Ryanair-the Future Impact of Its Macro Environment Essay Example

The airline industry is very much influenced by the rapid and dramatic changes taking place in the environment. All around the world, aircraft carriers are facing increases in fuel prices and are vulnerable to expensive disruptions like the 2010 volcanic eruption in Iceland. (paragraph 1,p.11) Trade unions, who drive up costs, and regulators are legal factors which prevent aircraft companies from implementing their own ways of cutting costs. (paragraph 6,p12) Ryanair, the largest low-cost carrier in Europe, is affected by all the above mentioned factors, but is still the market leader in this changing industry. So, what is the impact of the macro environmental factors on Ryanair’s future development? Comac, a technological ambition for China, is a potential future competitor of Boeing and Airbus in the aircraft production industry. The Chinese plane would likely cost 10% less than Boeing and Airbus jets. Ryanair’ CEO Michael O’Leary has been publicly enthusiastic about the Chinese company’s plans, saying that it could provide a further 5% savings in the company’s costs. This would be a possibility if Comac will agree to produce a stretch version of their featured plane C919, going to a number of 199 seats instead of the basic 174-seat configuration. Furthermore, Ryanair agreed to share its “experience and expertise” to assist Comac in the development of their new plans, from which both will have long-term benefits.(paragraph 11,p.13) The global recession affected the entire world economy, as well as the aircraft industry. But low-cost travel does not follow economic trends. Ryanair is planning to buy 50 new planes. Moreover, Michael O’Leary aims to increase passenger numbers from 75 to 85 million over the next two years. This means that discount airlines, including Ryanair, do well during recession. (paragraph 14,p.13) Consumers play an important role in the airline industry. Because of the recession “only low-cost airlines have posted much of a profit or