slots at Stansted from Go, rivals Ryanair

on value-for-money image;

stabilizing after aggressive growth spurt, including digesting Go;

better customer satisfaction and load factor than Ryanair, but poorer punctuality

record;

Shaky profit record - less deep pocket than Ryanair for price war.

9

Year :2003

Total operating cost (Million)Ryanair 579

Aer Lingus 814.2

British Airways 7309

Essyjet 883.4

Luthansa 16742

Southwest 5454

Virgin Express 224.7

Virgin Express:

Generally loss-making, no clear strategy;

Past best cost provider strategy (legroom, pampering, primary airports, etc.)

seems to be failing, because not taking in high yields - high break-even load

factor;

Seeking expedient takeover by SN Brussels Airlines, as Richard Branson‟s

interest and attention directed elsewhere;

Leases most of its aircraft, may be expensive, creating low operating margin; not

take advantage of fluctuations in supply of aircraft

Diminished threat to Ryanair

Strategic group map analysis in European airline industry

A strategic group map is an effective technique for identifying the relative strategic

positioning of competitors. when consider the Ryanair it have more competitor as above

mention .we have identify the various key factors that discriminate among the competitors.

Among them below mention the highlighted factors

1. Operating cost

2. Customer complaints

3. cabin crew amount

4. Check in staff

5. Entertainment facilities

6. Legroom facilities

7. Seat allocation

8. Route system

When we consider the operating cost with the airline competitors the Raynair has recorded

the 2nd

lowest operating cost in 2003.It is second only for the Virgin Express operating cost.

Reference: exhibit 1a table and the comparative airline financial statistic table in

the Ryanair case study, Eleanor R.E.,Higgins, Exploring corporate strategy,

person education Ltd, Uk,England.

10

Figure 2:Operating cost strategic group analyse

When we consider the customer complain with the airline competitors the Raynair has

recorded the 2nd

highest customer complain rate in 2002/2003.It is second only for

the Bmibaby customer complaint.

Reference: Exhibit 5 Table in the Ryanair case study, Eleanor R.E.,Higgins,

Exploring corporate strategy, person education Ltd, Uk,England.

Year:2002/2003

Company Name Customer Complain per Million passengers

1 Ryanair 12.7

2 Aer Lingus 3.2

3 British Airways 6.8

4 essyjet 9.3

5 Luthansa 0.6

6 Air France 3.6

7 KLM 5.9

8 veigin Atiantic 7.9

9 Bmibaby 53.7

10 lberia 1.6

11 BMI 4.2

11

Figure 3:Customer complain 2002/2003

This two factor show us though the Operating cost is lower the customer complaints

are high in the Ryanair. It give us the customer haven‟t good satisfaction regarding the

service of the Ryanair. So Ryanair have only the low cost strategy when compare with the

other strategic group. They can provide low fare ticket to the customer.

To identify the position of the Ryan air we could implement the Strategic group map. We get

the below reference data to implement the map. Catering and value of money used as the

strategic function. Then assign numeric value to represent below image data which are in

between worst and best.1-worst, 2-bad, 3-good, 4-better,5-best.finnaly implement the

strategic map according to the airline rating by using the excell.

Reference Exhibit 4a Airline Rating table in the Ryanair case study, Eleanor

R.E.,Higgins, Exploring corporate strategy, person education Ltd, Uk, England.

Exhibit 4a

12

Catering Value for money

Go 2 5

Virgin Atlantic 4 4

Buzz 3 3

easyJet 2 5

BMIbaby 1 5

BMI British Midland 3 3

Ryanair 1 5

British Airways 3 3

Flybe British European 3 3

Aer Lingus 2 2

Lufthansa 3 2

MyTravel Airways 2 2

Figure 4: Airline Ratings

Figure 5: Strategic group map

Index

Worst 1

bad 2

good 3

better 4

best 5

13

According to the above map we can identify the Ryan air, BMIbaby companies are

good to provide value to money. But they are not provided the good catering service. The

map area we can divide to main 4 sections.

Section 1: only Good for provide value to money

section2: Good for provide value to money and good for catering service

Section 3: not good for both services

section4: only good for catering service

According to this section we can analyst the strategic position/level of the

competitors. Virgin Atlantic is in the section 4 and it represent the higher position when

consider the above mention services.

