The Ryan family with a share capital of just ÃÂ£1, and a staff of 25 set up their own airline, Ryanair, in 1985. The airlines first route was then launched in July of that year, operating daily from Waterford in the southeast of Ireland to London Gatwick on a 15-seater Bandeirante aircraft. From those humble beginnings Ryanair has grown into one of Europe's leading Budget airlines currently employing a team of 2,700 people to fly approximately 35million passengers per year on 301 low fare routes across 21 European countries.
By analysing the competitive forces at work in the Airline industry and analysing Ryanairs strengths, weaknesses, opportunities and threats this report seeks to highlight the current strategy employed by Ryanair and its future sustainability.
Five Forces Analysis Analysis of the Low - Cost Airline Industry
Bargaining Power of Suppliers
-Boeing are RA's main suppliers
-Only 2 possible suppliers of planes - Boeing and Airbus
-Switching costs from one supplier to the other is high because all mechanics and pilots would have to be retrained.
-Price of aviation fuel is directly related to the cost of oil (Ryanair controls these through hedging).
-Regional Airports have little bargaining power as they are heavily dependant on one airline
-Bigger airports, where Ryanair's competitors operate, have greater bargaining power.
-Ryanair's policy is to try and avoid these airports.
Bargaining Power of Customers
-Customers are price sensitive
-Switching to another airline is relatively simple and is not related to high costs(Internet-all airlines are online)
-Customers know about the cost of supplying the service
Some barriers to entry:
-High capital investment,
-Restricted slot availability makes it more difficult to find suitable airports.
-Immediate price war if encroaching on existing LCC route.
-Need for low cost...