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Strategic capabilities of Ryanair
Strategic capabilities of Ryanair
Ryanair business model
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Ryanair set precedence when it modeled itself after the U.S. low cost air carrier
Southwest. Ryanair’s main focus is on serving the large leisure market between Ireland and the
UK, however, they experienced rapid growth and expanded to approximately 50 secondary airports over a variety of countries. The airline’s main areas of operations are in Dublin and
Stansted, however, their use of secondary airports expands their territory, making them the largest low-cost carrier in Europe. The purpose of this case study is to determine if congestion and capacity are issues at any of Ryanair’s secondary airports. Furthermore, the cause and effect, what generates demand, the historical growth trend, Federal Aviation Administration
(FAA) predicted growth
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However, Ryanair mostly bypasses these issues because the secondary airports they selected to operate out of have little to no congestion and a surplus of capacity (Gellar, Folan & Shain,
2013).
RYANAIR CASE STUDY
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The issue of over-congestion and limited capacity is not a new topic. This is why
Ryanair’s CEO, Michael O’Leary, refuses to operate in our out of primary airports. The secondary airports offer his airline sustainability of its low cost model and simplicity when it comes to check-in, takeoff and landing (“The impact,” 2003). Because the congestion at these secondary airports is minimal, Ryanair flights are always expected to take off and land on time.
Their aircraft do not have to wait in long takeoff lines to get their passengers from one destination to the next (Gossling & Upham, 2012).
Secondary airports are not usually situated in major metropolitan areas. This, however, is not a drawback for Ryanair, as these airports can then offer more capacity to the low fare carriers that operate out of them. This is one of the primary reasons that Ryanair is able to negotiate low operating costs, landing charges and passenger and luggage fees, which in turns enables
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These new aircraft will help Ryanair’s point-to-point destinations accommodate all predicted growth. Ryanair also plans to push forward with opening new point- to-point operating destinations at secondary airports in Russia and the Middle East. The airline’s
RYANAIR CASE STUDY solution for congestion and capacity is to continue operating out of their secondary airports and
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not enter into any contracts to operate at primary airports, like London Heathrow, even though there is a demand from consumers and the airports for this to happen (O’Halloran, 2015).
Ryanair’s successes can attribute greatly to their business model. This case study has shown that, though congestion and limited capacity issues are prevalent issues at today’s primary airports, Ryanair is able to bypass those concerns by choosing to operate out of secondary airports. Ryanair meets their consumer demands be expanding, both their aircraft fleet and the airports in which they operate. The airline’s growth is predicted to continue, even though Brexit has financially disturbed the markets. Ryanair will need to take action to offset Brexit, but for the time being, capacity and congestion will not be factors that stop the airline from continual success and
The airline industry has long attempted to segment the air travel market in order to effectively target its constituents. The classic airline model consists of First Class, Business Class and Economy, and the demographics that make up the classes have both similarities and differences to the other classes. For instance, there may be similarities between business class travellers on a particular flight, but they will not all be travelling for the same reason. An almost-universal characteristic of air travel is that customers do not fly for the sake of flying; the destination is the important element and the travel is a by-product, a means-to-an-end that involves the necessity of an aircraft that gets the customer from point A to point B. Because the reasons can differ greatly in the motivations for a customer wanting to fly, it can be difficult to divide the market into discrete segments, that is, there is always going to be overlap in the preferences and characteristics of any given segment. With that in mind, the commonalities that are shared between the clientele that make up the respective classes can easily withstand analysis.
Focus on underserved markets and large metropolitan areas, utilizing underutilized airports with less congestion adding to the ability to remain on the ground in less time.
A switch from premium overnight services to lower – margin deferred services and ground delivery services is an advantage to Airborne Express. With existing assets including trucks, tracking systems, regional hubs and sorting facilities, they only need minor initial investments to develop fully these kinds of services. They should use these assets wisely and effectively.
The company, Jet2, have many strengths to its name. One such asset is, as mentioned above, the six UK based airports from which it flies from. These six locations, Belfast International, Newcastle, Leeds/Bradford, Manchester Blackpool and (from 3 April this year) Edinburgh, are very well spread throughout the UK. Being a UK based firm, it is important for a firm like Jet2 to have locations throughout the UK, so that potential customers can use their services, and this is possible due to the accessibility of each of their base airports.
Moreover the company provides a frequent point-to-point service which allows them to avoid costs of services for connecting passengers, costs of baggage transfer and costs of transit passenger assistance.
