Case Study

Ryanair
Business Strategy Analysis

Submitted by:
Abhishek
Roll No.: 2104
Submitted to: Rajeev Kumar
Dr Megha M Sharma Roll No.: 2150
 OVERVIEW OF THE COMPANY:
• Ryanair is an Irish low-cost airline headquartered in Dublin, Ireland. It is one of the
largest and most well-known budget airlines in Europe. Founded in 1984 by Tony
Ryan, the airline has grown significantly over the years and is known for its no-frills
approach, offering low fares with optional add-ons for extra services.
• Ryanair operates an extensive network of flights across Europe, as well as some
destinations in North Africa and the Middle East. It primarily operates point-to-point
flights, flying between smaller or secondary airports, which helps keep costs down.
The airline has faced criticism at times for its strict policies, including fees for
services like checked baggage, priority boarding, and seat selection. However, its
low fares have made air travel more accessible to many people across Europe.
• Ryanair started in the year 1985 with only 57 staff members and with one 15 seater
turboprop plane from the south of east of Ireland to London-Gatwick which carried
5000 passengers on one route. In 1986, inspired by the story of the company go after
the big guys for a slice of the action and end up smashing the British Airways high
fare cartel on the Dublin-London route. The staff increased from a mere 57 to 120
staff members and the plane carried for about 82,000 passengers on two routes. In
1989, the company employed 350 staff and their average maximum passengers
increased to 600,000. In 1990-1991, the company had 700,000 passengers.
 RYANAIR BUSINESS MODEL:
• Low-Cost Model: Ryanair's primary revenue stream comes from selling air tickets. The
airline follows a low-cost model, offering no-frills, point-to-point flights at exceptionally
low prices.
• Ancillary Revenues: Ryanair is known for its aggressive pursuit of ancillary revenues.
These include charges for checked baggage, priority boarding, in-flight food and
beverages, seat selection, and other optional services. Ancillary revenue contributes
significantly to Ryanair's bottom line.
• High Load Factors: Ryanair focuses on maximizing the utilization of its aircraft by
achieving high load factors. This means flying with as many seats occupied as possible
on each flight, minimizing the number of empty seats.
• Secondary Airports: Ryanair often operates flights to secondary airports, which
typically have lower landing fees and operating costs compared to primary airports. This
allows the airline to save on expenses and offer cheaper fares to customers.
 RYANAIR BUSINESS MODEL:
• Operational Efficiency: Ryanair places a strong emphasis on operational efficiency and
cost control. This includes measures such as high aircraft utilization rates, quick
turnaround times at airports, fuel hedging to mitigate fuel price volatility, and bulk
purchasing of aircraft to secure discounts.
• Fleet Utilization: Ryanair operates a young and fuel-efficient fleet of Boeing 737 aircraft.
High fleet utilization, achieved through quick turnarounds and maximizing flying hours,
helps spread fixed costs over more flights, enhancing profitability.
• Route Optimization: Ryanair continuously evaluates its route network to identify
profitable routes and eliminate unprofitable ones. It prioritizes routes with strong demand
and minimal competition, allowing it to capture market share and drive revenue.
• Cost Discipline: Cost discipline is ingrained in Ryanair's culture. It negotiates
aggressively with suppliers, seeks favorable terms on aircraft purchases, and implements
cost-saving initiatives throughout its operations.
CHALLENGES:
• Regulatory Environment: Ryanair operates in a highly regulated industry, facing challenges
such as government-imposed taxes, fees, and regulations. Changes in regulations, especially
regarding safety, security, and environmental standards, can increase operating costs and
affect profitability.
• Competition: The European airline market is highly competitive, with both traditional carriers
and low-cost rivals vying for market share. Intense competition can lead to price wars,
reducing profit margins for all players.
• Labor Relations: Ryanair has faced criticism and labor disputes related to its employment
practices and treatment of staff. Strikes and disruptions can impact operations, leading to
financial losses and damage to the company's reputation.
• Customer Service Perception: While Ryanair's low fares attract customers, the airline has
been criticized for its no-frills approach and perceived lack of customer service. Poor
customer experiences can lead to decreased customer loyalty and negative word-of-mouth
publicity.
SOLUTIONS:
• Diversification: Ryanair could explore diversification strategies beyond its core airline
business. This may include expanding into related sectors such as travel insurance, holiday
packages, or loyalty programs to generate additional revenue streams.

