Critical Issues Faces By Low Cost Airlines Management Essay

Ryanair started its operation in 1985. In the first twelvemonth more than 5,000 riders traveled between South Eastern Ireland and London. The company expanded continuously and by 1989 the company had 14 aircrafts over 600,000 riders traveled per twelvemonth. Over the four old ages the costs increased well and ends up with LP of ?20 million

In 1990 the current CEO Mr.Michael O’Leary took over the direction and conducted major alterations in the company. Ryanair followed the the low cost-low frills construct and reduces the paths from 19 to 5 by 1991. The company increased the fleet to 21 over the following 6 old ages and singular addition in rider traveled in Ryanair due to its low pricing policy. Ryanair unable to increase unto the market due to strict ordinance imposed on European air hoses.

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Ryanair took full advantage in 1997 unfastened new paths in Continental Europe due to deregulating of European Union air transit ordinance. Over 160 paths have been established by 2001 and hubs have been set up all around the continent in London, Glasgow, Brussels, Frankfort, Milan, Now Ryanair is the cardinal participants within the European budget air hose industry and possibly the most profitable air hose

Identifying critical issues and nucleus job faces by low cost air hose

Regulation by domestic and EU

European air hose industry is ever capable to ordinance from both domestic and European Union. Before 1980 heavy limitation imposed by the single states to protect their national callings. Towards deregulating industry Ireland and UK signed bilateral understanding. In 1997 EU besides deregulate the industry and any European air hose can run anyplace within the Europe. Ryanair benefited by this move. Subsequently EU introduces competition jurisprudence which it prevent taking province assistance and committee. Besides any air hose holding dominant place in the market should non mistreat the dominant place. Ryanair affected by this regulation

Charter bearers and Franchises of major air hoses

Charter flight operators have taken important market portion in Europe. Major charter operators are owned by the major travel agents or major commercial air hoses operators. Small bearers such as Virgin Express have become franchise of major flag bearers. The flag bearers use these independent air hoses as franchises to vie with low cost budget bearers such as Ryaniar and easyjet. Budget carriers cost base does n’t let them to vie efficaciously on short-haul paths.

Customer service satisfaction

Ryanair has eliminated traditional in-flight services such as place allotment, complementary repasts and drink and intelligence documents. Alternatively Ryanair earn net income from such secondary services by bear downing clients for in-flight services and other travel disbursals such as travel insurance, auto hire, Internet. Ryanair is highly sensitive in altering the menu value. Recently it was widely on the media that Ryanair sing to bear downing fee for them for utilizing the toilet. Meanwhile Ryanair late announced that it ‘s raising its checkered baggage fee from a‚¬15 to a‚¬ 20 per bag. ( Appendix 10 ) . Although the Ryanair has singular path record for promptness, flight completion the perceptual experience of the softer side of its client service has non ever been good with much bad media.

Ryanair ‘s aims and long term vision

Ryanair nonsubjective to run the largest sum of paths with lowest menu comparison to any European Airline without compromising low cost bearer concern theoretical account including quality of service. ( Appendix 1 )

Purpose of this assignment

Purpose of this assignment is to analyse Ryanair ‘s long term vision of the concern theoretical account and subject a study to the direction in order for them for the hereafter planning for the success of the company and to avoid any future menaces. This study demonstrate

Detailed survey of Ryanair ‘s current scheme and the direction attack which impact on concern operations and maps towards bearer ‘s client relation. and the stairss direction has to concentrate in order to remain in strong place in the low cost market.

It evaluate Ryanair ‘s current scheme and the action program to be carried out by the direction in the hereafter to avoid any future menaces by the company.

It besides gives brief rating of Ryanair ‘s fiscal analysis and how the environmental factors affect the European air hose low cost industry.

Method and theory used

The schemes and theory put frontward in this analysis are industry analysis, environmental analysis, and fiscal analysis

Strategic factors and capablenesss

6.1.0 External environment

The PESTEL analysis & A ; Michael Porter ‘s five forces analysis clearly talk about external factors on Ryanair map and the schemes which are adapted by the administration. Hence, a good perceptive of Ryanair external environment will place the chances and avoid menaces ( Refer appendix diagram )

An air hose industry includes good established key participants and to vie with each and other but rynair has high potency of pulling the market. Therefore, the PESTEL variables in macro environment have major force on the public presentation of Ryanair


Internal environment.

This environment analyses about the strengths and failings of Ryanair. This aspect negotiations about Ryanair internal factors like accomplishments, rivals and capablenesss. Its steps the Rynair ‘s efficiency and effectivity to get competitory advantage ( Refer appendix diagram )

Harmonizing to the value concatenation analysis it is chiefly rely on Ryanair ‘s primary and back uping activities. Value concatenation analysis creates a value for Ryanair. However, through this analysis it is clearly focus on quality of Ryanair.

