Ryanari Pestel Analysis
Ryanair Analysis
Section A. 1. Analysis of the Business Environment
In order to analyze the airline industry, we need to conduct the PESTEL Analysis.
Political and Legal
- Regulations for the air travel industry are getting even more stringent. The European Union authorities demand that airlines operate in an open, transparent manner. Any state subsidies to airline companies are prohibited in order to make working conditions equal to anyone and to boost competition in the industry. There are also regulations in place for airlines not to exceed certain levels of noise and air pollution. All of the legislation and regulations make operating in the industry harder. - Trade unions are powerful in Europe and have a great bargaining power. Airlines thus may face high costs or fines unless they comply with strict labour legislation or lay off employees. Unionisation is, however, weaker in the budget airline sector, which puts less stress on Ryanair.
Economic
- Europe is undergoing economic slowdown. People therefore spend less, in general, and tend to travel less, as a result. - High oil prices inflate costs of fuel and impact margins negatively. - At the same time, people are ready to travel for less and thus willing to opt for low-budget airlines. - Business travel is on the surge. E.g., business travelers count for 40% of all Ryanair’s passengers. - At the same time, overall traffic in the industry as well as profitability levels plummeted in the aftermath of 11 September and after the war in Iraq and the SARS. This had a devastating effect on the majority of airlines but also gave an impetus to the development of low-cost carriers.
Social
- People’s mobility has been increasing during the last decades. People travel for leisure, business, and in search of new jobs. - Personal disposable income of people is rising in Europe as well as the number of senior citizens who enjoy traveling. - Traveling
Section A. 1. Analysis of the Business Environment
In order to analyze the airline industry, we need to conduct the PESTEL Analysis.
Political and Legal
- Regulations for the air travel industry are getting even more stringent. The European Union authorities demand that airlines operate in an open, transparent manner. Any state subsidies to airline companies are prohibited in order to make working conditions equal to anyone and to boost competition in the industry. There are also regulations in place for airlines not to exceed certain levels of noise and air pollution. All of the legislation and regulations make operating in the industry harder. - Trade unions are powerful in Europe and have a great bargaining power. Airlines thus may face high costs or fines unless they comply with strict labour legislation or lay off employees. Unionisation is, however, weaker in the budget airline sector, which puts less stress on Ryanair.
Economic
- Europe is undergoing economic slowdown. People therefore spend less, in general, and tend to travel less, as a result. - High oil prices inflate costs of fuel and impact margins negatively. - At the same time, people are ready to travel for less and thus willing to opt for low-budget airlines. - Business travel is on the surge. E.g., business travelers count for 40% of all Ryanair’s passengers. - At the same time, overall traffic in the industry as well as profitability levels plummeted in the aftermath of 11 September and after the war in Iraq and the SARS. This had a devastating effect on the majority of airlines but also gave an impetus to the development of low-cost carriers.
Social
- People’s mobility has been increasing during the last decades. People travel for leisure, business, and in search of new jobs. - Personal disposable income of people is rising in Europe as well as the number of senior citizens who enjoy traveling. - Traveling
References: The paper is based on RyanAir Case Study Scholes (2005) Exploring Corporate Strategy, 7th Edition, p882