Ryanair Case Study

Mayur Parvani(Roll no 07)

Manuara Chisty(Roll no 08)
Farah Deeba(Roll no 09)
Agenda
 Background
 Industry Key Success Factors
 Ryanair Strategy Deconstruction
 Competitive Advantages
 Value Chain Analysis
 Growth Possibilities
 Airline Competitor Responses
 Future Strategy
 Conclusion
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Background
 Founded in 1985:
 2 Aircrafts
 Carried 82,000 Passengers
 1991: Michael O’Leary Appointed
 Transformed to Low Cost Airline
 1997: Floated on Dublin SE and Nasdaq
 Rapid Expansion (2005 Figures):
 12 Bases
 220 Routes
 95 Destinations, Across 19 European Countries
 27 Million Passenger Annually

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VMOST
 Vision:
 To be Europe’s Leading Low Fares Airline
 Objectives:
 Number 1 For Customer Service
 Strategies / Tactics:
 No Frills, Low Cost Approach
 Point-to-point Short Haul Flights
 Regional and Secondary Airports

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Industry Key Success Factors
 Low Ticket Prices
 Frequent Departures
 Possibility of Advanced Reservations
 Reliable Baggage Handling
 Consistent On-time Services

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 External Analysis:
Porter’s Five Forces
Threat of New Entrants

MEDIUM

Industry
Suppliers’ Competitors Buyers’ Bargaining
Bargaining Power Power
Rivalry Among
LOW Existing Firms LOW
HIGH

Threat of Substitute
Products

MEDIUM

Source: Adapted from Porter, M. (1998)

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 External Analysis:
Porter’s Five Forces
Threat of New Entrants Industry Competitors
 Limited, but has happened  Increased Competition:
recently:  50 Budget Airlines
 BMIBaby.com  Flag Carriers:
 Easy jet  Low Cost Affiliates
 MyTravelLite.com  Alliances
 Monarch.com  Air France / KLM Merger
 FlyBe.com
 Compete on Limited Routes Threat of Substitute Products
 Capital Intensive
 United Kingdom:
 None
 The Rest of Europe
 Driving holidays
 High-speed trains

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 External Analysis:
PEST Analysis
• Increased Trade-union Pressure
•Pilot Trade Union
• EU Expansion
• EU Abolishment of Duty-free Sales
• Allegations of Misleading
Advertising
• “Climate Protection Charge”
Political – legal
Sociocultural
•Europe: Cars & High-speed Trains
•Increasing travelling lifestyles
•Increasing business travelling
•Fuel Price Increases
•Depreciation of US dollars
•EU Commission Rulings:
• Illegal Subsidies from Airports
• Overbooked Passenger Compensation
• Cancelled Flight Compensation
• Reimbursement of Delayed
Passengers
Economic
Technological
•Wireless Technology Expansion
•Internet sales/gambling
•Satellite television
• Increased internet competition
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 Internal Analysis:
Porter’s Value Chain

Firm Infrastructure

Human Resource Management

Support

Ma
Activities

rg
Technology Development

in
Procurement

Inbound Operations Outbound Marketing Service

n
gi
Logistics Logistics & Sales

r
Ma
Primary Activities

Source: Porter, 1985

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 Ryanair: Value Chain
Infrastr. Minimum Corporate HQ
Low Cost Management Performance
HRM Training
Limited Crew
Control In-house Contracts

Ma
Internet Integrated Low Tech Marketing
Tech. Dev. Internet n/a

rgi
Information Systems Internet Sales

n
Boeing
Proc. Discount Alliances Outsourced Private Low Cost
Low Cost
Quality No Frills Quick Promotions
Limited
Training Turnaround Resources
Low Cost* Free Publicity

n
Low Cost Basic/Low Cost

rgi
Reliable Controversial
Suppliers

Ma
Service Internet Sales High
Airport Productivity
Yield
Agreements
Management

Inbound Operations Outbound Marketing Service

Logistics Logistics & Sales

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 * Low Cost
Competitive Advantages
 Online Bookings
 One Class Travel
 Ticketless Boarding
 Unallocated Seats
 Flying to Secondary Airports
 Point-to-Point Flying
 In-house Marketing
 No Frills
 Reduced Turnaround Times
 No Refund Policy
 Corporate Partnerships
 No Cargo Service
 Bargaining Power
 New Aircrafts
 Owns Own Fleet
 Operations Denominated in
Euro
 Hedge Fuel Risk
 Highly Successful Ancillary
Service Offering
 Outsourcing of Services at
International Airports
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* Low Cost
Competitive Advantages (Cont.)
 Limited Airport Transportation
 Advertising on Airplanes
 Yield Management
 Uniform Fleet
 High Productivity
 High Service Levels
 General Cost Reductions
 Eliminating seatback pockets
 No blankets or pillows
 Airsickness bags distributed on request
 Charges larger penalties for overweight luggage

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 Ryanair: SW
Strengths Weaknesses
Low Cost Leader  Poor Employee Relations
Innovative Cost Reductions  Volatile Customer Relations

First-mover Advantage  Antagonistic Relationship with

Established Market Share Competitors

Substantial Growth  Uncharacteristic Management

High Load Factor Expansion

 Dependence on Michael O’Leary
Strong Public Image

Established Routes/Network

Range of Ancillary Services

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 Ryanair: OT
Opportunities Threats
Further Growth  Increased Competition:
Advanced Cost Reduction  New Entrants
Offering Free Flights  Alliances/Mergers Between
Competitors
EU Expansion

Expansion of ELFAA
 Industry Criticism
 Antagonistic Attitude of EU
Commissioners
 Non Expansion Into New EU States

 Trade Unionism

 Substitute Transportation:
 Cars,

 Trains

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Key Success Factors
 The Ryanair Business Model
 EU Deregulation
 Boeing Discounts
 EU Expansion
 Low Acquisition Cost of Buzz
 The Southwest Effect
 Effective Publicity
 Michael O’Leary

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How Ryan Air can survive in
future?
 Market Characteristics:
 7% Penetration (European Market)
 Ample Growth Opportunity
 EU Expansion
 Further Evolution of the Industry
 Ryanair Potential:
 Bargaining Power
 Competitive Resources
 Consolidate: Slower, Calculated Growth
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The ten commandments

1)Increase the frequency of existing routes

2)Open new routes in Europe
3)Devlop its small continental bases
4)Expand in Europe
5)Expand in North Africa
6)Agressively seek market share from charter
Market
7)Customer Service haul
8)Continue to find ways to reduce costs
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 9)Change online image
 10)Improve employee relations

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Ryanair Case Study

Questions?

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Thank you for
your attention!

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