Ryanair Airline’s Low-Cost Operations Strategy PDF

Ryanair Airline’s Low-Cost
Operations Strategy
Topic: Airlines Words: 3409 Pages: 12 Feb 3rd, 2021
Operations strategy entails the process of developing long-term
plans that aim at utilizing the key resources of any organization.
These efforts focus on linking the organization’s long-term
corporate strategies with the key resources. Operations strategy
addresses ways on how to utilize major or key resources to achieve
the required or desired corporate goals and objectives. The
organization’s operations strategy lays a framework for
determining how the organization utilizes its resources to gain a
competitive power and advantage in the market. There are many
external factors that affect the operations strategy. They include
globalization of business that leads to more competition in the
market as every product or service has to meet the demands and
tests of customers (Nigel 2009, p.34).
Every organization has to meet the needs and preferences of its
customers in order to maintain a good share in the market. These
efforts aim towards beating the competition and meeting goals
and targets the organization may have laid down. Another thing to
put into consideration is the advent of technology. New technology
means better ways of goods production and the better the quality
of goods produced the greater the power in convening and winning
customers. Every technology adopted has cost implications that
the operations strategy and other efforts have to put into

considerations. Therefore, the operations strategy aims at keeping
the organization in a better position to meet market demands
while making profits (Slack & Lewis 2011, p.25).
Basing on the needs and aims of Ryanair management, there exist
strategies that an organization has laid in place to achieve its
objectives and maintaining low costs. To do this well, Ryanair does
it by focusing on various key strategies. To begin with, the airline
provides frequent point-to-point services that are mainly short-haul
routes. These short-haul routes join or mainly target secondary
airport and other regional airports in major population centers
where there are many people. This move guarantee’s the airline
low operation cost in terms of revenue for using the secondary and
regional airports. This is simply because secondary airports’
location is usually away from the busy central business district of
many cities that Ryanair majors its operations. To cut unnecessary
costs, Ryanair focuses its operations on short-haul routes allowing
it to offer frequent travel services and eliminating certain services
like frill services that are usually offered on long-haul travel
(Waters 2006, p.19).
Short-haul or point-to-point services that Ryanair majors in helps
the airline to offer direct services. The direct services are
associated with non-stop routes which to Ryanair, greatly helps it
to cut or avoid many costs like through service for connecting
passengers which includes; transit passenger assistance costs and
baggage transfer costs. This effect gets translated to its costs for
ticketing as there are no loss selling tickets at a low price and the
cost of maintaining the airports and the aircraft is catered for, at
the end of the day Ryanair keeps maintaining low costs at all

times. With all these, things put together, Ryanair achieves low
costs ticketing and service delivery while focusing on making
profits. Thus, the operation strategy of achieving low costs has no
hindrance whatsoever (Waters 2006, p.22).
Moreover, Ryanair aims at maintaining its cost-effectiveness
strategy while focusing on the operations strategy by considering
aircraft equipment costs. From its initial strategy, Ryanair
controlled aircraft acquisition costs by purchasing used aircraft of
one type. This idea helped Ryanair in those days to cut costs
ultimately and maintain its low-cost strategy. In the late nineties,
Ryanair experienced a shortage in the supply of used aircraft in the
market. This phenomenon forced Ryanair to recalculate its
strategy to keep its operations at low costs. To this end, Ryanair
focused on buying a new fleet of new generation Boeing 737-800
aircraft of a single type from one manufacturer. This strategy aims
at limiting costs associated with; personnel training, maintenance,
and the purchase and storage of spare parts. This advantage does
not stop at that as they’re an easy and flexible crew and
equipment scheduling program. All the advantages and cost cuts
in the strategy aim at keeping the aircraft’s costing plans low. This
eventually translated into the mode of ticketing and the prices
offered at Ryanair. All this reflect on Ryanair’s overall low travel
costs that keep it the best low-cost airline in the whole of Europe
(Waters 2006, p.33).
The other thing that Ryanair focuses on maintaining its low costs is
the way of handling personnel productivity. Ryanair maintains its
initial labor force by looking for ways of improving its production
capability. This has translated to improved production per

