BUSINESS MANAGEMENT

EXECUTIVE SUMMARY

Ryanair is the Europes leading low-cost air carrier. It is widely known and is a
prefered choice for cost conscious air travellers. Over the past few years, it has
embarked on aggressive expansion plan.
Ryanair is not spared from global economic condition, and also the changing
customer expectation. To ensure sustainability, it has to react towards the changing
business environment and to be more receptive towards internal and external
customer needs. Besides that, Ryanair needs to continue investment in technological
advancement to be cost competitive.

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1.

BRIEF OVERVIEW OF RYANAIR HOLDINGS PLC.

Ryanair Holdings Plc., Europes largest operating low-cost airline based at
Dublin, Ireland. The company was established by three brothers from the
Ryan family - Cathal, Declan and Shane Ryan in the year 1985, with an initial
investment of 1 million and 25 staff. With a single airplane, a 15-seat
Embraer Bandeirante turboprop aircraft, the airline began its operations in
July 1985 on its scheduled routes between Ireland and United Kingdom and
utilized secondary airports to save cost. By late 1985, the airline entered the
Dublin-London market and competed with British Airway (BA), Dan Air and
Aer Lingus.

Michael OLeary, was appointed as the CEO of Ryanair in 1993. Being a

charismatic leader emulated the business strategies of Southwest Airlines
and developed the low-cost model further. Ryanair Holdings Plc was
incorporated in November 1996, and listed its shares on the Dublin and
NASDAQ stock markets in May 1997. On January 2000, Ryanair launched
the ryanair.com.
With a fleet of modern technological aircrafts to in-flight mobile services,
Ryanair has revolutionized the European air travel industry, serving 800
routes (Exhibit 1) from 32 bases (Exhibit 2), a record of close to 42.5 million
passengers in a year (Exhibit 3), making it the biggest low cost carrier and
the number one in Europe.

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2.

OVERVIEW OF SWOT ANALYSIS

The SWOT analysis is a simple framework for generating the Strengths,
Weaknesses, Opportunities and Threats of an organization. SWOT is a two
prong strategy; analyze the internal force through the strengths and
weaknesses, and the external force through opportunities and threats.

Figure 1 : Illustrative diagram of SWOT analysis

The strengths are the resources the organization that are usually capitalized
for planning a strategy or developing a competitive advantage. These
strengths usually comprise of a reputable brand image, a good leadership,
strong customer database or any other features that may add value to the
organization. The absences of these strengths are viewed as weaknesses.
Weaknesses are the negative aspects such as lack of marketing expertise,
poor quality of goods and services and damaged reputation. These factors
are usually within the organizations control and can be improvised with
proper organization and business strategies.
The opportunities reveal the possible chances of an organization gaining
profit and growth, some of which are a developing a new international market,
business expansion to international market or a merger with a new entity.

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Threats are the negative conditions that are beyond the control of an
organization, making it vulnerable to operate. Some of the examples of
threats are political unrest, terrorist attacks, recession, and change in
government policies. But these can be overcome with the presence of
substitute recovery plans for the organization.
3.

SWOT ANALYSIS ON RYANAIR

The SWOT analysis on Ryanair can be classified into various segments, as
illustrated in Figure 1.0 below. Ryanairs opportunities were capitalized using
its strengths, while eliminating the weaknesses and threats.

Figure 2 : The various segments of Ryanair SWOT

Strength
The major strength of Ryanair was its financial strength gained through its
profits over the past 14 years being in the Low Cost Carrier (LCC) industry.
This enabled the company to gain first mover advantage, especially in the
case of airplane procurements, whereby Ryanair makes deals based on their
own bargaining conditions, likewise in the case of Boeing.
The airline has relatively set high barriers to the new entrants of the similar
industry in UK. In other words, there will be an immediate price war if a
competitor is penetrates into the existing Low Cost Carrier (LCC) route.
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Preempting potential competitors has to either offer better value or lower fare
than Ryanair, which relatively lead to pain of losses to the competitor.
Throughout Ryanairs experience in the LCC industry, the company has
nurtured phenomenal brand awareness in UK through its no frills and low
fare policy that leads to higher seat capacity, thus enabling it to maintain its
position as a market leader in its industry.
Another strength of Ryanair is the remarkable track record for its high service
performance. Ryanair was voted the best airline in Europe by the Association
of European Airlines (AEA) in terms of best punctuality, low baggage loss and
least cancellations (breakingtravelnews.com) (Exhibit 4).
Ryanairs has implemented a hub-to-spoke system that simplified its network
of routes, making the flight operation more efficient. This system eliminated
terminal delays and gave way for more frequent flight with faster turn-around
and a reasonable punctuality.
The airline operates the largest travel website in Europe. Ryanair.com,
encourages online bookings and check-in since the time it was introduced in
March 2006. It enables its customers to enjoy benefits on the majority of
Ryanair routes.
Privilege was given to passengers traveling with hand luggage and a
European passport, whereby they will be able to bypass queues at airport
check-in at boarding gates, on to of a 9% reduction in its average fares.
Weaknesses
Although, Ryanair is one of Europes the most successful airlines, yet some of
its major weaknesses has impaired its viability. The weaknesses of Ryanair
can be segmented into five aspects, i.e. organization culture, decision making
process, customer services, corporate social responsibility (CSR) and
regulatory compliance.