14

Evaluate the strategic leadership of Michael O’Leary

The Michael O‟Leary is become the head of the team of managers in Ryan air. This

new team was appointed by the Tony Ryan .After this appointment the company enter the

path of success. The leadership style of Michael O‟Leary the CEO of Ryan air always repays

careful scrutiny.

He is famously rude to passengers with disabilities, his staff and regulators. His language is

the litany of the anti-hero, the self-styled champion of no frills service with low cost fares.

His entrepreneurial model is, by his own proud admission, an unashamed copy (of Southwest

Airlines) and delivered with a culture of iconoclasm to beat the traditional airline model. By

any measure, he has succeeded and delivered wealth to his shareholders beyond their wildest

dreams.

His leadership model is a clever one. As a leader, Michael O‟Leary is a risk taker, a hands-on

day-to-day decision maker. He is an asset and liability to Ryanair. He had pros and cons in

his leadership of the company. The characteristics that have driven the company forward –

his enthusiasm and energy, his strategic insight, his determination and mission orientation –

can be carried too far. The capacity to irritate may bring about conflict and change. Also, in

Michael O‟Leary‟s favor, as Ryanair‟s largest single shareholder, he literally „puts his money

where his mouth is‟. Another way of looking at Michael O‟Leary‟s leadership is whether he

was the right person for the job during the change era, but does the company now require

more of a „manager‟ than a „leader‟ during a consolidation era.

Leadership style in the Micheal o leary

Autocratic style of leadership,

Determining strategic direction.

Effectively managing the firm‟s resource portfolio.

Exploiting and maintaining core competences.

Developing human and social capital.

Sustaining effective organizational culture

The leadership style O‟Leary has instituted at Ryanair finds expression in a sort of transition:

a movement from autocratic leadership to democratic one. Thus, O‟Leary‟s leadership

structure as at when he joined Ryanair in 1988 as Tony Ryan‟s personal enforcer to 1994

when he became the CEO of the airline and now has undergone variation to suit different

situations. Debates could arise as whether O‟Leary‟s style would work in different

circumstance(s), but there is no doubt that he is a perfect situation match for the Ryanair

revolution. The remit of this study limits more investigation in this direction.

15

Competitive strategies

Customer evaluates an organization‟s offer in comparison to other competitive

offerings. It is the customer that is the sole judge of whether any element of the offer gives a

competitive advantage. Rayan Air also focuses on take high competitive advantages to their

airline. So Ryanair main competitive strength is in the ability to control its cost, through cost

efficient operating strategy. Ryanair continued to have more aggressive but innovative plans

to develop their new competitive approach. For example avoiding interlining or connecting

journey tickets, removing airport lounge service and company retail ticket outlets, no meals

for delay customers, having no frequent flyer programmers, stricter penalties for „„no show‟‟

passengers. Ultimately they all lead to quality improvements, such as increased on time

works, reduced lost bags, and no overbooking which other airlines find hard to eliminate.

Ryanair is famous in being tough on employees and ignoring trade unions, possibly in favor

of managing outsourced contract staff efficiently and easily creating their own corporate

culture. Operating in a single economy class structure enable Ryanair to simplify its layout

with assistant of unarranged seating, therefore making passenger board the plane at much

greater speed.

Ryan air has a very special brand name through its 14 years in the LCC market has

developed a very well recognized brand name. This is most special competitive strategy in

ryan air. They maintain very strong brand name. and also Ryanair seems to reap the most of

the benefits of flying to secondary airports as point-to-point, a feature the main rival easyJet

did not concentrate on. Michael O'Leary was especially keen on this selection of bases that

turned out to be a main source of cutting down operational costs, and turnaround times.

easyJet, in contrast focused on business passenger, emphasizing on big cities and exposed to

risks by major airlines and recorded losses. Michael O'Leary himself states that airlines who

try to operate in a hybrid no-frills / low-cost form fail to succeed in the market.

Ryan air has a uniform fleet saves on maintenance and training costs and also they

provide high service performan. These give a good image of the company‟s reliability. This is

occurring to be best among their competitors. Ryan air has high aircraft utilization it flies its

planes for longer thus generating more revenue from its assets.