Industry analysis

Before reaching of low-priced air hose, major company such as British Airways dominated the Europium air hose industry. Until 1997 one member state could non wing riders within another state ‘s domestic market. The Ryanair enter in the low-priced market with grate obstruction to get the better of. Nevertheless Ryanair able to break the market with runing low cost while maintain the net income. As a consequence Ryanair has become the largest low cost bearer in Europe.

In 1990 Ryanair operates with 74 aircraft including 41 Boeing 737-800, 21 Boeing737-200, 06 Boeing 737-300 and 6 BAE 146. The company offers about 475 short-haul flights per twenty-four hours functioning 84 locations in the UK, Ireland and Europe. 2004 was the best twelvemonth for Ryanair catching low-priced air hose Easyjet became largest air hose in footings of rider in Europe transporting more than 23 million riders brought in grosss of US $ 1.32 billion, an addition of 43 % from the old twelvemonth. It crates strong Ryanair trade name name and became Britain favourite low cost air hose.

Ryainair holding all Boeing aircraft, hence it has grater dickering power from the provider. In 2002 Ryaniar placed half of its order towards increase its aircraft by 112 in the following 10 old ages. ( Appendix 1 ) . Besides it planed to purchases engineering more progress and environmental friendly Boeing 737-800 and retiring old Boeing 737-200. Boeing737-800 reduces fuel burn and CO2 emanation per rider kilometre by 45 %

All of the Boeing 737-800 that Ryanair has bought or committed to purchase is certified for class IIIA landings ( automatic landing with minimal horizontal visibleness of 300 tubes and no perpendicular visibleness ) . Besides Ryanair has installed Operational Flight Data Monitoring ( OFDM ) system on each of the Boeing 737-800 aircraft. The intent of the system is to supervise operational tendencies and inform the direction. By analysing this study direction able to place possible country of hazard to rectify any divergence from the normal operating process, thereby guaranting Ryanair ‘s flight safety criterion. During its yesteryear 24 twelvemonth operation history Ryanair has non had any individual incident affecting hurt to riders or member of its flight crew.


Ryanair is the really competitory low cost air hose in the Europe. Towards lower its cost Ryanair uses secondary airdromes whereas the closest rival Easyjet does non. ( Appendix 4 ) Ryanair became no 1 ‘s in many countries.

rider traffic -over 23m for 2004 – over take Easyjet

rider growing

European paths ( 149 ) and bases ( 11 )

Customer service bringing – promptness, flight completion, and fewest lost luggage.

Procedure of strategic direction followed by Ryanair

The Low cost bearer concern theoretical account is extremely competitory and the theoretical account enhances the development of scheme preparation accomplishment by steering concern theoretical account systematic and comprehensive survey of each concern state of affairs ( Appendix 2 )

External factors sharpening competitory positioning the Ryanair

There are non one but many factors which determine the strength of competition, the degree of profitableness of low cost bearer market. New entryway brings competition to the industry and hazard of autumn of market portion and profitableness.

Environmental analysis

European Union Regulations: The European air hose ever capable to ordinance from European Union. The debut of the competition jurisprudence by European Union it prevents acquiring province assistance, good relationship with airdrome operators. EU expects by presenting this ordinance there will be healthy competition among flight operators. The well discussed fact that Ryanair had more favourable relationship with airdrome operators has benefited the bearer in a tine industry growing and aggressive pricing. EU committee in February 2004 which ruled that Ryanair had been having illegal province subsidy for its base airdrome at publicly owned by Charleroi Airport Appendix 8

Competition: After debut of the competition jurisprudence, competition in the air hose industry increases dramatically. This creates an environment for new entrants in to the market. Due to the monetary value competitions many of them could non lasted long. The chief competition among the participants in the industry dived into four chief classs. The four classs are flag bearers, Independent air hose, franchises of major air hoses and charter operators. The independent bearers include low menu bearers such as Ryanair, easyjet. These low cost bearers somewhat lower menu than flag bearers. Flag bearer ‘s utilizations independent bearers such as Virgin Express as franchises to vie efficaciously the low cost air hoses in the short-haul paths.

External forces. Airline industry has ever capable to alterations in the universe. Especially outbreak of pes and oral cavity in the UK, the SARS epidemic in Asia, Terrorist onslaught on 9/11, Gulf war, Economic downswing and recent vent eruption in Island.

Fiscal analysis

After Ryanair introduces low menu concern theoretical account every twelvemonth the figure of riders going increased. From 2002 the company starts to purchases Boeing 737-800



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