Ryanair airlines low fare concept was conceived by three Irish businessmen in 1984 who wanted to break up the duopoly of the major airlines between Ireland and England. The strategy was simple in nature; offer lower prices than any competitor on the same route. Ryanair began operations in 1985 with a single 15 seat turboprop aircraft operating one route between Waterford, Ireland to London, England. The fare was only €99 ($138), less than 50% of the two competitors at the time. Ryanair carried 5000 passengers during the first year. In 2012, the airline carried more than 79 million passengers. Ryanair has demonstrated consistent growth and profit with the exception of 1991 and 2001(Ryanair, 2013). Ryanair was founded with the intent of breaking up the air travel duopoly held by British Airways and Aer Lingus at the time (Ryanair, 2013). There isn’t a doubt that the goal was accomplished and continues to evolve. However, a new competitor has entered the market and threatens their “lowest fare anywhere” motto. EasyJet, founded in 1995 (Spotlight falls on, 2013) has emerged as another low cost carrier (Wensveen, 2011) and is keeping competition fierce as they try to exceed Ryanair customer service by providing “speedy boarding”, more flexible fares, guaranteed seats and better food service (Low cost airlines, 2013). In my opinion, the marketing strategy used by Ryanair is working very well. In 2012, an increase of more than 13% in profit was announced by the airline (Ryanair, 2013). Ryanair is Europe’s leading low cost carrier and continues growth in the number of passengers, routes, and aircraft. An in-depth review of how Ryanair utilizes the four P’s of product, price, promotion and place (Wensveen, 2011) will yield a b... ... middle of paper ... ...te was opened in January 2000. Since that time, virtually all ticket counters have been closed and the internet accounts for a majority of the ticket sales. Ticket purchases made by any means other than the internet website incur additional fees to cover costs (Ryanair, 2013). Works Cited Wensveen, J. G. (2011). Air transportation. (7th edition). Burlington, VT: Ashgate Publishing Company. Ryanair. (n. d.). About us. (n. d.). Retrieved from http://www.ryanair.com MSN Money (2013 November 16). Spotlight falls on easyJet profits. Retrieved from http://money.uk.msn.com/news/spotlight-falls-on-easyjet-profits Thomas, N. (2013 November 16). Low-cost airlines have come a long way. But who will win the battle? Retrieved from http://www.telegraph.co.uk/finance/newsbysector/transport/10454522/Low-cost-airlines-have-come-a-long-way.-But-who-will-win-the-battle.html
The following value chain, which focuses on Spirit Airlines, is representative of most of the firms in the Ultra Low-Cost Airline industry. Spirit is the industry leader in many areas such as operational efficiencies/cost structure, aircraft fleet management, brand/network and growth. The firm, however, trails industry foes in areas such as customer service and operational reliability and recoverability. While most in this segment pursue the cost-leader competitive strategy, Spirit has demonstrated the most effective model to date – whether the model is the most sustainable remains to be seen.
Spirit addresses “price” by attempting to get the lowest possible fair for their potential customers. They have instituted their “unbundling” strategy that essentially removes all the conveniences that other airlines afford. Fees for checked bags, fees for flight changes, and no complementary in-flight beverages are just a few of the cost-trimming techniques employed. This strategy allows Spirit to come up with impossibly low fares. It also conforms to customers who just want to get from point A to point B without paying extra for services they don’t use. This strategy, coupled with an in-your-face “promotion” ploy, has made Spirit Airlines “the most profitable airline in the U.S.” (Nicas, 2012).
In 1978, deregulation removed government control over fares and domestic routes. A slew of new entrants entered the market, but within 10 years, all but one airline (America West), had failed and ceased to exist. With long-term growth estimates of 4 percent for air travel, it's attractive for new firms to service the demand. It was as simple as having enough capital to lease a plane and passengers willing to pay for a seat on the plane. In recent news, the story about an 18-yr British...
