http://www.slideshare.

net/AntonWischnewski/ryanair-term-paper-upload
https://prezi.com/kf0udhsh2gnq/ryanair-the-low-fares-airline-future-directions/
https://www.scribd.com/doc/47646350/Ryanair-Case-Study
https://www.scribd.com/document/291060129/Ryanair-Case-Study-Analysis
http://www.slideshare.net/puya455/newanalysis-of-ryanairs-competitive-advantages

Critical Issues

Negative public image due to aggressive CEO and unfriendly staff.

Immature handling of sensitive issues such as criticizing politicians,
disabled passengers
Misleading advertisements and messy website.
Unreasonable ancillary charges for example wheelchair charges, check
in baggage charges, refund handling charges etc.
Leadership issues

Problems :

Vulnerable to rising fuel prices

Represents 35% of operating costs
Regulation by the European Union
Legal problems with the holding in Aer Lingus
Marketing controversial news

Pestel :
1. Political :
a. European Union affects Ryanairs strategy and operations by
establishing regulations and restrictions in the airline industry :
demands to refund air passengers in case of delays or cancelled flights
, EU might increase the emission fees
b. Ryanair should be aware of regional distinctions as the Irish tourist tax
and national government laws acting in favour of national airlines that
increase Ryanairs costs, e.g. national employees contracts in other
countries have different terms and conditions that must be applied and
are more expensive.
c. airport and handling charges increased by %, slower than the growth in
passenger numbers, reflecting a net reduction in costs from deals at

new airports and bases despite increased costs at certain existing

airports such as Stansted.
d. Increase in trade union pressure - Some of the countries in Europe
have formed a trade-union among each other's and due to this it gives
the pressure for Ryanair to do business in these countries. Furthermore
the Europe Union (EU) has expanded in the past few years and it is a
big factor that affects the direction and strategy planning for Ryanair
2. Economical
a. Ryanair saves costs by operating over secondary airports. In that way
they avoid primary airport charges and extra costs. The economics
downturn in 2009 has shown that Ryanair as the leading budget airline
can offer the cheapest flights attracting customers and still generate
returns
b. High price ceiling of petroleum products and fuels - From 2005 fuel
prices are increased and Ryanair's fuel costs represented 35% of
operating costs in 2006 compared with 27% the year before. Energy
and fuel costs are cause of uncertainty - Also jet fuel cost fluctuations
are unpredictable and not controllable.
c. Change in the mode of travelling due to the terrorist attacks - Because
of the terrorists attacks there was a treat that passengers would
choose other forms of transport such as trains rather than facing to the
inconvenience and expense of checking in luggage and extra time
spent in airport security queues.
d. Increase in travelling life style and flying patterns.

3. Social
a. Customers perceive Ryanairs customer service as poor, as the
passengers expect to be compensated for cancelled and delayed
flights.
b. The poor working conditions cause legal and safety issues that can
scare established and potential new customers away.
c. Additionally, the provoking and misleading advertisements lead to a
bad image of Ryanair from customer perspective

4. Technological
a. Ryanairs online check-in policy and marketing on Ryanairs website
demonstrates how to make use of the Internet technology avoiding
expenses of travel agents and excessive advertising

b. If technology such as on-board Internet connection and television are

offered for a fee they can generate additional revenue on board.
c. High fuel efficiency, less noise pollution and lessening of carbon
pollution - using Boeing 737 planes Ryanair tries to reduce pollution.

5. External / Environmental
a. Labour Unions such as British Airline Pilot Association (BALPA)
challenge Ryanairs business culture and do not accept the poor
working conditions of their employees. Ryanair is accused of
unsatisfied working conditions such as long working hours, insufficient
employee training and qualification, manipulation of employees to
accept working conditions and low salary
b. EU regulations regarding environmental awareness state that
additional fees are applied if the CO2-limit is exceeded
c. Contributing Global warming - though Ryanair contribute to the global
warming up to some certain they have introduced new aircrafts that
reduce fuel burn in 45%.
d. Noise level controls - Also they have lower the noise emission in 45% in
their new aircrafts

6. Legal
a. Ryanair is involved in a few legal battles with Stansted and Dublin
airport that raise their departure duties
b. Ryanairs misleading and provoking advertisement assault media law
and civil law resulting in high penalty fees. ( Allegations of misleading
advertisement - Ryanair accused it of misleading passengers on its
website by exaggerating the prices of its competitors in making
comparisons )
c. the poor working conditions lead to safety issues and can cause a bad
image. All those legal issues are causing handling-, penalty fees and
court expenses that should be limited.
Cost reduction strategy :

secondary airports
fleet commonality
maximize aircraft utilization
cheaper product design
minimize personnel costs

customer service costs

Porters Five Forces Analysis

1) The Threat of Entry
The low fares industry, especially, with established leading players as
Ryanair, is
really hard to enter. The entrants need high capital requirements in order
to
generate high economies of scale to compete in the European market.
Besides,
access to distribution channels is required. That means that the factor
threat of
new entrants is pretty low.
Some barriers to entry - there are some regulations when entering to the
European countries.
High capital investment - at the beginning of the new airlines need big
financials otherwise there is a threat of losing money.
Restricted slot availability makes it more difficult to find suitable airports European countries have many landing slots that were reserved or used
by national carriers. Also for new entrants have a need for low cost bases.
2) The Threat of Substitutes
A service that creates equivalent value to the customers as the airline
industry
does is the railway networks, sea transports and car rental firms. The only
significant threat is the train service because the other options are too
expensive.
Even though Europe has a good train network like EuRail, the
disadvantage of
trains is the journey time. It takes much longer to reach a destination by
train
than by plane, which results in a higher opportunity & transaction costs.
To
conclude, the threat of substitute is low.
Other modes of transport - the treat of substitutes to the airline industry
comes in three main forms. These are road, rail and boat service. Of
these, rail would seem to suggest the maximum threat because, certainly
around Europe, it offers a brilliant continental service around the main
cities that Ryanair fly to.
No switching costs for the customer - there is no switching cost when
changing the traveling mode and there is no close relationship between
customers
3) The bargaining power of buyers

