Ryanair Leadership Strategy Report

Topic: AutomotiveCommercial
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Last updated: June 4, 2019

Leading in a Complex World Strategy Report Strategic Recommendations (one page) Ryanair has been one of the Britain’s best low cost airlines for around 25 years since being established in 1985 by the Ryan family. Ryanair have always aimed to show their customers their statistics and monthly reports; “Ryanair believe that any worthwhile passenger service commitment must involve a commitment on both pricing and punctuality, that’s why Ryanair is committed to publishing Customer Service Statistics each month and these confirm that Ryanair is No. for Customer Service with unbeatable prices and punctuality. [ (Ryanair, About us, 2010) ] Although according to the figures Ryanair is the “World’s favourite” low cost airline, in the minds of their customers this is not always the case.

Many customers complain about the hidden charges and extra costs. Once you select your flight there may be charges such as taxes and online check in, that can add up to an extra ? 30 on to your flight price. Then you pay extra if you want luggage in the hold and then a ? credit card fee per flight. If Ryanair stated these charges before you are ready to pay, then customers have no reason to complain about these charges. This could improve their image, showing that their website is customer friendly. Ryanair have always been in the public eye for their advertising. Michael O’Leary seems to believe that any publicity is good publicity.

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Some of their advertising techniques can provide a negative impact for the company by offending people and providing the press the “ammo” to target the company.Ryanair could adapt a more traditional approach to advertising by not using any misleading or provocative images on their campaigns. One of the most effective ways for Ryanair to generate new income is to develop more bases and travel to new destinations. Travelling to new destinations can provide new jobs and provide entry to new markets out with the EU and help the company expand even further. Analysis – Internal Strengths ;amp; Weaknesses (press ‘tab’ in the last cell of the tables to add another line if you need it) Strengths| Strength| Evidence / argument|Cost Efficient Airline:| Ryanair is a cost efficient airline. Ryanair save money in numerous areas. By having turnaround times of 25 minutes, this means that the fleet spends more time in the air and more flights can be scheduled each day. By spending less time on the ground they reduce aircraft parking fees.

Also by flying to non-major airports their landing and parking fees are generally less expensive than flying to major international airports. They utilise only one type of aircraft, Boeing 737 with only one engine type, this reduces maintenance and training costs and maximises flexibility.They have negotiated bargain prices for these aircraft by buying bulk| Internet bookings:| Ryanair take the majority of their bookings online. Booking over the phone is more expensive for the company. Whereas if people book from home, they can print out their own boarding cards, which saves the company money and also results in avoiding a “middle man” such as travel agents. | High Service Performance:| “Ryanair is No. 1 for Punctuality. No.

1 for fewest lost bags. No. 1 for flight completions.

No. 1 for fewest complaints” (Ryanair, 2010).The high standards that the company has set have been a major strength for the company in maintaining the name of; One of Europe’s leading low cost airlines. This service they have managed to maintain for years but will have to continue to keep on top of these figures to remain one of Europe’s leading low cost airlines.

| One type of aircraft:| Ryanair’s fleet is all Boeing 737’s. This currently stands at 202 aircraft. This allows the company to bulk buy their aircraft, saving them millions of Euros. Since the fleet is new and modern they are very fuel efficient.

The fleet is fairly young so the aircraft needs less maintenance compared to older aircraft. With all staff working on the same type of aircraft this also saves on training costs as staff need only be trained or rated for one type of aircraft. Ground support, catering and luggage equipment is constant and consistent. | Environmentally Friendly:| Modern fuel efficient aircraft and high seat occupancy, resulting in the lowest emissions per passenger mile ratios compared to other carriers. “Ryanair has minimised and continues to reduce fuel burn and CO2 emissions per passenger kilometre.

This has been achieved through the combination of: numerous fuel saving measures (including the use of the latest aircraft and engine technology, e. g. , winglets); and commercial measures aimed at maximising passenger numbers per flight in order to spread the fuel use and CO2 emissions over the greatest number of passengers (efficient seat configuration and high load factors). ” (Ryanair, Europes Greenest Airline, 2006)| Weaknesses| Weakness| Evidence / argument| Bad Press:| As a company Ryanair has had its fair share of bad press in the past few years.It has received bad press in many instances. Ryanair are regularly criticised for all the hidden extra charges, such as ? 5 online check in fee per flight and a ? 5 per flight credit card fee. This can result in a ? 20 addition per person to advertised price for a return journey.

Ryanair also receive a lot of bad press due to their chief executive, Michael O’Leary because he comes across as rather arrogant in press interviews and television documentaries. “Mr O’Leary has never complained about being seen as a foul-mouthed bully.He maintains that there is no such thing as bad publicity and that the fights he picks are all intended to drive home the message that Ryanair’s approach to costs is a war that has to be ruthlessly conducted on many fronts. ” (Economist, 2007)In recent years Ryanair have been slated for their less than conventional advertisement strategies.