JetBlue's mission is "to bring humanity back to air travel". Its low-cost strategy is second-to-none, not even to Southwest. Utilizing Southwest as a model and benchmark early in Neeleman's career in the industry, he's managed to copy the Southwest model and expand upon it with his ability to find more innovative ways to cut costs along the organization's value-chain, while utilizing technology to increase productivity and further add to operational efficiencies. JetBlue's value chain demonstrates its ability to successfully compete in several key areas relative to the bases of competition within the industry and creates processes that focus on reducing costs, for the specific purpose of continuously creating value for its customers, i.e. fare pricing, customer service, routes served, flight schedules, types of aircraft, safety record and reputation, in-flight entertainment systems and frequent flyer programs.
As airline industry is a competitive marketplace, the airline companies use new technologies to improve their efficiency and decrease the overhead costs, including ‘advanced aircraft engine technology, IT solutions, and mobile technology’ (Cederholm 2014). The technology changes including technology improvement, new innovation and disruptive technology. The disruptive technology need to meet the characteristics of ‘simplicity, convenience, accessibility and affordability’ (Christensen 1995). The technology changes would bring both opportunities and threats to airline companies. Since Labour cost and fuel costs occupy 50% of most airlines operating cost (Groot 2014). Therefore, if new technologies could be disruptive in the two aspects, there will be important changes to current airline
Determining the marketing strategy for a massive airline, like United Airlines, is fairly difficult and extremely complex. Why? Because each city, season, route, and time of day will have some minor to major difference in how the airline presents itself. The difficulty in marketing and advertising for an airline is harder than other industries because each airline is selling thousands of different products. At first glance, United is selling flights, and that seems to encompass one product. However, selling a flight from Denver to Tokyo on a Monday is extremely different than selling a flight from Cleveland to Cincinnati on a Saturday night. The people flying that route, the cost, the airplane flow, the services provided, and the frequency/length of the flights all vary greatly from route to route, and the marketing strategies will fall in line with those difference. Although it would be impossible to determine an exact strategies, we will attempt to determine what United attempts to focus on, where they attempt to focus, and what their goals, both long and short ...
In a dysfunctional time for the airline industry, most airlines, especially major carriers, are adapting the concept of "doing less with more." One low-cost carrier, JetBlue, is changing the domestic aviation landscape in this regard and is defying the odds. Here is a company that has examined each marketing mix elements carefully, has adapted them to its customer’s needs, and is succeeding because of this approach.
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.
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
Ryanair is Europe’s largest low-fares, no-frills short-haul carrier. The organisation was founded in 1985 as a conventional airline but re-launched itself in 1990/1991 as a low-cost carrier, replicating American Southwest Airlines’ business model. Since then Ryanair has grown substantially and successfully. The company currently has 146 routes to 84 destinations in 16 countries, and carries more than 15 million customers annually. Ryanair aims to be Europe’s largest airline in 8 years (www.ryanair.com).
Product Strategy of the British Airways 1.1 Introduction to product strategy Product is the most important component in an organization. Without a product there is no place, no price, no promotion, and no business. Product is anything that can be offered to a market to satisfy a want or a need. It is the core ingredient of the marketing mix and is everything favorable and unfavorable, tangible and intangible received in the exchange of an idea, service or good (Kotler 11th edition, 2003). British Airways is a business offering service products, flights across destinations, in the transportation industry.
Airline revenue management implementation occurred shortly after deregulation. Since, the government discontinue its control over air routes and fares, airlines had to find a way to maintain and sustain their profitability. The first airline to introduced revenue management was none other than American Airlines. In 1985 and with pressure from low-cost carriers such as People Express, American airlines opted for a computerized approach to inventory allocation. This was the birth of revenue management in airline industry. Furthermore, American’s Sabre Airmax, the first RMS computerized system was born. In the first three years of its usage, American’s Sabre Airmax contributes with an extra $1.4 billion dollars of revenue.
When an airline does not have a sustainable competitive advantage, it does not have any properties of differences from there competitor and turns to a dangerous price war. The sustainable ...
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.
Studies and analyses regarding variations between companies performing higher or lower regarding their marketing practices has helped out to assure that a central textbook marketing strategy principle; which is to achieve success regarding that in the long term the products and services of a firm have to be well ‘positioned’ in the market. This paper aims to highlight the common formulations or ‘anatomies’ for strategies and the isolation of some of the most important inclusions that were thought to be really important in achieving success. Just to bring some “flesh on the bones”, this article examines the method through which theory is translated into practice.