Ryanair: A Low-Cost Airline Revolution

This article explores the success and business strategies of Ryanair, a leading low-cost airline in Europe. It discusses the airline's history, cost leadership approach, use of technology, asset and airport utilization, operational costs, ancillary services, and global challenges. The article also highlights the impact of Ryanair on the air transport industry and its global growth.

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GLOBAL HOSPITALITY AND TOURISM ISSUES
By (Name)
Class
Professor
College
City and State

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Introduction
Christopher Ryan, Tony Ryan, and Liam Lonergan founded Ryanair in 1985, and the first
air travel was between Ireland, Waterford, and London Gatwick. The plane was small with a
capacity of 15-seats with few flight attendants were needed to be less than 5.2 meters tall. During
its first year of operation, the airline had 51 employees and at least 5,000 passengers, and it was
one of the smallest commercial airlines worldwide. Notably, the airline was established during a
time when regulations of European air travels were in place, and the latter intended to break the
duopoly placed on London-Ireland flights that were held by Aer Lingus and British Airways. In
1986, a new ruling by the EU influenced the partial deregulation of air travel that stated that
airlines could ply new international flightpaths as long as either of the nations accorded. Thus,
Ryanair opened a second route from London Luton to Dublin, which directly competed with the
“duopoly”. Unfortunately, the Irish administration declined licensing for the course to shield
“Aer Lingus”, although “Margaret Thatcher” and the British administration accepted Ryanair to
the route.
Currently, “Ryanair” charges 99 pounds for the Dublin-Luton flight which was a total
undercut on the 209-pound regulation rate provided by “Aer Lingus” and “British Airways”.
Despite Ryanair proffering only two short flightpaths, it became Europe’s cardinal “low-cost
carrier” (LCC), and altered the air travel in the continent through its pricing structure. The airline
went through swift expansion during the late 1980s; Ryanair acquired new commercial planes,
and expanded the routes it offered. The airline provided flights out of the “United Kingdom”,
and it became a significant industry contender on all primary flightpaths within the “United
Kingdom” (Geller, Folan, and Shain, 2013, p.4). Ryanair felt the need of becoming a serious

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contender to the existing airlines in Europe; this influenced the latter to introduce a regular flyer
scheme, and provided enterprise class seats. However, this did not work well for the firm.
Business Strategy of Ryanair that Attributed to its Success
Ryanair has established itself as a major commercial airline globally. The former utilizes
the “cost leadership” approach and makes a fine consumer base and market dividend in the
European market. Importantly, the primary mission of the airline is to use latest technological
driven planes to please their consumers. Thus, they try to provide superb services to all ages and
class of people at the cheapest charges. In addition, Ryanair offers the best work experience to
their workers, and treats everyone equally with the utmost respect. Conversely, the airline
considers its shareholders by providing them with a 2x of return on their investment, which
enhances the company’s performance in a positive direction. The firm offers 30 percent of a
higher return on taking measures for their particular financial resources. These goals assist
Ryanair is working efficiently and strategically outdo its competitors.
Ryanair’s Current Business to Consumer Approach and Internet Use
The primary strategy of Ryanair in approaching its customers is providing low fares that
are coupled with quality customers’ services. The airline offers consumers with regular point-to-
point flights on short-haul flightpaths, which minimizes operation levies, while maintaining high
productivity. Furthermore, they take advantage of the internet in serving customers (McGarrity,
2014). The company has placed emphasized on customer experience through using social
networking sites such as YouTube and “Twitter” to get in touch with its purchasers directly, and
promoting the marque in an engrossing, and affable manner.
Ryanair Maximizing Asset Use and Airport Use

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The airline uses a single type of planes enables the firm to get great allots from
manufacturers, and it also streamlines and lowers maintenance costs. The main priority of
Ryanair has a relatively new fleet that reduces cost per passenger. Alternatively, maximizes the
airports during inconvenient flight times such as 5 a.m. or 11.00 p.m., which increase the use of
commercial planes flying almost 20 hours a day, which decreases ticket prices. The airline
increased plane use through less or paid hold luggage that decreases unloading and loading time.
This lowers fuel cost as planes become lighter. The Ryanair’s CEO, Michel O’Leary handles his
employees “not as the biggest asset, but as the biggest cost.” Thus, he minimizes cost by
elevating usage, and making individuals work hard, particularly pilots, and ordinance limits. The
latter further introduced payments for things that were free for staff such as food, training, and
uniforms (Technology and Operations Management, 2015). Lastly, Ryanair maximizes airport
and asset use through using smaller airstrips; Ryanair decreases airport levies and enhances its
coherence, as regularly Ryanair is the primary user of those airfields.
Operational Costs
Ryanair made 5,037 million euros in revenue in 2014, which was 3.0 percent from 2013.
The sales comprise of 75 percent from scheduled operations such as passenger transport, and 25
percent from ancillary services such as baggage fees, and in-flight purchases. Moreover, Ryanair
spent 4,378 million euros on business operational expenses, which was five percent more than in
2013. (Tran, Perkinson, Sinnenberg, Tarica, and Harrison, 2015, p.6). The most considerable cost
of the airline was on oil and fuel which covered 45 percent of the total payment, 14 percent on
airport and handling, and 12 percent on route charges. In spite of the increase in operational
revenue, the enterprise profit after taxation was down by at least nine percent from 2014 (523

