Evaluating the Corporate Strategy of Ryanair Essay Example

acquired Boeing 737-800 planes. Moreover, the airline has made purchases for an additional 64 aircraft that are set to be delivered in the next two years. Despite its continuous expansion, Ryanair has consistently retained its position as the busiest LCA in Europe and has accomplished significant achievements along the way.

In 1985, the Ryan family established Ryanair in Ireland. However, the company encountered financial difficulties and decided to introduce a business class service and frequent flyer program within a year. Unfortunately, these initiatives did not succeed. As a result, Ryanair shifted its focus towards cost reduction as its primary strategy. Presently, Ryanair provides budget-friendly fares across all markets and operates numerous flights using only one type of aircraft. The airline does not offer complimentary beverages or expensive meals during flights.

These determinations have significantly decreased ticket prices for customers. To further reduce costs, Ryanair also decided to reduce travel routes from 19 to 6 between 1990 and 1992. Under this new policy, the Irish company transported over 1 million passengers in one year for the first time in 1993. On May 29th, 1997, Ryanair became a public company through a successful flotation on the Dublin and NASDAQ (New York) Stock Exchanges. In March 1999, Ryanair accepted the delivery of five new Boeing 737-800 series aircraft. These new aircraft began operating from the main base at London Stansted, enabling Ryanair to operate at significantly lower seat costs and offer much lower airfares. Additionally, the new aircraft improved reliability and introduced a fantastic new customer product (www.ryanair.com).

Ensuring effective communication with clients is one of the company's main priorities. In 2000, Ryanair's website (www.ryanair.com) became Europe's largest booking website, generating

over 50,000 engagements per week. This platform provides clients with valuable information and allows them to access services like car hire, hotel accommodation, travel insurance, and rail services at the lowest prices available. During this time period, Ryanair was the only Low Cost Airline (LCA) that offered interactive internet services advantageous for its clients. By 2003, Ryanair had gained recognition as the fifth most popular brand worldwide and had become the fifth most searched website globally.

The Irish airline, Ryanair, was the first LCA (low-cost airline) to advertise on television by sponsoring Skynews Weather reports. As a result, one million people traveled with Ryanair in August 2001 for the first time in a month. In efforts to be more accessible to customers, the company also established its first Continental base at Brussels Charleroi Airport in Belgium from 2001 to the end of 2002. In 2002, Frankfurt Hahn was chosen as Ryanair's second Continental European base and began operating in April with ten routes.

According to J. Meier (personal communication, 15 April 2009), German clients are flocking in the millions to take advantage of the lowest air fares to and from Frankfurt. To accommodate this growth, Ryanair has announced the largest aircraft order ever made by an Irish airline. They have increased their order with Boeing from 45 to 125 planes, with an option for a further 125. The value of this order exceeds ˆ6 billion and shows Ryanair's ambition to become the largest Low-Cost Airline in Europe. Ryanair has also become the number one European airline for customer service, surpassing all other airlines in terms of punctuality, fewest cancellations, and least lost luggage (www.ryanair.com).

Meanwhile, according to the

company representative, "communications to clients have not stopped". In 2004, Google named Ryanair the most popular airline on the web, as the website remains the most searched travel site in Europe. These performances have continued, and now over 98% of all Ryanair bookings are made through the website and Internet customer services. From 2005 to 2006, Ryanair utilized communication tools to differentiate themselves from other airlines for their customers.

Firstly, a new communication called "no fuel surcharge warrant" was introduced to address the issue of additional charges for fuel expenses that many full-service airlines, such as British Airways, Air France, or Lufthansa, still include. Secondly, Ryanair achieved the title of "The World's Favorite Airline" by surpassing British Airways and other competitors in terms of passenger numbers. Additionally, Ryanair maintains its reputation as Europe's most punctual company with over 90% of flights arriving on time. Multiple radio advertisements were created to promote these achievements.

In order to attract new clients, Ryanair offered 100,000 seats for ˆ1 to celebrate their twentieth birthday. They also launched a new service called web check-in, allowing passengers to check-in online for all of Ryanair's flights. Ryanair is the first airline to carry over 5 million passengers in a month and has introduced a new onboard mobile service for customers. Currently, Ryanair operates 830 low-cost routes across Europe and serves 26 different European countries from their 31 European bases.

Ryanair, which has over 8,000 employees and expects to transport about 73.5 million passengers this fiscal year (www.ryanair.com), remains Europe's leading low-cost airline with an unchanged strategy since the 90s. Their approach focuses on offering affordable fares while maintaining cost-efficiency and operational effectiveness to attract

more customers.

Their strategy includes excellent customer service, frequent short-haul flights on point-to-point routes, minimizing operating costs, maximizing productivity, reducing customer expenses, optimizing use of online platforms for customer service, emphasizing safety and quality, improving profitability, and providing additional services.

Ryanair's market success demonstrates that their balance between price and service aligns well with customer demands. The company's commitment to building a strong brand is evident from its ranking as the fifth most searched website globally in 2003.

