RYANAIR

Ryanair

Ryanair

PEST Analysis

   The low budget airline Ryanair began its operations in 1985. Initially the company only had a staff of 57 employees and a single turbo propelled 15-seater airplane. The company started its operations from the south east of Ireland. The first flighst was from southern Ireland to London. The airline flew this route and carried approximately passengers from Gatwick, Ireland to London (Harrison, 2002).

Political Factors

Politically, the airline had to face a number of barriers in various countries set by governments to prevent low fare airlines from entering the markets. The airline had to negotiate terms and conditions with governments which prevented it from charging below the set limit to keep the competition going in the aviation industry.

Economic Factors

The following year in 1986, the airline decided to adapt an aggressive market strategy and take on the competing airlines directly. This move was an attempt to carve out the market share from the existing big players of the airline industry. Ryanair decided to confront competitors such as Aer Lingus and British Airways, and break their stranglehold on the route from Dublin to London. The rival airlines charged a higher fare from its customers. As part of the move, Ryanair increased the size of its staff from 57 to 120 employees. The airline began to operate on two routes and carried approximately 82000 passengers on both routes. Four years after its inception, in 1989 the company increased the number of its staff to 350 employees. The move began to yield returns as the airlines also saw an increase in the number of passengers swell to 600,000. In the following two years, the numbers of passengers increased to 700,000 annually.

Social Factors

Socially, the airline looks to contribute the environment and by giving back to the society in the form of charity and welfare programs. This allows the company to establish itself in the minds of its current and prospective customers.

Technological Factors

The airline also used the internet to its advantage by launching an online reservation website. The website was well received by potential passengers, and in three months the site had around 50,000 reservations every week. In the year 2001, the airline employed more than 1500 employees as staff members. By the same year, Ryanair was serving a staggering 10 million passengers every year in 56 destinations in 13 countries in Europe. In the following year, Ryanair launched its operations on the Frankfurt to Hahn route. The airline also entered a contract with Boeing through which the airline would purchase 150 new Boeing aircrafts over a period of eight years (from 2002 to 2010). These purchases would be the new 737-800 series of Boeing aircrafts.

SCP Model

Structure

However, even with the increase in the number of passengers, the airline found it difficult to manage the costing system of the organisation. This meant the airline lost a significant amount of money every year. To control the rising costs, the management decided to hire a team of fresh minds that would locate the problems and ...