MARKETING PROJECT

Marketing project of Ryan Air Ltd.

Marketing project of Ryan Air Ltd.

External Analysis

In order to take a look at the competition in this industry it is necessary to divide the players into four main categories. These four categories can be described as follows: flag carriers, independent airlines, franchises of major airlines and charter operators. "The flag carriers, which fly intercontinental routes as well as those within Western Europe, include both those that have traditionally been heavily dependent on aid from their respective governments (including Air France Group ("Air France"), Alitalia S.p.A. ("Alitalia"), Aer Lingus, and Iberia, S.A.) and "commercial" flag carriers such as British Airways, KLM, Scandinavian Airline System ("SAS") and Lufthansa AG ("Lufthansa") that have operated with no or little state aid in recent years. The independent carriers include low-fares carriers, such as Ryanair and easyJet Plc ("easyJet"), and carriers providing "frills" services more comparable to those of the flag carriers but at slightly lower fares than the flag carriers, such as British Midland Airways Ltd. ("British Midland"). Certain small carriers, including Virgin Express, have become franchises of major airlines, sharing some ticketing and other distribution systems with the flag carriers.(the flag carriers often use these smaller independent airlines as franchises to compete with the low cost carriers because their cost base doesn't allow them to compete effectively on short-haul routes) Charter flight operators are significantly more established and more competitive in Europe than in the United States, with many charter operations being owned by major travel groups or commercial airlines." (Grassley, 2002, pp. 18-36)

SWOT Analysis

Strengths

Ryanair has enhanced its position as the leading brand for low fares in Europe during the current downturn. The carrier now likens itself to budget-conscious consumer brands like Ikea, Aldi and McDonald's - rather than airlines. These brands do well in bad economic times.

Mr O'Leary's enduring conclusion is, "low cost always wins". The numbers from the latest financial year (ended 31-Mar-2009) speak for themselves:

Operating revenue from continuing operations rose 8.5% to EUR2.94 billion;

Passenger numbers rose 15% to 58.5 million;

18 net new aircraft (year-end fleet of 181 B737-800 aircraft);

Six new bases at Alghero, Birmingham, Bologna, Bournemouth, Cagliari, and Edinburgh;

223 new routes, for a total of "800+" routes with "1,200+ daily departures" (the airline has apparently lost count).

Ultra low costs, high ancillaries. The carrier's non-fuel expenses fell 3% last financial year, reflecting its unswerving focus on cost control. Another 5% reduction in non-fuel unit costs is targeted in FY2009/2010. Ancillary revenues grew by 23% to EUR598 million, helping Ryanair achieve its target of 20% of revenues (18% last year) one year ahead of schedule. There is still considerable scope for growth in ancillary items and the carrier will do well to continue its focus in this area as underlying fares plummet in the months ahead.

Weaknesses

Growth at all costs. The main reason Ryanair can post reductions in unit costs is flying more and more sectors. All cost lines are increasing, but as long as Ryanair continues to add more routes, it doesn't matter.

Again, the recession is helping. Ryanair notes, "significant reductions in capacity across Europe has ...