Dogfight over Europe: Ryanair (a)
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Dogfight over Europe: Ryanair (A)
Case Report
Table of Contents
Introduction
When the threat of an economic depression hangs over the world, the overwhelming majority of airlines are thinking about the future survival. Ryanair had been a notable exception, because Ryanair have sound business performance and remain profitable for the consecutive years.
Ryanair was founded in 1985. Ryanair is a normal scheduled private airline with 2 aircrafts. Since 1986, Ryanair gained a license to operate between Dublin and London, it is means that Ryanair started the competition with other European Airlines. In 1991, Ryanair close to bankruptcy, the new CEO Michael OLeary suggested learning from Southwest Airline Co., after Ryanair changed direction to low cost airline. And then Ryanair became the market leader very soon. In order to gain more market shares, Ryanair always innovate different cost reductions. Nowadays, the costs of Ryanair Airline are 30% lower than the average cost of the European aviation industry. For instance, Ryanair can complete of an aircraft unloading, cleaning, stocking and reloading processes within only 25 minutes. In 1990, Ryanair carried less than 1,000,000 passengers per year, but in 2001 Ryanair carried 9,000,000 passengers per year. With rapid expansion, in 2010, Ryanair have more than 500 routes, 132 destinations, across 26 countries. Now Ryanair become 3rd largest in Europe.
In this paper, analysis of how Ryanair can compete with other Airlines is done. Ryanair have clear competitive advantages, such as low cost leader, innovative cost reductions, and strong public image. However, Ryanair is also facing some threatens. So after case analysis, the problem definition is shown to help address problems and causes. In the third part, possible courses of actions are listed. Then, decision criteria along with assessment of outcomes of courses of actions are determined to make sure the quality of the solution. Finally, selection of one specific course of actions will be introduced.
Case analysis
Direction
According to information from case, it is found its vision is to be Europes leading low fares airline. All Airline companies are competing against each other in keenly contested European and whole world markets. In order to achieve this vision, Ryanair set several business ideas as low cost approach and no frills, point-to-point short haul flights, and regional and secondary airports, to be unique and competitive in this market.
For example, in the case, “Aer Lingus and BA already operated on the Dublin-London route, which was reputed to be quite lucrative for both carriers.” Aer Lingus and BA were priced at $208, but the number of passengers were not increased as they expectation. Three-quarters of a million travelers choose other transportation tools because of lower cost. Compared with Aer Lingus and BA, Ryanair publicized a fare of $98.
Change of environment
From macroscopic view, economic recession can provide suitable environment for the development of low-cost airlines. The recession has made travelers to be more sensitive about price. It is also the reason why travelers turned to Ryanair. Customers can enjoy cheap airline tickets, and better customer service from Ryanair compared with other competitor. From microscopic view, Ryanair has been involved in a price war erupted in the industry. Ryanair considered that the smaller competitors will not be able to take on this large-scale and long-term price war. The final result is that the revenuers will stabilize.
What makes Ryanair successful through dogfight over European Aviation
With the opening step of European Aviation, Ryanair expands rapidly. Although more and more private Airline competitors, there are several strengths should be noticed. The first is low cost leader, Ryanair innovates lots of methods for cost reductions. In the beginning, Ryanair imitated Southwest Airlines. Ryanair made great effort to improve usage rate, and chose some secondary airports to load. In this way, the cost of airport service fee could be lower; also the waiting time could be shorter.
Threats
It cannot deny that Ryanair is still facing some threats at this moment. The first one is increased competitors and substitute products. Based on the case, Ryanair was more competitive and performed very well in Dublin-London route, compared with Aer Lingus and BA. However, there are more and more new entrants and flag carriers. They also provide