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ISSUE

WEIGHTAGE

1. Organization Culture

10

2. Decision Making

3. Customer Service

4. Corporate Social Responsibility (CSR)

5. Ryanair.com

6. Regulatory Compliance

Source : OHigginns

Figure 3 : The weightage on some of Ryanairs weaknesses

One of the major weaknesses of Ryanair is its poor organization culture.

There are various factors influencing these criteria. Trade unions were not
allowed in the organization to deter bargaining terms and conditions, and
other legal aspects pertaining to the employees rights.
The overly emphasis on achievement outcomes has lead to negligence to its
employee welfares, resulting to employees poor quality in work performance.
In a press statement by the International Transport Workers Federation (ITF),
the employees were overworked to a point of exhaustion (work 12 hour days
without breaks), and had to pay for their uniforms, training and the water they
need to drink on flights (itfglobal.org).
These factors have lead to employees exasperation and hindered them to
deal with their customers in an unpleasant manner.
Ryanair has also projected a bad corporate image due to its CEO, Michael
OLeary. Being classified as an arrogant personality, the decision making has
been biased to status quo; i.e. no changes done to the business decision
based on the unpredicted and volatile economic situation. To accomplish his
ambitions and goals, OLeary favors his personal hostile ambitions towards
his customers and competitors.

