2.

Company Overview Ryanair was the first European Low Cost Carrier (LCC) by utilizing the Southwest LCC model in 1990. It started its business as a small family owned business by Ryan family in 1985. Its first route was between Waterford in the southeast of I reland to London Gatwick with a 15-seater Bandeirante aircraft. Currently, Ryana ir operates more than 1,400 flights per day from 45 bases with 1300 routes in 27 countries, covering 160 destinations and operating a fleet of 250 new Boeing 73 7-800saircraft. Ryanair presently has more than 8,000 people as employees and ex pects to carry approximately 73.5 million passengers in the current fiscal year. Now, Ryanair, with its rapid growth occupies a most sought after position in its own field, being Britains favourite airline . 3. Strengths and Weaknesses A well-known brand image of low prices is the greatest advantage for the company . Ryanairs operation for over 20 years in Europe as a first mover actually increa ses the entry barriers, thanks to experience and its reputation. Ryanairs latest annual report shows 8% traffic growth with 16% revenue increase compared with 20 101. The Continuous improvement to the aircraft fleet enhances the fuel efficien cy and on the other hand the same Boeing 737-800 model can reduce training and m aintenance costs. Ryanairs overall online service simplifies the booking and chec k-in process, saving staff numbers. New fuel hedging strategy tries to minimise the risk of price changes. Ancillary income brings big revenue for the company. However, constantly changing business environment factors like fuel prices, exch ange rates have become a major threat to low-cost strategy. The bad image of wor k environment and pay rates, non-union can affect the business in the long run. Various new taxes and duties throw another burden for Ryanair to find out new te chnological methods to achieve innovation for low cost2.

4. Business Model In recent months, recruitment has turned to agencies in Eastern Europe due to a shortage in Ireland5. With the airline industry increasingly buoyant, there is a wider range of options for Ryanair staff and would-be applicants. With Ryanair planning a large expansion - it has ordered 125 new aircraft to be delivered ove r the next 7 years3. 5. Generic Strategy Aside from its cost-reduction strategy, Ryanair has also been able to use Porters generic strategies to position itself in the marketplace. There are five differ ent generic strategies that a business can choose: cost leadership, differentiat ion, focused cost leadership and integrated cost leadership/differentiation . First, Ryanair offers the lowest cost of fare than its competitors in the airlin e. On the other hand, Ryanair has also become a focuser because it concentrated on a narrow customer segment which includes business people or travellers who co uld not afford 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, i t did not aim to offer the lowest fare on the market2. However, the company expa nded to continental Europe and had to focus on critical success factors to survi ve. Nowadays, it can be said that Ryanair has shifted generic strategies to beco me more of a cost-leader not only in terms of passenger volumes but being the lo west cost operator in the airline industry2. Ryanair has restyled itself and shi fted from a full service conventional airline to the first European low-fares, n o-frills carrier. In 1985, it provided scheduled passenger airline services betw een Ireland and the UK. By the end of 1990 and despite a growth in passenger vol

ume, the company had experienced some trouble and had to dispose of five chief e xecutives, recording losses of 20 million1. Ryanair had to fight to survive and t he new management team, headed by Michael OLeary, decides to restyle the company on the model of successful American Southwest Airlines2. Indeed, when one consid ers Porter s original framework, Ryanairs generic strategy used to be unclear as it situated itself somewhere between a cost leader and a focuser, although we ca n 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 onl y 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 undecided ab out which one it wanted. But as soon as competitors started blooming, it had to decide which strategy it would stick to2. This was the very strategy of Michael O Leary as he decided to ruthlessly pursue cost leadership. In addition, Expansion strategy and companys website are other factors that enabl e Ryanair to position itself in the marketplace. Under the expansion strategy, c ompany acquires Buzz in 20031. Such acquisition enables Ryanair to gain immediat e access to new French regional airports and makes the company the largest airli ne operating at London Stansted Airport.

