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![Sources
http://faculty.darden.virginia.edu/bourgeoisj/files/chapter%
205.html
http://www.air-scoop.com/downloads/In-Depth-Analysis-
Ryanair-Business-Model-Air-Scoop-Nov2010.pdf
Anon., n.d. Ryanair.
http://www.ryanair.com/en/about/ryanair-and-the-
environment
Aviation, C. C. (2011, May 25). CAPA Centre for Aviation.
http://www.centreforaviation.com/analysis/ryanair-
earnings-up-26-but-change-in-tack-for-2012-52109
BBC, 2012. Ryanair 'sexist adverts' banned after complaints.
[Online]
Available at: http://www.bbc.co.uk/news/uk-17036830](https://image.slidesharecdn.com/presentationryanair-140224071313-phpapp02-160205110726/85/Presentationryanair-140224071313-phpapp02-30-320.jpg)
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Presentationryanair 140224071313-phpapp02
Ryanair has utilized several key strategies to become Europe's largest low-cost carrier. These include maintaining a laser focus on cost containment, operating frequent point-to-point flights on short-haul routes, and maximizing ancillary revenue sources. Ryanair keeps costs low by operating efficiently from secondary airports and maintaining a young, fuel-efficient fleet. The strategy has proven highly sustainable due to Ryanair's continued growth and profitability, though recommendations include increasing flight frequencies and opening new routes to drive further expansion.
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Presentationryanair 140224071313-phpapp02
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- 2. Presentation outline 1. Companyoverview 2. Strategic analysis (External and Internal) 3. Key Elements of Strategy 4. Marketing Strategy 5. Revenue model 6. Is the strategy sustainable? 7. Concrete recommendations
- 3. Company Overview Low budgetairline Started in 1985 160 airports, 27 countries 1,300+ routes 1,500+ daily departures Fleet of 275 Boeings (Newest fleet (3yrs)) 5 main bases: Stansted (London) Charleroi (Brussels) Marseilles Madrid Bremen
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- 6. What is astrategy ? Corporate strategy is the set of explicit or implicit decision rules that determines what business(es) a firm will be in and not be in. Business strategy is how a firm develops and sustains a competitive advantage within an industry. Functional strategy is the set of decisions made in marketing, operations, finance, research and development, and human resources that supports the business strategy. (Faculty, Darden, 2012)
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- 8. PESTEL-Analysis Social Economic environment customerUnemployment in January2012 was 14.2%, Consumer travel lifestyle and demographics Political Strong Political Environment Open Sky Agreement. Economical Uncertainty of fuel cost. Economical Recession in favor of Ryanair . Technological Internet adaptation/Check-in Energy efficient engines will increase Use of Trains Environmental Controlling noise pollution Carbon footprint & Global warming concerns . Legal Corporate lawsuits Misleading advertisements
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- 10. Vision Become Europe’s leadingpassenger carrier
- 11. Objectives of Ryanair’Strategy Establish itself as Europe’s 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 Through maintaining a continuous focus on cost-containment and operating efficiencies.
- 12. The Key Elements Lowcost -Core of business model- Stimulates demand, particularly from fare- conscious leisure and business travelers who might otherwise have used substitutes of Transportation Ryanair sets fares on the basis of the demand for particular flights How ? Maintain focus on cost-containment Maximise ancillary revenue
- 13. The Key Elements LowOperating Costs Ryanair strives to reduce or control four of their primary expenses: Aircraft equipment/Fuel Personnel productivity Customer service costs Airport access and handling costs NO FRILLS STRATEGY
- 14. Graphical Analysis ofRyanair costs EUR million 2013 Change vs FY2012 % of 2013 total Fuel 1,886 18,3% 45% Airport & Handling Charges 612 10,4% 15% Route Charges 487 5,7% 12% Employee 436 5,0% 10% Depreciation 330 6,6% 8% Materials, repairs 121 16,1% 3% Aircraft Rentals 98 8,3% 2% Other 198 9,9% 5% Total Expenses 4,166 12,4% 100% (Source: https://www.ryanair.com/doc/investor/present/Half_Year_Results_2012.pdf)
- 15. The Key Elements CustomerService Deliver the best customer service performance in the low-budget airline Industry Ryanair has achieved better punctuality, fewer lost bags and fewer cancellations than all of the rest of its peer grouping in Europe. How? Ryanair achieves this by focusing strongly on the execution of these services and by operating from uncongested airports
- 16. The Key Elements FrequentPoint-to-Point Flights on Short-Haul Routes Frequent point-to-point service on short-haul routes to secondary and regional airports Short flights + Frequent service eliminating the necessity to provide “frill” services Non-stop routes and avoid the costs of connecting passengers, baggage transfer, transit passenger etc.