Ryanair have Invested seventeen billion euro on its fleet replacement and expansion programme. The move from the Boeing aircraft 737200 to the 737800 next generations reduces fuel consumption and CO2 emissions per passenger kilometre by 45 per cent. Ryanair currently operate the youngest most fuel efficient aircraft fleet of one hundred and sixty six Boeing aircrafts, at an average age of two and a half years compared to the world average of eleven years. Future plans provide for acquisition of a future one hundred and forty brand new aircrafts. From Ryanair’s initiatives and substantial investment in new aircrafts has led them to an overall reduction in fuel consumption and emissions of over f...
Lufthansa, one of the world’s biggest airliners, has divisions handing maintenance, catering and air cargo. Since the World War II the airline industry has never earned its cost of capital over the business cycle (Hitt, 2010). Most of the airline companies have either filed for bankruptcy or are being bailed out by their government. Lufthansa had also gone through these tough times, but had resurfaced to become one of the worlds most profitable airline company. The company adapted a transnational strategy, seeking to achieve both global efficiency and local responsiveness. Lufthansa’s monopoly in Germany came to a halt with the creating of the European Union. All the EU member countries become one regional and therefore the European competition became, an increasingly a local competition. Lufthansa created its regional Hubs, to cater for its domestic market. But the availability of substitutes such as bullet trains and the Euro tunnel, made is necessary for Lufthansa to create short traveling time, customizations and quality standards in the region to achieve a competitive advantage. But outside the EU there are no substitute to air travels as such all the flag carriers are competing in the market, the international airline industry is a highly competitive environment. A new force has also emerged in the world of air travel, in the form of three Gulf airlines with jumbo ambitions. Within a decade Dubai’s Emirates, Qatar Airways and Eithad from Abu Dhabi have between them carried the capacity of two hundred million passengers (Micheal, 2010). The company had to go global and therefore adopted the international corporate-level strategy, where Lufthansa will ope...
The airline industry is a costly business to partake in especially due to the cost of fuel and technology needed to operate the airplane. With EasyJet internationalizing into Africa, it had the notion of facing new competitors, however, with the finances (see appendix) it possesses and the famous identity of its brand, made the threat of being a new entry within the Nigerian market low. However, a big threat would be if local Nigerian airlines were to reduce its prices then EasyJet might be at risk because the local airlines have the necessary equipment and knowledge to operate in its region.
Airports can be considered as important national resources of most countries in the world. The main responsibility of an airport is in transportation of people and goods and in internal and global business. They are where the nation’s aviation system connects with other modes of transportation and where state responsibility for managing and regulating air traffic operations intersects with the role of governments that own and operate most airports. However, most major airports are owned and operated by the private sectors. This is due to several reasons such as to improve efficiency and economic performance, be more competitive as well as to maximize the community’s return from the airport assets in which public enterprise found out to be less efficient in term of its production and management.
Though these record numbers show a continued progression plans for increasing capacity have been delayed attending to ‘‘further consideration on environmental impacts’’ (Powley, 2016, online). Heathrow is operating at near-full capacity on its two runways (Powley, 2016). But the rise in passenger numbers was made possible by airlines’ increased use of large capacity aircraft such the Airbus A380 superjumbo (which Virgin Airlines is also contemplating adding to their fleet). For example, by the end of 2015, there were more than 20 daily A380 flights into Heathrow operated by eight carriers (Powley, 2016). VIRGIN ATLANTC: LEVERAGES VALUE OVER LONDON BASE.
Ryanair makes much of the fact that EasyJet's average fares are higher and its average punctuality is consistently lower. This is mainly due to the different range of airports used and Ryanair routinely scheduling flights to take thirty minutes longer than required. As of September 2005, Ryanair flies more passengers, but EasyJet has a higher turnover, leading both of them to claim to be "Europe's number one low cost airline".
Several large scale, interrelated conditions have affected the airline industry over the past several years in such a manner that every carrier has had to respond in order to remain viable and competitive.
Airline of choice: Remain the top choice for international flights for premium customers as well a...
We can also identify the weaknesses of Ryanair in accordance to scientific management. From what we have previously discussed in the essay we now know that there are a few points from Douglas McGregor’s theory X that can relate to scientific management. However these key points also have influences on Ryanair, which can come across as
Political · The expansion of the European Union (EU)· BAA’s proposed Stanstead expansion· CAA’s new regulations on airport charges