ryanair strategy case study

Ryanair Marketing Strategy 2024: A Case Study

Ryanair, a leading low-cost airline in Europe, has captured the market with its strategic marketing initiatives. With over 610 destinations and a growing fleet, Ryanair aims to expand its reach and solidify its position as a budget airline. This case study will dive into Ryanair’s marketing strategy, exploring key components such as brand positioning, customer segmentation, and digital marketing campaigns.

Ryanair understands the importance of targeting price-sensitive customers, which has been the cornerstone of its success. By offering affordable flights, the airline caters to a wide range of travelers, including students, budget travelers, business travelers, and cost-conscious individuals. Ryanair’s low-cost flight offerings allow customers to reach their desired destinations without breaking the bank. This targeted approach has enabled Ryanair to carve out a niche in the highly competitive airline industry.

One of the key factors in Ryanair’s marketing strategy is the effective utilization of digital platforms. The brand’s digital marketing campaigns extend its reach and engage with customers on various platforms, including Twitter and YouTube. By leveraging these channels, Ryanair can interact with its audience, share travel content, and provide important updates and offers. This digital presence allows the airline to connect with its customers on a deeper level, fostering brand loyalty and enhancing the overall customer experience.

Ryanair’s success on social media platforms such as TikTok and Instagram showcases the brand’s ability to adapt its content strategy to different audiences. On TikTok, Ryanair has captivated viewers with engaging, humoristic, and captioned videos under ten seconds in length. The airline’s TikTok account boasts a large fan base and an incredible view rate, contributing to its popularity. By embracing authenticity, creativity, and a humanized approach in content creation, Ryanair has effectively increased brand awareness and engagement levels.

Key Takeaways:

• Ryanair targets price-sensitive customers with its low-cost flight offerings.
• Demographic segmentation plays a crucial role in Ryanair’s marketing strategy, with the airline targeting students, budget travelers, business travelers, and cost-conscious individuals.
• Ryanair’s digital marketing strategy incorporates various platforms, including Twitter and YouTube, for customer engagement.
• The brand’s success on TikTok and Instagram highlights the importance of using video content to engage with audiences in a creative way.
• Emphasizing authenticity and creativity, Ryanair’s TikTok strategy sets it apart in the industry and contributes to its brand image and reputation.

About Ryanair

Ryanair is an Irish low-cost airline that was founded in 1985. It has become one of the top low-cost carriers in Europe, offering affordable flights to a wide range of destinations. Ryanair’s success as a budget airline has helped build its brand reputation as an affordable choice for travelers.

Ryanair’s commitment to providing affordable flights has made it a popular choice for travelers seeking budget-friendly options. With its extensive network of destinations and cost-effective operations, Ryanair has gained a reputation for its low-cost airfare. The airline’s focus on providing affordable flights without compromising on safety or service quality has solidified its position as a leading player in the low-cost airline industry.

In addition to its commitment to affordability, Ryanair also emphasizes punctuality and efficient operations. The airline prides itself on quick turnarounds and minimizing delays, ensuring that passengers reach their destinations on time. This focus on punctuality has contributed to the airline’s reputation for reliability and customer satisfaction.

Ryanair’s brand reputation extends beyond its affordable flights and operational efficiency. The airline has also gained recognition for its engaging and humorous marketing campaigns, particularly on social media platforms. By leveraging humor and wit, Ryanair has successfully connected with its target audience and created a loyal customer base.

Social Media Presence

• Instagram: 1.3 million followers
• Facebook: 5.1 million followers
• YouTube: 108K subscribers
• Twitter: 808.3K followers
• LinkedIn: 683K followers
• TikTok: 2.1 million followers

Ryanair maintains a highly engaging online presence across various social media platforms. With a large following on Instagram, Facebook, Twitter, LinkedIn, and TikTok, the airline leverages these platforms to connect with its audience and share diverse content formats. From user-generated content to engaging memes and regular fare and service updates, Ryanair’s social media channels offer a unique and entertaining experience for its followers.

The airline’s Twitter account stands out for its humorous and witty responses, which not only diffuse potentially negative situations but also generate positive buzz around the brand. By incorporating humor into its customer service responses and marketing campaigns, Ryanair has managed to create a loyal customer base and differentiate itself from competitors.

Ryanair’s strong brand reputation, affordable flight options, and engaging marketing approach have contributed to its success in the low-cost airline industry. The combination of competitive pricing, reliable operations, and a humorous brand personality has made Ryanair a trusted choice for budget-conscious travelers.

Marketing Mix of Ryanair

Ryanair, a leading low-cost airline in Europe, utilizes a well-designed marketing mix to effectively reach its target audience and maintain its position as a budget-friendly airline. The marketing mix comprises four key components: price, product, place, and promotion strategies.

Price Strategy: Ryanair’s price strategy revolves around offering low-cost flights to attract price-sensitive customers. The airline implements dynamic pricing and price discrimination, selling approximately 70% of its seats at the two lowest fares. This strategy allows Ryanair to maximize seat occupancy and cater to a wide range of customers.

Product Strategy: Ryanair focuses on maximizing the capacity of its fleet, which consists of 250 new Boeing 737-800 aircraft, with orders for 64 more. By operating a large fleet, Ryanair ensures a wide range of destinations and frequent flight options for its passengers. The airline also provides additional services, such as food and drink purchases onboard, to enhance the overall travel experience.

Place Strategy: Ryanair predominantly sells its tickets online through its user-friendly website and mobile app. This direct distribution channel saves the airline 15% on agency fees and allows customers to easily access reservations, contributing to a seamless booking process.

Promotion Strategy: Ryanair’s promotion strategy focuses on highlighting its brand values of affordability, simplicity, and customer care. The airline adopts an in-house advertising approach to minimize advertising spend. Ryanair also utilizes controversy as a promotional tool, generating buzz and attracting attention. Additionally, the airline collaborates with tourism boards to promote travel to specific destinations, leveraging partnerships to expand its reach.

By effectively implementing its marketing mix strategies, Ryanair has positioned itself as a renowned low-cost airline, capturing a significant market share and continuously attracting price-conscious travelers.

Competitor Analysis of Ryanair

Ryanair, as the first and largest budget airline in Europe, faces competition from other low-cost airlines in the industry. EasyJet, BMIbaby, Fly Be, and Aer Lingus Group are among Ryanair’s main competitors. These airlines also emphasize low-cost tickets as a way to attract budget-conscious travelers.

Among the competitors, EasyJet is a direct rival to Ryanair, offering similar affordable flights and targeting the same market segment . Lufthansa, on the other hand, competes with Ryanair primarily in brand positioning. While Lufthansa focuses on comfort and luxury, Ryanair differentiates itself by targeting price-sensitive customers and offering the lowest prices in the market.

By positioning itself as the top choice for budget travelers in Europe, Ryanair has successfully established its brand as a reliable and affordable airline option. The airline’s emphasis on cost leadership and differentiation aligns with Porter’s Generic Competitive Strategies, allowing Ryanair to maintain its competitive advantage in the low-cost airline market.

Target Audience Analysis of Ryanair

Ryanair, as a leading low-cost airline, has a well-defined target audience consisting of price-sensitive customers who are predominantly young and budget travelers. The airline’s marketing strategy focuses on understanding and catering to the needs and preferences of this specific group of travelers.

To effectively reach and engage with their target audience, Ryanair creates advertisements that resonate with young travelers and budget-conscious individuals. These ads highlight the affordability and cost savings associated with flying Ryanair, appealing to those who are looking for cheap flights and want to save on travel expenses.

In addition to targeted advertisements, Ryanair personalizes its offers based on customer preferences and past bookings. By tailoring their offerings to individual travelers, Ryanair enhances the customer experience and builds a loyal customer base among price-sensitive customers.

Social Media Engagement

Ryanair recognizes the importance of social media in reaching its target audience. With over 1.5 million followers on Twitter, the airline leverages its social media presence to engage with customers uniquely.

Ryanair’s Twitter account is known for its humorous responses to customer inquiries, generating positive buzz around the brand. The airline’s customer service team uses humor and wit to not only diffuse negative situations but also generate positive reactions. This approach not only sets Ryanair apart from its competitors but also creates a distinctive brand personality that resonates with the target audience.

