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Ryanair: the low-fares airline - future directions?

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J Stefan Crespo - Donaire

on 16 December 2014

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Transcript of Ryanair: the low-fares airline - future directions?

Overview of Ryanair

Ryanair: the low-fares airline - future directions?
Porter's 5 Forces
SWOT Analysis
Situation & Problems
Case Study
Ryanair: The low-fair airline Future directions?
Francisco Bayona
Fernanda Canevaro
Nelia Carrasco
Stefan Crespo - Donaire
Guillaume Denis

- Europe´s leading budget carrier

- Stuck to the low cost / fare model

- Most profitable airline in the world on the basis of operating and net profit margin

- Delivered 12% increased in profit, despite
a 74% increased in fuel cost

- Ancillary revenue grew by 36%

Situation:

•Low fares
•Ancillary Revenue
•No frills


Problems:

•Vulnerable to rising fuel prices
•Represents 35% of the operating costs
•Regulation by the European Union
•Legal problems with the holding in Aer Lingus
•Marketing controversial news
Ryanair's Positioning Strategy
- Price -->
Leader
-
Premium - Competitive

- Features --> Original - Customized -
Basic

- Quality --> Excellent -
Average
- Acceptable

- Support --> Comprehensive - Standard -
Minimal

- Availability --> Restricted -
Selective
- Universal

- Reputation --> Prestigious - Respected -
Functional

•Secondary airports

•Fleet commonality

•Maximize aircraft utilisation

•Cheaper product design

•Minimize personnel costs

•Customer service costs
Cost Reduction Strategy

•Expand into central & eastern Europe

•Continue aggressive acquisition

•Increased ancillary revenues

•Focus on after sales

•Renovate and making major changes to the customer service

•Internet ticketing (e-commerce)
Alternatives to the proposed strategy

Conclusions

> Ryanair is the 1st low-fares airline in Europe
> The company enjoyed growth and success
> Complicated environment

How create added-value and sustainable strategic advantage?

Using internal resources to manage difficulties and threats.
Cost reduction and relevant positioning.
Find new solutions: expand in eastern EU, focus on services (After-sales, customer care, e-tickets, etc.)



It was the 1st Airline to charge for check-n luggage & in-flight food & beverages- since then, ALL budget Airlines have followed suit
Options for road-transport and high-speed rails that don't charge for luggage
After plan to purchase 100 aircraft from Boeing between 2013 & 2015, Ryanair sought to open negotiations with Airbus
Signed Memorandum of Understanding with COMAC (Chinese aircraft manufacturers)
76 Million Passengers in 2012; consistently reporting earnings in excess of 20%
We are in times when lowest-cost producer wins
Ancillary services (in-flight food & beverages, check-in luggage charges, & online distribution of accommodation & car rentals)
Growing criticism of extra charges, like check-ins, making Ryanair more expensive than competitors
Customers vote with their feet by choosing Ryanair for 4 tenets of customer service: low fares, good on-time record, few cancellations, & few lost bags
Airlines had seen no economic profit over a 40 YEAR period till 2012
Flights are to secondary & regional destinations (which are significantly further away from city centers)
6 European Airlines closed in 2012 (which included Spanair and Malev)
Ryanair took the opportunity to open a new base in Budapest, & expanded bases in Spain
Full transcript