RYANAIR’S STRATEGIES

Presentation outline

1. Company overview2. Strategic analysis (External and

Internal)3. Key Elements of Strategy4. Marketing Strategy5. Revenue model6. Is the strategy sustainable?7. Concrete recommendations

Company Overview

Low budget airline

Started in 1985

160 airports, 27 countries 1,300+ routes 1,500+ daily departures

Fleet of 275 Boeings (Newest fleet (3yrs))

5 main bases: Stansted (London) Charleroi (Brussels) Marseilles Madrid Bremen

Leader

Michael O'LearyRyanair, CEO

Company Overview

Strategic Analysis

What is a strategy ?

Corporate strategy is the set of explicit or implicit decision rules that determines what business(es) a firm will be in and not be in.Business strategy is how a firm develops and sustains a competitive advantage within an industry.Functional strategy is the set of decisions made in marketing, operations, finance, research and development, and human resources that supports the business strategy.

(Faculty, Darden, 2012)

External Analysis

PESTEL-Analysis

SocialEconomic environment customerUnemployment in January 2012 was 14.2%, Consumer travel lifestyle and demographics

PoliticalStrong Political EnvironmentOpen Sky Agreement.

EconomicalUncertainty of fuel cost.Economical Recession in favor of Ryanair

.TechnologicalInternet adaptation/Check-inEnergy efficient engines will increaseUse of Trains

EnvironmentalControlling noise pollutionCarbon footprint & Global warming concerns

.

LegalCorporate lawsuitsMisleading advertisements

Internal Analysis

Vision

Become Europe’s leading passenger carrier

Objectives of Ryanair’ Strategy

Establish itself as Europe’s leading low-fares scheduled passenger airline

Through continued improvements and expanded offerings of its low-fares service.

Ryanair aims to offer low fares that generate increased passenger traffic

Through maintaining a continuous focus on cost-containment and operating efficiencies.

The Key ElementsLow cost-Core of business model-

Stimulates demand, particularly from fare-conscious leisure and business travelers who might otherwise have used substitutes of Transportation

Ryanair sets fares on the basis of the demand for particular flights

How ? Maintain focus on cost-containmentMaximise ancillary revenue

The Key ElementsLow Operating Costs

Ryanair strives to reduce or control four of their primary expenses:

Aircraft equipment/FuelPersonnel productivityCustomer service costsAirport access and handling costs

NO FRILLS STRATEGY

Graphical Analysis of Ryanair costs

EUR million 2013 Change vs FY2012 % of 2013 total

Fuel 1,886 18,3% 45%

Airport & Handling Charges 612 10,4% 15%

Route Charges 487 5,7% 12%

Employee 436 5,0% 10%

Depreciation 330 6,6% 8%

Materials, repairs 121 16,1% 3%

Aircraft Rentals 98 8,3% 2%

Other 198 9,9% 5%

Total Expenses 4,166 12,4% 100%

(Source: https://www.ryanair.com/doc/investor/present/Half_Year_Results_2012.pdf)

The Key ElementsCustomer Service

Deliver the best customer service performance in the low-budget airline Industry

Ryanair has achieved better punctuality, fewer lost bags and fewer cancellations than all of the rest of its peer grouping in Europe.

How? Ryanair achieves this by focusing strongly on the execution of these services and by operating from uncongested airports

The Key ElementsFrequent Point-to-Point Flights on Short-Haul Routes

Frequent point-to-point service on short-haul routes to secondary and regional airports 

Short flights + Frequent service eliminating the necessity to provide “frill” services

 Non-stop routes and avoid the costs of connecting passengers, baggage transfer, transit passenger etc.

The Key ElementsFocused Criteria for Growth.

Additional routes from the U.K. or Ireland to other locations in continental Europe/USA

Increasing the frequency of service on its existing routes

Starting new domestic routes within EU countries; establishing more new bases in continental Europe.

The Key ElementsTaking Advantage of the Internet

January 2000, Ryanair launched new reservation system: Flightspeed

Make and pay for confirmed reservations in real time through Ryanair’s Ryanair.com website.

Ryanair has heavily promoted its website through newspaper, radio and television advertising. (96% of all reservations online)

MARKETING STRATETGY

WEBSITE

Publicity Marketing

Deliberate controversial statements, to gain media attention.

MARKETING STRATETGY

“We want to offer the lowest fares while

keeping advertising costs to a minimum”

Michael O’ Leary

Subsidies20%

Ancillary revenues22%

Core revenues58%

“Any fool can sell low airfares and lose money! The difficult bit is to sell the lowest airfares and make profits.” Michael O’Leary

Ryanair Revenue Model

Ancillary Revenues

Hotel reservationsExcess baggage feesCar Hire: HertzOnboard sales of beverages, food and merchandise. Internet Income……………….

Is the Strategy sustainable over the next five years ?

Market Growth

Low

High

High LowMarket Share

Stars Question Marks

Cash Cows Poor Dogs

Boston Matrix-model

New Destinations such as USA, Croatia,etc.

Top Destinations – London, Madrid, Brussels,etc.

Really unfrequently used destinations.

Unknown airports/destinations Unfrequently used. Morocco.

Concrete Recommendations

Increase Flight Frequency of Routes

Open New Routes in EU

Strategic Alliance

Seek to protect themselves from oil prices

Investigate Load Factors

Exploit tourism Trends

Thank you for Listening!

Any Questions ?

Sourceshttp://www.ryanair.com/doc/investor/Strategy.pdfhttp://www.ryanair.com/en/investor/statementhttps://flightfox.com/tradecraft/polyester-airlines-europe-vs-americahttp://www.theguardian.com/business/ryanairhttp://www.slideshare.net/kevinconstant96/ppt-ryanair2http://www.docstoc.com/docs/23288365/Ryanair-Case-Study---PowerPoint

Sourceshttp://faculty.darden.virginia.edu/bourgeoisj/files/chapter%205.htmlhttp://www.air-scoop.com/downloads/In-Depth-Analysis-Ryanair-Business-Model-Air-Scoop-Nov2010.pdfAnon., n.d. Ryanair.http://www.ryanair.com/en/about/ryanair-and-the-environmentAviation, C. C. (2011, May 25). CAPA Centre for Aviation. http://www.centreforaviation.com/analysis/ryanair-earnings-up-26-but-change-in-tack-for-2012-52109BBC, 2012. Ryanair 'sexist adverts' banned after complaints. [Online] Available at: http://www.bbc.co.uk/news/uk-17036830