Ryanair’s Twitter account often utilizes pop culture references and current events to create timely and relatable content. This helps the airline stay relevant and connect with the young travelers and budget-conscious individuals they target.

Overall, Ryanair’s marketing strategy effectively captures the attention and loyalty of its target audience by prioritizing affordability, personalization, and engagement through social media channels.

The Need for Speed

In the highly competitive airline industry, speed and agility are essential for success. Ryanair, the largest airline in Europe, understands this better than anyone. With a fleet of 250 new Boeing 737-800 aircraft and firm orders for 64 more, Ryanair operates over 1,100 low fare routes across Europe, connecting 157 destinations in 26 countries.

Ryanair’s commitment to speed can be seen in every aspect of its operations. The airline focuses on quick flight turnarounds, ensuring minimal time on the ground and maximizing efficiency. This allows Ryanair to offer more flights and capitalize on market demand .

But it’s not just about fast turnarounds. Ryanair’s agility shines in its marketing strategies as well. The company has embraced digital marketing, leveraging social media channels like Facebook, Instagram, and TikTok to connect with its audience and enhance brand awareness. With the guidance of Michael Corcoran, Head of Social & Creative Content, Ryanair’s social media presence exhibits a humorous and intentional tone, appealing to a wide audience. The airline’s social media strategy blends elements of disruption, self-deprecation, irreverence, and playfulness, keeping up with current trends and audience preferences.

This ability to adapt is key to Ryanair’s competitive advantage in the industry. The airline recognizes the importance of staying ahead of market changes and responding swiftly to new opportunities. By embracing a customer-centric approach and cost-effective operations, Ryanair has successfully positioned itself as a low-cost, no-frills carrier without compromising on quality.

A significant part of Ryanair’s success lies in its ability to generate ancillary revenue. Deals with Hertz car rental and hotels contribute to the company’s profits, offsetting the low fares offered to passengers. Additionally, Ryanair’s online booking system saves them 15% on agency fees, further increasing their profit margins.

With over 73.5 million passengers expected to fly with Ryanair in the current fiscal year, it’s clear that the need for speed and agility has paid off. The airline’s emphasis on quick turnarounds, agile marketing, and adaptability allows it to navigate a rapidly changing market landscape and maintain its position as Europe’s leading airline.

Digital Marketing Presence of Ryanair

Ryanair, known for its innovative marketing strategies, effectively utilizes digital marketing to enhance its brand presence and connect with customers. The airline leverages various platforms and techniques to engage with its target audience and create a strong online presence.

Website: User-Friendly Experience

Ryanair’s website is a key component of its digital marketing strategy. It provides customers with a user-friendly experience for planning and booking flights. With a streamlined interface, customers can easily navigate the website, search for flights, and make reservations. The website also offers additional services and features that enhance the overall customer experience.

YouTube: Engaging Travel Content

On YouTube, Ryanair shares engaging travel content to connect with viewers and showcase the unique experiences it offers. The channel’s 108K subscribers enjoy a variety of videos, including travel guides, destination highlights, and behind-the-scenes footage. By leveraging YouTube’s visual storytelling capabilities, Ryanair establishes a closer connection with its audience and inspires them to explore new destinations.

Twitter: Customer Engagement and Flight Updates

Ryanair utilizes Twitter as a platform for customer engagement and sharing important flight information. With 808.3K followers, the airline actively responds to customer inquiries, providing timely support and assistance. Additionally, Ryanair uses Twitter to provide real-time updates on flight schedules, delays, and other relevant information, keeping its customers well-informed and connected.

Potential Expansion: Facebook and Instagram

While Ryanair has already established a strong digital presence, it could further expand its reach by utilizing Facebook and Instagram for unique marketing campaigns. With millions of followers across different platforms, Ryanair can leverage these social media networks to engage with a wider audience and showcase its brand in new and creative ways. By incorporating visually appealing content and interactive features, Ryanair has the opportunity to enhance its digital marketing strategy and capture the attention of even more potential customers.

With its comprehensive digital marketing presence, Ryanair effectively engages with its audience and ensures its brand remains top-of-mind. By combining user-friendly websites, engaging YouTube content, active customer engagement on Twitter, and the potential expansion to Facebook and Instagram, Ryanair continues to drive customer engagement and strengthen its online presence.

SWOT Analysis of Ryanair

Ryanair, one of Europe’s leading low-cost airlines, can be analyzed using a SWOT analysis to identify its strengths, weaknesses, opportunities, and threats. This analysis provides valuable insights into Ryanair’s current position and potential areas for improvement.

• Ryanair is known for its low-cost flight offerings, attracting price-sensitive customers and experiencing high demand.
• The airline operates over 1,800 daily flights across 40+ countries, demonstrating its extensive reach and network.
• Ryanair consistently achieves high load factors, indicating efficient operations in filling available seats.
• Ancillary services such as baggage fees, seat selection, priority boarding, and in-flight sales contribute significantly to Ryanair’s revenue.
• The company boasts a substantial competitive advantage with over 65% more routes than its nearest competitor, holding the top position globally in terms of the number of routes.
• Ryanair’s focus on cost reduction has positioned it as a cost leader in the industry, facilitating competitive pricing and financial success.
• Potential service quality issues and disputes with regulatory organizations are weaknesses that Ryanair needs to address to improve customer satisfaction and public image.
• The low-cost airline market in Europe is highly competitive, with rivals such as EasyJet, Wizz Air, and Vueling vying for market share, posing a challenge for Ryanair.
• Labor relations have resulted in disputes and strikes, impacting Ryanair’s operations and potentially damaging its reputation.
• Despite strong financial performance, Ryanair faces vulnerability to external factors such as economic downturns and fluctuating fuel prices, which can impact its profitability.

Opportunities

• Ryanair has opportunities to expand its routes and operations to new destinations, tapping into new markets and reaching a wider customer base.
• Leveraging digital marketing strategies can further enhance Ryanair’s brand visibility, customer engagement, and revenue generation.
• Government support through initiatives like the COVID Corporate Financing Facility presents opportunities for Ryanair to navigate challenging times in the aviation industry.
• In the wake of the COVID-19 pandemic, Ryanair has the opportunity to adapt its operations and customer offerings to cater to evolving travel trends and preferences.
• The ongoing threat of COVID-19 restrictions, uncertainties related to vaccine access, and the increased popularity of video conferencing may impact the recovery of the aviation industry and pose challenges for Ryanair’s operations and customer trust in travel.
• Intense competition from other airlines, economic recessions, and changing fuel prices are external factors that pose threats to Ryanair’s market share and profitability.
• Internal challenges such as labor disputes and service quality issues can further jeopardize Ryanair’s reputation and competitiveness.

By analyzing Ryanair’s strengths, weaknesses, opportunities, and threats, the airline can strategically capitalize on its strengths, minimize weaknesses, seize opportunities, and mitigate threats. This analysis serves as a valuable guide for Ryanair’s decision-making processes, enabling the company to maintain a competitive edge in the low-cost airline industry.

Market Segmentation by Ryanair

Ryanair, as a leading low-cost airline, utilizes market segmentation to effectively target different customer segments. By tailoring its services to meet the specific needs and preferences of various traveler groups, Ryanair maximizes its appeal and captures a wide range of customers.

One of the key customer segments that Ryanair targets is student travelers. With their often limited budgets, students are cost-conscious travelers who appreciate the affordability that Ryanair offers. The airline understands that students value low fares and are willing to forgo certain frills for the sake of saving money.

Another important segment for Ryanair is budget travelers. These travelers prioritize finding the most affordable flights and are not overly concerned about luxury or comfort. Ryanair’s low-cost fares and no-frills aviation concept cater to the needs of these budget-conscious individuals, making it an attractive choice for their travel needs.

In addition to student travelers and budget travelers, Ryanair also focuses on targeting business travelers. These travelers are often cost-conscious and seek economical options for their frequent trips. Ryanair’s low fares and consistent service offerings make it a viable choice for business travelers who prioritize cost-efficiency.

Lastly, Ryanair appeals to a broader segment of cost-conscious travelers. These are individuals who prioritize saving money and finding the best value for their travel experiences. By positioning itself as a low-cost carrier and consistently offering affordable fares, Ryanair captures the attention of this segment, attracting travelers who prioritize cost savings.

