Ryanair Ltd.

1. 5 Forces Analysis
On the European airline industry in and around 1990 to determine the
degree of attractiveness of the industry

Threat of Potential Entrants

Threat of Substitutes

Only limited number of airlines operating, dominated by national flag

carriers.
Restrictions of discretionary fares resulting in low bargaining power of
buyers.

Bargaining Power of Suppliers

Air travel is costlier than other modes of travel cars, buses and trains.
Airlines provide full service to its customers.

Bargaining Power of Buyers

Regulated industry till 1987 with national flag carriers dominance and
restrictions:
a. of entry into the airline business
b. on operating flights between third countries
c. to establish discretionary airfares
Restrictions eased out gradually in the areas of airfares, transportation
volumes and operation of air routes.
Gulf war broke out in 1991 resulting in low volumes
Easy entry of new players post easing out of the restrictions

Aircraft suppliers are few.

Airports No information
Fuel No information

Rivalry Among Existing Firms

Limited Routes available for each airline

Limited transportation volumes

270382311

2. 3 Cs Analysis
Including a customer analysis of the industry to evaluate the opportunity
that OLeary identified

Customer (Market)

Competitor

Level of customer satisfaction in same in small airports that are away

from the city and large airports when factors such as traffic jams near
large airports and flight delays caused by airstrip crowding ae taken into
consideration
Low fares attracted customers who had previously used cars, buses, and
trains, and major airline companies former customers
Vacationers and recreation travelers are attracted to the low cost tickets

Major Airlines companies tickets are costlier as they operate full service,
have different classes of travel, full range of in-flight service, free drinks,
meals, blankets etc. They maintain exclusive lounges in the airports.
Seat occupancy rate in 60-70%

Company

Low cost Management

Operation thru a fleet of aircraft with all the same model to save on
maintenance and equipment, on the cost of training, and reducing price
per order through centralized purchasing
Airframe maintenance operations are outsourced and paid by the actual
time required to complete as against dedicated maintenance operations
Dynamic pricing system
All tickets booked thru the Internet to save agency commissions
Employee salaries are high and many own shares in the company making
the morale high

3. Value Chain Analysis

Evaluate the strategy adopted by Ryanair against the strategies taken by
major airlines

Infrastructure

Information System

Low cost operations

Activities for reducing cost are enforced across the board in the company

Own web-site for ticket sales

Human Resource Management

270382311

Technology Development

On time operations The plane will not wait

Lower parking fees due to quick turnaround time
Utilization of Aircraft higher than average

Marketing and Sales

Short-distance routes within Europe

Flights Arrive and depart from small airports in the suburbs of the cities
for lower costs involved

Outbound Logistics

Lower dependency on travel agents

Ticketless boarding/travel
Unallocated seats, first come first serve

Operation

Package deal with Boeing for large fleet

Single model of aircraft for lower cost of equipment
Outsourced Maintenance paid on actual time required

Inbound Logistics

Internet Ticket Sales-90%

Procurement

Higher Salaries of employees

Lower cost of training due to single model of aircraft

Rock bottom airfares

Dynamic Pricing
In-flight sales of food, drinks and merchandise
Rental cars add ons

Service

Single class of travel

No in-flight entertainment, meals, drinks, blankets
No refund policy

270382311