employee thus boosting the overall sales at minimal costs. Another
thing that helps Ryanair so much is the mode of compensation for
employees. Every employee gets compensated basing on
productivity-pay incentives that majorly include; commissions for
onboard sales of products basically for flight attendants. Another
effort by the airline to cut costs bases on paying pilots and cabin
crew personnel depending on the number of hours and the sector
they flow in. This setup goes in line with the industries’ standards
for fixing maximum hours for working thus no exploitation and
inhibition posed by this move by Ryanair in trying to control costs.
Overly, Ryanair has managed to cut costs using this strategy and
thus maintaining its low costs over the whole of Europe and
beating the competition at the same time (Waters 2006, p.41).
Another thing for consideration is the agreements that Ryanair has
made with third-party contractors to handle; ticketing, aircraft, and
passengers at selected airports. This move became cost-effective
when the management opted to negotiate long-term contracts that
mostly have fixed costs that are subject to revision or periodic
increases only under inflation situations. This way the airline cuts
more costs and at the end of the day comes up with low costs for
its air travel tickets. This goes in line with the elimination of travel
agency strategies that were costly to run and maintain. This has
come with the introduction of the airline’s own internet booking
facility and reservation center. This has had an impact on the sales
of the airline as direct sales revenues increased significantly owing
to the new way of booking through the internet. On the other hand,
Ryanair maintains its low-cost strategy by controlling airport
access and service charges associated with it. The airline’s record

of delivering a high constant volume of the customer of passenger
traffic growth at most of the airports it majors its services has
helped the airline to negotiate good and favorable contracts
(Waters 2006, p.27).
Ryanair has other various ways of maintaining its high
performance while focusing on reducing costs through the
provision of ancillary services, core air passenger services, and
scheduled services that are usually non-flight services, these are;
food, merchandise, and internet-related services and beverages.
The other thing is the provision or rather distribution of
accommodation services, travel insurance, and car rental through
the websites of the airline, which reduces costs while boosting
sales. This strengthens the operations strategy of the airline in
achieving its corporate goals and aims (Waters 2006, p.38).
What would you describe as the market qualifiers and
order winners in the low-cost airline market?
To begin with, we look at the difference between the market or
order qualifiers and order winners. To start with, order qualifiers
are the minimum characteristics or elements that an organization
or its products must-have for their consideration and potential to
satisfy the suppliers as their source. Order qualifiers make an
organization be in a better place of overcoming competition. On
the other hand, order winners are such characteristics as high
customization or an outstanding service delivered to customers in
a unique way. When this order winner becomes the trend of many
other organizations as a way of attracting and satisfying potential

customers, then it becomes automatically a market qualifier or
order qualifier. This is a minimum acceptable level for operation in
any given line of industry such as the airline industry (Waters
2006, p26).
For low-cost Ryanair, there are market qualifiers and order winners
that have helped the airline to cope with competition and attract
more customers in the market. To begin with, we look generally at
both the qualifiers and market winners at the same time. Ryanair
has introduced the mode of ticketing and direct calling services
that has enabled the airline to handle customers faster and deliver
services at the expected time. This achievement is through the
establishment of the website ticketing system. This ticketing
system has ultimately increased the mode of sale as customers
spend much less time confirming and reserving their flight seats
that include paying capability on spot. All this is enhanced by
having a different contractor handling the whole process for
Ryanair. The separation of services from Ryanair helps the
management have a good follow-up plan and increases the speed
of service delivery as the whole process has a different set of
management under the contractor whose main job is to provide
that service without mix up (Waters 2006, p.29).
The other thing that has attracted customers so much and acted
as an order winner for the past few years bases itself on the quality
of services offered. This starts with the way of handling customers
using the new ticketing strategy that has won the trust of
customers as they rely on the company for its daily travel needs.
The quality of service ranges from quality of aircraft used as the
organization decided to buy aircraft from one company thus