16

Business Process Reengineering to maintain the competitive strategy through

Information Technology and Information System

Specially ryanair is one of the famous airline which maximizing the use of the

Internet. During January 2000, Ryanair converted its host reservation system from the British

Airways Booking System to a new system hosted by Accenture. The Skylights system allows

internet users to access Ryanair's host reservation system and to make and pay for confirmed

reservations in real time through Ryanair's website. It is also a great asset in terms of

producing companion revenues. Ryanair will continue to use the internet as its primary point

of sale. Over the next 5 years the aim is to have 100% of bookings via the internet so as to

eliminate the costly call centers. Management believes that Ryanair‟s operating costs are

among the lowest of any European scheduled passenger airline. Ryanair strives to reduce or

control aircraft equipment costs, personnel productivity, customer service costs , airport

access and handling costs. This also be a competitive advantage of the ryanair. Ryanair

favours secondary airports with convenient access to major population centers and regional

airports. Firstly these have more competitive access and handling costs.

Ryanair‟s alternative strength is in their highly visit website, which is unforeseen

intention of lowering ticket issuing transactional cost. Therefore, through the use of

information system to enhance customer relationship and intelligence data minding created a

competitive strength for the business.

17

Resources and Competencies

The origins of competencies were fully based on how advanced end product

technology manufactures exploited their unique core skills and resources among the

organization, and across their market. The main vision was on the “collective learning of an

organization, especially how to coordinate diverse production skills and integrate multiple

skills of technologies”, and a model for transforming competencies into end product through

the development of core products was presented. The strategic capability analysis helps in

identifying the core and threshold competencies and resources of a company. Ryanair‟s core

competencies are that it is Europe‟s leading low cost airline as it provides low fares to all its

customers. Ryanair does this to stimulate demand. It targets fare conscious leisure or business

travelers who may not travel at all or use other methods of transport such as car, coach or

trains. It can further build on this competency by conducting market research to understand

his customer needs. It can then develop deals, products and services that will attract and

retain customers.

Main Resources and Capabilities

Ryanair’s Resources

Ryanair‟s unique resources are its employees. It can build on this resource by training

and developing its existing staff in their jobs to increase their skills and for achieving

excellence in service delivery. They always will re-train all of their main staff in people

skills. Another special resource in ryanair is its competent leadership. This can further be

improved by encouraging young talent and by training and developing key employees to

become tomorrows‟ leaders. And main advantage in Ryanair is they have knowledgeable

pilots. These pilots need to keep themselves informed of the changes in international flying

regulations to efficiently do their jobs.

The resources of Ryanair are,

Physical Resources – consists of the resources that are needed to operate such as

aircraft fleet, headquarter, secondary airports.

Human Resources – the company has talented and knowledgeable employees.

Financial Resources – The finance comes from the Ryan Family, shareholders,

investors and creditors.

Intellectual Capital – these are the knowledge, skills, abilities and talents that every in

Ryanair possesses

18

Ryanair's Competencies

Ryanair‟s major competencies are its customer services and agreements with airports.

It can further develop its customer services by developing and delivering standardized way of

delivering customer service throughout the organization.Ryanair possesses the sophisticated

and able technology that can cater to the fast changing global marketing management trends.

It has core competence in its use of information technology that can support its management

and marketing operations. Ryanair will continue to use the internet as its primary point of

sale. Thus, adding to its innovations in service providing among the wide range of clientele.

Its IT supports competent procurement of services (e.g. bookings and ticketing) in e-

marketing or online aspect. After establishing its website in January 2000.

Ryan air Core competencies are;

Innovative cost cutting

Alternative revenue generation

Innovative cost cutting method:

The main point of Ryanair's strategy involves reduce cost at wherever possible and

pass the savings to the customer with low ticket prices. All the activities in its process are

designed to increase efficiency and reduce costs. Ryanair is continuously come up with very

Innovative Cost reduction method as a example Ryan Air doesn't have to have personnel in

by offering a very few services at the airport, like limited airport check-in facilities or

removal of baggage transfer, these areas. Lower customer service cost and riddance of ticket

agent fees by high fixation of internet to sell tickets. By having a uniform fleet, it has helped

to lower its maintenance costs and time. They also don‟t provide meals to passengers facing

delay. They do not provide wheelchair services to disable passengers. This reduces cost in

maintaining only fewer inventories of aircraft maintenance parts and training of maintenance

engineers. Ryanair flies offers only point-to-point route and flies to less expensive secondary

airports which charges lower airport fees. Since these airports are not very populous, Ryanair

can attain fewer delays and higher turnaround times.

