Ryan Air Company Analysis

Introduction

Ryan Air was launched in 1985 by the Ryan family with a 15-seat aircraft. Subsequently, in 1986, the company launched its route to London from Dubai to compete with Aer Lingus and Britsih Airways, the dominant airline. Ryan Air offered lower traveling prices, and as a result, in 1995, Ryan Air overtook Aer Lingus and Britsih Airways to become the most prominent global schedule route carrier in Europe (BANSAL, 2020). Also, after the 2008 financial and economic crisis, there was a severe effect on the financial sector, and that’s one of the reasons Ryan Air maintained the low fare cost, hence, providing quality services at a lower price to the broader public.

The organization has continued advancing to offer its customers the best services. According to Cook and Billig (2023), on 27th August 2014, Ryan Air launched a new “Business Plus” product for corporate travelers. The “Business Plus” offers a range of benefits, including ticket flexibility shifts, fast-track security, checked-in allowance for 20kg baggage, and prior boarding. The organization’s Business Plus provision joins a sequence of service improvement and has also introduced the “Always Getting Better” programme.

Nevertheless, the sustainability of the company’s competitive benefits accomplished in costs has risky working conditions for the employees and some effects on the services provided to the customers. The organization is a model that focuses on achieving the benefits of short-term economic finance and forgetting to build value to the environmental and social long-term dimensions.

Therefore, from the case study, Ryan Air faces two primary issues, including the challenge of accomplishing sustainability of its long-term competitive advantage and the problem of continuing to provide better value to the consumers.

Analysis of Strategic and Financial Factors

After several years of endless growth, Ryan Air has continued to report low profits, and there is a projection of a continuous fall in profits in the coming years. However, the number of customers continues to increase in the company. According to Padberg (2017), the stagnant growth in Ryan Air’s profits is blamed on reducing traveling fares because of the Brexit uncertainty since the company has to wake up and stimulate by providing good promotions. Also, Walder (2013) on the other hand indicates that apart from the low fare prices that the organization charges, its shrink in profit is also a result of the rise in fuel prices by approximately over 28% and the rise in the costs of staff (Atrill, 2019).

Key Financial Figures

Source: 2019 Ryan Air Financial Report

Remarkably, the most critical reason for the reduced profits of Ryan Air in 2019 was the Boeing

737 Max delays that came as a result of the Ethiopian Airline incident. According to Kurnaz et al. (2023), Boeing 737 Max was crushed in 2019, resulting in 157 deaths; hence, leading to the company carrying only 142 million passengers, approximately 6% less than the organization projected in 2019.

With only about 7% development in the operating revenue and about 20% growth in the expenses of operation, the organization’s profits shrunk faster, and its earnings dropped from €1 82 Billion in 2018 to €1,07 Billion in 2019.

Alternatives to Solve the Primary Problems of Ryan Air

The main problem at Ryan Air is accomplishing sustainability of its long-term competitive advantage and continuing to provide better value to the consumers. The issue can be addressed using alternative ways to help the organization operate well and make the desired profits.

First, the organization should stay ahead of the competitors by utilizing the tactic of one consumer focus. This implies that Ryan Air needs to pay attention to just a few or one customer segment. They should provide a single benefit and offer essential products that benefit customers more than the competitors. Furthermore, the company must back up its low prices with some operations that are superefficient to keep the costs down. Aldi, a Trader Joe’s in the U.S., has utilized the “consumer focus” method and has thrilled in the competitive market in German. According to Taneja (2022), the Aldi outlet is small and stores about 15,000-square-foot with approximately 700 commodities only, 95% of which are store brands. On the other hand, there are about 25,000 and above products that traditional supermarkets carry. The organization sells more of every product than its competitors.

Recommended Strategy and Solution

The Strategies that Ryan Air should embrace to maintain or improve its competitiveness include the following;

First, the organization should continue to use the ‘red ocean strategy.’ The ‘red ocean strategy’ is where an organization steals clients from different market segments (Cook & Billig, 2023). In the case of Ryan Air, it should continue to influence customers from the significant airlines. The organization can also implement this method by influencing customers from the segment of business class of different airlines. When Ryan Air embraces this method, it can show that the differentiated marketing strategy is valuable when it comes to competition.

Secondly, air travel passengers keep growing; most are from middle-income groups. Therefore, Ryan Air needs to boost its consumer relationship by designing a sound service system for customers that can still provide low-cost air travel and offer training services to the employees on how to monitor and deal with consumers, including their needs and values. In short, rather than believing that offering low cost is the only way to beat consumers, the organization should also provide excellent services. Generally, customers can remain loyal even with an increased fare cost when there are good services.

References

Atrill, P. (2019). Financial management for decision makers. Pearson UK.

BANSAL, H. (2020). Aviation explained: A basic introduction to civil aviation. HIMANSHU BANSAL.

Cook, G. N., & Billig, B. (2023). Airline operations and management: A management textbook. Taylor & Francis.

Henry, A. (2021). Understanding strategic management. Oxford University Press.

Kurnaz, S., Rodrigues, A., & Bowyer, D. (2023). Challenges and opportunities for aviation stakeholders in a post-pandemic world. IGI Global.

Padberg, T. (2017). Financial statement analysis of airlines. BoD – Books on Demand.

Taneja, N. K. (2022). Airimagination: Extending the airline business boundaries. Taylor & Francis.

Walder, J. (2013). A strategic analysis of Ryanair. GRIN Verlag.