For the exclusive use of J. SICINSKI Harvard Business School9-700-115 Rev. November 21, 2007 Dogfight over Europe: Ryanair (A) In April, 1986, the upstart Irish airline Ryanair announced that it….
Ryanair’s Strategic Issues and Suggestion
Ryanair (0704007 business ??? ) their strategy Ryanair’s strategy is to offer their services with cheap price. So their competitive advantage is “Cheaper price” than other rivals. To maintain cheaper price than other rivals, they faces several problems. facing problems There were several challenges faced by low cost carriers in Europe like rising aviation fuel costs, ensuring staff productivity and maintaining a large fleet for expansion. 1. There are lots of airways which is provide cheap fare of flight such as easyjet, Virgin express, Air Berlin and so on.
As minor airways use the same routine, minor airports get a purchasing power from the airlines competition. It is hard situation for Ryanair to minimize the fare. 2. The aviation turbine fuel costs fluctuated as economic and political situation changes and increasing demand of fuel. Also, the fuel should be paid by US dollars, so change of exchange rate affects to the fuel cost. Ryanair had not added surcharges like other airlines so that they could maintain lower fares.
But increasing fuel cost makes hard to maintain lower price for Ryanair. 3. As I mentioned earlier, there are so many airlines offer cheap fares in Europe. The major competitors of Ryanair were easyJet, bmibaby, Air Berlin, SkyEurope, Wizz Air and Aer Lingus. Also, there were other low cost substitutes like train and tram services in Europe. 4. Ryanair want to expand their business in the European continent as it was becoming popular tourist destination. Also it is planning to expand its network to North Africa.
It requires more aircraft, human resources, and agreements with airport authorities and governments. But the incidents of terrorism in UK and Europe, requirements from airport authorities and governments is hard for them. providing solutions 1. As there are quite lots of airlines which offer low fare of flight, they can be united and make a union of lower fare flight. Then they can have a purchasing power to local airports. 2. When the CEO judges the fuel cost goes up and thinks the time of low cost of fuel, CEO can make a long term contract with oil supplier.
At this strategy, CEO’s judgement is really important. Also, the company can do Forward Trading of oil. 3. Customers choose some airlines by fare and service. As the automatic devices are developed fast, they can reduce the cost by replacing from human resources to automatic devices. But the part of offering services, employees should be focused. 4. Do negotiation with the countries such as North Africa, US etc , then try to be liberalization. After the negotiation, business expansion will be easier.