6. Future Strategies and Recommendations (i) Marketing Strategy Ryanair should sustain their current products, scheduled flight and ancillary se rvices, mean while continuing to expand their routes and destinations, while enh ancing the ancillary services portfolio. For Ryanair to keep maintaining their position in the industry and increase sale s margin, they have to keep sustaining the lowest prices in the market since it is their unique selling point; by continuously enhancing their operations cost e ffectively to support such strategy. Ryanair should continue investing in their online booking system, and encourage all passengers to use the system for booking tickets, since it was proven in pre vious analysis to be a highly effective solution, meanwhile expand their bases i n strategically suitable airports. Ryanair current promotion is quite successful for their needs, with help of Mich ael OLearys regular publicity stunts. However, it is recommended to keep following such strategy without increasing investment in advertising, but focus on improv ing their image and reputation. (ii) Increase the frequency of existing routes There is still a lot of room for improvement and the company can definitely obta in new destination cities within existing markets. (iii) Open new routes in Europe, Turkey and North Africa Eastern Europe is fast becoming a hotspot for tourists and business travellers a like due to the continuing expansion of the E.U. In addition, routes to North Af rica are also very popular for both tourists and North Africans who have immigra ted to Europe. By offering truly low cost flights to these destinations Ryanair could easily capture this market share. (iv) Take market share from Charter Market Charter flights are one of the best ways for going on a holiday. However, Ryanai r is trying to challenge this model by offering cost-effective opportunities for people to organise their own holidays and avoid the appalling mass tourism mode l offered on the market today. Thus the company tries to steal market from the c harter airline business, which for the moment captures around 25% of the entire air industry2.

(v) Customer Service Overhaul Ryanair has had a remarkable track record for its tangible customer service (punct uality, flight completion etc) however, the perception of the softer side of its c ustomer service has not always been good with much bad press. With this in mind Ryanair, while maintaining its strict rules and regulations, must make an adjust ment in this area. Ryanair has to be more concerned how the society and all its stakeholders perceive the company and what they think of it. (vi) Continue to find ways of reducing costs Ryanair has already reduced significantly its cost as a result of a severe reduc tion policy. Ryanair has to keep searching for ways to further reduce its costs, because this is a perfect way to continue outperforming its competitors. 5. Conclusion From the analysis above, it is clear that Ryanair s strategy has several differe nces from those of its competitors, and that these differences directly and indi rectly contribute to its competitive advantage. Only one major weakness in Ryanair s strategy is evident: the attitude to employ ees. Post 9/11, the aviation industry initially suffered major job cuts and as d emand for jobs outstripped supply, employee relations were less important. This situation has changed with the huge expansion of flying, particularly in the low -cost market. Ryanair s own planned expansion relies on being able to recruit cr ews. Without adequate staffing, expansion could lead to rapid increases in cance llations and hence compensation costs. The one change to strategy that is therefore suggested is an increased move to s pread staff bases more across Europe, particularly in Eastern Europe where wages are lower. Since training payments can be deducted from salaries, the financial disincentive to entry is removed. By setting up training schools across Europe, crew recruitment procedures can be made more efficient, and agency costs could also be removed. The employment market may ultimately dictate an improvement in staff terms in or der to address shortages, which would have an impact on costs. Overall, Ryanair can be summarised as a company that has had a very clear strate gy differentiating it from competitors in a way that enabled it to meet customer requirements particularly effectively, and there are remarkably few commercial weaknesses in its approach. 6. References Ryanairs Website, www.ryanair.com/en/about Accessed on 6th of March 2012 Ryanair: the low fares airline - future destinations? - Case Study, Eleanor OHigg ins, University College Dublin, 2010 Ryanairs Annual Report 2011 www.ryanair.com/doc/investor/2011/Annual_Report_2011_Final.pdf Accessed on 6th of March 2012 South Wests Website, http://www.southwest.com/html/southwest-difference Accessed on 11th of March 2012 Ryanair s latest cut on costs: staff banned from charging phones Andrew Clark, Apr il 2005 http://www.guardian.co.uk/business/2005/apr/23/theairlineindustry.transportinthe uk Accessed on 14th of March 2012 Michael Porters Generic Strategies, http://www.learnmarketing.net/generic.htm Accessed on 6th of March 2012