Ryanair. From Europe to United States
1. The business profile
1.1. Description of our business
The company is already No.1 low cost carrier in the Europe so it is beneficial to broaden the Ryanairs horizon world wide. Our services will be cheap transatlantic flights to United States of America from London and Dublin airports to New York airport with Ryanair airlines.
1.2 Targeted market and customers
In the low cost carrier market our customers will be mostly young and middle-aged people who want to go to America very cheap and consider as a goal not the journey and its comfort, but the destination.
1.3. Growth trends in this business
The low cost carrier market is growing. There are more no-thrills long-haul flights operated all over the world. Other low cost carriers already started to offer transatlantic flights for example Aer Lingus, Zoom airlines for about 100 euro per journey. Australias Jetstar has been operating flights from Australia and New Zealand to Honolulu, Japan, Vietnam, Thailand and Malaysia. With the release of the new planes they are expecting to expand their flights to continental Europe and United States. AirAsia X started its first long-haul flights to London with a one way ticket that costs about 180 euro.
1.4. Pricing power
Being the most profitable airline in Europe, Ryanair will be able to launch the new service to the market, by buying long-haul aircrafts from struggling competitors. That will state the beginning of Ryanairs growth world wide. The economy class will be very cheap, compared with other rivals who offer transatlantic flights, though the business class will be very high-priced, because there will always be people who are ready to pay extra for a luxurious journey. With these money-making business customers and cut-rate economy class Ryanair will be able to broaden its pricing power. With its Price Elasticity of Demand and a great financial performance Rynair will be able to increase the profits more than ever.
2. The company overview
2.1. Our mission for Ryanair
Our mission for Ryanair is to come up with a new business idea that would make Ryanair not only No. 1 low cost carrier in the Europe but also will help to expand world-wide, to other continents and become No.1 cheap airlines in all over the world by remaining No. 1 for Customer Service with unbeatable prices and punctuality .
2.2. Company ownership
Ryanair Holdings plc is an Irish low cost carrier that is owned by shareholders. KA dar????
2.3. Company history
Ryanair is a company that was founded in the year 1985. Ryanair started with 5 thousand customers in the first year, while now it embrace even more than 72 millions customer per year. Ryanair operates more than 1,400 flights per day from 44 bases and more than 1100 low fare routes across 27 countries, connecting 160 destinations. In the year 2010 Ryanairs traffic grew by 10%.
2.4. Company location and facilities
Ryanair has 42 bases and offers 158 destinations all around the Europe. Ryanair has agreements with the DAA, the Irish government authority charged with operating Dublin Airport, to lease ticket counters and other space at the passenger and cargo terminal facilities at Dublin Airport. The airport office facilities used by Ryanair at London (Stansted) are leased from the airport authority; similar facilities at each of the other airports Ryanair serves are provided by Servisair plc or other service providers(copinta ish interneto)
3. Products and services
3.1. Product and service description
Ryanair is the low cost carrier that offers very cheap flights all over the Europe. It is the largest low cost carrier in the Europe and is No. 1 for Customer Service with unbeatable prices and punctuality. Ryanair offers more than 150 short-haul destinations in Europe for very low price. 3.2. Future products and services
As Ryanair is a company thats willing to remain at the top and to be in the centre of attention it is crucial to surface with many innovative ideas in order to implement this aspiration. As the new service we are offering to operate cheap long-haul transcontinental flights from London and Dublin to New York, it will expand Ryanairs horizon and raise the scope of the company. Moreover, it can be the groundwork for Ryanair to expand all around the world (starting from New York and later going wider into United States, Asia and Africa).
3.2. Competitive comparison
Following the companys vision having the largest amount of routes and the lowest fares of any European Airline without compromising their business model; outperforming every other carrier on all fronts including quality of service and also aspiring to uphold a high level of growth is the only way to differentiate well among the other competitors. As the low cost carrier industry is highly competitive, if the company wishes to be No. 1 in the market it has to offer wide range of services and very low cost. Competing with other companies there is a heavy pressure on prices, margins, and hence on profitability.
Ryanair has 247 aircrafts Boeing 737-800. As fleet commonality is one of the parts of Ryanairs cost reduction strategy, it does not have any other kind of aircrafts, thus saving money for maintenance, employees trainings and etc. Despite that our idea is to buy new airplanes in order to be able to offer the new service Transatlantic flights to US.
This idea will narrowly affect the strategy of the company and will request for expenditure, though in time it will pay off and return with huge yield. For reducing the expenses we offer to purchase the airplanes from struggling competitors.
4. Industry analysis
4.1. Market segmentation
We are using psychographic segmentation for our business idea. The consumers are divided according to their lifestyle, attitude, believes and character features, for example some of them would pay a lot of money for having a comfortable flight and all kinds of extra facilities during the trip, while others for example students would travel in any conditions as long they can travel as cheap as possible.
4.2. SWOT analysis of Ryanair
|Strengths: |Weaknesses: | |Very low price for tickets |Extra cost for extra services (magazines, food, drinks, baggage, | |A large selection of different directions |insurance and etc.) | |Punctuality |Bad quality of service | |Airplanes are fully well-stocked |No conjunctive flights | |New, economy, more ecological airplanes (it decrease running costs) |There are no offices or at least telephone centres in each country | |Was accepted as the best low-cost carrier in all around Europe |(thus Ryanair avoid payments for employees and various taxes) | | |Availability to buy a ticket only with a credit card (for lots of | | |people it is very uncomfortable) | | |Only in Europe | | |Strict Visa regulations to US and Russia | |Opportunities: |Threats: | |To establish conjunctive flights |Increase of fuel prices | |Transatlantic flights |Competitors consolidations to alliance | |More flights directions not only in Europe or to US but all around |Big penalties for controversial projects that Ryanair tend to hold | |the world (Africa, Asia) |The end of recession when people will start to travel for high costs| |To be the number one Low cost carrier company in all over the world | |
4.3. PESTEL analysis
¢ Vizas to Russia, America etc.
