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Evaluation and Analysis of Ryanair Strategic Position Between 2006 and Today
1. Introduction
According to Barrett (2004), the emergence of budget carrier in Europe is due to the economic recession, deregulation of the European aviation industry and integration of market. Ryanair is one of the most successful low budget carriers in Europe as it claimed itself as the biggest budget carrier in Europe by passenger number according to its 2010 annual report. Ryanair is renowned for its clear-cut cost cutting objective and its business model has made possible to generate the largest profits among the aviation industry during the financial crisis across the globe in 2009 according to Financial Times (2010). Ryanair also pride itself on the continuous traffic growth, increasing market share, successive reduction in unit costs, rolling out of new routes and increase in number of bases.
This paper will study and analyse the strategic position between 2006 and 2010 using PESTE model and SWOT analysis to show how strategies of Ryanair change with the macro-environment. Also, the strategies devised will be further evaluated in the second part of the paper.
2. The business model of Ryanair in brief
Cost cutting measures by reduction of customer service items
As defined by Mintel (2009), “No-frills airline is one that offers low fares by eliminating many traditional passenger services”. To offer customers substantial fare discount as compared to traditional airlines, Ryanair adopted a stringent cost cutting policy by reducing the number of customer service items in their products, including reduction of in-flight services such as not serving any free food or beverages on board, passengers seat are not pre-allocated and only economy class is served; in addition, there is no airport lounge service or retail ticket offices for Ryanair passengers, and to incur less maintenance cost, reclining seats were replaced by cheaper fixed seats. The elimination of
1. Introduction
According to Barrett (2004), the emergence of budget carrier in Europe is due to the economic recession, deregulation of the European aviation industry and integration of market. Ryanair is one of the most successful low budget carriers in Europe as it claimed itself as the biggest budget carrier in Europe by passenger number according to its 2010 annual report. Ryanair is renowned for its clear-cut cost cutting objective and its business model has made possible to generate the largest profits among the aviation industry during the financial crisis across the globe in 2009 according to Financial Times (2010). Ryanair also pride itself on the continuous traffic growth, increasing market share, successive reduction in unit costs, rolling out of new routes and increase in number of bases.
This paper will study and analyse the strategic position between 2006 and 2010 using PESTE model and SWOT analysis to show how strategies of Ryanair change with the macro-environment. Also, the strategies devised will be further evaluated in the second part of the paper.
2. The business model of Ryanair in brief
Cost cutting measures by reduction of customer service items
As defined by Mintel (2009), “No-frills airline is one that offers low fares by eliminating many traditional passenger services”. To offer customers substantial fare discount as compared to traditional airlines, Ryanair adopted a stringent cost cutting policy by reducing the number of customer service items in their products, including reduction of in-flight services such as not serving any free food or beverages on board, passengers seat are not pre-allocated and only economy class is served; in addition, there is no airport lounge service or retail ticket offices for Ryanair passengers, and to incur less maintenance cost, reclining seats were replaced by cheaper fixed seats. The elimination of