By effectively segmenting its target market and tailoring its services to meet the specific needs and preferences of each segment, Ryanair remains a top choice for student travelers, budget travelers, business travelers, and cost-conscious travelers. The airline’s market segmentation strategy allows it to tap into a diverse customer base and maximize its market reach.

Reputation Management Importance

Reputation management is crucial in today’s digital era for businesses of all sizes. A positive business reputation not only builds trust and credibility but also fosters customer loyalty. It plays a significant role in influencing decision-making by customers, employees, investors, and the general public. Therefore, building and maintaining a positive reputation is vital for sustainable growth and long-term success.

Business reputation goes beyond mere public perception. It encompasses the collective trust, respect, and goodwill that a company has developed over time. It reflects how customers perceive a business, its products or services, and its values.

For companies like Ryanair, which operate in competitive industries like aviation, reputation management is even more critical. In a highly dynamic and interconnected market, maintaining a positive reputation helps Ryanair stand out among its competitors, attract new customers, and retain existing ones.

A strong business reputation instills confidence in customers, assuring them of the reliability, quality, and credibility of Ryanair’s services. They are more likely to choose Ryanair over its competitors, knowing that their travel needs will be met efficiently and with the utmost professionalism.

Moreover, a positive reputation enhances customer loyalty and advocacy. Satisfied customers who trust Ryanair are more inclined to engage in repeat business, recommend the airline to their friends and family, and share positive experiences on social media and review platforms.

Reputation management is not just about maintaining a positive image; it also involves proactively addressing any negative feedback or issues that may arise. By promptly responding to customer concerns and resolving problems, Ryanair can demonstrate its commitment to customer satisfaction and earn their trust and loyalty.

Additionally, a positive reputation has a profound impact on the perception of Ryanair’s brand in the eyes of potential investors, partners, and employees. A company with a strong reputation is more likely to attract capital investment, form strategic partnerships, and recruit top talent, all of which contribute to its overall success and growth.

Therefore, to thrive in today’s competitive business landscape, Ryanair must prioritize reputation management as an integral part of its overall marketing and business strategy. By investing in building and maintaining a positive reputation, the airline can foster trust, credibility, and customer loyalty, positioning itself as a leader in the aviation industry.

Importance of Monitoring Business Reputation

In today’s digital era, monitoring a business’s reputation is crucial for maintaining its success and standing in the market. Public opinion holds significant power and can make or break a company’s reputation. A good reputation is essential for building trust, attracting customers, boosting investor confidence, and ensuring overall business success.

By monitoring a company’s reputation, businesses gain early detection of potential issues that may arise. This early detection allows for proactive response and timely resolution of problems before they escalate. It also enables businesses to gain valuable customer insight and understand their preferences, opinions, and concerns.

Through reputation monitoring, companies can track trends and stay ahead of the competition. By analyzing sentiment analysis and other metrics provided by tools like Brand24, businesses can pinpoint the sources of both positive and negative feedback, enabling them to address issues promptly and prevent reputational risks.

Analytics tools, such as anomaly detection and emotion analysis, help businesses identify potential issues and improve based on customer insights. Monitoring emojis used in mentions can provide further insights into the emotional response towards a company.

Take Ryanair, for example, a leading budget airline in Europe. With over 1.5 million followers on Twitter, Ryanair utilizes its social media presence to engage with customers uniquely. The airline’s humorous responses and incorporation of wit and humor in customer service not only diffuses potentially negative situations but also generates positive reactions around the brand. By incorporating humor into their marketing campaigns, Ryanair differentiates itself from competitors and creates a distinctive brand personality that resonates with the target audience.

By monitoring their reputation and engaging with customers effectively, Ryanair showcases the importance of proactively managing their reputation. This approach has contributed to their success as a budget airline and highlights the increasing popularity of humor as a marketing strategy.

In conclusion, monitoring a company’s reputation allows for early issue detection, customer insight, proactive response, trend tracking, and effective reputation management. It is a vital aspect of maintaining a positive brand image and staying competitive in today’s digital landscape.

Ryanair’s marketing strategy as a low-cost carrier and its strong brand positioning have contributed to its success in the airline industry. By employing tactics such as price discrimination, customer segmentation, dynamic pricing, and digital marketing campaigns, Ryanair optimizes the customer experience. The airline primarily targets price-sensitive customers, including young individuals and students, in its advertising campaigns.

Reputation management is also a key aspect of Ryanair’s strategy, as it plays a vital role in attracting and retaining a loyal customer base. By continuously improving its marketing approach and effectively managing its reputation, Ryanair remains a leader in the low-cost airline market.

With over 610 destinations in Europe and plans to expand rapidly by 2024, Ryanair aims to further strengthen its position as a dominant player. By leveraging opportunities in new routes and digital marketing, Ryanair can continue to serve a broad customer base that includes students, budget travelers, business travelers, and cost-conscious individuals. With its focus on exceptional value and customer service, Ryanair’s well-established brand and commitment to innovation ensure its continued growth and success.

What is Ryanair’s marketing strategy?

How does ryanair differentiate itself from its competitors, who is ryanair’s target audience, how does ryanair leverage digital marketing, what is a swot analysis of ryanair, how does ryanair segment its customers, why is reputation management important for businesses, what is the importance of monitoring business reputation, related posts:.

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Nina Sheridan is a seasoned author at Latterly.org, a blog renowned for its insightful exploration of the increasingly interconnected worlds of business, technology, and lifestyle. With a keen eye for the dynamic interplay between these sectors, Nina brings a wealth of knowledge and experience to her writing. Her expertise lies in dissecting complex topics and presenting them in an accessible, engaging manner that resonates with a diverse audience.

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How Ryanair's Relentless Cost-Cutting Redefined the Airline Industry

Ryanair, Europe's leading budget airline, has seen an extraordinary trajectory of growth, outperforming its competitors by a wide margin in the airline sector. Its relentless approach to low-cost and operational excellence, combined with strategic route expansion, has undoubtedly played large parts in assuming a dominant role within the European airline industry. Let's delve into the factors that enabled Ryanair to become one of the few companies to generate substantial returns for its shareholders in an industry that's usually not lucrative.

Key Insights

Inspired by Southwest Airlines: Ryanair's transformation into one of the world's leading low-cost carriers was significantly influenced by CEO Michael O'Leary's insights gained from Southwest Airlines.

Relentless cost-cutting: Ryanair's exceptional growth and competitive edge are rooted in its status as the lower-cost provider, achieved through strategic initiatives such as negotiating lower airport landing fees and adopting a shrewd fleet acquisition strategy.

Spillover effects: The cost reduction strategies not only generate significant savings but also attract publicity, enabling essentially free marketing and word-of-mouth promotion.

Financial performance: Ryanair's relentless focus on low-cost operations has enabled it to expand rapidly, doubling its size and significantly increasing its market share since 2016.

Founding Story

Founded in 1984 in Ireland by the Ryan family, with Tony Ryan at the helm, Ryanair began its operations with a single small turbo-prop plane. The airline's initial aim was to disrupt the duopoly held by British Airways and Aer Lingus (both are now wholly owned by International Consolidated Airlines Group ) on London-Ireland flights by offering a lower-cost service.

Ryanair's early days were marked by significant challenges. The airline struggled to find its footing in a market dominated by established carriers. Its initial strategy focused on offering simple, low-price flights, but without a clear business model to sustain its operations, the early days were marked by financial difficulties.

The turning point came in the early 1990s when current CEO Michael O'Leary, who was initially hired as CFO in 1988 by the founder Tony Ryan, took a trip to the United States. There, he met with Herb Kelleher, co-founder of Southwest Airlines , and was inspired by Southwest's successful low-cost model. O'Leary returned to Ireland convinced that Ryanair could revolutionize air travel in Europe by adopting a similar approach.

The Southwest Airlines Inspiration

The meeting between Herb Kelleher and Michael O'Leary is a pivotal moment in airline history. The meeting was intended for O'Leary to learn from Kelleher's experiences and insights into the low-cost airline business model.

Southwest Airlines' model was straightforward yet revolutionary: use a single model of aircraft to reduce maintenance and training costs, focus on quick turnaround times to maximize aircraft utilization, offer point-to-point flights to avoid costly hub operations, and eliminate unnecessary extras that contributed to higher ticket prices.