¢ Terrorism (some people are afraid of terrorism act and prefer to avoid travelling and stay home) Economic factors:
¢ High cost of fuel
¢ Currency fluctuation
¢ Financial crisis
¢ Immigration/emigration. Young people are travelling not only within Europe but also to other continents more and more (ERASMUS exchange programme, more opportunities to work or study abroad, visiting friends, relatives and etc.) ¢ Demographic trends. Talking about age, younger generations are much more likely to use carriers for their travels and are more enjoying the benefits to reach their destination for a cheap price without any services included in a ticket price. Despite the fact that new airplanes will be larger, still for elder people it will not be so comfortable. Technological factors:
¢ Internet has allowed the organisation to avoid lot of costs and it is one of the most important features of Ryanair because people are allowed to
buy tickets only online ¢ New discoveries and research
¢ Noise pollution
¢ Emission constraints set by the European Commission
¢ Legislation on working time regulation
4.4. Main competitors
Ryanairs main low-cost competitors are easyJet, Monarch Airlines, bmibaby, Centralwings, Air Berlin, Germanwings, Transavia, Jet2, SkyEurope, Vueling, Wizz Air, Flybe, Thomsonfly and TUIfly. We have highlighted the most important competitors easyJet and Aer Lingus. Both easyJet and Ryanair offer wide range of flights and very low costs while Air Lingus offers good quality (is not low cost carrier) but have broaden the range of destinations to US, Africa what is important for our new Ryanairs strategy.
EasyJet is the British airlines and were established in 1995 by the American airline Southwest Airlines model. The same model was used for establishing Ryanair. The main point of this model is fully well-stocked airplanes; fast during flights service (when airplane lands, stewardesses settle it for another flight quickly) and extra costs for extra services. Although the strategy of easyJet and Ryanair is very similar, there is a difference between choosing airports. EasyJet is more likely to chose bigger cities for landing where the service tax is higher but people are tend to chose better airports for comfort and that they can reach the city faster. Ryanair is using other strategy and flies only to the secondary importance airports that way saving money on the huge taxes of the airport. Due to these differences, easyJet describes Ryanair as a company which flies to nowhere while according to Ryanair easyJet is just the high cost airlines. The number of easyJet passengers has reached 45.2 millions in 2009. In addition to this, easyJet became the second low cost airline after Ryanair. Aer Lingus, the Irish airlines, was established in 1936.
The centre of the company is in Dublin. During the year 2007 the number of passengers was around 9,3 millions and the turnover reached 1,3 milliards euros. It is Interesting that 29,4 % of Aer Lingus stocks belongs to Ryanair. The main factor that keeps Aer Lingus the strong competitor is that they already offer transatlantic flights to North United States and to Africa. At the moment Aer Lingus uses 30 Airbus A320-214 airplanes for flights in Europe and to Africa, 6 Airbus A321-211 only in Europe, 3 Airbus A330-220 and 5 Airbus A330-300 to United States. It uses the main bigger airports (not the second importance like Ryanair). The cities in US that Aer Lingus flights to are Boston, Chicago, New York and Orlando.
5. Strategy and implementation
5.1. Marketing strategy
Ryanair has a very efficient low cost strategic capability maintaining their position as Europes leading low-fares airline, operating frequent point to point flights on short-haul flights, mainly out of regional and secondary airports so this idea will change some points of their strategy. Although, we will be using the same strategy that Ryanair has been using: the Porters generic strategy where the main focus is on the cost leadership. Just the fleet commonality will have to change due to the fact that Ryanair will purchase new aircrafts to be able to implement the plan of flying to US. Also they will offer long-haul flight, but still it will be only from London and Dublin to New York, that is one of the shortest possible ways between two continents.
5.2. Pricing strategy
It is essential that our business idea would meet the needs and expectations of the consumer. Moreover it can not dispute with the companys view (vision, mission and goals) and it has to bring benefit to the company. For that reason it is very important to set the effective price that would produce profit to the company and also hold Ryanairs position of being No.1 cheapest airlines.
5.3. Promotion strategy
We will mainly depend on Ryanairs website in order to reach new and old customers and to promote our new business idea that will change one belief of the customers that you can travel cheap only to the destinations, no one is interested in. That will ask some changes in the promotion section. Firstly, Ryanair will have to focus more attention on the advertising, because in the beginning the new product is always unclear and confusing for the costumers. As Ryanair is the company that does not impose many finance to the advertising, their form of advertising is very well considered and it creates an extra public interest in the company that costs nothing. Ryanair also has a group in world-wide popular social website Facebook with 71,585 fans where they can share information and news or discuss about the current or future routes. This is a good example how to raise popularity of the company and create awareness of the new products or services, not by investing fortunes to the advertising budget.
5.4. Human resource management strategy
Now Ryanair has over 8000 employees. When the organisation is creating its image it is necessary not to forget the personnel. It would be very wise for Ryanair to pay more attention to its staff. Not only the public image of the company would get better, but also the employees would respond about the organization more positively and would be impelled to take care of the customer more attentive.
For our business idea Ryanair will need more people in its alongside. The needs of our business human resources will be best met by operating with contract workers who will work full time. Our business idea offers Ryanair to operate 3 flights to New York per week, in the beginning. After some time, if the demand will be higher the number of flights could be expanded.
5.5. Strategic Business Unit (SBU) analysis A strategic business unit is a part of an organization for which there is a distinct external market for goods or services that is different from other business units. In this case we have chosen United States as our new SBU.