MGT-314.
15
Case Study on Ryanair
SUBMITTED BY: GROUP-6
NAME ID
SAILA ANJUMAN 1921751030
ISRAT JAHAN AMIN 1922141630
SHOSHI
SHAHADAT HOSSAIN 1921114030
BIJOY
LAMISA HUMAYRA 1922210630
MD. EMON AHMED 1931242030
1. What were the impacts of deregulation on the European airline industry?
Ans: The deregulation trend ensures that we will have a more desirable and
safer airline business in the future. Unfortunately, the move toward
deregulation has also had some negative consequences. The impact of
deregulation on the airline sector was significant, and numerous changes
occurred due to the movement. The barricade to entry into the market was
dramatically lowered, resulting in new competitors entering the industry
without experiencing significant difficulty. Increasing competition made it
more difficult for the incumbent airlines to survive, allowing passengers to
travel on more routes.
Flight passengers have increased to 2.3 million since deregulation, up from
994,000 in the years before deregulation. According to industry estimates,
fares have fallen by an estimated 37 percent ex-Dublin and 42 percent ex-
London in real terms. The earnings statistics of Aer Lingus, the market leader at
the time of the regulations, demonstrated that protection allowed employees
to gain economic rents. In response to increased competition, a two-tiered
structure was implemented. The increased competition in the aviation
business leads to higher productivity across the board, resulting in lower costs,
higher capacity utilization, and greater efficiency.
In addition, compensation grew as a result of the deregulation movement, and
airfares were reduced by 40 percent, which had a beneficial influence on
passengers. As a result of this new method, airlines were forced to choose
their planes based on the number of passengers. The airline began to reap the
benefits of realizing economies of scale, resulting in cost savings. There was a
clear outcome as a result of the deregulation of the market. The independence
granted to airlines provided them the ability to choose their network on their
terms and the opportunity to add new routes. Low-cost carriers, in particular,
took full advantage of the situation, beginning to serve routes between
secondary airports and international hubs in the early 2000s.
Furthermore, as a result of this change, travelers now have a more fantastic
range of transfer points, making it more accessible and better for the
customer. At the same time, it enhanced competition in the airline sector
between networks and competition in the airport itself. Because of the
implications of deregulation, European countries have adopted a lower-cost
strategy, which has resulted in them pricing their tickets at a lower rate. It also
aided the previous flag carriers in their efforts to improve their overall
efficiency. The most positive result of deregulation has to be reduced accidents
and plane crashes, particularly in commercial aviation.
The deregulation of the airline industry removed limits on where carriers might
travel. Airlines implemented a hub-and-spoke system to increase their
efficiency, which relied on a small number of big airports as primary linking
points. This method optimized aircraft usage boosted passenger loads, and
allowed more aircraft to remain in the air. Deregulation has resulted in
obstacles to entry into the aviation business for a possible new airline. This has
significantly reduced many new airlines entering the market and increasing
competition.
2. Discuss the business & revenue model of Ryanair?
Ans: Ryanair Airlines' main business strategy is to provide customers with the
cheapest annual transportation costs. Ryanair's basic business strategies are:
To compensate for fuel fluctuations, most airlines charge their
customers "Carrier imposed fees" (including fuel surcharge costs).
Ryanair Airlines avoids this expense in order to keep ticket rates as low
as possible.
Customers are notified as soon as possible if there is a flight delay due to
any reason. In addition, they offer alterations to consumers for a
standard charge.
In the event of a flight cancellation, Ryanair offers a rapid refund to its
passengers.
Ryanair Airlines prioritizes lowering flight delays and cancellations, as
well as maintaining faster check-in times.
Customers of Ryanair can check the departure schedule online and print
their boarding passes to save time and make the procedure smoother.
Although being a low-cost airline, Ryanair Airlines makes its money by charging
extra fees to their customers and ticket prices. However, Ryanair allows its
customers the option of choosing whatever services they want to pay for. To
minimize turnaround time and landing costs, Ryanair Airlines flies into
secondary airports that are located outside of the central city. There are fewer
flights per day because of the shorter turnaround time, allowing Ryanair to
obtain more profits and cover its expenses. In addition, Ryanair Airlines has the
lowest ticket prices; more customers choose to travel with them. By filling its
planes before takeoff, Ryanair can reduce the cost per passenger unit. There
are additional expenses for checking bags as well as for meals and beverages.
Customers must purchase food and drinks during flights, which are not
provided by the airline. Furthermore, in order to balance the costs of fuel, the
airline charges for oversized and overweight baggage.
Lastly, Ryanair strives to standardize its aircraft. In order to keep the planes'
parts widely accessible, they do not need to store spare parts for other planes.
This helps the company reduce maintenance costs and maximize revenue.
3. Use Porter's Five Forces Model to analyze Ryanair and its competitive
market?
Ans: Before the possibility of Ryanair or without a doubt any minimal expense
transporter was even conceived, the European aviation routes industry was, as
of now showed, profoundly directed. By identifying with Porter's "five forces,"
one is able to ascertain what this meant for Ryanair and its compositeness
within the European air transport market.