Inspired by this model, O'Leary transformed Ryanair from a small, struggling airline into one of the world's largest. The "stealing of the idea," as it is sometimes dramatically phrased, was more about adapting a proven business model to a different market. Isn't it fascinating how a single event, leading to one crucial insight, can entirely rewrite the future for companies and even industries? Let's explore this low-cost model in depth.

Ryanair: Low-Cost Squared

Ryanair began its operations in 1988, flying between London Gatwick Airport and Waterford, Ireland's fifth-largest city, with a single turbo-prop plane. Initially focusing on the London-Ireland flight market, which was historically dominated by British Airways and Aer Lingus, the company spent the next 30 years expanding into markets across Europe, route by route. As of 2023, Ryanair operates over 3,600 daily flights across 94 hubs, carrying almost 200 million passengers annually – a doubling of numbers since 2016.

The bedrock of Ryanair's spectacular growth is its status as the lower-cost provider – by a wide margin – in an industry notorious for inefficiency and uneconomical operations. Ryanair exemplifies the benefits of a substantial cost advantage: aside from fuel, Ryanair’s unit costs are around half those of its closest competitor, easyJet , and significantly lower than those of other rivals such as Norwegian and Air Berlin. This cost leadership compels competitors to price their fares at double Ryanair's rates, which explains why Ryanair continues to take market share across Europe.

Ryanair's low-cost strategy is founded on extreme operating efficiency, with its greatest cost advantage being airport landing fees. Unlike the common industry practice, Ryanair traditionally operates from smaller airports where it can exert influence over airport owners rather than adopting a position of subservience. As a result, even when primary airports raise fees, Ryanair often secures concessions.

Its second biggest cost advantage comes from shrewd fleet acquisition strategies. While other airlines, influenced by pilot-focused cultures, prioritize diverse fleets of advanced aircraft, Ryanair has built a uniform fleet opportunistically. For instance, in 2003 amid an industry slump, it made a massive purchase of high-quality Boeing 737-800s at reduced prices. This bulk purchasing strategy not only yields volume discounts from manufacturers but also facilitates staffing an in-house maintenance crew, which proves to be vastly more economical than external alternatives.

These two cost advantages are mutually reinforcing, creating a deep and increasingly strong competitive edge. The acquisition of inexpensive planes enables Ryanair to operate profitably at low fares to smaller airports, allowing Ryanair to dominate traffic at these airports, which in turn leads to significantly lower landing fees. A recent order to double its fleet over the next eight years will not only ensure the continuity of these dynamics but may also accelerate them, as no other airline is expanding as rapidly as Ryanair.

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In essence, Ryanair is renowned for rethinking traditional aspects of the airline industry and relentlessly pursuing cost reductions. Its strategies are often controversial, yet rivals invariably follow suit to capitalize on similar savings. Examples from its extensive list include charging for food and beverages, imposing fees for luggage and airport check-in, abstain from frequent-flier programs, and avoiding the use of air bridges. Such bold initiatives not only allow Ryanair to sell seats at lower prices but also generate substantial publicity – much of it critical – which serves as an economical means of capturing the attention of potential customers. As CEO Michael O'Leary explained:

"As long as you run around generating noise, it drives people on to our website. And we don't spend hundreds of millions of dollars on marketing to do it. Charging for toilets continues to be the number one story that resurfaces in the press and it's the gift that keeps on giving. We've never done it, but it keeps coming up on social networks every three or four months, the media picks up on it and then someone writes a story on it." – CEO, Michael O'leary

Epitomizing the strategy of combining low prices with additional benefits, Ryanair continually leverages its competitive advantages. Several times, it has capitalized on the profitability and efficiency stemming from its cost-conscious operations to secure aircraft acquisitions at prices significantly lower than those available to rivals, burdened by higher structural costs. Moreover, Ryanair has started to make inroads into primary airports and the business travel sector, gradually supplanting Europe's retracting legacy carriers. This cultural commitment to low-cost operations has resulted in margins and returns on invested capital that are unparalleled in the airline industry, with operating income more than doubling between 2015 and 2023.

Ryanair's revenue growth from 1997 visualized:

In conclusion, Ryanair's remarkable journey from a modest operation with a single aircraft to becoming a dominant force in the airline industry is a testament to the power of innovation, strategic foresight, and a relentless commitment to cost efficiency. By challenging traditional business models and continuously seeking ways to reduce expenses, Ryanair has not only transformed itself but also the landscape of the European airline industry, ultimately benefiting both its shareholders and customers significantly.

Its aggressive expansion and low-cost strategies have made it a case study in business and aviation circles alike. As the airline looks to the future, with plans to further expand its fleet and reach, Ryanair stands as a shining example of how disruptive business models can lead to unprecedented success, even in industries facing naturally tough economic conditions.

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Home » Management Case Studies » Case Study: Strategy of Ryanair

Case Study: Strategy of Ryanair

Overview of the company.

Ryanair started in 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 from the story of the company go after the big guys for a slice of the action and end up smashing the or British Airways high fare cartel on the Dublin-London route. The staff increased from 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 has 700,000 passengers.

However, despite of the increase of passengers, the company is not so good in managing cost that the company has lose its money. A new management team is brought in to sort it out and re-launch as a “low fares or no frills” airline, closely modelling the Southwest Airlines model in the U.S. And in 1994, Ryanair bought its first Boeing 737 aircraft which carried over 1.5 million passengers. In 1995, Ryanair is the biggest passenger carrier on Dublin-London route, the largest Irish airline on every route being operate and carried 2.25 million passengers in the year ( 2002).

In 1997, the EU air transport deregulation allowed the airline for the first time to open up new routes to Continental Europe with over 3 million passengers on 18 routes carried. Ryanair launched services to Stockholm, Oslo, Paris and Brussels and took time out to float Ryanair plc on Dublin and NASDAQ Stock exchanges. The company was awarded as Airline of the Year in 1999 by the Irish Air Transport Users Committee.

In 2000, they announced the launch of 10 new European routes for the summer 2000 after much deliberation and watching others burning money. The company has also jump onto the internet with the launch of their new online booking site and in just 3 months the site is taking over 50,000 bookings a week. By 2001 there are more than 1500 employees working for Ryanair and more than 10 million passengers are carried to 56 cities in 13 European countries. The company has opened Frankfurt-Hahn in 2002 as their second continental European base and announce a long term partnership with Boeing which will see the company acquiring up to 150 new Boeing 737-800 series aircraft over an eight year period from 2002-2010.

The booking in their web accounts have increased to 94% which has probably has something to do with opening another 26 routes. In year 2003, the company is characterized by rapid expansion and the start the year by announcing that the company has ordered an additional 100 new Boeing 737-800 series aircraft to facilitate the rapid European growth plans. They acquired Buss from KLM in April and re-launched 13 buss routes in May. In February they opened their first base in Italy at Milan-Bergamo and launched their Stockholm base in Sweden with six new European routes. In all 60 new routes are added throughout 2003 to bring the company a total of 127 routes. By 2004, the company is named as the most popular airline on the web by Google and they launched their 10 th  and 11 th  bases in Rome Ciampino and Barcelona Girona and continue to add more routes to their already extensive network. The company has also passed out British Airways to become the UK’s favourite airline in United Kingdom and throughout Europe ( 2002) .

Critical Success Factors

Although the company had encountered different problems, specifically in line with its cost structures, the company had been able to survive and grow in the marketplace. Ryanair implement different marketing strategy to make the company survive in the competition and to be able to gain competitive position in the airline market. It is said that the company was regarded recently as the most punctual airline between Dublin and London. And because of the strategy of the industry, Ryanair is now recognised as the second largest airline in United Kingdom and Europe’s largest low-fares airline having a network of over 57 routes in 11 countries and served by a fleet of 31 Boeing 737-200 and -800 aircraft with over 1,400 staffs and personnel.

In order to position itself in the marketplace the company continuously concentrates on driving own its costs to offer the lowest fares possible and remain profitable. In addition, Ryanair offer minimum standards of service and very low prices for point-to-point, short haul flights. The goal of Ryanair is to meet the needs of travelling at the lowest price. The Critical Success Factors (CSFs) are as follows in airline industry: the strategic focus of having the lowest prices, being reliable within the marketplace, comfort and service and frequency.

