Issues About The Low Cost Airline Ryanair Business Essay

In this assignment is analyzed a figure of issues about the low-priced air hose Ryanair. Below it is analyzed its scheme, the snap of demand for its service, its profitableness aims and experience curve consequence, its public presentation aims and its ability to be efficient, effectual and adaptative, the critical factors that constitute possible menaces, how it will be able to take advantage of the present conditions, its selling mix and eventually a brief research proposal for the direction of the company to understand its consumers in order to establish an advertisement run.

Introduction

Ryanair is a low-priced Irish air hose headquartered in Dublin. It was founded in 1985 and its first path was from Waterford in Ireland to London Gatwick. Now, it has 44 bases and 1100 paths in 27 states. It has a fleet of 250 new Boeing 737-800 aircraft and its figure of riders in 1986 was 82.000, while in 2009 is about 66.500.000 ( ryanair.com, 06/02/2011 ) .

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1. Business Strategy of Ryanair

Business scheme refers to the determination devising of a company as a whole, when it is moving in a individual field of production of goods and services. The sorts of concern schemes are: cost leading, distinction and focal point scheme, harmonizing to Porter ( 1985 ) , who suggests to the houses to take one of these schemes, which can give to the houses a competitory advantage. In the instance of Ryanair, the scheme chosen is the cost leading scheme, holding every bit nonsubjective to go the most low-priced manufacturer of air transit service. Bing the company with the lowest cost of service production inside the air hose industry gives to Ryanair the competitory advantage to dispose its service in lower than the other companies, and as a effect more competitory monetary value ( Georgopoulos, 2006, p. 235 ) . However, Ryanair ‘s scheme has some elements from the focal point scheme every bit good, as it is concentrated in a client section of market that includes business communities and travellers that can non afford the cost of menus of the bing air hoses. But the chief aim of Ryanair is to supply low-price tickets in order to excite demand, obtain competitory advantage and go the low-priced leader in Europe.

2. Price Elasticity of Demand in Ryanair

Price snap of demand measures the manner in which the demanded measure reacts when the monetary value of the good or the service alterations ( additions or reduces ) . In other words, snap measures the grade of sensitiveness of the demanded measure in the alterations of the monetary value of a good or service. The snap of demand of Ryanair can be considered elastic. The grade of snap is truly of import for the houses, because they can gauge what will be the impact of the alteration of monetary value on their income or net income. So, if the demand is elastic, a lessening in the monetary value augments the gross of the house, in our instance Ryanair. On the other manus, an addition in the monetary value will do a lessening in income. Equally good the elastic demand, indicates for a house the being of many replacements. For this ground, Ryanair has to maintain its monetary values low in order to accomplish success, and maintaining its clients, as there are a batch of other low-priced air hoses ( close replacements ) or ordinary air hoses, who doing a price reduction on their tickets can easy be preferred by the consumers. ( Cole, 1987 )

3. Profitability aims of Ryanair and Experience Curve

The experience curve consequence is that the most frequently a end or process is performed, lower cost will be required in every undermentioned repeat. Every clip the entire volume of production is acquiring double, the costs are falling by a stable and predictable per centum and this makes the house more profitable ( Georgopoulos, 2006, p235 ) . For Ryanair that is a low-priced company, experience curve is a truly utile tool for achieving its profitableness aims. A factor that allows the company to utilize the experience curve as step of its profitableness is that it uses one sort of aircrafts ( Boeing 737 ) and this has every bit result the absence of distinction in care and operations of the aircrafts through clip. This decreases the costs of developing the employees for obtaining new operational and mechanical accomplishments and minimizes the service costs. Except of the experience curve consequence, there are besides other schemes adopted by Ryanair that help it to stay profitable, like the “ seat-only ” policy, bear downing all the extra services like baggage, bites etc, direct distribution maintaining off the intermediates, such as travel bureaus, flights from secondary airdromes with low revenue enhancements, different monetary value charge for every place and rewards of the forces in the lower limit.

4. Ryanair ‘s public presentation aims and Efficiency, Effectiveness and Adaptivity

Analyzing Ryanair ‘s public presentation aims, it is possible to be judged if the company is efficient, effectual and adaptative. So, about the quality of service Ryanair offers, low-priced tickets are non ever plenty to pull the clients, following a low-priced policy ( non offering excess vacancies ) , Ryanair counts on its care and safety, efficient engagement and baggage handling and promptness. As affair of velocity of its service, Ryanair has a low turnaround clip of aircrafts, something that lessening every bit good cost. It is considered to be besides an air hose with high dependableness as for last twelvemonth there were 93 % on-time flights and a rate of 0.4 per 1000 riders bags missed ( Ryanair website, 06/02/2011 ) . This air hose offers a high grade of flexibleness to the travellers as they are able to take the degree of service they will be offered as any extra convenience is to boot charged to the monetary value of the ticket. Finally harmonizing to cost, all the above policies help Ryanair to stay in its low-priced scheme, doing it efficient and effectual, as it keeps the gross higher than the costs, therefore all public presentation ratios remain positive ( Forbes.com, 06/02/2011 ) . This permits company to go adaptative in recession times and to stand possible losingss. ( Table 1, appendix )

