RYANAIR: LOW PRICE, HIGH PROFITS – BUT INCREASING COMPETITION
I. Background
- Ryanair was Europe's original low fares airline and is still Europe's largest low fares
carrier. In the current year Ryanair will carry 50m passengers on 563 low fare routes
across 26 European countries. We have 23 European bases and by the end of March
2008 Ryanair will operate a fleet of 163 new Boeing 737-800 aircraft with firm orders
for a further 99 new aircraft (all net of planned disposals), which will be delivered over
the next 5 years. Ryanair currently employs a team of 4,800 people, comprising over 25
different nationalities.
- The chart of Ryanair passengers from 1985 to 2005:
35000
30000
25000
20000
15000
10000
5000
0
85
87
89
91
93
95
97
99
01
03
05
19
19
19
19
19
19
19
19
20
20
20
passengers (thousand)
II. Ryanair strategy
1. Strategy: Low-price competitive strategies: offer the lowest fares of any airline operating
in Europe.
-
2. Segmentation
- Focus on customers who have more low income and go by air plane with no-business
purpose.
- Customers who are sensitive with price and no need more services
3. Product features
analysis some information from the table:
+ Branding:
+ Service:
+ seating:
+ distribution
+ advertising:
+ fare:
4. Reduce firm’s cost activities
- booking ……
- owns rather than leases its airplanes can allow some standardization of maintenance
activities
- concentrates
- Competing service
-
III. Competitors
IV. The lesson from Ryanair
- Lesson: Use low cost strategy when the firms can (from text book),
- Threats in the future: competition, … (in the case)