increasing the level of performance to boost the quality of services
offered by Ryanair. The other thing that assures quality is the level
of maintenance that the company offers to its customers, at this
time Ryanair offers contracts to the best airline maintainers across
Europe to guarantee the quality of service through safety. This
explains why for more than twenty years of service, Ryanair has
not had any injury or records of accidents thus it becomes the
order winner for the airline due to quality and most importantly
safety for its passengers.
This has been moving between order winner and order qualifier
depending on the type of customer handled by the organization.
Ryanair as the pioneer of the low-cost airline had so many things
that it put in place to ensure cost-effectiveness, this starts with, the
choice of using secondary airports that allows the airline to charge
its customers lowly. The other thing is with used aircraft that
guarantee the management of the airline to maintain a low-cost
ticketing strategy. Ryanair also maintains its existing staff while
improving their performance thus improving both quality and
increasing sales as customer handling techniques get improved
every time. The improvement of staff performance reduces the
cost of recruiting and training new personnel, thus this reduced
cost of production translates to the low-cost ticket strategy, which
wins more and more customers (Waters 2006, p20).
How does Flextronics’s operation strategy help the
company satisfy customers?
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Operations strategy entails the process of developing long-term
plans that aim at utilizing the key resources of any organization.
These efforts focus on linking the organizations’ long-term
corporate strategies with the key resources. Operations strategy
addresses ways on how to utilize major or key resources to achieve
the required or desired corporate goals and objectives altogether.
The organizations’ operations strategy lays a framework for
determining how the organization utilizes its resources to gain a
competitive power and advantage in the market. There are many
external factors that affect operations strategy, these include;
globalization of business that leads to more competition in the
market as every product or service has to meet the demands and
tests of customers (Slack & Lewis 2011, 23).
Every organization has to meet the needs and preferences of its
customers in order to maintain a good share in the market. These
efforts aim towards beating the competition and meeting goals
and targets the organization may have laid down. Another thing to
put into consideration is the advent of technology. New technology
means better ways of goods production and the better the quality
of goods produced the greater the power in convening and winning
customers. Every technology adopted has cost implications that
the operations strategy and other efforts have to put into
considerations. Therefore, the operations strategy aims at keeping
the organization in a better position to meet market demands
while making profits (Nigel 2009, p.32).

To begin with, Flextronics Company satisfies its customers through
various ways as per the operation strategy. The first thing to look
at is; reduction of variability, waste, and cost by the incremental
improvement of existing processes, products, and systems. By
focusing so much on how to improve the production both in quality
and speed, Flextronics management aims at using the best
available techniques to venture into the production market and
come up with better ways to utilize that technique to meet the
required standards of the market. These techniques need to
eliminate wastes while improving the quality of production. These
innovative ways have resulted in two goals; new products and new
processes. These new products have over and again helped the
company meet market demands and therefore satisfy customers
as these new products are produced based on the needs and
requirements of the market. With these new processes at
Flextronics disposal, everything that entails producing products
efficiently and at affordable costs translates to the company’s low
product costs at high quality thus customer satisfaction
guaranteed (Pan & Polishuk 2008, p.30).
Discuss the progression of
operation contribution and
identify the level of the
contribution made in Flextronics
The operation strategy of Flextronics Company has contributed to
many things in the market. To begin with, the company’s strategic
supply chain management has progressively contributed to the
organization through cost reduction that is of importance and

advantage to the customers. This goes on in continued level of
supply and the improvement of time-to-market. The cost reduction
process always bases on current market pricing. The strategy also
focuses on helping customers with the utilization procedure of Flex
services. Through the operations strategy, the company monitors
and analyses the market trends together with monitoring customer
material supply agreements to ensure adherence. The operations
strategy helps the company in coordinating new product
forecasting of new products, demand shifts, and technical
requirements for developing good products meeting the market
requirement. This has raised the level of operation in that the
company competes favorably with other multinational companies
(Foscht 2007, p.25).
Operation strategy
Operation strategy of Ryanair and
how it helps it to maintain low
costs
To begin our discussion, Ryanair’s operations strategy focuses on
maintaining low costs while increasing customer traffic, to attain
this, Ryanair puts more focus on containment and operation
efficiency. Every aspect of operation regarding customers and the
whole business is given total concentration. Cost containment
comes in every new strategy that the management of Ryanair lays
down. First and foremost, the airline purposed to reduce costs
through the adoption of new ways of ticket selling. To this end, the
costs that were incurred during the time of the airline’s agency

