Industry Analysis of Ryanair
Industry Analysis of Ryanair
1)Bargaining Power of Buyers:Bargaining power of buyers is high as buyers have a lot of choices as there are multiple low price airlines in the market. This is threat is quite high as customers can change their minds on which airlines to fly. Besides, customers know about the cost of supplying the service. Furthermore, there is no brand loyalty.
2)Bargaining Power of Suppliers: Bargaining power of Aircraft manufacturers is quite high as there are only two major suppliers which are Boeing and Airbus in the market.As the low price airline industry converts to a single model (or very few models) of aircraft to reduce price, the airlines become dependent on the aircraft manufactures. Switching costs from one supplier to the other is high because all mechanics and pilots would have to be retrained.Bargaining power of aviation fuel suppliers is quite high as there are only a few major suppliers.This threat is quite high. Regional Airports have little bargaining power as they are heavily dependant on one
Airline. Bigger airports, where Ryanairs competitors operate, have greater bargaining power.Ryanairs policy is to try and avoid these airports.
3)Threat of Substitute Products or Services:There is always a threat that the consumer might switch to alternate mode of transport like train or bus.But at this moment for point to point transportation with in Europe, especially for island countries like Ireland & UK, flying is the most convenient optionThis threat is quite low.
4)Threat of New Entrants:Even though the price barriers to entry are quite high, there have been a lot of newentrants in the market hoping to duplicate the success of the existing low price airlines.But new entrants face significant challenges in acquiring landing slots and gates at both primary and secondary airports as the existing airlines have stranglehold on most of slotsand gates.This threat is quite low
5)Rivalry Amongst Existing Competitors: Rivalry amongst existing competitors is not high as existing competitors try to avoid a direct clash with each other and concentrate most of their effort in poaching customersfrom existing legacy carriers.This threat is quite low.The overall industry is attractive for existing low price airlines. Most cost advantages can be copied immediately. However if any company does decide to compete on the same basis as Ryanair there will
be heavy pressure on prices, margins, and hence on profitability. The low price airlines is about 30% of the overall airline industry and there is quite a lot of opportunity to grow at the expense of the legacy airlines. Besides, there is not much differentiation between services. Price is the main differentiating factor.
Analysis of Ryanairs Competitive Advantagestweet