Strategic Positioning Of The Ryanair Airline Commerce Essay

Strategic Positioning Of The Ryanair Airline Commerce set ab come onRyanair is a leading no nonsense air passage in europium and across the globe, it has managed to outperform all other flight path businesss and in 2006, it carried over 34.8 cardinal passengers. Ryanair is tar directing low income earners and cost sense of right and wrong customers 1.2.1 PESTEL outline(See appendix 7.5) PESTEL analysis is a useful strategic tool for understanding foodstuff fruit or decline, business position, potential and stress for operations. It is a framework for revie succeedg a moorage and keister be applied by Ryanair to review strategic direction as nearly as foodstuffing intention 4. When one flavor in the PESTEL analysis is moved(p), the rest will in like manner be affected for example if the political situation of Ireland trans contrivets then the economical, technological, social, legal, economical and even environmental aspects will change 4.Ryanair is not in good ter ms with virtually governments in the European Union as well as airline application authorities and airport regulatory bodies due to the rules and regulations they set. The EU precious to charge tax on aviation fuel due to carbon emissions breakd by the airline industries before 2010, Ryanair argued that any environmental taxations scheme should be to the benefit of more efficient mail carriers, so airlines with low load factors that generate racy fuel consumption and emission per passenger and airline that poke out connecting kinda than superman to point flights should be penalised then excluding itself 5. Secondly, Ryanair protested against charges and conditions on more or less airports much(prenominal) as Stansted and capital of Ireland.Economical conditions also affect both capital letter availability and cost, as well as command 4. If demand is high and the capital is low, it will be attractive for Ryanair to invest and grow with expectations of creation profit fitted. To influence demand Ryanair must continue to use its incumbent schema and reform its improvements and upgrade its customer c ar policies.The currency replacement rates affect Ryanair as they may determine whether customers will entertain a flight or not. If the exchange rate is high, customers will favor to use other means of transport such as the EURO express. To avert this situation, customers can use the Euro to book flights 1.Moreover, jet fuel prices atomic descend 18 dominated in US dollars and at that placefore Ryanair will shake to risk paid more or less for fuel as it will entangle the exchange rate.The opportunity to exploit a particular scheme successfully may depend on demand which exists in growth conditions and does not in recession. Although a depressed frugality will generally be a treat which results in a number of organizations going out of business, it can go forth opportunities for some4. The recession decreased the number of rivals in the pers of all timeance as well as weakening the re principal(prenominal)ing competition. In and after recession, customers ar more willing to fly with a no frill or low cost carriers rather than a differentiated or hybrid carrier. Therefore, to real extent the recession has had a positive meet Ryanair.The socio or cultural environment involves demand and tastes, which vary with fashion and expendable income, and general changes, can provide both opportunities and threats for Ryanair 4. Ryanair should be aware of demographics changes as the structure of the population by ages, affluence, regions, number working and so on so as to be able to take advantage when an opportunity occurs.Technological breakthroughs affect the airline indus depict the most. If the organization can conciliate to the technological change then it will be able to spank competition and increase its grocery share. The global focus in the twenty- start-off century is environmental protection. Ryanair has been able to meet the demand and standards of the world food market by adjureing eco friendly airlines. The aircrafts produce 50% less emissions, 45% lower noise emissions per seat. A winglet modification programme on the pass away is providing better aircraft performance and a 2% reduction in shoot fuel consumption, a saving which Ryanair hopes to improve in the coming historic period 1.Ryanair has been employ one type of airline, Boeing 737 to save cost on preparedness staff. As Ryanair cannot dump expenses on its customers it should look for ways to reduce cost and the author believes that this is one of it 1.Legal factors affecting Ryanair is that of labour unions. Ryanair does not oblige a good relationship with its employees as it has refused to acknowledge unions. Secondly it is providing myopic working conditions and low salaries. Although Ryanair has argued that its pilots are the best paid short allure pilots in Europe. In the autumn 2006 pilots in Ryanair l odge a indisposition with the Irish Labour Relations Commission on the basis that there were significant in net salary between Ryanair and Aer Lingus pilots.2.2 Michael Porters 5 Forces abridgment (see appendix 7.8)The threat of substitutes in the airline industry is high as there are other means of transport to and from Europe as well as in spite of appearance Europe. Customers are opting to use the Euro Express (train) rather than using an aeroplane as it is cheaper and offers extra benefits. The Euro Express enables its customers to enjoy