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Strategic Analysis of Ryanair's Position in the European Low-Cost Airline Industry

   

Added on  2023-04-20

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Leadership ManagementStatistics and ProbabilityPolitical Science
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Running head: STRATEGIC ANALYSIS OF RYANAIR’S CURRENT POSITION IN THE
EUROPEAN LOW-COST AIRLINE INDUSTRY
STRATEGIC ANALYSIS OF RYANAIR’S CURRENT POSITION IN THE EUROPEAN
LOW-COST AIRLINE INDUSTRY
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Strategic Analysis of Ryanair's Position in the European Low-Cost Airline Industry_1

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STRATEGIC ANALYSIS OF RYANAIR’S CURRENT POSITION IN THE EUROPEAN
LOW-COST AIRLINE INDUSTRY
Executive Summary
The players in the aviation industry requires extensive evaluation of their strategic
plans in order cope up with the fluctuating market conditions. Ryanair is one of the reputed
airlines organization in the country of Europe that have penetrated the market with innovative
approach and grab a huge amount of customer base from its rivals within a short span of time.
The objective of the firm was not related to siphoning of customer base from its rivals but in
the past it provided effort in satisfying customers by their service quality and effective
operational management framework of airlines network. It breached the duopoly of Aer
Lingus and British Airways for which the tendency of this companies to form cartel in case of
price negotiation and charging the same services of the airlines at higher price were cut down.
Ryanair took the initiative to put forth that the similar kind of services can be provided to the
customers at cheaper rates. To understand the market scenario and the probable areas through
which scopes for market penetration and service development can be understood from the
company’s perspective is essentially studied and incorporated in this paper. All this are done
after understanding the external and internal environmental analysis through the PESTEL and
SWOT analysis, Ansoff matrix, etc. The paper created a strategic planning endeavour
through which it was been found that the current decline in Ryanair’s business performance is
due to low customer satisfaction, poor customer services, hidden charges, misleading
advertisements regarding fares as well as ambiguous agreements. However, it is been found
that the company can acquire its state of sustained growth through the merger, acquisition,
market development, code sharing as well as sector consolidation along with that significant
hike upon the short distance travellers. This will help the company to achieve the
opportunities available in the market and counter the currency movements, fluctuations in the
fuel prices, competition with the local carriers as well as natural disasters.
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STRATEGIC ANALYSIS OF RYANAIR’S CURRENT POSITION IN THE EUROPEAN
LOW-COST AIRLINE INDUSTRY
Table of Contents
Executive Summary...................................................................................................................1
1.0 Introduction..........................................................................................................................4
1.1 Aim...................................................................................................................................4
1.2 Company Background......................................................................................................4
1.4 Company Vision...............................................................................................................5
1.5 Company Mission............................................................................................................5
2.0 Current Strategic Analysis...................................................................................................5
2.1 Industry Reports...............................................................................................................5
2.3 Market Analysis...............................................................................................................7
2.2. Internal Analysis.............................................................................................................8
2.2.1 SWOT Analysis........................................................................................................9
2.3 External Analysis...........................................................................................................11
2.3.1 PESTEL Analysis....................................................................................................12
3.0 Strategic Group Analysis...................................................................................................14
3.0.1 Comparison of the Competitors in the Aviation Industry.......................................15
3.0.2 Porter Generic strategies.........................................................................................16
4.0 Ansoff Matrix.....................................................................................................................17
5.0 Value chain & Resource based View.................................................................................19
6.0 VRIO Analysis...................................................................................................................22
6.1 Recent Strategic Endeavour...........................................................................................24
7. 0 Recommendations.............................................................................................................24
Strategic Analysis of Ryanair's Position in the European Low-Cost Airline Industry_3

