Business Report on Ryan Air

Table of contents

Business Report on Ryan Air

1. Terms of reference

2. Procedures

3. Findings

3.1 External analysis

3.1.1 Legal issues

3.1.2 Competition

3.2 Strengths

3.3 Weaknesses

3.4 Opportunities

3.5 Threats

4. Conclusions

5. Recommendations

6. Bibliography

1. Terms of reference

This report is an analyse of the low cost airline Ryan Air. It is going to look at the external factors influencing the industry and analyse the internal factors using a SWOT analysis. The report is written by Nicolas Harmsen for NH consultants, a management consultancy with international customer base. Its purpose is to give the management of Ryan Air recommendations based on the external and internal analysis.

2. Procedures

The Internet was the main source of information for this report. Mainly search engines, but also the corporate website and Websites such as Yahoofinance.com or the Financial Times website. But the author also used the Regents College database to research articles about the topic.

3. Findings

Introduction

Ryan air was founded in 1985 by the Ryan family to provide scheduled passenger airline services between Ireland and the UK as an alternative to the state monopoly carries Aer Lingus. Initially, Ryan Air was a full service conventional airline with two classes of seating, leasing three different types of aircraft.

The company began to introduce a low cost operating model in the early 1990s. Ryan air operates 74 aircraft including 41 Boeing 737-800 "next generation aircraft, the Company offers approximately 475 scheduled flights per day serving 84 locations in the U.K., Ireland and continental Europe. Offering widely-available low fares, Ryan air carried more than 23 million

Passengers during 2004. Major achievements for the company include overtaking Easy jet to become Europe's largest airline in terms of passengers as well as overtaking British Airway's UK/Europe traffic. (O'Cuilleanain, 2004) Ryanair currently serves more than 300 routes between 130 airports in 20 European countries and two in Morocco. Its main hub is London Stansted Airport, with 88 routes. Ryanair has other bases throughout Europe, at Charleroi Brussels South, Cork, Dublin, Frankfurt-Hahn, Girona, London Luton, Liverpool, Milan Orio al Serio, Pisa, Nottingham East Midlands, Glasgow Prestwick,Newcastle International Airport, Rome Ciampino, Shannon and Stockholm Skavsta. (Wikipeida.com, 2004)

3.1 External analysis

3.1.1 Legal Issues

For a long time regulations from domestic governments were really harsh because they wanted to protect their national airline. From 1980 on EU thrived for the deregulation of the industry, following a trend started by the Republic of Ireland and the United Kingdom. From 1997 on, any European airline can operate within Europe without restriction. Some experts say that the deregulation did more harm than good to the industry, and that the events of September 11 were just another blow for the already struggling airline Industry. (O'Cuilleanain, 2004)

Ryan Air falls under the regulation of the EU competition laws, the more specific regulations of the European airline industry and under the regulations of the Irish government. (O'Cuilleanain, 2004)

3.1.2 Competition

The deregulation of the sector led to an explosion of competition, and although many new entrants were quickly ousted by existing players, competition is expected to grow even further. There are a number of competitors who pose a threat to Ryan Air. These are:

Other low coat airlines: easyJet, Air Berlin, Germanwings, Transavia, SkyEurope, Wizz Air, flybe, Thomsonfly and Hapag Lloyd Express. In 2004 approximately 60 new low-cost airlines were formed. Also the Irish airline, Aer Lingus moved to a low-fares strategy from 2002, leading to much more intense competition with Ryanair on Irish routes - Ryanair's most profitable. (Wikipedia.com, 2002)

Flag carriers: Major airlines such as Lufthansa, Air France, Alitalia and Ibera. A number of these arilines have been in financial

difficulties of late, and offten require aid from their respective governement e.g. Air France and Alitialia. Those posing any real thereat to Ryan Air are the stronger, financially indipendant airlines such as Lufthansa. (O'Cuilleanain, 2004)

Charters: Charter flight operators remain significantly more established and more competitive in Europe with many charter operations being owned by major travel groups or commercial airlines. (O'Cuilleanain, 2004)

3.1.3 Strengths

A firm's strengths are its resources and capabilities that can be used as a basis of developing a competitive advantage. (Quickmba.com, 2004)

Ryan air's key strengths are as follows:

o Cost efficiency: This is Ryan air's key strength. The company realises that the maintenance of its leading position among other low cost airlines depends on being the airline with the lowest cost. This requires constantly driving down cost to sustain low fares and remain profitable, even on low yield. Ryan air's costs reduction strategy focuses on five areas:

o Fleet commonality: Ryan air uses Boeing 737s, which are very widely used and hence the company is able to obtain spares and maintenance services cheap (Johnson, 2003)

o Contracting out of services: other than Dublin Airport where it maintains its own staff and services Ryan air contracts out aircraft handling, ticketing, baggage handling and other functions to third parties