the scenario musical composition offering more or less the same services as the airplane.Rivalry amongst actual crockeds there are a number of competitors inside the market and when the European Union commenced even more competitors entered the market. The industry is agonistic and is becoming saturated. Each competitor is using a strategy to get a foot hold in the industry. Although some of the airlines are using the no frill strategy, Ryanair has been able to best them by creating a truehearted brand offering the lowest price fare.dicker power of suppliers, the talk terms power of suppliers is low as there are many suppliers in the industry. The suppliers of the airline industry are those who supply the airline with parts such as the blades and engines, food, uniforms for the air hostess and so on. They are slow exchangeable as Ryanair can get these services from any country indoors and outside of Europe. Ryanair as a supplier has a high negociate power as it offers services that are unique in the market (it is the only no frill airline in the United Kingdom).Bargaining power of buyers, the bargaining power of buyers is very high as there are a lot of substitutes and competitors in the market. The customer can easily use his/her car to go Dublin rather than take an airplane. Secondly, as there are a number of competitors in the market, the airlines will offer discounts and promotions to attract customers an d therefore customers can easily switch from one airline to another.Threats of naked entrants the biggest barrier to entering the airline industry is capital exactly nowadays entrepreneurs can take a loan with the bank or form an alliance such as a joint reckon to overcome this barrier. The industry regulations can help decrease the number of untried entrants and reduce competition within the market. There is no union among the existing firm to keep new entrants out, in other industries the existing firm come together to keep new entrants out of the industry as they would saturate the market even more.2.3 Ratios AnalysisRyanairs financial performance is positive, although there is still room for improvement (see appendix 7.9). The net profit mete in 2006 was lower than 2005 hardly Ryanair managed to increase it in the second half(prenominal) of 2006. The return on capital employee has been constant from 2005 to 2006.3.0 STRATEGY CHOICES3.1 StrategyRyanairs object lens is to firmly establish itself as Europes leading low-fares schedule passenger airline through proceed improvements and expanded offerings of its low-fares service. Ryanair aims to offer low fares that generate increase passenger traffic while throwing a continuous focus on cost-containment and operating efficiencies 1.Ryanair was initially a hybrid (see appendix 7.4) as it was a full service conventional airline, in the early 1990s it pose a no frill carrier under the management of Michael O Leary 1. The author believe that this move by the nous Executive police officer has enable Ryanair to create a market peak for itself and gain market share and therefore I would not suggest a change in strategy. The industry is very competitory and is becoming saturated so if Ryanair decides to change its strategy it will have to design and implement a new strategy that is not being used by its competitor or that has never been used in the industry. This is next to impossible as all of the stra tegies i.e. differentiation, cost leadership are already being used. Secondly, Ryanair would overleap the foothold it has in the industry and its market share and it would have to lower from scratch, which will mean more capital will have to be invested into the new strategy.Although Ryanair is using the no frill strategy1 they must be vigilant to not devalue the smart set. Currently, it has a large customer base besides most of which have a very low opinion of the airline 6. Moreover, Ryanair should increase more benefits to its customers for example they should remove the 50 cent wheelchair impose that was impose on every passenger ticket 6. These small charges are making customers opt to fly with a different airline.The airline offers point to point flight 1. Ryanair uses secondary terminals to avoid crowding in the terminals as well as to decrease its turnaround quantify. The turnaround time is also kept to a minimum by the flight attendants cleaning the airplane instead of outsourcing professionals.Building on its success in the Ireland-U.K. market and its expansion of service to continental Europe, Ryanair intends to follow a manageable growth plan targeting specific markets to gain an advantage over its competitors. Ryanair believes it will have opportunities for continued growth by 1Initiating additional routes from the U.K. or Ireland to other locations in continental Europe that are presently served by higher-cost, higher-fare carriersIncreasing the absolute absolute frequency of service on its existing routesStarting new domestic routes within EU countriesConsidering possible acquisitions that may turn available in the afterlifeConnecting airports within its existing route network (triangulation)3.2 Competitive Advantage AnalysisRyanair has many combative advantages (See appendix 7.7). According to Ryanairs official website the following are some of its competitive advantage3.2.1 Low Fares Ryanair sets fares on the basis of demand for particular flights and by reference to the period remaining to the date of way out of the flight, with higher fares charged