5. Critical factors that can be menaces for Ryanair ‘s success

There are factors that during periods of growing, contribute to the company ‘s success, but during recession periods can work in contrary, go critical and even represent a menace for the house ‘s successful public presentation, particularly for a low-priced air hose, like Ryanair, that is really sensitive to the stages of the economic rhythm. The basic critical factor, that could and did do Ryanair to hold loss, during the nowadays recession, is the fuel monetary values ( Cole, 1987 ) . Ryanair has committed to a policy of non enforcing fuel surcharges, which means that all fluctuations have to be absorbed by the company. Because of its dependance on oil ( fuel ) market Ryanair reported its first loss on 2009 ( The Guardian of 02/01/2009 ) . Besides, during recession there is an addition in low-fare competition, non merely by new low-priced air hoses come ining to the market, but besides by ordinary air hoses that doing offers to their tickets to pull clients. It is true that during recession, clients are even more monetary value sensitive, so every trade good offered in a low-price ticket is preferred. A last critical factor, is the gap of Ryanair to new paths in South Europe ( Ryanair.com, 06/02/2011 ) , while the South Europe is in deep economic crises and there is limited growing on South European market.

6. Taking advantage of New Conditions

Ryanair has for certain better public presentation than ordinary air hoses in footings of airfares, promptness and baggage dependability, but it still can do betterments for catching the chances that appear in present conditions. There are air hoses traveling insolvent and in this manner Ryanair can take advantage taking their portion of market. It can accomplish this with aggressive selling runs to pull more clients ( e.g. 7 euro tickets for the new paths in Greece ) , cost decrease purchasing new aircrafts less fuel-consuming, more finishs, as there are non plenty routes to Eastern Europe and trades with more suppliers of services, like hotels, car-rental companies. In this manner, it will do its market place stronger among the rivals, create loyal clients that will prefer it cause they will travel to their finish cheap and fast, derive a bigger portion of the market, taking the topographic point of air hoses that went insolvents and doing good trades with its providers so it will be able to be provided with committees or merchandises in low cost.

7. Ryanair ‘s Marketing Mix

Merchandise or Service

What offers as merchandise Ryanair is low-priced, frequent flights to European finishs, following the “ lone place ” policy, as it is non offering anything else but the place on the plane. Food, drink, baggage, pre-assigned seats, higher-quality services, like concern category are to boot charged and beginnings of income for the company ( Ryanair.com, 06/02/2011 ) . Additionally, in its web-site, the client can happen services like car-rental companies, bus tickets and hotels from which Ryanair takes a committee.

Monetary value

Ryanair has low menus. It has besides, a particular manner to put the monetary value of the tickets, harmonizing to the demand of the period, as the about 80 % of the tickets are sold during low demand periods in low monetary values and the 20 % in higher demand periods in higher monetary values every bit good.

Topographic point

Ryanair does n’t utilize the intermediate travel agents and in this manner does n’t pay the sum of agent committees. Alternatively, it uses its web site to book the tickets of its clients and to advance the companies with which it is co-operating. This reduces the costs truly a batch. Besides, it uses secondary and provincial airdromes, in order to hold low revenue enhancements and increase the demand of the part around the airdrome. This allows the aeroplanes of Ryanair to be turned around faster.

Promotion

They spend every bit less as possible on advertisement as they use largely as mean of publicizing the cyberspace. They have low-priced advertisement runs reminding merely to the riders the low menus of Ryanair ( Picture 1, appendix ) . Additionally, some of the aircrafts are used as advertisement infinites from other companies.

Peoples

Pilots in Ryanair are experient pilots, but it besides hires plebes and trains them until they will hold the necessary experience to take a publicity. Cabin crew in the beginning is non straight working for Ryanair, but through companies that provide Ryanair with cabin crew. After one twelvemonth of full clip work, they can go direct employees of Ryanair with low wages but with the chance to increase them with fillips from onboard gross revenues. After one twelvemonth they have a little allowance for uniforms, ID ‘s and checkups ( Ryanair.com, 06/02/2011 )

Physical Evidence

The aeroplanes are the most expensive and dearly-won plus of Ryanair. They try to pass every bit small as possible for them. As they have a fleet of Boeing 737 they outsource the care of it and they get better monetary values as the sort of the aeroplanes does n’t distinguish. Besides, Ryanair buys its aeroplanes normally in price reduction when the other companies do n’t desire them.

Procedure

There is non check-in with the ordinary manner, as there are non seats in the aircrafts of Ryanair. The riders merely show their paperss and the first that comes the first served ( Ryanair.com, 06/02/2011 ) . Besides, the riders walk to the aeroplane or they are driven by a coach if it is off and they give straight their baggage to the terminus, which is fast but non safe for the baggage.

8. Brief Research Proposal

Problem Statement: Ryanair is meaning to establish a new advertisement run, inside the frame of the intense competition in the mature air hose market.