It is noted that low-cost companies concentrate on this first critical success factor by trying to offer the lowest prices. Although Ryanair has eliminated extras such as in-flight meals, advanced seat assignment, free drinks and other services, it still prioritises features which remain important to its target market. Such features include frequent departures, advance reservations, baggage handling and consistent on-time services.

Cost Reduction Strategy

To achieve its goal of having a competitive position in the airline market, Ryanair uses a cost reduction strategy. Such cost reduction strategy relies on five main aspects like fleet commonality, contracting out services, airport charges and route policies, managed staff costs and productivity and managed marketing costs. In terms of fleet commonality, the company used only one kind of plane which limits the cost for staff training, maintenance services and facility of obtaining spares, facility in scheduling aircraft and crew assignment. With their purchase of aircraft Boeing 737, Ryanair has been able to gain capacity and reduces the average age of fleet which means savings on maintenance costs and avoiding the fit of European Union-conform equipment on old feet.

The next factor under the cost reduction strategy of Ryanair is contracting out services. In this manner, aircraft handling, ticketing, handling and other functions are contracted out by Ryanair to third parties. In addition, in order to limit their expenses engine and heavy maintenance are also contracted out whereas the staff of Ryanair carries out routine maintenance.

Another factor for the cost reduction strategy of the company is in terms of airport charges and route policies. Herein, Ryanair has made judicious choice of dealing with secondary and regional airports, where the traffic is not jammed and fees incomparably lower. Since Ryanair, is a true windfall for such airports, the airline company has a bargaining power which enables it getting favourable access fees. In addition, Ryanair provides only a point-to-point service, thus, it has no cost concerning connecting passengers. Moreover, the company pays special focus to on-time departures because it means maximising aircraft utilisation.

Managing staff costs and productivity is another factor used for reducing the cost for Ryanair. In this manner, the company pays its staff on modest salary but has set up a performance related pay structure which urges employees to maximise the number of sectors flown daily. This way, Ryanair both controls productivity and keeps staff costs down. Lastly, managing marketing costs is another factor that makes the company reduces it costs. Ryanair advertises mainly on it website with its logo “Ryanair.com, the Low-Fare Airline”. In addition, it is also advertised in national and regional Irish and UK newspaper, on radio and on television.

Porter’s Generic Strategy

Aside from it cost-reduction strategy, Ryan has also been able to use Porter’s generic strategies to position itself in the marketplace. Accordingly, a company positions itself by leveraging its strengths. Today, more and more people and organization are striving to be recognized in the business arena. With this objective, these organizations had been able to competently and effectively adapt to the situation in the market place by using generic strategies that enhanced their competitiveness. There are five different generic strategies that a business can choose.

These include cost leadership , differentiation , focused cost leadership and integrated cost leadership/differentiation. Each generic strategy helps the company to establish and exploit a competitive advantage within a particular competitive scope ( 2003). By applying these strengths, three generic strategies are resulted: cost leadership , differentiation and focus ( 1997). The strategies used by the company include cost leadership, differentiation strategy and focused differentiation.

Cost leadership strategy is based upon a business organising and managing its value-adding activities so as to be the lowest cost producer of a product within an industry ( 2002). Cost advantage may achieve in terms of how product or services is designed or in terms of its quality. Differentiation strategy is based upon persuading customers that a product is superior to that offered by competitors ( 2002). The value added by the uniqueness of the product or services may allow the company to charge a premium price for it. However, the danger associated with differentiation may include imitation by competitors and changes in customer tastes.

Focus-differentiation strategy is aimed at a segment of the market fro a product rather than at the whole market or many markets ( 2002). The successful way using focus strategy is to tailor a broad of product or service development strengths to a relatively narrow market segment that they know very well. The risk may include imitation and changes in the target segments. In the case of Ryanair, these three generic strategies had been utilized. First, the company offers the lowest cost of fare than its competitors in the airline. On the other hand, Ryanair has also become a focuser because it concentrated on a narrow customer segment which include Irish and UK business people or travelers who could not aford to fly major airlines.

The main goal of the company is to provide a no frills service with low fares designed to stimulate demand. At the time, it did not aim to offer the lowest fare on the market. However, the company expanded to continental Europe and had to focus on critical success factors to survive. Nowadays, it can be said that Ryanair has shifted generic strategies to become more of a cost-leader not only in terms of passenger volumes but being the lowest cost operator in the airline industry.

Ryanair has restyled itself and shifted from a full service conventional airline to the first European low fares, no frills carrier. In 1985, it provided scheduled passenger airline services between Ireland and the UK. By the end of 1990 and despite a growth in passenger volume, the company had experienced some trouble and had to dispose of five chief executives, recording losses of IR £20 million. Ryanair had to fight to survive and the new management team, headed by Michael O’Leary, decides to restyle the company on the model of successful American Southwest Airlines .

Indeed, when one considers Porter’s original framework, Ryanair’s generic strategy used to be unclear: it situated itself somewhere between a cost leader and a focuser, although we can consider it was closer to a focuser. The problem with such niche strategies is that they involve a number of risks, the most obvious being that the niche can get saturated and competitors invade the segment. As long as Ryanair was the only European no frills airline, it did not have to distinctly define its strategic position. It used to try and mix focus and cost leadership and was muzzy about which one it wanted. But as soon as competitors started blooming, it had to decide which strategy it would stick to. This was the very strategy of : he decided to ruthlessly pursue cost leadership. This strategy was a success and by 1997, Ryanair was floated on the Dublin Stock Exchange and on NASDAQ.

Expansion strategy is another factor that enables Ryanair to position itself in the marketplace. The company has been known to be an airline which launches new routes since its operation begins. In addition, under the expansion strategy, company acquires Buzz in February 26, 2003. Such acquisition enables Ryanair to gain immediate access to11 new French regional airports and makes the company the largest airline operating at London Stansted Airport. In addition, the company continues to expand by opening two new Continental European bases with low-fare flights from Milan Bergamo and Stockholm. In the year, 2003, the company has been able to launch 73 new routes and carry over 2 million passengers in one month (July). In addition, the company website has been able to make the company position itself in the global market.

Strategic Options

The case study has provided the problems and issues encountered by the Ryanair, in spite of its strategies. One of the problems is in terms of handling customers or target market. In addition, another problem is assuring quality service. In this manner, the strategic option that can be used by the company for satisfying both internal and external customers and marketing environment is the use of total quality management. The industrial competitions in airline industry worldwide are at brisk, making companies in this field across the globe search for extensive strategic management procedures that would keep them in on the business world. The tasks of crafting, implementing, and executing company strategies are the heart and soul of managing business enterprise. A company’s strategy serves as the game plan management and is use to stake out a market position, conduct its operations, attract and please customers, compete successfully, and achieve organizational objectives. Thus, TQM as a strategy is certainly appropriate for such situation.

Total Quality Management is a philosophy of management that is driven by the constant attainment of customer satisfaction though the continuous improvement of all organizational processes ( 1998). It is a management philosophy that seeks to integrate all organizational functions such as marketing, finance, design, engineering, production, customer service, and others to focus on meeting customer needs and organizational objectives ( 2000).

It is known that every organization’s primary purpose is to stay in business, so that it can promote the stability of the community, generate products and services that are useful to customers, and provide setting for the satisfaction and growth of organization members. From this perspective, it can be said that TQM strategy for achieving its normative outcomes is rooted in four interlocked assumptions: quality, people, organizations, and the role of the senior management (, 1995).

Total Quality Management is a planned procedure for satisfying internal and external customers and suppliers by integrating the business environment, continuous improvement, and come through with advancement, growth, and safeguarding the cycles while changing organisational culture. Furthermore, TQM is an array of management system throughout the organisation, geared to ensure that the organisation to continuously attain or surpass customer requirements. TQM places strong focus on process measurement and controls as means of continuous improvement (, 1999). Moreover, Total Quality Management is infinitely variable and adaptable. Although originally applied to manufacturing operations, and over the years only used in that area, TQM is now being recognised as a standard management instrument, just as applicable in service and public sector organisations like the airlines industries ( 2004).

