RyanAir Business Model/ Effect of Recession / Future trends / Recommendations

Essay by aayushmailUniversity, Master'sA, April 2009

download word file, 29 pages 0.0

Downloaded 127 times

1. IntroductionRyanair is a low-cost, no-frills airline carrier in Europe that set up in 1985. They've managed to maintain the lowest prices over the years despite the entry of competition after deregulation of air travel in Europe in the late 1990s. Due to their reputation and long-term success, they have a lot of experience and brand recognition. Their low prices have been made possible through numerous strategies. First, they use a standard fleet of planes (Boeing 737s), which has cut down on training requirements (increasing the flexibility of current employees) and has allowed for economies of scale. Their use of secondary airports outside of the major cities lowered their landing and airport fees significantly. In addition, Ryanair averages a 25 minute turnaround in comparison to 60 minutes of other major carriers, which increases their efficiency. Ryanair has a very high productivity since their airplanes were hardly ever on standby and they use fewer employees per plane, lowering their wage cost.

This still fits in with their strategy because they are focused on low-prices with a lower service scope than most carriers. As a result, they do not offer anything for free (food, drinks, other services like baggage check-in). They even turned the usual big cost of food into a revenue opportunity by selling them on the planes. Ryanair has very simplified operations, as they don't assign seat numbers and their flights are point-to-point, which means they don't have to deal with the complication of transferring baggage and passengers to other planes. Perhaps one of their greatest areas of profitability has come from their online sales. By 1993, 95% of their bookings were done online. This cut transaction costs substantially. Another way they were able to reduce costs even more was through their partnerships with car rental companies, hotels, life insurers,