Research Aims: The purpose is to roll up informations that will help company ‘s direction to listen and understand better its clients before establishing the new run.

Data Collection: Both primary and secondary informations will be used. The biggest portion of informations will be primary, as direction wants to hold the sentiment of the house ‘s client the present period of recession and intense competition. A smaller portion of the informations will be secondary, from beginnings like the web-site of Ryanair, fiscal and statistic studies of old periods, every bit good as the information of the online booking informations bases, so that will be compared to the day of the month that will be gathered.

Kind of Research: Research will be quantitative as graduated tables and Numberss will be used to the inquiries and besides it has to be dependable and the information gathered mensurable for the direction to do determination out of the information provided to it.

Research Design: As researches and informations about Ryanair has been made and gathered once more in the yesteryear, the present research will be descriptive. It will throw visible radiation to the behaviour of the consumers of Ryanair under the present fortunes.

Target Market: Travelers-customers of Ryanair, that travel with low-priced flights in Europe and book their tickets though cyberspace, including the business-class travellers.

Information Sought: The penchants of the clients and their sentiment about Ryanair during the period of recession and the intense competition and the degree of their satisfaction of the service offered to them.

Questionnaire Design and Form of Response: The questionnaire of this research has to be short with few, simple, straight-to-the-point and easy to understand inquiries as it will be given to the client digitally so it must non pall him. Open-ended inquiries have to be avoided and the responses given have to be every bit specific as possible. Finally, the questionnaire has to supply to the director the necessary information about the penchants and the sentiment of the consumers. ( A sample questionnaire in appendix )

Contact Method: As contact methods could be used either the on-line interview or the e-mail method. The advantages of these methods comparing to the others are that they have no or truly low cost, which is compatible with the low-priced scheme of Ryanair, and that the engagement of tickets is made through cyberspace. So, an online interview, on one manus can be uploaded in the bing web-site, but in this manner we can non command who is replying the questionnaire, conditions he is client or non. On the other manus, in e-mail interview it is certain that those who reply are client of Ryanair but directing the questionnaire with the verification electronic mail of their engagement we are non certain that they will direct it back. Besides, both of these ways have low response. In this research, is proposed an on-line contact method with particular characteristics. It will be placed between the page that the client is composing his personal information for purchasing the ticket and the concluding verification of the user for doing the engagement. In this manner, the answering of the questionnaire will be compulsory for the user to continue to the verification and makes certain that this individual is a Ryanair ‘s client. This intercrossed method has as status the fact that the questionnaire will be short and non palling at all.

Sampling Issues: Will be used a probabilistic, random method of trying as the replies of all the clients of Ryanair during the period of the research will be gathered and the questionnaire will be compulsory for booking the ticket. This will be something easy, as the information gathered will be stored to data-bases of the company, ready for statistic processaˆ?

Validity and Generalization of the Findingss: As the method of the research will be probabilistic, its consequences will be valid and will be able to be generalized to the population. In this manner, the direction of Ryanair can take valid information and do decisions about the penchants and the sentiment of their mark market.

Decisions

Sum uping, Ryanair is a low-priced air hose that follows the cost leading scheme seeking to minimise its costs and it has an elastic demand, which means that its consumers are truly sensitive to the alterations of the monetary value. As a tool for cut downing its costs Ryanair can utilize the experience curve consequence, but non entirely this policy. Harmonizing to its public presentation aims it is an efficient, effectual and adaptative company, while one of the most critical factor, that can be a menace for it is the fuel monetary value and by and large it is really sensitive to the alterations of economical rhythm. Although, Ryanair is the leader of the bing low-priced companies can better itself based on aggressive selling and reduction of costs.

Mentions

Books:

Cole, Stuart ( 1987 ) , Applied Transport Economics, Kogan Page Limited, 3rd edition, pp. 117-119, 146, 183-193.

Doganis, Rigas ( 2003 ) , Flying Off Course: the economic sciences of international air hoses, Rutledge, 3rd edition, London, pp. 66-69,104-106, 188-190, 264-266, 307-308.

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Holloway, Stephen ( 2003 ) , Straight and Level: Practical Airline Economics ” , Ashgate Publishing Limited, Aldershot, Hampshire.

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“ Easyjet and Ryanair winging high on the Southwest theoretical account: Charting the ups and downs of low-priced bearers ” , ( 2006 ) , Strategic Direction, Emerald Group Publishing Limited, Vol. 22, No. 6, pp. 18-21.

“ Fight or flight? “ , ( 2007 ) , Strategic Direction, Emerald Group Publishing Limited, Vol. 23, No. 1, pp. 12-15.

“ Employees come foremost at high-flying Southwest Airlines: Model contrasts with the Ryanair attack to low-priced air power ” , ( 2007 ) , Human Resource Management International Digest, Emerald Group Publishing Limited, Vol. 15, No. 4, pp. 5-7.

“ Hardworking times at British Airways and Ryanair: Wining the conflict for the skies ” , ( 2004 ) , Strategic Direction, Emerald Group Publishing Limited, Vol. 20, No. 4, pp. 4-6.

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