Ryanair

Why has Ryanair been successful so far? tense In the early 1990s, Ryanair won the game after a great recovery from the losses 20m when they rearrang new strategic planning to become first low fares in Europe. Some of the major tricks were adopted by Ryan air are, for instance, it builds its strategies on the successful model of Southwest airlines and the new management style which refresh and change the fortune of the company. In addition, the principle of growth ambitions that Raynair adopted encourged its entry to Irland-UK market and its success as an irish ethnic airline. Additionally, this ambition also encourged the company to expanding its aircraft fleet, for example, the company fleet grow from 22 aircraft in 1999 to 54 at the end of 2003. The strategy of owning aircraft rather than leasing and the 45 Boeing illustrate the long vision of the company as an important reasn behind its success. Beside that the benefit from these new aircrafts in maintenance cost and fuel efficiency. Moreover, the free seat giveaways engaged the company on no fares airline activities which is another reason for its success. The company financial growth and its unique profitability distinguished the company from its European counterparts during a period of time. Therefore, the remarkable growth in profitiabltiy, revenues, traffic, routes and fleet help the company to expand rapidly. Furthermore, Rayanaire reach the success by becoming No. 1 for customer service. Thus one of the main reason behind the success of the airline is the excellent customer service and the staff which is able to provide that to the customers. Customer service plays an important part in the success of the business in a service industry. The airline has maintained to retain its customers by ensuring timely services and offering lowest fares for majority of the destinations covered by it as compared to prices offered by competing airlines (Sullivan, 2008). Ryanair also tries to minimise its operational costs and thus does not make huge operational losses. The company is always in a pursuit to drive down its costs in order to offer the best prices to the customers and remain profitable at the end (Burns, 2006). The goal of the airline is to meet the needs of the customers during travelling at lowest costs possible although not compromising on the quality and standards of service. The success to the airlines thus comes from the offering of lowest prices, providing comfort to the customers and also maintaining the service and frequency of its fights. Is Ryanairs strategy sustainable? Ryanairs strategy is based on cost reduction in operations through fleet commonality, outsourcing of services, airport charges and route policies, managed staff costs and by
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managing its marketing costs. Considering the PESTEL analysis of the airline industry, it is essential for the company strategy to ensure that it takes into account the existing as well as the competition from new and emerging players. In addition to this the threat from substitutes is always present which in this case is alternate modes of travel like trains (Hitt, 2005). The aviation industry is one of the most competitive ones with focus of majority of the players being on the margins in the business as they bleed money due to financial losses in the operations. Ryanairs strategy focuses on achieving the bottom lines through a series of steps involving cost cutting measures which are sustainable in nature and which are also required in the business considering its present state (Bowers, 2009). By focussing on the five areas mentioned earlier, the company can look to squeeze its costs in every area in order to provide the best flight rates to the customers which would result n increasing the business revenues over time (Simons, 2009). The strategy would also ensure that it would safeguard the business directly from any new entrant in the low cost flying business as it would required time and effort for the new player to involve these changes in its operations. Would you recommend any changes to Ryanairs approach in view of the changing environment situation over recent years? If so, what are they? Keeping in mind the changing environment situations, Ryanair can take a variety of steps to further improve its operations. They are as follows: 1. The airline can look into ways and means to improve its oil hedging and currency trading practices. 2. As more competitors emerge into low cost section, it is necessary for the airline to improve its perception and image in the minds of the consumers and to further develop a positive image (Sullivan, 208). 3. The airline should involve itself into marketing of ancillary products. Gift coupons, cobranded credit cards are some of the options which the airline can explore. 4. Succession planning is very integral to the success of any airline and Ryanair should give it a very serious thought. Should Ryanair consider introducing long haul flights? Ryanair should not consider introducing long haul flight as it does not support its strategy which is based on cost cutting in operations. Introduction of long haul flights adds certain
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components in the operations where costs add up and it is difficult to keep the prices of flight as such (Riegel, 2008). The customer service has to be beefed up along with certain requirements like in-flight meals which have to be added up in long haul flights. Any changes in the current scenario of operations would disturb the business operational efficiencies. It would be difficult for the company to focus on both the service quality aspect on such long haul flights when its main intention is to cut costs to survive in the business. It is not related to the business strategy at all and the introduction of such routes might put the company at risk as well. Did the Aer Lingus bid make strategic sense? Should Ryanair launch another bid for Aer Lingus or another carrier? Keeping in mind the situation in the airline industry, the Aer Lingus did not make any strategic sense and the airline should not make any further attempt for another bid or think to acquire another carrier. As per the environmental analysis, the strategy is against the interest of all the stakeholders attached and also the main reason not to pursue this strategy is that the board of Aer Lingus is firmly opposed to the bid from the very starting (Clauss, 2007). Ryanair should hold on to its stake at Aer Lingus and should not launch another bid for it or for any other airline in the near future. Evaluate the strategic leadership of Michael OLeary. Should he continue to serve as CEO? Micheal OLeary played an important role in Ryanair in strengthening its business model. He adopted SouthWest Airlines low price model and also ensured that Ryanair business remains committed to it for time to come (Simons, 2009). He ensured that all operations in the business which add no value should not be performed and thus costs should be saved in the end. Michael was behind the idea of standardising the fleet of aircraft to ensure better economies of operations and also to have lesser costs in employee training etc (Calder, 2007). The leadership of Michael OLeary played a critical role in making the cost reduction one of the companys core competencies. Under his guidance the airline developed its human capital with a strong focus on culture and values in the organisation. References Ken Burns. Evaluating business strategy. New York: Penguin, 2006, pg. 34-37

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Ireland, Hitt. Strategic Business Management. Harvard Business Review, 2005, pg. 12-14 Sullivan, O. Ryanair sticks to 10% growth forecast. The Irish Times, 2008 Bowers, Simon. Ryanair on a victory roll. London: The Guardian, 2009 Riegel, Ralph. Ryanair wages price wars. London: The Sunday Times, 2008 Calder, Simon. Michael O'Leary A Life in Full Flight. Dublin: Penguin Island, 2007 Johnston, Clauss. Perfectly legal. New York: Portfolio, 2007 Simons, Andrew. Business of low cost flying. London: Virgin Books, 2009

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