Alternative revenue generation method:

Ryanair's ultimate goal is to offer free flights by generating revenue through other

means. It always creative in finding new sources of revenue onboard their flights. Some

examples of this are inflight advertisements, on-board shopping and gambling, pay-preview

television. All the flight attendants get commission on the items they sell onboard. Food and

beverages, airport check in, baggage checking and any other additional passenger service is

charged higher than normal charge. RyanAir will not provide refreshments or meals to

passengers facing delays. Anyone who wish to avail themselves of such services will be

asked to pay for them directly to service provider. RyanAir currently generates non-air

revenue from third party service provides like car rental, hotel reservation, travel insurance,

ground and rail transportation which it sells on its website.

19

Critical Issues

Customer service satisfaction

- Ryanair has eliminated traditional in-flight services such as seat allocation,

complementary meals and drink and newspapers.

- Ryanair earn profit from such secondary services by charging customers for in-flight

services and other travel expenses such as travel insurance, car hire, Internet.

- Ryanair is extremely sensitive in changing the fair value.

- Ryanair is raising its checked luggage fee from 15 to 20 per bag. Although the

Ryanair has remarkable track record for punctuality, flight completion the perception

of the softer side of its customer service has not always been good.

Risks & Challenges

- Extra capacity building would create uncertainty about the success of new routes

and locations

Fuel Prices

-Vulnerable to rising fuel prices

-Represents 35 % of the operating costs

Industrial Relations

-IR with pilots was fraught

-Unions were not recognized

Safety Issues

-Poor staff morale

Unwillingness and failure to recognize unions

- Ryanair is also fired for providing poor working conditions for its workforce.

Understanding that employee‟s and the customers are the factors that decide the success of

the company Ryanair should solve these critical issues.

20

Conclusion and Recommendation

Conclusion

The Ryanair is the cost effective leader in the European airline market. It maintains the

lowest operation cost, when compare with other computers. Below figure show the

relationship between the environment and the analysis tool. PESTEL analysis is a useful

tool for understanding the “big picture” of the macro environment. It helps to identify

operating opportunities and threats in the macro environment. Then that PESTEL analyst data

can used for understand the market sector compaction via the Porter‟s 5 forces analysis.

Especially this model help to analysis the competition in the industry .Then the Ryanair

Company can use the strategic group analyst to identify the position of the compactor‟s.

Competitive strategies, resource and competencies and leadership strategy can be aligning

according to the competitors and airline sector conditions. As example when the fuel price

increases in economic sector it affects each level in the Ryanair‟s environment. So we can

identify the above relationship between this all analytical tools.

1. Ryan air

2. Competitors and market

3. EU airline sector

4. Macro environment

Figure 6: Relationship between analytical tools

21

Recommendation

According to the study the Ryanair only consider reduce the cost as their strategy. Also it

has the good leadership strategy. When consider the customers service it is not in good

condition. Below list mention our suggestion regarding the company development

1. Increase the customer service

2. Increase the customer loyalty

3. Should invest on the Information Technology

4. Need day to day updated completive strategy

5. Further reduce the cost

22

References

CASE TEACHING NOTES Ryanair – The Low-Fares Airline Eleanor

O‟Higginshttp://pgsm.co.uk/members/teaching/strategic/ryanair.pdf

Exploring Corporate Strategy 7 th edition , Gerry Johnson ,Kevan Scholes ,Richard

Whittington, Copyright Pearson Education, Inc. Publishing as Prentice Hall

http://www.uncg.edu/bae/people/acquaah/491/lecture6.ppt (Strategic Groups ,Slide

share )

http://www.amazon.com/books/dp/3640744314

http://www.pricecheck.co.za/offers/44936598/Ryanair%27s+Strategy+From+A+Pers

pective+Of+Core+Competencies+%28ebook%29