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This has lead to various critics by the regulatory authorities, competitors and
general public resulting to court rulings and bad press; but yet he was
inconsiderate about it and went on with his agenda.
In the aspect of customer relations, Ryanairs cost cutting efforts has resulted
to annoyance and inconvenience to its customers. There were high
complaints especially in the case of charging customers even for the basic
needs such as oxygen mask (Exhibit 5), its reluctance to take responsibility
of lost baggage, discriminating the disabled and refusal to provide services to
the disabled or older passengers (O Higgins). One example was in the case
of a disabled passenger, Bob Ross, where he was charged 18 to use a
wheelchair at Stansted Airport, in Essex (news.bbc.co.uk). Exhibit 6
highlights the other cases pertaining to Ryanairs customer service.
Some of the other shortcomings were due to its advertisements, which is
either misleading or offensive. In most cases the adverts provided false
information, especially in the case of its ticket fares with hidden charges; and
its destinations which mentioning main city location, while actually operating
from remote locations (http://en.wikipedia.org/wiki/Ryan_Air). There were
also advertisements which had offensive elements to degrade its competitors,
one of which is in the case of Sabena Airlines whereby the ad projected a
picture of the Manneken Pis, a famous Belgian statue of a urinating urchin,
with a punchline stating, "Pissed off with Sabena's high fares? Low fares have
arrived in Belgium." (Exhibit 7) (Irishtimes.com 5 May, 2001).
Opportunities
The opportunities for Ryanair came in various forms, varying from the air
industry deregulation, new routes, entry to the US domestic market and
Ryanair Direct.
De-regulation of the air industry by the European Union (EU) in the year 1992
opened new dimensions for the airline. Taking advantage of this Ryanair
launched its services at Paris, Charleroi and Stockholm. The company earned
huge profits enabling it to place an order for 45 units of the new Boeing 737800 series fleets.
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This was a big order worth $2 million. The company introduced a new
business model in Europe, new services to new markets and low fares to 300
million people that were being explored by the high fares of flag carriers.
These were not possible with the previous regulation that restrained capacity,
fares and routes. (Case studies: SAS Airline & Ryanair)
The enlargement of the European Union has also increased in new
destinations and therefore this lead to better company performance of
Ryanair. Countries in Eastern Europe were becoming an attractive destination
and airports were pursuing Ryanair to bring its low fare service to their
communities. This has ensured a sufficient number of new market growths
are made available for Ryanair for the next five years.
Another potential prospect for Ryanair was when United States (US) opened
up its restricted routes (trans-Atlantic routes) to Ryanair and the other new
rivals. A new long haul flight will be launched to cater the trans-Atlantic route,
offering a fare as low as $12 for one-way. The "Open Skies" deal, took effect
towards end of March 2008, allowing Ryanair to serve close to five to six
destinations in US from its 23 bases in Europe. (USA TODAY - 12/4/2007)
Canada being present for potential businesses in international trade has
opened up an opportunity for Ryanair to establish themselves as a low cost
carrier and also to partner with companies within Canada to offer the same
low-cost air fare they offer in their home base Europe.
Therefore, this could be a great place for Ryanair to capitalize on the airfare
market, and expand into the U.S as well. (terpconnect.umd.edu)
The low cost based policy continued to find new opportunities, one of which is
Ryanair Direct (a call centre) to encourage customers to book their seats
directly with the airline. This is in regards to improvise on the Customer
Reservation System (CRS) and to do away with the travel agents have cost
associated to the sales of ticket for Ryanair. In other words, Ryanair was
charged by the travel agents for booking done through CRS and a fee
imposed for every ticket sold. Besides enabling a save in the costs by
eliminating travel agents commissions of 7.5%, the website was also used to
sell travel insurance, accommodation and car hire.
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Threats
Ryanair has been continuously facing fierce operating challenges. This is
because the company operates in a highly competitive marketplace. The
competitors has commenced their own no frills charter services and have
reacted by introducing fare cuts on short routes, flying larger aircraft with one
passenger class, reducing in-flight service, internet bookings and weekend
offers. Mainstream airlines also intend to follow the budget airline model to be
executed on international routes. (O Higgins 2004).
Technological advancement had a reversed implication to Ryanair. Internet
and credit card usage was still at an infancy stage especially in Eastern
Europe. (Economist 2004c:69).The rapid development in telecommunication
may result in lesser need a business travel. Meetings can be held via video or
teleconferencing, thus eliminating the need for physical presence in a
location.
Terrorist attacks were an unpredicted threat to Ryanair. This was evidenced
in the case of the terrorist attacks on United States and London. This caused
a drop in the air travel as the consumers were apprehensive about security
and a raise in the insurance coverage due to a third party liability from acts of
war or terrorism. This resulted in Ryanair seeking other options such as
government or self insurance, which relatively resulted to cost increase and
revenue drop. (Ryanair.com)
Threat also came in the form of a drop in the fuel price. Ryanairs strategy of
fuel hedging provides extensive protection against unpredicted fluctuations of
fuel prices. However, the current drop in the fuel price, resulted in them
dipping onto its cash balance to finance the differences, thus affecting its
margin (Oxfordbridgewriters.com).
The change in government policies such as an increase in the air passenger
taxes results to a higher air travel cost. This may lead passengers to seek for
alternative mode of transport such as high-speed trains and buses for their
travel needs, therefore causing a drop in air travel demand.

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4.

RECOMMENDATIONS

TO

OVERCOME

THE

WEAKNESSES

AND

THREATS OF RYANAIR
People relation is an important aspect to determine Ryanairs success.
Internally, it leads to improve the morale of their staff especially taking care of
their basic needs and welfare, listening to their positive and negative
feedbacks as well as getting them involved in making recommendations and
decisions. This leads to greater sense of belonging and whole hearted
participation in Ryanair business.
Externally, Ryanair need to be more customers focused. This is through
meeting the basic expectations of an air traveler. Being too cost focus will
lead to negative perceptions over Ryanairs commitment towards its travelers.
Creative pricing to bundle in some of the individual items charged separately
such as oxygen mask and wheelchair will help eliminate undue critics. Being
attentive too problems faced by the customers will also help to bolster its
image.
Most of the threats faced by Ryanair are external and beyond their control
such as terror attacks, fluctuating bunker cost as well as weather. Maintaining
a good cost management system such as having a young and healthy fleet of
aircrafts will ensure good asset utilization, in terms of constantly ensuring
good load factor and profitable routes.
This will enable them to react fast and better against external threats by
realigning their network according to market demand.

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5.

