RYANAIR

Strategy, Competition and Sustainability: Case Study of Ryanair



Table of Contents

Introduction3

Critical Analysis of Ryanair's Strategy Approach3

Key Factors for achieving competitive advantage4

Ryanair's Approach4

Route policy4

Passenger Service4

Ancillary Revenues5

Low Operating Costs5

Fleet Costs5

Passanger Service Costs6

Airport Access Fees6

Personnel Productivity6

Commitment to Safety and Quality Maintenance6

Focused Criteria for Growth7

Is Ryanair's strategy sustainable?7

Customer viewpoint7

Producer/efficiency viewpoint8

Sustainability8

Evaluation of Strategic Options8

Conclusion9

References10

Strategy, Competition and Sustainability: Case Study of Ryanair

Introduction

Ryanair Holdings (Ryanair) operates a low-fares scheduled passenger airline serving short-haul, point-to-point routes between Ireland, the UK, Continental Europe, and Morocco (Data Monitor, 2012). The company offers more than 1,300 scheduled short-haul flights per day serving 155 locations throughout Europe and Morocco, with an operating fleet of 250 aircraft flying approximately 1,100 routes. The company was established by the Ryan family in 1985 operating daily flights on a 15-seater Bandeirante aircraft from Waterford in the southeast of Ireland to London Gatwick. Since then, Ryanair has pursued an aggressive expansion policy, adding new routes and opening new centers of operation across Europe to become the world's most popular airline for international flights, having flown 72.1 million passengers in FY2011. This is a highly commendable performance in a very competitive industry. Ryanair must compete with other low-cost airlines such as easyJet and Monarch, as well as with legacy carriers like British Airways and Lufthansa (Data Monitor, 2011).

Critical Analysis of Ryanair's Strategy Approach

If Ryanair wants to play the role of 'low-fares policeman' in Europe, it has to assume superiority on the critical cost factors within its management's control. So far, Ryanair has successfully pursued its cost leadership model. Certain moves have decreased costs and boosted revenue simultaneously, e.g. the www.Ryanair.com website. Although touting its on-time performance record, it is unclear whether its punctuality performance is accurately perceived and appreciated in the marketplace. Additional sources of revenue should continue to be sought, again without compromising the low-cost model. Simultaneously, Ryanair has to continue aggressively to pre-empt competitors entering its routes.

It has to anticipate its competitors' growth patterns and destabilize them. Currently, the carrier has the deep pockets to wage a price war against any existing and potential airline competitors. The battle with Go on the Dublin-Scotland routes is relevant in this regard. Students can analyze this intriguing situation - the first all-out price war between two budget carriers in Europe on Ryanair's own turf. Was being established already on the route an advantage to Ryanair? Which of the two carriers had the resources and capabilities to win this war? What are the longer-term implications for Ryanair of winning or losing? What would students anticipate? What would they recommend from the Ryanair perspective? How many price wars on how many fronts can Ryanair afford to fight? Maybe one competitor alone cannot defeat Ryanair, but many simultaneous competitors might succeed. Scenario analysis would be useful here, drawing a series of strategic maps involving different combinations of erstwhile and potential competitors.

Ryanair needs to understand its clientele, especially its new clientele, as it rolls out routes and opens up hubs in mainland Europe. What are its expectations, apart from the low-fares aspect? Is ...