Ryanair. SWOT Analysis of the Leading Low Fare Airline


Term Paper (Advanced seminar), 2016
17 Pages, Grade: 2,7

Excerpt

Table of Contents

Method

Ryanair
The Company and the Market of Low Cost Carriers
Ryanair’s Mission & Vision

External Analysis of Ryanair
Macro-Environment Analysis: PEST
Political/Legal/Ethical
Economic
Sociocultural/Demographic
Technological
Industry Analysis
Competitive Advantage
Porter’s Five Forces

Internal Analysis of Ryanair

SWOT Analysis & Results

Recommendations

Ryanair: SWOT Analysis Of The Leading Low Fare Airline Ryanair is Europe’s leading low cost airline and offers the lowest fares on the airline market. But the question is how the 1985 established small Irish company can count 103,000,000 international passengers in the fiscal year 2015, only 30 years later (Ryanair, 2015). Why does Ryanair have a high recognition value for its brand, despite doing the advertising in-house and distributing only by using online channels? What is more, Ryanair does not offer customer loyalty programs, they do not have free drinks or food on-board; they even do not need external cleansing power for their fleet. And why no other low cost airline, like Easyjet or Lufthansa’s subsidiary Germanwings, overtook Ryanair’s competitive advantage to set the prices on the market? Actually they tried, but it still not working. What is so unique about the Irish Airline and how successful they compete with the airlines until today, will be demonstrated further in this assignment using the SWOT analysis.

Method

Most information used in this assignment for theoretical parts is represented in Marshall and Johnston book Essentials of Marketing Management, 2011 in addition to other sources listed at References. All data about the company Ryanair and its internal and external environment are based on online researches.

The first chapter submits a general view on Ryanair’s history and the low cost airline market. In the next chapter the author analyses the whole external market of Ryanair using different frameworks like the PEST Analysis, the Cost Leadership Strategy as well as the Porter’s Five Forces Framework. With the help of the S&W Audit the internal analysis will be debated before turning to the next chapter, the SWOT Analysis to recap the Threats, Opportunities, Strengths and Weaknesses of Ryanair. In the last chapter the result is drawn, accompanied by recommendations due to future trends.

Ryanair

The Company and the Market of Low Cost Carriers

Low Cost Carriers (LCC) or low cost airlines are airlines that offer lower fares than Full Service Carrier (FSC) in exchange for fewer customer service and passenger comfort (IATA, 2015). American Southwest Airline introduced the business model in the 70s. Tony Ryan founded Ryanair 15 years later in year 1985 in Ireland. Five years later, after successful operating in the airline industry, Michael O’Leary copied the concept of American Southwest Airline based on the cost leadership strategy and launched Ryanair under new management as Europe's first LCC (Ryanair, 2015). This was followed by ups and downs, but nonetheless Ryanair transformed to Europe’s leading low cost airline, offering the cheapest fares sustaining its competitive advantage till today. Started with a staff team of 25 people in 1985 the employee number increased to 9,500 in 2015 (German Aerospace Center, 2015). With a fleet of 321 Boeing B737-types, Ryanair owns about 2,388,582 aircraft seats in Europe, is established in 31 countries, in 194 destinations, with 78 airport bases, and 1,800 daily flights. The DLR counted 103,000,000 Ryanair passengers in year 2015 in Europe.

Ryanair’s Mission & Vision

Today strategic-customer centricity and the long-term customer satisfaction are core organizational values and goals. The difficulty about this statement is the challenge a manager has, by implementing the firm’s overall mission and vision to the strategy (Marshall & Johnston, 2011).

Ryanair strongly believes that its mission and vision is to provide people a way to travel at the lowest fare on the market. Over time, by following the trends, Ryanair’s mission extended, concentrating more on customer’s needs and wants, but still offering the lowest fares. The latest version of Ryanair’s vision will be examined in this paper.

External Analysis of Ryanair

This chapter serves to analyze Ryanair’s external environment. Therefore a complete situation analysis of the macro-environment and the industry must be developed (Marshall & Johnston, 2011). It summarizes all the external factors, which might create opportunities or cause threats to Ryanair’s operations, which will be tracked in Table A1 (see Table A1 in Appendix for complete proofs).

