Essay About Alitalia S.P And Ryanair Aims

Ryanair Strategy
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STRATEGY
Ryanairs objective is to firmly establish itself as Europes leading low-fares scheduled
passenger airline through continued improvements and expanded offerings of its low-fares
service. Ryanair aims to offer low fares that generate increased passenger traffic while
maintaining a continuous focus on cost-containment and operating efficiencies. The key
elements of Ryanairs strategy are:
Low Fares. Ryanairs low fares are designed to stimulate demand, particularly from
fare-conscious leisure and business travelers who might otherwise have used alternative forms of
transportation or would not have traveled at all. Ryanair sells seats on a one-way basis, thus
eliminating minimum stay requirements from all travel on Ryanair scheduled services, regardless
of fare. Ryanair sets fares on the basis of the demand for particular flights and by reference to the
period remaining to the date of departure of the flight, with higher fares charged on flights with
higher levels of demand for bookings made nearer to the date of departure. Ryanairs Dublin to
London (Stansted) route is its largest route in terms of passenger volume, with fares ranging from
_0.99 to _199.99 (excluding government taxes and passenger service charges). Ryanairs
competitors generally do not operate a one-way pricing policy, so direct comparison is not
possible, but current round-trip fares on Aer Lingus, Ryanairs largest competitor on the London-
Dublin route, for travel in September 2004 were _82.27 for economy restricted return tickets,
_218.27 for economy flexible return and _353.75 for business class tickets. In July 2004, Ryanair
launched a fare promotion offering a total of one million seats on certain routes for “_0.99”
(excluding government taxes and passenger service charges) for travel during the period between
September 7, 2004 and January 31, 2005, and launched a similar fare promotion in August 2004
offering a total of 900,000 seats on certain routes for “_0.90” (excluding government taxes and
passenger service charges) for travel during the period from September 2, 2004, and February 10,
2005.
Customer Service. Ryanairs strategy is to deliver the best customer service performance
in its peer group. According to reports by the Association of European Airlines and the airlines
own published statistics, Ryanair has achieved better punctuality, fewer lost bags and fewer
cancellations than all of the rest of its peer grouping in Europe. Ryanair achieves this by focusing
strongly on the execution of these services and by operating from uncongested airports.
Frequent Point-to-Point Flights on Short-Haul Routes. Ryanair provides frequent
point-to-point service on short-haul routes to secondary and regional airports in and around major
population centers and travel destinations. In the fiscal year ended March 31, 2004, Ryanair flew
an average of approximately 1.83 round-trips per route per day with an average route length of
491 miles and an average flight duration of approximately 1.2 hours. Short-haul routes allow
Ryanair to offer frequent service, while eliminating the necessity to provide “frill” services
otherwise expected by customers on longer flights. Point-to-point flying (as opposed to hub-andspoke
service) allows Ryanair to offer direct, non-stop routes and avoid the costs of providing
through service for connecting passengers, including baggage transfer and transit passenger
assistance costs.
In choosing its routes, Ryanair favors secondary airports with convenient transportation
to major population centers and regional airports. Secondary and regional airports are generally
less congested than major airports and, as a result, can be expected to provide higher rates of ontime
departures, faster turnaround times (the time an aircraft spends at a gate loading and
unloading passengers), fewer terminal delays and more competitive airport access and handling
costs. Ryanairs “on time” performance record (arrivals within 15 minutes of schedule) for the
first six months of 2004 was 92%, exceeding that of its principal competitors, including
Lufthansa AG (“Lufthansa”) 84%, Air France 84%, easyJet Plc (“easyJet”) 82%, British Airways
81% and Alitalia S.p.A. (“Alitalia”) 80%, according to the Association of European Airlines
reports and the airlines own published statistics. Faster turnaround times are a key element in
Ryanairs efforts to maximize aircraft utilization. Ryanairs average scheduled turnaround time
for the fiscal year ended March 31, 2004 was approximately 25 minutes. Secondary and regional
airports also generally do not maintain slot requirements or other operating restrictions that can
increase operating expenses and limit the number of allowed take-offs and landings.
Low Operating Costs. Management believes that Ryanairs operating costs are among
the lowest