OVERVIEW OF PEST ANALYSIS

PEST analysis is a tool used to identify the external macro-environment thats

affects an organizations operation. The PEST is an acronym for Political,
Economic, Sociocultural and Technological.

Figure 4 : An illustration of a PEST Model

The PEST analysis helps to determine market growth or decline, business
position, potential and guidance for the business operations (Kotler : 1998),
thus being effective for business and strategic planning, marketing planning,
business and product development and research reports. PEST also ensures
that companys performance is aligned positively with the powerful forces of
change that are affecting business environment.

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6.

TECHNOLOGICAL ANALYSIS ON RYANAIR

The technological environment on the whole does not have an adverse
impact on the company, but has been an added advantage to it in the aspect
of cost efficiency. The biggest success for Ryanair was the conversion British
Airways Booking System (BABS) host reservation system to Skylight Systems
by Accenture in January 2000.
The Skylights system enabled the Ryanair customers to reserve and book
their air tickets through ryanair.com. These strategic marketing application
has helped Ryanair in terms of reduction in its operating cost, improve its
sales performance and total consumer patronage, eliminate travel agents
commission, and streamline labor functions in the aspect of eliminating front
desk personnel.
The airline has also moved into offering in-flight mobile phones services on
their regular routes across UK airspace. The usage of mobile in flights was
generally being banned due to its signal being interference to the onboard
communication and navigation system. But the new technology that was
specially designed for Ryanair by a Swiss communication company, OnAir,
was able to weaken the signal from the phones and transfers calls, texts and
e-mails through a satellite (Exhibit 8) (BBC, UK 19 February, 2009).
Another innovation of Ryanair was the implementation of an electronic device
to assist the cabin crew in selling merchandise on-board. The technology was
rolled in the Ryanairs fleet on April 2008 onwards and this has enhanced the
onboard sales service, enabling them to introduce more products. (REUTERS
4 January, 2008)
The aircraft technology has also been an added advantage to Ryanair
through its investment in the next generation aircrafts and engine
technologies. The new Boeing fleets have minimized noise, fuel and CO2
emissions, thus enabling the company to achieve the combination of:
numerous fuel saving commercial measures. (Ryanair.com)
(2,824 words)
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APPENDIX

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EXHIBIT 1 :

SOME OF RYANAIRS ROUTES

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EXHIBIT 2 :

RYANAIRS DESTINATIONS

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EXHIBIT 3 :

PASSENGER GROWTH FROM YEAR 1995 TO 2007

The numbers from the latest financial year (ended 31-Mar-2009):

Operating revenue from continuing operations rose 8.5% to EUR2.94 billion;

Passenger numbers rose 15% to 58.5 million;
18 net new aircraft (year-end fleet of 181 B737-800 aircraft);
Six new bases at Alghero, Birmingham, Bologna, Bournemouth, Cagliari, and
Edinburgh;
223 new routes, for a total of "800+" routes with "1,200+ daily departures" (the
airline has apparently lost count).

Source : RyanAir.com

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EXHIBIT 4 :

THE CUSTOMER CARE STATISTICS FOR THE SECOND

QUARTER OF 2009

Source : RyanAir.com

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EXHIBIT 5 :

FEE IMPOSED FOR EMERGENCY INSTRUCTION CARD AND

OXYGEN MASK

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EXHIBIT 6 :

SOME OF THE OTHER CASES INVOLVING RYANAIRS

DISABALED PASSENGERS

YEAR

DETAILS

2005

Airline was criticized for ejecting nine blind and partially sighted passengers from a
flight at Stansted, because the group meant the plane would be carrying more than
the four disabled passengers permitted by the airline's safety regulations.
(http://www.mnddc.org/news/inclusion-daily/2005/10/101405ukairacc.htm)

2005

Ryanair was forced to pay Bob Ross 1,336 in damages after charging him 18 to
use a wheelchair
(http://news.bbc.co.uk/2/hi/business/4114399.stm)

2006

Refusal in providing a sick cancer sufferer with a wheelchair.