Macro-Environment Analysis: PEST

PEST is an acronym for: Political, Economic, Sociocultural, and Technological factors that affect key aspects of the business environment, such as market growth potential or decline as well as the firm’s current position in the market place (Kotler, Keller, Brady, Goodman & Hansen, 2009).

Political/Legal/Ethical.

Owing the fact, that Ryanair is operating in Europe the stability of flight routes and destinations might be guaranteed. However, the political institution, the EU affects the airline industry by establishing regulations and restrictions for example to establish the EU competition law. Additionally, they are charging Co2 emission fees, which they can increase whenever they want (Centre for Asia Pacific Aviation, 2014). An important point is the national government laws acting in favor of national airlines. Labor Unions such as British Airline Pilot Association (BALPA) do not accept the poor working conditions of Ryanair’s employees (Centre for Asia Pacific Aviation, 2014). Yet, through the deregulation of airlines in 1978 and the Open Skies Agreement Ryanair has a strong profit growth. Due to the terroristic attacks last year in Paris, people might be scared using airline services more than in the past, but this is just an assumption and has no evidence. The Globalization promotes the worldwide tourism and the use of the air transportation.

Economic.

As already mentioned, Ryanair is operating only in Europe and benefits from a stable economy. Even the economic downturn in 2009 did not change the low-price strategy of Ryanair. They still offered the cheapest flights, noticing the high customer demand for low fares at these hard times (German Aerospace Center, 2015). Exchange rates might be an economic threat, even if Ryanair operates only in Europe. As every other airline, Ryanair is dependent on fuel prices fluctuations. Ryanair’s prices are fluctuating in regard to high or low season bookings in addition to advance bookings.

Sociocultural/Demographic.

As Drucker remarked in 1954: “The customer is the foundation of a business and keeps it in existence. He alone gives employment. And it is to supply the consumer that society entrusts wealth-producing resources to the business enterprise” (p. 37). To determine Ryanair’s customers, it is important to say that the customer is buying an intangible service, the airline service. Nowadays this service includes different elements, but first of all it is air transportation. According to different types of Ryanair’s customers, different social facts appear. Business travellers are more service-oriented and the leisure travellers more price-oriented. Ryanair addresses its offerings to everybody in Europe avoiding to distinguish customers (Ryanair, 2015).

To determine the sociocultural or demographic factors that might be a threat or an opportunity the trends on the LCC market should be considered. At the end of the year 2015, the International Air Transport Association (IATA) published the Global Passenger Survey, which demonstrates the current customer statistics. As stated, 66% of the air travellers are male and 34% female customers. Concerning the age of the customers it can be determined that the ages 25 - 34 years are travelling the most with 25%. The biggest traveller group is from Europe with 27%.

Technological.

With respect to technology, Ryanair is always following current trends, which include new technological changes and costly investments in new airplanes. Due to this, Ryanair has to deal with recycling, pollution and noise of the aircraft. The growth of the internet business and the use of mobile apps are additional important changes in technology.

Industry Analysis

Competitive Advantage.

A strategy is a road map to get the organization where it wants to go. It comprises two key phases: The formulation and execution - phases. What is more, a generic strategy is a firm’s overall directional strategy at the business level due to decide which path to take: It can choose the growth strategy, the stability strategy or the retrenchment (Marshall & Johnston, 2011). Moreover, Michael Porter divided the competitive strategy in 3 primary categories:

1. Cost Leadership implies organizations having the lowest costs and producing goods or providing services for a broad customer base.

[...]

Excerpt out of 17 pages

Details

Title
Ryanair. SWOT Analysis of the Leading Low Fare Airline
Course
Strategic Management
Grade
2,7
Author
Year
2016
Pages
17
Catalog Number
V350013
ISBN (eBook)
9783668370234
ISBN (Book)
9783668370241
File size
953 KB
Language
English
Tags
ryanair, swot, analysis, leading, fare, airline
Quote paper
Irina Düsseldorf (Author), 2016, Ryanair. SWOT Analysis of the Leading Low Fare Airline, Munich, GRIN Verlag, https://www.grin.com/document/350013

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