According to GilbertAs (1996), stigmatization is becoming more important for product differentiation, which supports the idea that brand awareness is a valuable tool in preparing for competition. Connelly and Williams (2005) further argue that establishing a strong brand, along with customer loyalty and satisfaction, is particularly relevant for LCAA's as they offer an alternative to full-service airlines.

Over time, the airline has defined its product and stuck to that model, operating over 180 routes from 17 bases. To keep fares low, the company made the strategic decision to reduce travel agents and marketing costs by selling tickets online. This decision had a positive impact on customer numbers because customers prefer to independently check, compare, and purchase tickets without involving an agency.

Ever since the introduction of cyberspace engagement in 2000, rider Numberss have been quickly increasing. The growth rate has gone up from 15.7% in 1999 to 30.7% in 2000 and over 40% in following years. Ryanair's emphasis on offering low prices rather than quality service has played a role in this expansion. Nevertheless, there could be potential problems for Ryanair if a new airline enters the market and adversely affects their market share and profitability in the long run.

According to Lawton

(1999), focusing solely on one strategy, such as price leadership, will not be sustainable in the future. However, Ryanair's desire to expand indicates that it will prioritize other factors to maintain its competitive advantage. While the decreasing prices of low-cost airlines may decrease demand for air travel in general, the demand for Ryanair's product is likely to remain high. Ryanair effectively meets the market's demand, as its strong price reduction strategy attracts numerous customers. As long as customers maintain their preferences and needs, wanting only to travel from one point to another without any additional amenities, this situation is expected to continue.

The clients are inclined to choose low-cost airlines because of the affordable services they offer. However, Ryanair is mainly concerned with maintaining their market presence by closely monitoring their expenses. To illustrate this, I had a personal experience with Ryanair where one of my flights was cancelled without any communication, ticket alteration, or compensation. Despite sending multiple letters to Ryanair, I did not receive a response. It was only after contacting the European Commission for Air Passengers Rights three years later that I finally received a refund.

The main decision for the company is to maintain low costs at all costs, even if it means risking its position in the market. It is crucial for Ryanair to provide affordable services in order to satisfy customers' needs and expectations. The company should prioritize building relationships with its clients to avoid losing its market position. By combining low prices with a loyal customer base, Ryanair can gain a competitive advantage.

The impact of the number of travelers directly affects schemes. Ryanair's success and customer appeal can be attributed

to their introduction of a hard discount pricing scheme. In terms of SWOT analysis, the company has several strengths such as being a low-cost pioneer, having first mover advantage, a strong brand, established market share, offering various auxiliary services, and maintaining good relationships with customers. However, they also face unpredictable relations with customers, poor employee relations, refusal to recognize unions, reliance on Michael O'Leary, and an unfriendly connection with competitors.

There are numerous opportunities for Ryanair including ongoing development, advanced fee reduction options, EU growth potential, traveler destinations expansion, increasing competition in the industry (particularly from new low-cost entrants), alliances/mergers between competitors that could alter dynamics in the market; however there is also industry criticism and competition from alternative transportation methods such as cars and trains.

To establish a competitive advantage currently Ryanair focuses on establishing a strong brand reputation while adapting strategies to market conditions for improved competitiveness. The text further outlines different business strategies including cost leadership (offering products at lower prices than competitors), differentiation (providing unique features or benefits that set them apart), focused cost leadership (targeting specific markets by offering lowest prices), and integrated cost leadership/differentiation (combining both cost savings and unique features).

Ryanair underwent a restructuring process, shifting from a traditional airline model to become the first European low-cost carrier. Initially, their services were limited to flights between Ireland and the UK. However, by the end of 1990, despite an increase in customers, Ryanair faced losses totaling 20 million IR pounds. Under the leadership of Michael O'Leary during this period, they decided to adopt American Southwest Airlines' successful model. Nevertheless, they encountered challenges associated with simultaneously reducing costs and specializing. Without a well-defined

strategy, competitors could potentially enter the market and threaten Ryanair's existence.

So they choose to travel for Cost Leadership which proved to be a right pick.

Decision

Despite the fact that Ryanair is tied to a low-cost policy and doesn't care about client loyalty, customer service, and having a bad experience with them, both the clients and myself will continue to buy their services. Yes, we will get the basic service, but it is cheap and easy, and after testing it, I will fly with them in Portugal. Ryanair's rapid growth is attributed to their low-cost airline business model that has restructured the European Aviation Industry. They have pioneered advanced cost reduction methods and creative alternative revenue generation, including free flights in the next stage of development. Value segments consist of travelers who are interested in optimizing comfort, time, and price. This indicates a demand for airports located in city centers and convenient travel times. Competitors are catering to the value market segment and have established slots at some major airports, offering cost-effective basic services.

Acquiring a comparable air hose would enhance expansion into market segments that prioritize value, while still maintaining its leading position in the low-price segment.