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Transcript of Ryanair
Cristobal Sanchez Castillo Airplane
industry analysis BRIEF HISTORY Definition and characteristics The development in '70s of XX century USA airlines which operate on relatively short distances in a certain region without offering additional services The history starts from ’50s - low prices were already offered in the by Pacific Southwest
Southwest Airlines which started flying in 1971 no-frills cheap discount LOW-COST CARRIERS Aircraft Deregulation Act from 1978 intended to remove government control over fares, routes and market entry (of new airlines) from commercial aviation - liberation of the market for flight routes and flight prices between the states in the US. The development in '90s of XX century Europe - About 1995 - the Irish airline Ryanair and EasyJet Aircraft liberalization 1978 http://www.emagazine.airlinebusiness.com/1M4f9a6eecc775e320.cde/page/8
difficulties – money-consuming factor, big financial contribution
Social and political trends–
at the beginning legislative barriers, changes
opportunity new mobile generation SUPPLIERS – companies like Boeing, big contracts and price negotiation
CUSTOMERS – people with increasing necessity of shift around
COMPETITORS – at the beginning small competition (high entrance barriers) MICRO MAKRO -this industry require high financial contribution
-arrangement with airports
-hidden barriers -people are sensitive on price
-there is no problem change company – relatively good information (in internet) - people don’t have other possibility to travel so cheap and fast. (rather unelastic)
-substitutes are overland (rather expensive) and water transport (slow). -strong specialization
-low number of suppliers (main: Boeing and Airbus)
-high cost of changing suppliers – rather loyalty
-dependence of petrol price
-LOW –small and medium airports It’s difficult to differentiate product, differences across the business model. Cost leadership-differenciation Strategic management:
all those initiatives, objectives and decisions taken by the management using its own resources to improve efficiency, productivity and positioning the company.
To achieve a competitive advantage:
reduce direct and indirect costs of the airline.
Example: Vueling, Easyjet...
always trying to stay one step ahead with passenger services.
Example: Emirates, Singapore,Etihad... Their management is based
in three big beginning: Reduction of all those not basic services for which the clients are not ready to pay anything.
Obtaining income for the collection of additional services to those travelers who wish it.
Subcontracting of great part of the processes and necessary activities to work, since it can be the maintenance of the planes, the turnover of baggages, etc. Consequences in the industry: React of the traditional firms. Price reduction.
Strategies offers and promotions.
Example:Iberia has been estimated at 100 million euros to a Master Plan with measures to improve its competitiveness. Big airlines can not compete with the same arms as their competitors
Big airlines and small airlines. Stylish design products
Offering a unique combination of products
Create a distinctive community
Sell experiences Differenciation management: Until 1993.
Big airlines and small airlanes.
Deregulation sector and liberalization.
Big airlines and low cost airlines.
Competitive advantage= cost leadership. Cost leadership airlines v Segmentation Matrix There are hundreds of airlines nowadays
Every country has at least one
Now the market it´s suffering a merger policy, because the current number of airlines is not profitable
Airlines are doing what they do better, and mergering to others that can do what they cant. Segmentation Matrix (II) No low-cost carrier offers intercontiental flights, due to it requires:
Bigger and more expensive airplines
More fuel consumption
Higer levles (and cost) of maintenance
More crew on each flight
Then, a low cost carrier would finally offer similar prices to full-service ones
People when it´s going to take a long trip, are more concerned on safety Low-cost in intercontinental flights We can find 3 strategic groups in relation with the cost and geographic scope:
Regional airlines, with normal costs
Full-Services airlines Strategic groups International Domestic Intercontinental Full-service
Airlines Quality of the service Geographic Scope Regional airlines are airlines that operate regional aircraft to provide passenger air service to communities without sufficient demand to attract mainline service. There are three ways for a regional airline to do business:
As a feeder airline, contracting with a major airline, operating under their brand name
Operating under their own brand
As an independent airline larger than an air taxi or commuter airline service
Colgan Air Regional airlines
Easyjet, Ryanair, Vueling
(normal-cost) Full-service airlines Using airships in the mid-19th century One of the earliest airline organizations, a British group called Aircraft Transport and Travel Austria, Belgium,
Germany, the Netherlands 1 January 1914
Tony Jannus conducted the United States' first scheduled commercial airline flight Sources: http://www.elfaa.com/background.htm
http://en.wikipedia.org/ Low-cost Airlines
Colgan Air, Aer Arann
Qatar Airlines, Iberia,