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STRATEGIC ANALYSIS OF RYANAIR’S CURRENT POSITION IN THE EUROPEAN
LOW-COST AIRLINE INDUSTRY
8.0 Conclusion..........................................................................................................................25
9.0 References..........................................................................................................................26
10.0 Appendices.......................................................................................................................28
10.1 Porter Five Forces........................................................................................................28
10.2 Business Environment..................................................................................................29
10.3 Value Chain Analysis of Ryanair.................................................................................29
10.4. Resource base value framework of Ryanair................................................................30
10.5. Industry Data...............................................................................................................31
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STRATEGIC ANALYSIS OF RYANAIR’S CURRENT POSITION IN THE EUROPEAN
LOW-COST AIRLINE INDUSTRY
1.0 Introduction
It is important to delve into the aspect of strategizing a business based on its objective
and the future prospects that it wants to initiate depending upon its existing situation in the
market and the intrinsic capacity of the organization to respond back to the market
fluctuation. Strategic management is an effective tool that supports in understanding the
market scenario and direct an organization with managerial leadership skills to ensure
optimum competitive advantage form the market followed by ensuring its long run industrial
sustainability (Abrate et al. 2016). In fact higher quality of services can be provided which
attracted the customers towards Ryanair and partially snatched a lump sum customer base
from its competitors. Hence, strategizing the business led to effective business performance
of the company. This aspects are investigated in detail within the paper through qualitative
analysis which will help to understand the strength and weakness of the company as well as
will direct towards understanding the probable threats and opportunities available for the
organization to cope up with the market situation.
1.1 Aim
The purpose is to ensure that Ryan Air is able to strategize its business to gain
competitive advantage in the market of Airlines in Europe as well as in the international
sphere.
1.2 Company Background
Ryanair is one of Europe's favourite girl that have its operation with more than 1600
flights Delhi from nearby 72 bases and connecting 192 destinations in 31 countries. Notably
it have nearby 300 flights of new Boeing 737-800 aircrafts. Being one of the Ultra-low cost
carrier in Europe they are being able to minimise the fare of flights for all destinations for the
passengers. It has made the travel by air accessible all kind of people and hence remain open
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STRATEGIC ANALYSIS OF RYANAIR’S CURRENT POSITION IN THE EUROPEAN
LOW-COST AIRLINE INDUSTRY
the new route for tourism in Europe that haven't open before (Abubakar and Dogoji. 2015).
The company was initiated by the Ryan family who share capital of 1 pound and a staff of
nearby 25 by the year 1985. In the year 1986 the company obtained their permission from the
regulatory authorities to challenge the British Airways to break the duopoly in the Dublin
London route. 46 seated turbo BAE 748 aircraft was launched for providing the services.
1.4 Company Vision
To establish itself song in Europe that provides flight services at lowest possible cost
and schedule passenger airline crew the process of continuous businesses expansion and
service improvement.
1.5 Company Mission
To become one profitable low cost airline not only Europe but globally implementing
The Rolling out low fare process and accepting the consumer base based on their quality of
services followed by operating for the benefit of passenger people as well as stakeholders.
2.0 Current Strategic Analysis
To understand the existing situation of the company it is important to delve into the
prevailing condition of the company some of which can be done by adaptive analysis of the
past trends and some of them can be done through the rational analysis. The adaptive analysis
is done through invigorating into the literature and articles that are based upon examining the
past trends that lead to current situation while the rational analysis is done through the
internal and external analysis tools.
2.1 Industry Reports
The major competitors of Ryanair are British Airways, Vueling, Flybe, Aer Lingus,
Virgin airlines, Delta airlines, Easy Jet, Jet Blue, etc. The major brands of the company
Ryanair are Ryanair Sun, Ryanair holidays, Ryanair rooms, Laudamotion and Buzz which is
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STRATEGIC ANALYSIS OF RYANAIR’S CURRENT POSITION IN THE EUROPEAN
LOW-COST AIRLINE INDUSTRY
Ryan air’s subsidiary. Initially the flight service was provided from Dublin to London and the
plane fare was 99 pound, given in less than half a price of that was rendered by British
Airways and Aer Lingus. Since in all the Airways the lowest fare was 209 pound (Caridá and
Bonizio. 2018). Forcibly the British Airways, Easy Jet, Jet2, and Flybe etc. start reduction in
their high prices due to response back to Ryanair that first started the Welfare in Europe in
case of flights at cheaper cost. Industry report suggests that created space for smoother entry
of the firm while beating its existing competitors with respect to the price and quality of
services where similar kind of services or services of a better kind based on the perception of
customers were provided by Ryanair at cheaper cost. This led to easy market penetration and
quick ability to earn potential market capitalization within a short span of time. By 1987 the
company acquired the Jet flights by using three of its BAC1-11 aircrafts from the Romanian
State Airline, Tarom. The aircraft was county arrival full wait list from Tarom that provided
all the pilots and the engineers to operate the aircraft by Ryanair. Due to rapid growth by the
year 2010 it was found that the routes are cost efficient and hence competition that was
initiated between all the three companies aforementioned to accumulate no profit but a loss of
20 million pound. This established the plinth for substantial restructuring and complete the
authorities of the company to invest of father more of 20 million pound in order to sustain in
the competitive market.
Ryanair traverse the path like that of Southwest airline model of low cost fare and
launched their management of aircrafts throughout Europe when challenging the competitive
situation and their Rivals. The strategic endeavour allowed the company to overtake details
by 2000 and launch Europe largest flight booking website. It became the largest passenger
airline in the Dublin London route where internationally scheduled flights for Europe and
Dublin was established. From the Appendix it is been seen that there is a 28 % increase in the
total operating revenue by 2017. However, by half of the fiscal year of 2017, Ryanair have
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STRATEGIC ANALYSIS OF RYANAIR’S CURRENT POSITION IN THE EUROPEAN
LOW-COST AIRLINE INDUSTRY
already generated 74 % of the full revenue that the company have earned in the particular
year. However, in the areas of marketing cost as well as the scheduled revenues it is been
found that by 2018 it is down by 15 % due to airport cost for passengers. The average staff
cost has reduced revenue by 5 % and the airport passenger cost lowered by 7 %. But the
positive point is that in that timeframe Ryanair is able to acquire huge amount of customers
that are interested for low fare travels which raised the consumer base by 26 %. Moreover,
the ancillary revenue account increased by 15 to 17 % within the overall revenue generated.
2.3 Market Analysis
The current scenario analysis reveals the prevailing market situation accordingly as
follows:
After the Brexit the GBP has depreciated significantly by almost 20% by the financial
year 2017. Ryanair earns a considerable proportion of annual revenues in GBP as
estimation reveals that the amount of GBP/USD that affects the company’s income
for every plane movement is nearby 8 million.
Depreciation in the GBP affects the financial operation of Ryanair but apart from that
the fluctuation in the fuel prices also affects its profitability and the business model of
the company. Ryanair is operated as low cost carrier and hence it is dependent upon
the fuel prices which if are low then the margin of profitability of Ryanair rises that
helps the company to remain operating. This is the factor upon which Ryanair has
limited control. In the last two years the fuel prices were low which helps the
company to keep their costs low though rise in the fuel price recently due to the geo-
political as well as economic reasons globally have threatened the low cost operating
model of the company.
Other state-owned and regional carriers like Wizz Air, Easy Jet, Alitalia, Air Berlin,
etc. are rendering competition to Ryanair. The Hungarian low cost carrier, Wizz Air
Strategic Analysis of Ryanair's Position in the European Low-Cost Airline Industry_8

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