In 2001 Ryanair was involved in a law suit with Sabena Airlines before the company went bankrupt. Sabena Airlines stated that Ryanair were: “”provoking and denigrating and misleading the consumer in a cunning way. (Sabena, 2001)Their inclination to cancel or change flight times is resented by customers and their poor staff relations also generate bad press. | Distance from airports to destinations:| Ryanair regularly use “minor” airports to save on costs. These can be far away from your final destination. For example Paris Beauvais is around 85km outside of the centre of Paris. This can lead to further transport costs for passengers by having to get a shuttle bus from the airport to their required destination.

Passengers may find that dvertising the airport as “Paris” or “Barcelona” misleading as they are not exactly in the cities advertised. There are exceptions such as Campiano, Rome. This is much closer to city centre than Rome International.

| Poor Customer Service:| Ryanair is known for its less than average customer service. Back in 2002 Ryanair came under fire after not providing a wheelchair for disabled passengers at London Stansted. The airline do not provide compensation if your flight is delayed resulting in you missing a connecting flight.

NO-frills airline Ryanair might want to send its staff to charm school, following research that shows travellers are fed up with its poor customer service. ” (Minot, 2008) Ryanair staff have been criticised for being rude to customers on board flights. | High Staff Turnover:| Ryanair staff are mainly all contracted from another company, “Crewlink”. Ryanair do not show loyalty to their workforce.

A lot of the jobs that Ryanair offer are seasonal over the summer months when there are more flights scheduled.Cabin crew are given 3 year fixed term contract with a cabin crew agency who are contracted to supply staff to Ryanair. This does not guarantee that they’ll have a reliable source of income if they train to become cabin crew. This is a weakness for Ryanair because the cabin crew may not be motivated to provide good customer service if they feel they are not a valued employee.

| Distinctive Competencies (up to one page of discussion) Advertising Ryanair are currently calling themselves “Britain’s Favourite Airline”, which is a bold statement to be making.Ryanair are known for their controversial advertising techniques. They have been slated many times for the ads that they produce and many of them have been banned. Ryanair do not only advertise themselves they regularly advertise their partners such as Hertz on their website. Recently (15th March) Ryanair proposed advertising on the boarding cards that their customers print out; “Ryanair’s new advertising service allows both global and local brands to reach a pan-European audience by integrating online and print advertising to deliver exceptional value to focused advertising campaigns.

Ryanair passengers must reference their boarding cards on a number of occasions during a trip – providing repeat exposure for advertisers. ” (Ryanair, Ryanair Launches Boarding Card Advertising, 2010). Operational Characteristics Ryanair currently use the Boeing 737-800 with seat occupancy of 189 and only one class on the aircraft…

economy. This is more seat occupancy than most other airlines which generally have 162 seats and are split into two classes. Ryanair avoid having late night flight departures, this reduces noise emission. (Ryanair)provides direct services as opposed to connecting flights, in order to limit the need for passengers to transfer at main hubs and thus reduces the number of take-offs and landings per journey from four to two, reducing fuel burn and emissions per journey” (Ryanair Holdings PLC, 2009) Another characteristic of Ryanair is that they’re bookings are solely online and their passengers print out their own boarding cards.

This avoids the “middle man” and therefore keeps fares low for Ryanair customers. Young Aircraft Fleet Ryanair differs from other airlines because thier fleet is extremely young and are all the same type of aircraft.Their new Boeing 737-800 have only been in comission since 2005 after they retired their previous fleet the Boeing 737-200A. The young aircraft are fuel efficent because they do not have to be refueled as much.

The engines of the aircraft are quieter than the previous model which helps Ryanair comply with the noise reduction legislation. Analysis – external Opportunities and Threats Opportunities| Opportunity| Evidence / argument| New Destinations:| Ryanair have the opportunity to travel to more destinations to generate new markets.Ryanair currently have 153 destinations mostly in the EU but there is the opportunity to fly to new countries and cities. The EU is becoming larger and they could extend service to countries out with the EU. Morocco and Romania, both out with the EU, have recently been added as destinations. | Economic Climate:| The Economic Climate can favour Ryanair. If the economic climate is in a downturn then consumers may favour “no frills” cheap air travel rather than going down a more costly route of travelling with scheduled carrier airlines.

This can also mean that Ryanair can rise or lower their prices to suit because they will still remain cheaper than their competitors. | Control over smaller airports:| Some airports such as Glasgow Prestwick, Torp (Oslo), Treviso (Venice) and Gerona (Barcelona) cater primarily to Ryanair. Ryanair use this to their advantage. These airports depend solely on Ryanair flights, without them they could cease to exist. Ryanair use this power over these airports and local governments to maintain low costs and gain grants.