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million euros). This was attributed to the increase in oil and fuel expenditure by 128 million
euros.
Ancillary Services and Paperless Operation
Ryanair’s ancillaries include charge and debit card transactions, surplus baggage levies,
dealings in bus and rail tickets, and commissions obtained from products sold on Ryan.com, and
inflight sales (Idea Works, 2010, p.5-6). Also, the new consumer-friendly “always getting better”
plan provides chances for boosting ancillary revenue (Reddan, 2016). Consequently, Ryanair’s
partnership with Vodafone Ireland developed paperless cockpits on its commercial planes.
Vodafone aided the airline’s IT and communication needs across Europe including check-in,
ticketing, inflight crew, ground crew, and pilot systems. Also, Vodafone provides local and
international network access, fixed line, and mobile 3G and 4G functionality on 189 regions
covered by Ryanair in Europe and North Africa (Conghaile, 2015).
Global Challenges on the Business Growth of Ryanair
O’Leary once stated that Ryanair is expressed management failure in their rostering
department, which developed a temporary choke point on staff. The primary concern was a
miscommunication of cancellations of 59 flights over six weeks. Nevertheless, Ryanair is facing
challenges due to the constant raise in fuel prices since 2005. The low-fares policy of the airline
restrains its capability to pass on elevated propellant costs on commuters through increasing
fares. In 2006, the combustible costs of Ryanair were 35 percent of its operation cost, which was
at least five percent more than in 2005.
Furthermore, the fuel prices are often in US dollars, which increases the risk especially
after the introduction of exchange rate exposure (O’Higgins, 2012, p.5). In 2005, a new

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regulation by EU required air passengers to receive compensation for delays, denied boarding,
and cancellations. Also, passengers affected by cancellations were needed to receive rerouting,
free care, or refund. Moreover, financial compensation of 600 euros for any flight cancellation
would be inflicted, unless the cancellation was due to unavoidable situations such as weather
conditions. These compensations would be detrimental to Ryanair as it would spend more
compared to the low-fares it charges.
The weaker “GBP post-Brexit” influenced downhill constraints on prices. The GBP
devalued after the “Brexit referendum” by at 20 percent by the end of “FY16”. Thus, “Ryanair”
earned a section of its yearly revenue in GPB, and approximated that for every 1p motion in GBP
per USD may impact its income by at least eight million euros. Therefore, the significant shifts
in GBP would materially affect the company’s operations and financials. Additionally, the ATC
staff strikes and shortages in Europe has significantly altered the operations of Ryanair. For
instance, the strikes in France and shortages of ATC staff in recurring shortages in the UK and
Germany affected the flight schedules especially in 2018. Notably, there are 37 national ATC
providers in the European Union, although Europe has the least number (SWOT &PESTLE.com,
2019). Also, the French ATC went on strike for nine weekends during the peak of the summer
season, which caused many flights to get canceled, and multiple Ryanair departures delayed.
Global Impact on the Business Growth of Ryanair
Ryanair has positively impacted on air transport by making it affordable for even low-
income individuals in its destinations. However, this has caused the airline to face stiff
competitions from other regional and state carriers. For instance, Wizz Air is a tough competitor
to the latter, which offers the best customer experience just like Ryanair.

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Conclusion
Ryanair focuses on providing affordable flights to all its customers. Ryanair charges 99
pounds for the Dublin-Luton flight which was a total undercut on the 209-pound regulation rate
provided by Aer Lingus and British Airways. In addition, the airline uses the latest technological
driven planes to please their consumers, which offers superb services for all ages and class of
people at the cheapest charges. Thus, the airline utilizes the “cost leadership” approach, and
makes a fine consumer base and market portion in the European market.

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References
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Geller, D., Folan, B., and Shain, B 2013. Ryanair Strategy Report. Bridges Consulting. Available
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Idea Works 2010. Ryanair-The Godfather of Ancillary Revenue. Idea Works. Available from
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McGarrity, P 2014. Ryanair Invest in Digital to Improve Customer Loyalty. Digital Marketing
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Reddan, F 2016. Ancillary Charges Enable Ryanair Revenue to Gain Altitude. The Irish Times.
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SWOT &PESTLE.com 2019. Ryanair SWOT & PESTLE Analysis. SWOT &PESTLE.com.
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Technology and Operations Management 2015. Ryanair: Lower price Beats Higher Price Every
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