on flights with higher levels of demand for bookings made nearby to the date of departure. The airline sells seats on a one-way basis, thus eliminating minimum stay requirements from all travel on Ryanair scheduled services, irrespective of fare. Ryanairs competitors generally do not operate a one-way set policy, so direct comparison is not possible, but current round-trip fares on Aer Lingus, Ryanairs largest competitor on the London- Dublin route, for travel in September 2004 were 82.27 Euro for economy restricted return tickets, 218.27 Euro for economy flexible return and 353.75 pounds for business part tickets.3.2.2 Customer gain Ryanair delivers the best customer service performance in its fellow group. According to reports by the Association of European Airlines and the airlines proclaim make statistics, Ryanair has achieved better punctuality, fe wer lost bags and fewer cancellations than all of the rest of its peer grouping in Europe. Ryanair achieves this by focusing strongly on the writ of execution of these services and by operating from uncongested airports.3.2.3 Frequent Point-to-Point Flights on Short-Haul Routes Ryanair provides frequent point-to-point service on short- arrest routes to secondary and regional airports in and around major population centres and travel destinations. Short-haul routes allow Ryanair to offer frequent service, while eliminating the necessity to provide frill services otherwise expected by customers on seven-day flights. Point-to-point flying allows Ryanair to offer direct, non-stop routes and avoid the cost of providing through service for connecting passengers, including luggage transfer and transit passenger assistance cost. In choosing its routes, Ryanair favours secondary airports with expedient transportation to major population centres and regional airports. secondary and regio nal airports are generally less congested than major airports and, as a result, can be expected to provide higher rates of onetime departures, alacritous turnaround times, fewer terminal delays and more competitive airport admission price and handling cost. Faster turnaround times are a samara element in Ryanairs efforts to maximize aircraft utilization. Ryanairs average scheduled turnaround time for the fiscal year ended March 31, 2004 was approximately 25 minutes. Secondary and regional airports also generally do not maintain schedule requirements or other operating restrictions that can increase operating expenses and restrain the number of allowed take-offs and landings.3.2.4 Low Operating Costs Management believes that Ryanairs operating costs are among the lowest of any European scheduled passenger airline thus being advantageous to the airline. Ryanair strives to reduce or control quadruple of the primary(a) expenses involved in running a major scheduled airlineAircraft equipment costsPersonnel productivityCustomer service costsAirport access and handling costs3.2.5 Aircraft Equipment Costs Ryanairs initial strategy for controlling aircraft acquisition costs was to leverage used aircraft of a iodine type Boeing 737, there was a significant reduction in the number of such used aircraft available for purchase in the market. The 737-800s represent the in style(p) generation of Boeings 737 aircraft and share certain basic attributes in common with Ryanairs current eliminate. Although Ryanairs acquisition of the 737-800s has already, and will continue to significantly increase the size of its fleet from that in 1998 and thus significantly increase its aircraft equipment and related costs, the purchase of aircraft from a single manufacturer enables it to limit the costs associated with staff office training, maintenance and the purchase and storage of spare parts, as well as affording greater flexibleness in the scheduling of crews and equipment.3.2 .6 Personnel Productivity Ryanair endeavours to control its labour costs by continually improving the productivity of its already highly-productive work force. wages for employees emphasizes productivity-based wear incentives, including commissions for on-board sales of products for flight attendants and payments based on the number of hours or sectors flown by pilots and cabin crew personnel within limits set by industry standards or regulations fixing maximum working hours, as well as participation in Ryanairs stock option programs.3.2.7 Customer Service Ryanair has entered into agreements on competitive terms with third party contractors at certain airports for passenger and aircraft handling, ticketing and other services that management believes can be more cost efficiently provided by third parties. Management attempts to obtain competitive rates for such services by negotiating multi-year contracts at prices that are set or subject only to periodic increases linked to inflat ion. The development of its own internet booking facility and reservations centre has advantaged Ryanair to eliminate travel agentive role commissions.3.2.8 Airport Access Fees Ryanair attempts to control airport access and service charges by focusing on airports that offer competitive cost terms. Management believes that Ryanairs present of delivering a consistently high volume of passenger traffic growth at many of these airports has allowed it to negotiate favourable contracts with such airports for access to their facilities. Ryanair advance endeavours to reduce its airport charges by opting, when practicable, for less expensive gate locations as well as outdoor boarding