As these airports and local resorts develop Ryanair’s leverage increases. New Customer Bases:| More locations could be assessed not only if they are favourable as a destination but as they may serve a locality with a good customer base. By finding new customer bases e. g. Egypt.

Egypt has a population of around 80million. By opening a base in a highly populated area, this creates a whole new customer base which can generate Ryanair a brand new source of Income. | Threats| Threat| Evidence / argument| Fuel Consumption| Ryanair are dependant on the oil market. With oil being a finite resource Ryanair are very sensitive to changes to the fuel prices.If oil prices rise then Ryanair may have to raise prices, cut flights and routes and close down bases throughout Europe. | Price Changes affecting customers:| Customers are sensitive to changes in prices. The general public are always interested in getting a “bargain”. If Ryanair raise their prices then they may lose customers.

People who are looking for a “no frills” flight, expect to pay a “no frills” price. If Ryanair raise their prices then customers expect more from their flights, better service, better seats and more onboard facilities. Greater Air traffic control Charges (ATC charges)| ATC charges are : “Charges are fees paid by airlines for services and facilities provided by airports and Air Navigation Service Providers such as: Use of the runway (landing charges).

Use of the airport infrastructure (parking and boarding bridge charges). Use of the terminal building (passenger charges). Airport security (security charges). Protection of the environment (noise charges). Air traffic control (en route navigation and terminal charges). Other air navigation services (Meteorological and Aeronautical Information Services)” (IATA, 2010).

If these prices are increased then Ryanair may have to change some of their services, raise the cost of flights or cancel some of their routes. | Other Low- Cost airlines:| Ryanair’s main competitors are other low cost airlines such as EasyJet, BmiBaby. Jet2 and FlyBE. Ryanair need to make sure that they don’t cover the same routes as these airlines at a higher price. This can result in Ryanair losing out to their competitors.

All companies need to negotiate who has what airspace. | Terrorist Attacks:| After the tragedy of 9/11 in 2001 air travel suffered.The public were scared in case another event like this occurred. The attempted bombings on 10th August 2006 resulting in the arrest of 8 individuals and carry on luggage restrictions ever since; “As a result, Ryanair cancelled 279 flights in the days following the incident and refunded a total of €2. 7 million in fares to approximately 40,000 passengers.

In the days following the arrests, Ryanair also suffered reductions in bookings estimated to have resulted in the loss of approximately €1. 9 million of additional revenue. ” (Ryanair Holdings PLC, 2009).

Although after the failed attack on Glasgow Airport in June 2007 there was no adverse affect on Ryanair bookings, there is always the treat of another major disaster happening resulting in a decline of air travel. | PESTEL (list the three most important factors, and any evidence / argument, in each box) Political Factors| Economic Factors| Government Regulation: Government regulation on air travel can vary from country to country; this can cause difficulties for Ryanair. Ryanair need to come to agreements with each separate government. The most important regulation comes from local governments, which own and manage the airports in their region and therefore control key bottlenecks to airport services: access to boarding gates and runways. Most local airport commissions allocate gates without a formal market mechanism, such as a bidding process; often they require proof that the airline would operate in the best interest of the public.

” (Gowrisankaran, 2002)| Recession: The recession affects air travel greatly. It can provide both a positive or a negative effect. The public have less disposable income during a recession.Ryanair suffered a large loss of €102m in Q3 2009 but in Q3 2010 they have only lost €11m. O’Leary stated;“Our Q3 loss of €11m is disappointing although better than expected, and a significant improvement on last year’s Q3. These numbers are distorted by a 37% fall in fuel costs which offset a 12% decline in average fares.

” (O’Leary, 2010)When the recession first started people were scared of spending unnessarily. As the recession matured people perfered to travel Low-cost compared to luxuary air travel| Employment: Ryanair provide employment either directly or indirectly at each destination.This gives them leverage over local and national governments.

Ryanair can provide employment by hiring local people with local knowledge as cabin crew on flights to and from their home destination. Ryanair can also provide indirect employment such as more airport staff on the routes Ryanair travel. If tourism increases in one of their destinations then there could be chances for employment that might not of came about if Ryanair did not travel to the area. | Taxes: If government income taxes decrease people will have more money in which they can spend on air travel. Vice versa if income taxes increase.Both of these outcomes can favour Ryanair. If taxes increase, consumers who regularly travel with carriers such as British Airways.

