1  Table of Figures  

Figure  1: Porter’s Five Forces Model  

Figure  2: Industry Life Cycle.  

Figure  3: BCG Growth-Share Matrix  

Figure  4: Michael Porter’s Generic Strategies.  

Figure  5: Bowman’s Strategic Clock  

Figure  6: Ansoff Matrix  

Figure  7: Michael Porter’s Value Chain.  

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2  Table of Tables  

Table 1:  Basic figures of Ryanair and UK competitors.  9

Table 2:  Ryanair SWOT Matrix.  10

Table 3:  How Britain and Ireland’s biggest airlines compare  12

Table 4:  Service performance and average fees of Ryanair and UK competitors  14

Table 5:  Price comparison Ryanair and train services  24

Table 6:  Competitive factors in the airline industry.  25

Table 7:  Facts Figures of Ryanair and UK competitors  26

Table 8:  Price comparison of Ryanair and UK competitors London-Madrid  27

Table 9:  Price comparison of Ryanair and UK competitors London-Marseille  27

Table 10:  Ryanair asset/resource evaluation  32

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3 Introduction 

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.

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4 Ryanair Competitive Analysis 

Porter’s Five Forces model helps to gain a holistic view of an industry by considering barriers to entry, supplier power, buyer power, threat of substitution and competition. Figure 1 shows Porter’s model listing various aspects which need to be considered in relation to the airline industry, either with a high or low power and influence (Johnson et al., 2008). (A more detailed analysis of the low-cost airline industry can be found in the appendices on page 23.)

4.1 Competition 

The airline industry has always been hotly contested, which is evidenced by a plethora of airline bankruptcies. The high fixed costs for operating scheduled flights necessitate a relatively high passenger number to at least break even. In fact, seats which are not sold today are virtually worthless tomorrow. Airlines have attempted to improve their processes as well as provide excellent customer service in order to gain competitive edge. However, the success of Ryanair’s low-cost business model, which was adopted from Southwest Airlines in 1992, has markedly changed the rules of the game (Ryans, 2008). In Schumpeter’s terms, as cited by (Grant, 2005), low-cost carriers caused a “gale of creative destruction”, or “discontinuous change” (Grove, 1999), which has disrupted the whole European airline industry.

Table 1 shows that Ryanair ranks on top in terms of passenger numbers and profit compared to its UK rivals. (More detailed information can be found in the appendices on pages 25-27.)

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4.2 SWOT Analysis 

Table 2 highlights Ryanair’s strengths, opportunities, threats and weaknesses as well as appropriate actions to overcome adverse effects and seize on opportunities.

(More detailed information on Ryanair’s external environment can be found in the appendices on pages 28-30.)

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4.3 Ryanair’s Strategic Capabilities 

Ryanair’s success is attributed to outstanding operational effectiveness, as it gets more out of its inputs through eliminating unnecessary processes. Ryanair has markedly tailored its activities to be more efficient than any other rival. This, without doubt, is Ryanair’s core competence and a critical determinant of its competitiveness. In order to succeed as a lowcost carrier it is of paramount importance to develop the critical resources needed in order to gain profits and outpace competitors.

4.3.1 Physical Resources

Ryanair flies the youngest fleet, aged 2.9 years on average, consisting of Boeing’s 737-800NG winglets aircraft which, according to Boeing, “promise to enhance safety, capacity and operational efficiency” (Ryanair, 2010; Boeing, 2011). A single modern fleet entails cost-

advantages with regard to operations, staff training, maintenance as well as purchase and storage of spare parts. Likewise, flexibility in terms of staff scheduling and equipment handling significantly increases. Ryanair pays meticulous attention to safety and quality maintenance, which is a critical success factor to win customers’ trust. In this regard it adheres to the highest European standards (Ryanair, 2010).

4.3.2 Human Resources

Ryanair employs a highly trained and non-unionised workforce, which plays a key role in operational efficiency. In 2010 Ryanair’s average employment rose by 10% to a total of 7,032. Average pay has increased from € 45,333 in 2009 to € 45,948 in 2010 which is above the average of some major rivals. Labour costs are controlled by continually improving the productivity of employees through performance-based pay incentives. When it comes to employee planning Ryanair attempts to offer staff “new opportunities for career development and progression.” Employees attend initial and regular trainings which include safety and fire drill courses, ground school training as well as pilot conversion courses. (Ryanair, 2009; Ryanair, 2010). It is worth mentioning that employees are expected to pay for trainings, uniforms, meals and drinks and even mobile phones used at work (BBC, 2009a).

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