RYAN & SKYBUS

Ryan & SkyBus



Ryan & SkyBus

RYAN

Introduction

Ryanair was the first European airline to model itself on the successful formula of Skybus Airlines in Texas by offering itself as a low fares, no frills carrier, serving short-haul city pairs and providing single class air transportation. Skybus claims to have the lowest operating cost structure in the US domestic airline industry. It is distinguished not only by being the only major airline that has ever won the Triple Crown - Number One in on time arrivals, baggage handling and customer satisfaction - but it has won it for six consecutive years between 1990 and 1996. In 2000, Skybus slipped to fifth out of ten for punctuality, fourth for baggage handling, but retained its number one customer satisfaction position.

Research Appropriate Theories for Ryanair

This approach is in line with Michael Porter's theory that there are three major strategies companies can adopt to gain competitive advantage:

Cost leadership - where an organization seeks to be the lowest cost producer by selling standard, mass products. This is where the original LCC model eminates.

Differentiation - where companies introduce a unique dimension that is considered to be important to the market. Some LCCs have moved onto this strategy.

Focus - this involves targeting a certain segment of the market and is rarely adopted by LCCs. (Maik 2006, 227)

Ryanair. The strategy for this organization is the closest to the original Skybus model overall. Like most European flights it offers a point-to-point rather than a hub service, it has absolutely no frills (meals, seat allocation or frequent flyer program). It aims to turn flights around within 25 minutes and routes are consistently the shortest of all the LCCs. Interestingly, Ryanair is one of the most profitable low cost airlines in the market.

E-Marketing

The low-cost airlines typified by EasyJet and Ryanair have demonstrated how the business model can be developed based on operational efficiency and a low-cost route to market. Sophisticated software allows these airlines to offer low cost flights that can be booked over the Internet. The software allows for the price of the flight to be managed against the capacity of the plane. Hence an early booking, when planes are relatively empty, or travelling at an inconvenient time usually means that a very low price is offered. As capacity fills and the fixed and variable costs of the flight are offset then the price starts to raise and can match, or even exceed, the prices offered by national flag carriers. (Magnus 1998, 169)

The market for low-cost airlines continues to develop with Buzz, a subsidiary of the Dutch airline KLM, recently being taken over, whilst new low-cost airlines continue to be established such as Air Berlin in Germany. Such relationships are different from transactional ones because they are interactive and no longer impersonal at arm's-length. (Robert & William 2004, 61)

Customer Satisfaction Strategies fro Ryanair

In keeping with the 'spirit' of Skybus, Herb Kelleher, founder, Chairman, President and CEO, challenged the company to win the Triple Crown for a fifth time running in 1995 by ...