Customers have a high bargaining power because switching to another

airline is
simple and there are no additional expenses required (e.g. EasyJet and
Virgin
Express). Especially, in a strategy of cost leadership each customer
becomes
important. Besides, an increasing problem is that more and more
competitors
start to offer cheap prices, as well.
Low price - Customers are price sensitive and they know about the low
cost of supplying the service from Ryanair.
Distribution - power of travel agents was decreasing as prospects used to
book tickets from internet or through direct booking. So it was a threat to
travel agents, so they employed to offer complete travel solutions to
customers. Direct bookings on the Ryanair website has meant that there
have been savings in the region of 42.6% in marketing and distribution
costs.
4) The bargaining power of suppliers
The bargaining power of suppliers is high, as there are only two
manufacturers
competing in the aircraft industry. Supplier switching costs are high, as
the pilots
will need to be retrained and high capital investments must be made.
Ryanairs
main supplier has traditionally been Boeing. But Ryanair can allow itself to
change suppliers because of its healthy cash flow and because it has
already
tried to purchase Airbus aircrafts after the purchase of 200 jets from
Boeing got
cancelled.
Aircraft Suppliers - Boeing is Ryanair's main supplier. There are only 2
possible suppliers of planes. They are Boeing and Airbus.
Fuel Suppliers - Price of aviation fuel is straightly related to the cost of oil
(Ryanair controls these through hedging
Regional and Bigger Airports - Regional Airports have little bargaining
power as they are heavily dependent on one Airline. Bigger airports,
where Ryanair's competitors operate, have greater bargaining power.
Ryanair's policy is to try and avoid these airports.
5) The extent of Rivalry between competitors
The number of competitors that are trying to imitate Ryanairs cost
leadership is
increasing. As the market share of the budget airline is only 30% of the
whole

airline industry the market contains the potential to grow. This might also
be the
problem for Ryanair and its expansion strategy. As the threat of entry is
high the
extent of rivalry stays as middle.
Most cost advantages can be copied immediately - However if any
company does choose to race on the same basis as Ryanair there will be
heavy pressure on prices, margins and hence on profitability
Low frills and low price - Ryanair has a benefit over other airlines because
their policy of bundling low frills and low prices together means that they
are competing for the more price responsive customer.

SWOT
Strenghts
-

point-to-point flights
young, uniform aircraft fleet
cheap labour (outsourced)
strong marketing model
innovator in cost reduction
strong brand image
strong bargaining power in airport deals
aggressive and innovative leadership
established market share

Weaknesses
-

poor customer service

poor working conditions
bad public image
low level of understanding for employees
refusal of recognizing unions
antagonistic relationship with competitors

Opportunities
-

market share expansion

establish good relationships with labour unions asBALPA
Ryanairs website presence and modern technology
Competition committee : control/harm competitors
Industry growth in European air travel industry (expansion)
Further growth

Threats
-

EU regulations
National governments laws
Substitute transportation
Budget airline criticism
Legal issues
Fuel price fluctuations
Competition domination (alliance/mergers between competitors)
Terrorism
Impending legislations for environment protection

Strategic Group Model

Strategic group is a "group of firms in an industry following the same or a
similar strategy along the same strategic dimensions". (Fletcher 2003) It
consists of competitors competes with similar strategic dimensions such as
product, quality, target market, geographical area. Firms are competing
directly with the aligned strategic groups as they hold same strategic scope.
(Porter 1980) The below graph represent the strategic group analysis for the
airline industry. The grouping has been done accordance to the dimensions
of quality and price.
1st strategic group - This is the basic strategic dimensions of this strategic
group and Ryanair provides low cost fares with no frills. Ryanair's major
competitor in this strategic group is Easy jet as they contain a similar
resource promise in the industry.
2nd strategic group - These companies targets the middle class hence they
offer fares for a moderate cost and the service contain reasonable quality.
The major players in this strategic group are Ethihad, Thai, Qatar and Kuwait
air ways.
3rd strategic group: Emirates, British airways and Singapore airways
generally targets the high end people. They provide a luxuries service with a
high pricing system.
According to the Strategic group Model Identifying Strategic group layers
would enhance the understanding about the direct competitors, Different
bases of competitive rivalry within the strategic group and also the threats
and opportunities could be examined very clearly as it narrow downs the
major players in the same category.

Positioning strategy
Price -> Leader Premium competitive
Features -> original customized basic
Quality -> excellent average acceptable
Support -> comprehensive standard minimal
Availability -> restricted selective universal
Reputation -> prestigious respected functional

Alternatives to the proposed strategy

-

Expand into Central & Eastern Europe

Continue aggressive acquisition
Increased ancillary revenues
Focus on after sales
Renovate and making major changes to the customer service
Internet ticketing (e-commerce)

How to create added value and sustainable strategic advantage?

-

Using interna resources to manafe difficulties and threats

Cost reduction and relevant positioning
Find new solutions: expand in eastern EU, focus on services ( after
sales, customer care, e-tickets, etc )