The Total Quality Management (TQM) philosophy of management is customer-oriented. Hence, the airline operations must be developed in order to steadily deal with the improvement of their operation through the ongoing participation of all employees in problem solving efforts across functional and hierarchical boundaries. TQM incorporates the concepts of service quality, process management, quality assertion, and quality perfection. Consequently, the airline company must be able to control all transformation processes with regards to their operations and services to better satisfy customer needs in the most economical way.

In order to apply the TQM to Ryanair especially to be used in its airline operations and services, the management of the airline company must be able to accept the whole concept of the improvement, which means that all the people of the airline company must agree that there is a need for a total transformation especially for the quality of operations and services that the industry will be offered. Furthermore, the management should be willing to participate to all the improvement, value each and every ones opinion in order to achieve total quality management and provide a total quality operations and services to satisfy their customers. Managers and experts disagree about how to effectively implement TQM to their organisations.

Eventually, customer satisfaction has always been regarded as the driving force behind quality improvement; others suggest quality management is achieved by internal productivity or cost improvement programs. In other applications, Total Quality Management is regarded as a technique to introduce the context of participative type of management ( 1998). Thus, the management should be more straightforward to provide the potential role of applying the Total Quality Management to their operations and services.

In addition, since Total quality management is based on internal or self-control, which is embedded in every element of the work system (technology and people), the employees or the people behind the operation and services being offered to the passengers and customers of the airline must be able to determine the problems beforehand, to anticipate its occurrences.

Pushing problem solving and decision making down in the Ryanair especially to their operations and services may allow people who do the work to both assess and take remedial action in order to deliver an operation or service that meets the needs of their customer. In applying total quality management to airline operations, they must be able to combine it with the core strategy of the industries; this does not mean that such airline companies must have total changes. It is important that in application of the Total Quality Management to the Ryanair operations and services they must also consider that an appropriate strategy should be used in order to employ a total quality operations and services that would satisfy all clients and customers.

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Every company has a specific strategy it follows to thrive in the market. The strategy involves positioning the brand in a certain place within the marketplace. Strategic positioning refers to how a company sets itself apart from the competition and delivers a product to the customers. In this case study, we will examine the strategic position of Ryanair, a leading European airline.

To learn more read our explanation about strategic positioning .

Introduction to Ryanair

Ryanair Holdings plc is an Irish airline group and a parent company of Ryanair, Ryanair UK, Buzz, Lauda and Malta Air. It was founded in 1984 by Christopher Ryan, Liam Lonergan, owner of Irish travel agent Club Travel, and Irish businessman Tony Ryan , founder of aircraft leasing company Guinness Peat Aviation.

Ryanair started its operations in 1985 and began flying between Waterford and Gatwick Airport to compete with British Airways and Aer Lingus.

In 1986 the firm added the Dublin - Luton route.

In 1990 what it relaunched as 'Europe's first low fares airline' by implementing frequent flights, moving to a single aircraft fleet type and removing free drinks and expensive meals on board. Currently, Ryanair is Europe's largest airline group. It connects over 240 destinations in over 40 countries. Offering the lowest fares in Europe,

Ryanair brand positioning

Ryanair positions its brand as a low fare airline. The company does not try to place itself among airlines such as British Airways, Lufthansa or Air France which offer a relatively high-quality service at a higher price. Instead, Ryanair aims to satisfy people who are looking for the cheapest service possible, no matter the quality. Because Ryanair promotes its brand as:

The Low Fares Airline" (ryanair.com)

Many customers have built trust in the company and believe that its prices are the lowest. In doing so, they might not bother checking offers from other providers as they know that Ryanair will still be cheaper. This way Ryanair has created many loyal customers. However, such a brand position puts off more demanding customers who do not mind spending more money to get better service. Such customers are less likely to opt for Ryanair and instead, they go for other, full-service airlines.

Ryanair's business strategy

Every company has a specific strategy that places it in a certain position in the market.

According to Porter's generic strategy matrix, all markets operate in the same way. They can be segmented in two ways based on four factors: narrow or broad scope and cost or differentiation source of competitive advantage.

Based on these factors, companies can choose a suitable strategy to follow. As a result, are three main types of strategic positioning strategies: cost leadership , differentiation and focus strategy.

To revise this concept, take a look at our explanation on strategic positioning.

Ryanair. Fly cheaper. "(Ryanair.com)

Ryanair Holdings plc uses the focus strategy , particularly the cost focus strategy.

Companies using a cost focus strategy aim to provide the cheapest product or service within the industry.

As a result, Ryanair offers the cheapest flights in Europe. It addresses the market for people who look for a cheap, basic and efficient service. Ryanair's competitors include EasyJet, Aer Lingus Group, Vueling Airlines and Wizz Air.

Since Ryanair is cost-focused, it does not attempt to compete in all market segments. This means that it does not offer flights for customers with higher requirements, looking for high quality and luxury service. Instead, the airline targets those who have lower requirements and do not mind the lower quality of service for a cheaper price.

There is no business or first class on Ryanair, as the company does not attempt to satisfy customers who look for the best quality, luxury flights.

What is more, contrary to many other airlines, there are no free drinks on board. Food that customers can enjoy during the flight is very simple, such as heated sandwiches and ready meals. Ryanair flies point to point to mid-sized cities using secondary airports. Therefore, demanding customers are very unlikely to use Ryanair's service. Instead, they will go for airlines such as British Airways, Lufthansa or Air France, which are higher cost airlines that Ryanair does not compete with.

How does Ryanair make it so cheap?

Ryanair offers the cheapest fares across Europe. The company sells flights for as little as £ 7, sometimes even cheaper. Flights are not cheap to operate. Each flight is associated with expenses such as airport, aircraft and staff. Additionally, in the United Kingdom, airlines are charged a fee called Air Passenger Duty which is a tax applied to each passenger on each flight. For Ryanair, this comes in at £ 13 per passenger. In such a case, how does Ryanair make any profit?

The company charges additional costs for all additional services at a high price.

The price for an extra legroom seat costs at least £ 15. What is more, priority boarding is at least £6. Both of these services together cost at least £ 21 for the passenger, meanwhile, the airline does not incur additional costs.

This means a pure profit for Ryanair.

If you wanted to order some drinks or water to consume on board, you would face high prices.

The price for preordering Ryanair's small hot breakfast box is £ 10. The breakfast includes bacon, white pudding, sausage, hash browns, tomato, bread, orange juice, and a coffee which altogether do not cost £ 10.

Secondly, there are many additional fees.

If you do not check-in online, the airline will charge you £ 45 at the airport to do that for you. If you want to change your flight, you will have to pay a flight change fee of £ 35 per person. Also, if you want to book a flight which is in a day or two, the price will be several times higher than if you booked it in advance.

Thirdly, Ryanair flies to and from cheap secondary airports.

It flies to London Stansted which is almost 32 miles from the London city center. The airline also does not pay to use the airport's jet bridges that airports charge extra for.

Lastly, there is only one aircraft type at Ryanair which is B737. In doing so, the company needs to keep parts in stock for one type of aircraft only. Furthermore , the crew only need to be trained on one aircraft.

To conclude, Ryanair positions itself as a low-cost and non-full-service brand. This makes the brand stand out from other full-service airlines to customers who are looking for the cheapest, most basic flight options. W hile offering low fares, Ryanair makes a profit on all additional services such as seat allocation, priority boarding, and food and drinks on board. It also charges extra for check-in at the airport and any flight changes. Moreover, Ryanair sees all the possible options to cut costs. It flies from secondary airports, does not pay to use jetbridges and uses one type of aircraft only. This way the airline implements the cost focus strategy.

Ryanair Strategic Position - Key takeaways

• Ryanair Holdings plc is Europe's largest airline group connecting over 240 destinations in over 40 countries.
• It uses the focus strategy, particularly the cost focus strategy, meaning that it aims to provide the cheapest product or service within the industry.
• Ryanair competitors include EasyJet, Aer Lingus Group, Vueling Airlines and Wizz Air.
• The airline makes profits by charging customers for everything at a high price. It also charges many additional fees, flies to cheap secondary airports and operates one type of aircraft only.

https://corporate.ryanair.com/

https://www.managementtoday.co.uk/brief-history-ryanair/food-for-thought/article/1449458

https://www.ryanair.com/gb/en

https://www.comparably.com/companies/ryanair/competitors

http://www.rapid-business-intelligence-success.com/ryanair-business-strategy.html

https://simpleflying.com/why-is-ryanair-so-cheap/

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Frequently Asked Questions about Ryanair Strategic Position

What competitive strategy does Ryanair use?

