Business Strategy on Ryan Air Case Study Example | Topics and Well Written Essays - 3000 words

Business Strategy on Ryan Air - Case Study Example Ryan air is one of Europe's largest low-cost carriers and one of the most successful, operating on 262 routes to 22 countries. Its focus is on providing low cost, efficient, frequent connections and consequently offering no other frills or supporting services on their flights. The changes in the nature of the barriers to entry in the mid - 1980s with the deregulation of the airline industry , as well as the adoption of a strategy which was noticeably different from that pursued by the market leader at the time (Aer Lingus) was a credible means for Ryan air to gain entry into the market. O'Leary, the company's Chief Executive Office, adopted the Southwest Airlines model, established by Herb Kelleher which adhered to the following principles: fly one type of plane to keep down engineering costs every year; turn around aircraft as quickly as possible; and concentrate on selling seats by avoiding loyalty schemes or air miles. The airline took several other steps to restructure its business model. It eliminated business class to concentrate on economy class and leisure customers. It stopped serving free meals and beverages on flights - a move which allowed the airline to reduce the number of attendants on each flight from five to two. It also eliminated seat assignments to speed up boarding and stopped carrying cargo, which reduced aircraft turnaround times from 45 minutes to 25 minutes. There has been a revolutionary increase in the number of low-cost airline which are otherwise called the budget airlines in the aviation industry over the last few years. The budget airlines are usually operators who provide low-cost travel options for the passengers. The budget airlines try and cut the indirect costs to the maximum possible extent. Passengers are not offered wet towels, meals etc. Sometimes it may even happen that they do not even offer water to the passengers flying the budget airlines [(Phillip), 2002]. Internal analysis Revenue Generation is one of the most important aspects that Budget airlines give more importance, to the extent that most of the budget airlines have a position that is unique to this particular industry - "Chief Revenue Officer" (AIR DECCAN) whose sole responsibility is to focus on revenue generation from all possible sources. Unlike the scheduled airlines, they sell the maximum possible space they can. They sell space on the aircrafts in order to give advertisements. They even sell the space on the rear side of the boarding passes (Palanikumar). However, despite of the increase of passengers, the company is not so good in managing cost that the company has lose its money. A new management team is brought in to sort it out and re-launch as a "low fares or no frills" airline, closely modelling the Southwest Airlines model in the U.S. And in 1994, Ryan air bought its first Boeing 737 aircraft which carried over 1.5 million passengers. In 1995, Ryan air is the biggest passenger carrier on Dublin-London route, the largest Irish airline on every route being operate and carried 2.25 million passengers in the year (ivythesis). The main areas which have been the focus of the airline's concentration on costs have been: - Fleet commonality (operates only one type of aircraft, Boeing 737- 200s) - Contracting out of services