- 17. The Key Elements FocusedCriteria for Growth. Additional routes from the U.K. or Ireland to other locations in continental Europe/USA Increasing the frequency of service on its existing routes Starting new domestic routes within EU countries; establishing more new bases in continental Europe.
- 18. The Key Elements TakingAdvantage of the Internet January 2000, Ryanair launched new reservation system: Flightspeed Make and pay for confirmed reservations in real time through Ryanair’s Ryanair.com website. Ryanair has heavily promoted its website through newspaper, radio and television advertising. (96% of all reservations online)
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- 20. Publicity Marketing Deliberate controversialstatements, to gain media attention.
- 21. MARKETING STRATETGY “We wantto offer the lowest fares while keeping advertising costs to a minimum” Michael O’ Leary
- 22. Subsidies 20% Ancillary revenues 22% Core revenues 58% 0% “Any foolcan sell low airfares and lose money! The difficult bit is to sell the lowest airfares and make profits.” Michael O’Leary Ryanair Revenue Model
- 23. Ancillary Revenues Hotel reservations Excessbaggage fees Car Hire: Hertz Onboard sales of beverages, food and merchandise. Internet Income ……………….
- 24. Is the Strategysustainable over the next five years ?
- 25. Market Growth Low High High Low Market Share StarsQuestion Marks Cash Cows Poor Dogs Boston Matrix-model New Destinations such as USA, Croatia,etc. Top Destinations – London, Madrid, Brussels,etc. Really unfrequently used destinations. Unknown airports/destinations Unfrequently used. Morocco.
- 26. Concrete Recommendations Increase FlightFrequency of Routes Open New Routes in EU Strategic Alliance Seek to protect themselves from oil prices Investigate Load Factors Exploit tourism Trends
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- 30. Sources http://faculty.darden.virginia.edu/bourgeoisj/files/chapter% 205.html http://www.air-scoop.com/downloads/In-Depth-Analysis- Ryanair-Business-Model-Air-Scoop-Nov2010.pdf Anon., n.d. Ryanair. http://www.ryanair.com/en/about/ryanair-and-the- environment Aviation,C. C. (2011, May 25). CAPA Centre for Aviation. http://www.centreforaviation.com/analysis/ryanair- earnings-up-26-but-change-in-tack-for-2012-52109 BBC, 2012. Ryanair 'sexist adverts' banned after complaints. [Online] Available at: http://www.bbc.co.uk/news/uk-17036830
Editor's Notes
- #8 To establish how Ryanair is doing we must examine and understand their external and environmental forces. To do this we will use PEST analysis. This is taking into account the influences politics, economy, social and technology have on Ryanair’s business. Each of these external forces plays a huge impact on the strategic direction of Ryanair.
- #9 The Open Skies Agreement is another form of deregulation that could affect Ryanair’s position in the airline business in the future. Open skies is the name of the agreement between the EU and US that will allow EU-based airlines to fly from any city in the EU to any city in the US and vice versa.
- #13 Ryanair’s objective is to firmly establish itself as Europe’s 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 Ryanair’s strategy are:
- #14 Ryanair strives to reduce or control four of the primary expenses involved in running a major scheduled airline: (i) aircraft equipment costs; (ii) personnel productivity; (iii) customer service costs; and (iv) airport access and handling Costs (reduce as much costs as possible, none or few services provided.
- #15 Looking at cost we immediately see that Fuel is a major cost, equaling 45% of total operating costs. This not only illustrates that fuel is a major point of attention (as for any airline), but also illustrates how Ryanair managed to keep its other costs at an unseen level. Employee costs for example or one of the lowest in Europe. Looking at CASK and RASK (baseline 2009) we see that CASK ex fuel is still decreasing but at a lower pace, but fuel costs make that total CASK increases. For the moment Ryanair was able to pass on fuel costs to its customers with a little more on top. So RASK still outpaces CASK.
- #20 Digital Marketing Strategy newspaper, radio and television advertising