ticket selling were eliminated as the ticket access was made easier
through the airline’s website. Customers or passengers book their
travel reservations online; this led to increased sales as the
customers paid promptly on the request on seat reservation. There
are no charges for maintaining offices in various destinations to
handle customer requirements (Kahawatte 2010, p.35).
Eliminating the agency charges and the associated commissions
mean that the airline can still offer low-cost tickets without
incurring any losses as the inhibiting factors get more and more
reduced with improvised operation strategies. The strategy by
Ryanair management to set fares according to the demand of
particular flights and the remaining time for departure, keeps the
customers contented as they themselves determine the number of
fares they will pay depending on the time they reserve their seats
ensures that the airlines keep fares low (Kahawatte 2010, p.40).
The other important factor about Ryanair’s operations strategy
that helps them to maintain low costs is the decision by the
management to improve the performance of the existing
workforce other than recruiting and training new workers. The
management has focused itself on ensuring that the services
delivered by all employees at all levels meet and exceed the usual
customer handling procedures. In doing so, the management has
cut down on costs of recruiting and training new personnel and at
the same time, the move helps the company increase its sales as
more and more customers get satisfied by the services delivered
by the employees and the whole airline at all levels. Pilots and
cabin crews get their pay on a commission basis and based on the
route operated. This way, the salary is not fixed which ensures that

minimal finances are wasted. With these cost cuts, the airline can
offer low costs for its services without any impediments for a long
time (Kahawatte 2010, p.42).
Definition and a list of six market
qualifiers and six order winners
Order-winners are things with direct influence to winning business.
These are the key things that customers consider before
purchasing a product or service. Market qualifiers are aspects of
competitiveness, which determines the operations performance at
certain levels that customers regard as the best for the product for
business consideration. Below the qualifying levels makes the
customers neglect the products of that company as of low quality
required. The list of order winners and market qualifiers is given
below. Order winners are; price, range, flexibility, quality,
specialization, and speed, and for qualifiers they are; quality,
customization, cost, speed, quality, dependability, and mode of
servicing (Roh 2009, p.15).
Critical analysis of Flextronics
operations strategy
The operation strategy of Flextronics aims at making the company
the world’s number one consumer choice by focusing on
procurement, material management, and quality procedures that
keep on being refined every time to meet and exceed the
customers’ expectations. This, not only ensures good profits but it
also focuses on its grip in the market and winning off its

competitors by far to gain a good market share that would ensure
the firms’ stability. The firm’s operations strategy highly focuses on
employee teamwork that helps the company to realize its continual
improvement in both customer handling and quality production
processes that results in good products and services that keep
improving every time. This teamwork aims at meeting challenges
presented to the company by customers. By doing this, the
company improves its customer focus initiative that keeps better
as time goes by this is one of the things about the operations
strategy that keeps the competitors of Flextronics at bay (Simchi-
Levi 2010, p.23).
Critical evaluation of stages in
Hayes and Wheel right’s model
of operation related to
Flextronics
In any organization, a good operations strategy results in good
production as well as good customer handling, the two are key
factors that may ensure good market share ownership by the
company practicing these two important factors. Looking at Hayes
and Wheelwright’s model of operation strategy, it is clear that the
model operations strategy focuses on building a good foundation in
terms of production processes that will help any particular
company to meet the market demands and satisfy customers
beyond their expectations. This, not only improves product
performance and profit-making but it also increases the company’s
power in the market. This helps a company to overcome
competition (Russell & Taylor, 2005).

The model of operation strategy in Hayes focuses on employing
the best there is of technology and processes that would give the
best quality of products and minimizes costs or damages. This
leads to customer satisfaction just like Flextronics who has grown
from nothing to the world’s leading contracting firm in
manufacturing. Flextronics’ quality of production at minimal costs
has been the winning point for the company on a world full of
competition and changing market trends in terms of customer
tests and preferences. The mode of supply chain should be
focused on expanding the acquisition of good suppliers and
increase the customers just as Flextronics’ power in finding the
best suppliers, Hayes model has applied this to keep operations
high in the market. The other thing that Hayes model strategy has
handled excellently just like Flextronics is the mode of introducing
new products, the model operations strategy of Hayes allows it to
introduce new products basing on market trends and also basing
on customer needs.