Ryanair is using a cost focus strategy which aims to provide the cheapest airline service within the industry.

What was Ryanair's positioning strategy?

Ryanair's positioning strategy is to promote itself as a low-fares airline. This puts the brand in favour of price-conscious customers. However, those who do not mind spending more for better service will be less likely to opt for Ryanair. 

Is Ryanair's strategy sustainable?

The low-cost model of Ryanair reduces the amount of carbon dioxide released during flights, resulting in sustainability. 

What is Ryanair's business model?

Ryanair's business model is a low-cost and non-full-service model. The airline offers the cheapest price with minimal services for customers looking for basic flight options. 

What are the major contributors to Ryanair's profitability?

Despite the low fares, Ryanair makes a profit by charging additional fares for extra services such as extra legroom or priority boarding. Those who wish to order food or beverages onboard also face relatively high prices. 

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Ryanair case study and strategic analysis

An analysis on the competitiveness and low-cost strategy of europe’s leading low-cost carrier ryanair.

Research Paper (undergraduate) , 2011 , 37 Pages , Grade: A

Autor:in: BA (Hons) Christoph Müller (Author)

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This report conducts a competitive analysis of Europe’s leading low-cost carrier Ryanair. For this purpose, various concepts and frameworks of the strategic paradigm are applied, such as Michael Porter’s Five Forces and Value Chain Analysis, SWOT or Resource-Based View. When it comes to Ryanair’s external environment the report provides extensive information on the external factors that are having a significant impact on Ryanair’s low-cost strategy and its economic viability. For example, it takes into account recent global incidents, such as the volcanic eruption in Island or the public turmoil in Libya. Furthermore, based on the competitive analysis recommendations are made on Ryanair’s future direction and as to how it can sustain and extend its strategic position. In particular, this part deals with strategic human resource management, corporate social responsibility, lean thinking and diversification. Due to the complexity of the aspects covered in this report and the need to clarify some of them more comprehensively, appendices are provided to promote understanding.

Table of Contents

1 Table of Figures

2 Table of Tables

3 Introduction

4 Ryanair Competitive Analysis 4.1 Competition 4.2 SWOT Analysis 4.3 Ryanair’s Strategic Capabilities 4.3.1 Physical Resources 4.3.2 Human Resources 4.3.3 Core Competences 4.4 How Ryanair adds value and differentiates itself from competitors 4.5 Industry Life Cycle / BCG Growth-Share Matrix

5 Conclusion

6 Recommendations on Ryanair’s future direction 6.1 Michael Porter’s Generic Strategies / Bowman’s Strategic Clock 6.2 ANSOFF Matrix 6.3 Strategic human resources and CSR 6.4 Lean thinking 6.5 Diversification

7 Appendices 7.1 Five Forces Analysis 7.1.1 Barriers to entry 7.1.2 Power of suppliers 7.1.3 Power of buyers 7.1.4 Threat of substitution 7.1.5 Competitive rivalry 7.1.6 Competitive factors in the airline industry 7.1.7 Facts & figures of Ryanair and two major UK competitors 7.1.8 Flight ticket price comparison 7.2 PESTEL Analysis 7.2.1 Political & Legal 7.2.2 Economic 7.2.3 Social 7.2.4 Technological 7.2.5 Environmental 7.3 Value Chain Analysis 7.4 Asset/Resource Analysis

8 References

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RYANAIR CASE STUDY ANALYSIS

Introduction.

This case study analysis is done in order to look at the current strategies which are used by Ryan air though the utilization of various strategies and models in order to generate a better future for the company (Caputo, Borbély, and Dabic, 2019). As various aspects have been developed in this report, the major focus would be on the unique strategies through which the company has made rapid success in the international market and has gained great competitive advantage.

1.     Ryan Air – Organizational structure, type, vision, mission, key objectives and the strategy

Organizational structure.

The structure of Ryan Air in accordance with the details that have been given has remained to be tall which means that the organization is having a functional structure. This functional structure of the organization represents a traditional functional structure in which the functional heads of the company report directly to the CEO of the company who is Michael O’Leary (Caputo, Borbély, and Dabic, 2019). The Chief Operating Officer and the Chief Financial officer report directly to the CEO of the company along with the Legal Secretary, HR manager and the ground operations officer (Caputo, Borbély, 2019). Hence it illustrates the ideal hierarchy of the company which is short and the company is being able to communicate effectively within different segments in order to ensure the consistency of the company to be permanent (Caputo, Borbély, 2019). The upper management staff has the following people:

Michael O’ Leary – Director and Chief Executive Officer

Neil Sorahan – Chief Financial Officer and Deputy Chief Executive

Ray Conway – Chief Pilot

Caroline Green – Director of Customer Service

Michael Hickey – Director of Engineering

Juliusz Komorek – Direct of Legal and Regulatory affairs and Company Secretary

Kenny Jacobs – Chief Marketing Officer

David O’Brien – Direct of Flight Operations and Ground operation

Edward Wilson – Director of personnel and In-Flight

Ryan Air – Mission and Vision statement

The mission statement of Ryan Air is:

“To offer low fares that generate increased passenger traffic while maintaining a continuous focus on cost containment and efficiency operation.”

The vision statement of Ryan Air is:

“Ryan air’s objective is to firmly establish itself as Europe’s leading low-fare scheduled passenger airline through continued improvements and expanded offerings of its low-fare service.”

By using this strategy, Ryan Air has been success to gain large amounts of customers and growth since it has been incepted in the year 1985 (Caputo, Borbély, 2019). The different strategies which the company has used in order to maintain its competitive advantage and has survived in extremely turbulent times have been categorized into eight types: Maintenance of low fares for the customers, delivering the best performance in customer service, provision of frequent service point-to-point over short haul routes, achievement of lowest cost of operations in the industry, taking complete advantage of the internet (Caputo, Borbély, 2019), commitment to quality and safety maintenance, enhancing the results of operations through the ancillary services and focusing on the growth of the markets that are being targeted (Caputo, Borbély, 2019). The major focus of these strategies is to focus on the Ryan air’s core competencies which are exceptionally offered by it in the saturated market of airlines. By the provision of constant best value, the growth is expected to be growing for many of the next years to come.

2.     Ryan Air – SWOT and PESTLE analysis

Below are the internal and external analysis of the company in order to see where the company is functioning effectively and where it is not. For the internal analysis of the company, the SWOT analysis is conducted to look at the Strengths, Weaknesses, Opportunities and Threats for the company while the PESTLE analysis is conducted to see the effect of environmental factors on the company.

Ryan Air – SWOT analysis

Strengths: The Company has strong marketing strategies which has made strong brand reputation and brand recognition among the people and the use of aggressive price strategy has built a strong image of the company in the minds of the customers (Gürel, and Tat, 2017). The costing for the company is low due to the deals with the airport operators. Reputation is considered to be the biggest budget of the airline (Phadermrod, Crowder, & Wills, 2019). The publicity of the company is focused a lot due to the controversial issues and O’Leary. It had been published by the Air Transport World Magazine that Ryan Air had been the most profitable airline across the globe (Gürel, and Tat, 2017). The airline was titled as the “world’s favorite airline” in the year 2006.

Weaknesses: The cash for the purchase of new planes in tied up. The basis of the entire company is made upon the lowered cost market of airline (Phadermrod, Crowder, & Wills, 2019). The profit warning shocks have showed that the company might have used the cash reserves and the fiscal structure of the company is weak. The issues such as the EU Commission issue was backed down by the company which created trouble for it (Gürel, and Tat, 2017). The relations among the employees are found to be poor. The dependence of the company is complete made upon the Michael O’Leary who is the CEO of the company.

Opportunities: New routes for the company can be profitable for the market share of the company. The new planes would provide larger capacity to the company (Gürel, and Tat, 2017). The company must use the space of advertising on the planes and websites which could increase the revenue (Phadermrod, Crowder, & Wills, 2019). Collaborations could be made with other airlines while expanding within EU.