(http://archives.tcm.ie/irishpost/2006/08/30/story4561.asp)

2007

A 14-year old with a broken leg being forced to stand for two hours on a flight,
despite the boy being in pain.
http://www.shortnews.com/start.cfm?id=61961

2007

Ryanair ordered a group of visually impaired passengers to disembark from a flight

before take-off on the excuse that the flight had exceeded the permitted number of
"mobility-impaired" passengers and refused to pay compensation required by law,
claiming that they had disembarked voluntarily. Ryanair paid compensation before
court proceedings took place.
(http://www.timesonline.co.uk/tol/travel/news/article2293457.ece)

2008

Paul Heath left to lift disabled wife, Jo Heath Refusal onto plane after RyanAir
cabin crew and handling agent refused to offer assistance.
(http://www.dailymail.co.uk/travel/article-610634/Ryanair-left-lift-disabledwife-plane.html)

Source : Wikipedia

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EXHIBIT 7 :

THE MISLEADING AND OFFENSIVE ADVERTISEMENTS OF

RYANAIR

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EXHIBIT 8 :

THE IN-FLIGHT MOBILE SIGNAL TRANSMISSION

Source : http://news.bbc.co.uk/2/hi/technology/7899446.stm

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BUSINESS MANAGEMENT
REFERENCE
a)
1.

Internet References
BBC News, Ryanair allows mobile phone use,
- Viewed on 12 August, 2009
http://news.bbc.co.uk/2/hi/technology/7899446.stm

2.

Birds Eye View, Strength, Weaknesses, Opportunities, Threat

Viewed on 20 July, 2009
www.air-scoop.com

3.

Case studies: SAS Airline & Ryanair, New Boeing 737-800 series fleets
- Viewed on 4 August, 2009
http://umu.diva-portal.org/smash/record.jsf?pid=diva2:140520

4.

Conduct A Strategic Analysis Of A Multinational Company (MNC) Or An International

Company Ryanair, PESTLE Analysis, Technological
- Viewed on 4 August, 2009
http://www.oxbridgewriters.com/essays/business/ryanair-airports-strategy.php

5.

Funding Universe, Ryanair Holdings Plc, Michael OLeary

- Viewed on 13 August, 2008
http://www.fundinguniverse.com/company-histories/Ryanair-Holdings-plc-Company-History.html

6.

How Ryanair Has Exploited The Economic Theory Behind Airline Contestability And
Deregulation, Ryanairs Cost Advantages
Viewed on 28 July, 2009
http://www.airneth.com/index2.php?option=com_docman&task=doc_view&gid=533&Itemid=15.

7.

Low Cost or Low Ethics, Innovation

Viewed on 1 August, 2009
http://stajano.deis.unibo.it/ResP2005-pdf/Ryanair.pdf

8.

Reuters, Ryanair picks GuestLogix in-flight sales devices, Electronic Device,

- Viewed on 30 July, 2009
http://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSL0456358520080104

9.

Ryanair Holdings Plc, European Airline Market

Viewed on 28 July, 2009
http://www.ryanair.com/site/about/invest/docs/2003/20F_front_2003.pdf

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10. Ryanair Plc, Government Regulations, SWOT Analysis, Objectives and Long Time
Vision
Viewed on 28 July, 2009
http://solvay.ulb.ac.be/cours/alle/BuspPresRyanair04.pdf

11. Ryanair SWOT Analysis: Addicted to growth, a great model for bad times,
STRENGTH : Low fare super brand
- Viewed on 31 July, 2009
http://www.centreforaviation.com/news/2009/06/03/ryanair-swot-analysis-addicted-to-growth-agreat-model-for-bad-times/page1

12. Ryanair, Critisicm and Complaints Misleading Advertising

Viewed on 5 August, 2009
http://www.hamblecollege.co.uk/hamblewiki/wp/r/Ryanair.htm

13. Ryanair, Ryanair, Europes Greenest Airline, Fuel burn and CO2 emissions
- Viewed on 30 July, 2009
http://www.ryanair.com/site/EN/about.php?page=About&sec=environment

14. Strategic Case Analysis : Ryanair, External Analysis - PEST

Viewed on 12 August, 2009
http://www.essaycapital.com/samples/Degree_Case_Analysis_Harvard.pdf

15. The Case of Ryanair EU State Aid Policy on the Wrong Runway,
The New Principles of the Commission for Assessing Subsidies to Airlines: A Critical
Evaluation
- Viewed on 4 August, 2009
https://www.uni-marburg.de/fb02/makro/forschung/gelbereihe/artikel/2004-13-GroetekeKerber.pdf

b)

Book References

16

Strategic Management Concepts and Cases by Peter Wright, Mark J. Kroll, John Parnel
SWOT Analysis : Page 50 - 54

17.

Management, James A.F. Stoner, R. Edward Freeman, Daniel R.Gilbert,JR

Macroenvironment Analysis

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