Will begin to favour cheaper air travel with Ryanair. If they are paying less for flights then people are more inclined to travel more, instead of taking one expensive trip with BA then customers could take several city breaks with Ryanair. | Labour markets: The low cost airline has enabled commuting e. g. Polish Joiners and German doctors may come to work in the UK knowing they can get affordable flights home at the weekend or that their family can come out and visit them.This flexibility of labour markets has political ramifications. Unemployment and GDP can be affected by this roving workforce. | Fuel costs: Fuel costs are ever changing.

In the future, fuel costs can increase significantly due to the depletion of petroleum reserves. This can affect the price of Ryanair’s flights drastically, fares will increase to counteract the increase in price that Ryanair are paying for their fuel. Although Ryanair is yet to suffer from Fuel prices “Operatingexpenses declined from €769. 1 million in the first quarter of 2009 to €620. 0 million in the first quarter of 2010,due rimarily to a 42% decrease in fuel costs” (Ryanair Holdings PLC, 2009)| Societal Factors| Technological Factors| Destination preference: The general public are hard to predict on what their holiday preferences are each year. With Global warming affecting Britain, which sometimes results in warmer summers. Consumers prefer to save money by staying in the UK rather than going further afield, if they can get the same weather back at home.

| Developing new aircrafts – Boeing can bring out a new fleet of aircraft which can be developed to be lighter and stronger which can be manufactured for less than previous aircraft.This can discontinue the production of Boeing 737’s which is Ryanair’s only type of aircraft. Making that Boeing 737’s upkeep more expensive because new parts are no longer being manufactured. | International Events: Sporting and cultural events affect air travel. E. g. World Cup, Olympic games. Air travel can be influenced by cultural events.

More people wanting to attend the event or visiting the area where the event is held. This can Favour Ryanair E. g.

2010 Olympic Games in London. Ryanair can increase the amount of flights to and from London during these events. New Fuel – As oil is a finite resource scientists are constantly trying to develop an effective substitute. If a renewable substitute is created then Ryanair do not have to rely on oil and the ever changing prices of the fuel. On one had the new fuel may be cheaper, allowing Ryanair to keep their prices steadily low but on the other the fuel may be more expensive because it is in high demand resulting in Ryanair having to raise their prices, angering customers. | Less/more need for Business travel: Due to advancements in technology, business travel may not be required as much. E-Learning decreases the need for out of office training.Conference calls make communicating from different parts of the world easier than it used to be.

Many businesses still like to work in a conventional way by visiting the countries they are associated with. | New ICT technology – With new ITC technology booking procedures can be made easier, which could make the company completely paperless. Bookings taken solely online when the customer only has to put in their passport number, which can be scanned when at the airport, showing that they are booked on the flight. Making boarding procedures faster than having to queue for cabin crew to check your piece of aper. | Environmental Factors| Legal Factors| Global Warming: With everyone constantly worrying about Global warming and damage to the environment. Ryanair have to prove that they are doing their bit to help the environment.

Ryanair make sure that they are maintaining a good standard at sustaining the environment, even when it comes to the dispose of their “waste”; “Normal waste is removed in accordance with the Environmental Protection Act of 1996 and Duty of Care Waste Regulations. For special waste removal, Ryanair operates under the Special Waste Regulations 1998. ” (Ryanair Holdings, 2009, p. 4)| Aviation Laws: There are many aviation laws that Ryanair have to comply by. An example is noise emissions; “Ryanair is subject to international, national and, in some cases, local noise regulation standards.

” (Ryanair Holdings, 2009, p. 34)Currently Ryanair comply with these regulations. The Federal Aviation Administration (FAA) ask Ryanair to periodically check their aircraft and fixtures. To date these checks have not affected flight schedules but if more thorough checks are to be carried out. In the future it could affect Ryanair flights| Reduce CO2 emissions: By having the engine and aircraft technology such as Winglets.Ryanair achieve the status of “Europe’s Greenest airline”. During 2012 the airline industry will be included in the “EU Emissions Trading Scheme”. This is when the company will have an allowance of CO2 emission and if they wish to go over the allowance they will have to buy more allowance.

It is predicted that this scheme will affect the European airline industry negatively. Ryanair have stated that; “Ryanair takes its environmental responsibilities seriously and intends to continue to improve its environmental efficiency and to minimize emissions. ” (Ryanair Holdings, 2009, p. 5)| Human Relations Laws: New laws enforced such as increasing minimum wage.

Ryanair may be affected by this. They may have to pay staff more, increase staff breaks and provide staff with more paid holiday leave. Although this could help Ryanair’s image, if staff are being paid more, then they may feel more valued. Resulting in better customer service and motivation to excel at their work.

| Emissions per person: Ryanair are currently one of the best airlines for lowest emissions per passenger. This is due to the high seat occupancy of each flight.

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