Threats:  the competitors such as BMI baby, Easyjet and Thomsonfly could act as the biggest threat to the company (Gürel, and Tat, 2017). If there is recession in the economy, the disposable income of the company would decrease, fluctuations in the prices of fuel could be a threat to the company. Restrictions could be put by the EU Commission on the company if does not adhere to the aid rules of the state (Phadermrod, Crowder, & Wills, 2019).

Ryan Air – PESTLE analysis

Political or Legal: change in the policies of the government would had a great impact on the company, due to which the company had to get involved in a number of disputes in both of the countries (Perera, 2017). The governments in the regions where company flies might support the flagship carrier. The local councils have been objecting to the noise of the company and new runways built supported the operations of the business a lot (Caputo, & Borbely, 2016).

Economic: the economic recession which was substantial in the economy of Ireland was growing but it changed suddenly but due to this reason a number of customers didn’t fly for business as it was cost cutting (Caputo, & Borbely, 2016). Uncertainty is caused because of fluctuating fuel costs. The factors like country wise conflicts have influenced the operations of the company.

Social: due to increasing trend of travelling, the opportunities of the company to fly in countries which were previously unconsidered has increase (Caputo, & Borbely, 2016). Business travel by the airline has increased due to the provision of lowered costs (Perera, 2017). A broad demographic of consumers have been attracted through this strategy.

Technological: the company is providing online check-in and self-service at the airport and the company has also used the internet facilities to increase its awareness among the consumers (Policy, 2018).

Environment: the aircrafts of the company are more environmental friendly. The company pays for the environmental taxes against the emission of carbon in the EU.

3.     Ryan – Change management

It has been suggested by the current report of Ryan Air that a change is needed in the organization due to the changes in the business environment of the company (Calvellini, Frosecchi, & Tufo, 2019). It has thus become important for the company to change its environment in accordance with the external factors of the company while analyzing the external environment of the company in order to become more effective in the industry (Calvellini, Frosecchi, & Tufo, 2019).

The company was facing a number of issues such as the reputation in the public which was deteriorating and the price of the shares of the company were falling (Calvellini, Frosecchi, & Tufo, 2019). The overall productivity of the company was suffering due to the dissatisfaction among the employees of the company. In this situation, the change management model which was created by Kubler-Ross was implemented in order to minimize the problems of the change in the company which was promised by the CEO to the public and the pilots of the company (Calvellini, Frosecchi, & Tufo, 2019). The change management model was applied in the following manner:

Shock: the shock was unavoidable and made the company to implement change management in the organization.

Denial: the managers of the organization started to inform the employees slowly about the change which has to be brought in the company (Calvellini, Frosecchi, & Tufo, 2019).

Frustration: the uncomfortable feelings among the employees would have been reduced through communicating with them.

Depression: motivating the employees at this stage is the most important task for the company. This is because the feelings are altered by the change (Calvellini, Frosecchi, & Tufo, 2019).

Experiment: the change must be started to get implemented at this stage and the managers must be motivating the staff through appraisals in order to implement the change successfully.

Decision – a set of rules must be made for the new change in the company so that the jobs of the people could be done consistently and smoothly (Calvellini, Frosecchi, & Tufo, 2019).

Integration – compliments and motivation are maximized at this stage in order to congratulate the people on their success (Calvellini, Frosecchi, & Tufo, 2019). The quality of work must be controlled at this stage of the change management.

4.     Ryan Air – Organizational management

The Ryan Air plans, organize, lead and control using the POLC model of management. By using this framework, the managers respond to the challenge of the problems which are creative and these have been categorized into four different stages which are planning, organizing, leading and controlling (Griffin, 2016). The implementation of these within the organizational structure of Ryan Air is described below:

Planning: in the planning function of Ryan Air, the company focuses on the objectives of the company which have to be achieved while analyzing the environmental conditions of the company (Ansoff, et al, 2018). The vision and mission of the organization are set by the managers of the company at this stage while predicting the future of the company (Griffin, 2016). Strategic planning, operational planning and tactical planning is then done which is based upon the objectives of the Ryan Air.

Organizing: at the level of organizing, the company allocate the responsibilities to all of the individuals and the efforts of all of the people are coordinated (Ansoff, et al, 2018). The duties and responsibilities of all of the people are decided at this stage and organizational culture, organizational design and the social networks within the company are then decided by the company (Griffin, 2016).

Leading: at this stage, the organization decides about the leadership that would be used at the organization, the decision making pathway which would be followed and the motivation among the members of the team (Ansoff, et al, 2018). The company here decides who it would be motivating the employees through different methods such as reward management, performance management etc. The communication among the groups and teams is decided too.

Controlling: the systems and processes are formulated here through the creation of different policies and understanding the contribution of behavioral sciences in understanding (Griffin, 2016). The performance standards and the corrective measures are made at this stage which help to know about the status and quality of performance. Managers at all levels and departments are

5.     Ryan air – business management techniques

The three major controls which are focused by the organization are the performance control, operational controls and the financial or budgetary control which are followed keenly within the organizations (Fayol, 2016). The tools and techniques which are majorly used by Ryan Air in this regard are as follows:

Performance control: the performance control in the organization is achieved by the performance management tools and techniques. This helps the organization to stay in competition and generate higher amount of productivity (Fayol, 2016). The major performance tools which are used by the organization are key performance indicators and the metrics which help in showing how well the company is performing against the goals of the company, performance appraisals, reward management and management by objectives (Fayol, 2016).

Operational control: the operational control consist of controlling and managing the basic operations of the company which happen in the everyday life (Fayol, 2016). The tools and techniques which the company uses in the operational control are the marketing control which consists of researches and trends in the market, the control of human resources in the company which consist of performance control and behavioral control and the control over the equipment and supplies of the company (Fayol, 2016).

Financial control: the company controls the finances of the organization through top down budgeting, bottom up budgeting, flexible budgeting and zero based budgeting. This helps the company to take control over the finances of the overall company.

6.     Ryan Air – Leadership

The leadership of the Ryan air is based on the leadership strategies of Michael O’Leary ways of business management (Buchan, 2017). The leader of the company seems to be accepting the challenges for the company and makes strong commitments among the executive of the company. The leadership of Michael O’Leary is divided into five levels which are:

Level one: being capable of making productive contributions through the knowledge, skills, talents and good work habits which the leader is having (Decker, 2016).

Level two: contributing as a team member in the company and contributing his individual capacities to achieve the objectives of the group and working efficiently in the group settings (Buchan, 2017).

Level three: he is a competent manager as he knows how the people could be organized along with the resources to achieve the objectives of the company.

Level four: the leader of the company has a clear and vigorous vision of the company which has made him to achieve higher standards of performance in the company (Decker, 2016).

Level five: the leader of the company is considered to be building greatness by the blend of humility which is paradoxical and professional will.

The leadership of Michael O’Leary has been able to utilizing a number of steps to make Ryan Air as the no. 1 airline of UK and the major reason behind this are the driving forces of O’Leary rather than his restraining forces (Buchan, 2017). The blend of greatness in every task he does with the abilities he is carrying forms the greatest forms of leadership. In short, the leader possess democratic style of leadership with a combination of autocratic (Decker, 2016).

7.     Ryan Air – Human Resource functions

Though the employer and employee relationships were previously not good in the company. But now as the networks among the people are focused by the company, the relationships of the company between the employee and employers are focused and developed (Piludis, Jones, & Hansen, 2018). The company follows the common employee lifecycle that has been made standard in the business industry. The payroll of the company is streamlined and the services of the human resources by entering into a contract while utilizing the ResourceLink (Buchan, 2017). The system of the Ryan Air is operated by the staff of the company. There are a number of programs which are made for the employees such as the payroll programme, health and safety programmes, training programmes and expenses. The internal communication system in the company was not implemented until the year 2011 (Piludis, Jones, & Hansen, 2018). Signagelive was considered to be the provider of the company which provides daily programming list to the 44 bases of Ryan air all across the Europe (Ahmed, et al, 2019). For example, the reward management and appraisal programmes for the employees has benefitted the relationships of the employers and employees a lot through the utilization of change management programme in the company (Piludis, Jones, & Hansen, 2018). This created a sense of loyalty is created among the employees of the company through this and thus the overall productivity is increased.

The overall success of the company is found to be dependent upon the differentiation strategies which the company has used in order to make it the number one airline all across Europe.

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