• Continuous Cost Reduction: Ryanair should continue to focus on cost reduction initiatives to
maintain its competitive edge. This includes optimizing route networks, negotiating favorable
contracts with suppliers, and investing in fuel-efficient aircraft to lower operating expenses.

• Enhanced Customer Experience: Improving the customer experience can help Ryanair attract
and retain customers. This may involve investing in training for staff, offering more flexible
ticket options, and enhancing the online booking process and mobile app.

• Strengthening Labor Relations: Ryanair should work towards improving its relationship with
employees and addressing labor concerns to minimize disruptions and build a more positive
corporate image.

• Strategic Partnerships: Forming strategic partnerships with other airlines or travel

companies can provide Ryanair with opportunities to expand its reach and offer customers a
broader range of services while potentially reducing operating costs through economies of
scale.
SWOT ANALYSIS OF RYANAIR:
Strengths
• Marketing – strong branding and reputation, aggressive price strategy.
• Low cost due to airport operator deals.
• Reputation as the biggest budget airline.
• Lots of publicity due to O’Leary and controversial issues.
• Air Transport World magazine announced that Ryanair was the most profitable airline in the world.
• 2006 Annual Report, Ryanair designed itself as the ‘World’s Favourite Airline’.

Weaknesses
• Cash tied up in the purchase of new planes.
• Entire company based on the European low-cost airline market.
• Shock profit warnings may have used cash reserves and weakened fiscal structure
• Refusal to back down over issues such as EU Commission
• Poor employee relations
• Total dependence on the CEO Michel O ‘Leary
SWOT ANALYSIS OF RYANAIR:
Opportunities
• Possible new routes,
• New planes = larger capacity.
• Advertising space on the website and planes, more revenue
• International Airline collaborated
• EU expansion

Threats
• Competitors – BMI baby, Easyjet, ThomsonFly.
• Economic recession would mean less disposable income.
• EU Commission could put restrictions on companies if they do not adhere to state aid rules
• Substitute transportation like cars and high-speed trains.
• Fluctuations in fuel prices
CONCLUSION:

• On the whole Ryanair seem to be following a strategy that works

for them. They are obviously aware of their business environment
and understand the importance of monitoring it as they took
advantage of the opening in the market when they restyled
themselves over a decade ago.
• However they need to be aware that this environment is
constantly shifting and evolving and therefore maintaining a
close eye on it and being ready to adapt to any changes should
be a fundamental part of their strategy.
 RECOMMENDATION:
• Ryanair’s aim is to keep fares low, mainly by not introducing fuel surcharges. Actions like this,
which were of course highly publicized, ensure Ryanair is constantly attracting customers.

• Part of Ryanair’s success is made possible by the fact they are such a lean company, both in the
way they operate and the services they offer. O’Higgins (2004) claims that when the carrier
dropped their cargo services, although they were going to be losing £500,000 of revenue a year,
they decreased the turnaround time of their aircraft from 30 minutes to 25 minutes to attract
more business travelers who required punctuality.

• Innovativeness like this has ensured Ryanair’s sustainability and will carry them forward into
the future. To recommend any major changes would be to predict how the airline industry will
change which ultimately cannot be foreseen. However, it has been concluded that the budget
airline will continue enjoying its boom, with many passengers now enjoying the short breaks
away at a low price. Also, the advent of new routes will bring more custom, from both departure
points. If there was to be a drop in demand Ryanair would certainly suffer and subtle shifts in
their strategy could be appropriate. For example, offering drink vouchers onboard for the
customer’s next Ryanair flight might entice more people back, or making alliances with hotel
groups to offer a complete package, rather than just selling advertising space on their website.
REFERENCES:
• Finlay, Paul (2000), Strategic Management. An Introduction to Business and
Corporate Strategy. Pearson Education. ISBN 0 201 39827 3
• Haberberg, Adrian & Rieple, Alison (2001), The Strategic Management of
Organisations. Pearson Education Ltd, ISBN 0 130 21971 1
• Lynch, Richard (2000), Corporate Strategy 2nd Ed. Pearson Education Ltd, ISBN
0- 273-64303-7
• McManus, John, ‘Maybe it’s time for Ryanair to jettison O’Leary’, Irish Times, 11
August 2003
• O’Higgins, Eleanor, (2004), Ryanair
• O’Higgins, Eleanor, (2007), Ryanair – the low – fares airline
• www.ryanair.com
• www.grin.com
THANK YOU