stairs rather than more expensive jet ways.3.2.9 Ecommerce During January 2000, Ryanair converted its host reservation arranging from the BABS (British Airways booking System) to a new system called Flight speed, which it operates under a 10 year hosting agreement with Accenture Open Skies (Open Skies). As p art of the implementation of the new reservation system, Open Skies developed an internet booking facility called Skylights. The Skylights system allows internet users to access Ryanairs host reservation system and to make and pay for confirmed reservations in real time through Ryanairs website which accounts for a 96% reservation of all flights.3.2.10 Safety Ryanairs commitment to safety is a primary priority of the Company and its management. This commitment begins with the hiring and training of Ryanairs pilots, cabin crews and maintenance personnel and includes a policy of maintaining its aircraft in accordance with the highest European airline industry standards. Ryanair has not had a single incident involving major injury to passengers or flight crew in its 20 year operating history. Although Ryanair explores to maintain its fleet in a cost-effective manner, management does not seek to extend Ryanairs low cost operating strategy to the areas of safety, maintenance, training o r quality assurance. Routine aircraft maintenance and repair services are performed at Dublin, London (Stansted), Glasgow (Prestwick), Shannon and Milan (Bergamo) by Ryanair and, at other airports maintenance contractors.4.0 STRATEGY IN ACTIONAccording to Ryanairs website the political party plans to initiate new services and improve existing ones and therefore the author will suggest ways the company can do so.The first is initiating additional routes from the U.K. or Ireland to other locations in continental Europe that are currently served by higher-cost and higher-fare carriers. As economies have just emerge from a recession, customers are more cost conscience and therefore if Ryanair continues to use its no frill strategy it will be able to quickly gain market share and dominance.Increasing the frequency of service on its existing routes, as seen in appendix 13 the most used route is from Dublin to London, therefore Ryanair should increase flights from Dublin to London and vic e versa.Starting new domestic routes within EU countries, as the EU Union continues to grow, more markets will open up. Ryanair should try to enter these markets the first so as to gain the first instrument advantage such as being the first to exploit the market thus gaining more knowledge about the market.Considering possible acquisitions that may become available in the future. Ryanair acquired a small Dutch budget, short haul, carrier buzz and wanted to acquire Aer Lingus its Irish rival and long haul airline. Although the acquisition failed at the time, Ryanair can still try again but using a different strategy. In the future the airline should grant a stockbroker to purchase Aer Lingus as it did when its stockbroker Davy purchased the Aer Lingus shares. Secondly, Ryanair should negotiate behind closed doors, the first attempt failed because of media interference. Ryanair should state that it will bring in an expert to exert the organizational structure so that the 2 organiza tions can be able to work together and allow trade unions so as to win over the trust of the government and the Aer Lingus board.Connecting airports within its existing route network, currently Ryanair is using secondary terminals to avoid traffic and increase its turnaround time. only when most customers prefer to use the main terminals and therefore if Ryanair uses both the main and secondary terminals it will be able to increase its customer base.5.0 demonstrationAs seen in section 3.2 Ryanair is using the no frill strategy, the company has positioned itself well in the market and has manage under the leadership of the Chief Executive Officer and shareholder Michael O Leary to become a home name. Although Ryanair is targeting a niche in the market where its customers are willing to release extra benefits for the low fare, the company should try to add value for its customers where ever it can and when ever it can to increase brand loyalty and last sales.6.0 REFERENCERyanairs official website, http//www.ryanair.com obtained on 21st November 2009 at 1211 P.MG. Johnson, k. Scholes, R. Whittington 2008, Exploring Corporate Culture, 8th Edition, Prentice HallRyanairs history 2009 obtained from http//en.Wikipedia.org/Ryanair on nineteenth November 2009 at 1123 A.MPESTEL Analysis, obtained from http//university-essays.tripod.com on 19th November 2009 at 1200 P.MS. Cairns and C. Newson, predict and decide Aviation, climate change and UK policy, ECI Research Report 33, environmental Change Institute, University of Oxford 2006D. Milmo, Ryanair the world least favorite airline, Guardian 26 October 2006 nucleus for Asia Pacific Aviation 2009, obtained from http//www.cntreforpacificaviation.com on 15th November 2009 at 212 P.MBBC WORL NEWS, fast track, interview with Michael OLeary time 1155 28th declination 2009Ryanairs marketing mix 2009 obtained from http//www.marketingteacher.com on the 27th of November 2009 at 1206 P.M.Ryanairs competitive advantage obtained from http//www.slideshare.net/puya455/newanalysis-of-ryanairs on the 27th November 2009 at 100 P.MRyanairs value cooking stove analysis obtained from http//www.peerpapers.com/essays/Ryanair-Value-Chain-Analysis/171123.html?topic