Porter's Five Forces Analysis:
The threat of New Entrants: The aviation industry is very expensive for new
entrants. The entry barriers of this sector are high. Government regulation,
high barrier to entry, economies of scale, and product differentiation can also
be the reasons for no entry of newcomers so that the threat of new entrants
for Ryanair is considered low.
The threat of Substitute: In Europe, sea transport and high speedy rail system
can be the substitute for Ryanair airlines. However, a train or ferry may not be
convenient as it takes too long to reach the destination, and fares can be more
costly. Thus, the threat of substitutes is also relatively low.
Bargaining Power of Buyers: There are plenty of consumers in the aviation
business that impacts the bargaining power of the customer. The group of
consumers consists of individual clients and travel agencies. Plus, customers
have a range of choices to decide on the low airlines that provide a coffee
worth but are extremely differentiated within the service providing. The
additional possibility the customer has, the additional sensitivity of the
customer to the price modification. This makes the bargaining power high of
the customers.
Bargaining Power of Suppliers: The bargaining power of suppliers is high. Due
to the restricted number of suppliers, they are leaving the firm with no
possibility for the aviation business. The airline company cannot simply switch
the provider thence build the suppliers a lot of belligerents to exert their
power. Also, Ryanair is facing high-cost pressure from monopoly providers of
airports and traffic management.
Degree of Rivalry: The depth of competition in this industry is relatively high.
There are many low-cost airlines operating their business on similar routes to
Ryanair. Many Ryanair competition attempting to imitate their strategy as
affordable suppliers. A lot of important, the client shift price to vary to a
different complete or firm is low rising the fierce competition within the
business. Notably, the increasing range of rivals will open up and create high
threats to Ryanair.
4. As a low-cost airline, how Ryanair ensures quality throughout its
operation?
Ans: First of all, Ryan air's operating strategy focuses on increasing customer
traffic while maintaining low costs. To this end, Ryan air pays more attention to
containment and operational efficiency. Every aspect of operations related to
customers and the entire business has received full attention. Every new
strategy formulated by Ryan air's management includes cost control. First, the
airline set out to reduce costs by adopting new ticket sales methods. For this
reason, the cost incurred during the airline's agency ticket sales is eliminated
because the airline's website makes it easier to access the ticket. Customers or
passengers book travel online; this leads to increased sales because the
customer paid for the seat reservation request on time. Maintaining offices in
multiple destinations to meet customer requirements does not charge any
fees.
The abolition of agency fees and related commissions means that airlines can
still provide low-cost air tickets without causing any losses because there are
fewer and fewer restrictions with the temporary operating strategy. Ryan air
management establishes a fare strategy based on the needs of a particular
flight and the remaining departure time so that customers are satisfied; since
they decide the amount of the fare, they pay based on the time they book. A
seat, ensuring the airline keeps the fare low.
Another vital factor in Ryan air's operational strategy that helps them keep
costs down is management's decision to improve the performance of existing
employees rather than hiring and training new employees. Management has
focused on ensuring that the services provided by all employees at all levels
meet and exceed standard customer care procedures. By doing so, the
administration has reduced the cost of recruiting and training new staff. At the
same time, as more and more customers are satisfied with the services
provided by the employees and the airline in general, this measure helps the
company increase sales—all levels. Pilots and flight attendants charge
commissions based on the routes they operate. In this way, wages are not
fixed, ensuring minimal financial waste. Through these cost reductions, airlines
can provide low-cost services without any hindrance for an extended period of
time.
5. Can any Bangladeshi airline company be successful following the same
strategy used by Ryanair? Give your opinion.
Ans: Nowadays, Ryanair is a famous airline company in the European airline
industry. Before, it was not so much a big and popular airline as now because
of huge competitors and ongoing strategies they followed. But now they are a
popular and successful airline for their new procedures which were followed a
few years ago. Their main success came from a low-cost business model. Like
them, if any Bangladeshi airline company follows their strategy, then it will be
a successful company.
If we chose US-Bangla Airlines as Bangladeshi airlines nowadays, this company
is not as popular as other popular airlines as they follow some unique
strategies. To reach success, US-Bangla Airlines can follow Ryanair airline's
primary system, which is a low-cost strategy. US-Bangla Airlines should provide
low-cost airfares than traditional airlines. Except for few people, most of the
passengers do not prefer too much cost for their plane journey. So, if US-
Bangla Airlines offers low-cost fares, then people will choose this airline and
escape other high-cost airlines. US-Bangla Airlines can buy an old airplane to
reduce its cost. But at that point, the old airplane's fuel cost and servicing cost
will be so high than brand new airplanes. So, they should escape buying an old
airplane and should buy brand new affordable airplanes and those will be fuel-
efficient and need not service more. They can target the economic class's
passengers as their target market and avoid business class seats where they
can use economy class seats in the whole plane. To follow the concept of low
cost, they can stop giving the additional services or benefits like mandatory
food, soft drinks, blankets, priority boarding, premium services, baggage
handling, Wi-Fi and internet access, etc., whereas they can earn extra revenue
out of tickets by charging additional services. US-Bangla Airlines can use
secondary airports, usually located outside the main city, to minimize time and
landing charges. Moreover, the secondary airports provide the advantage of
lower air traffic, minimum delays, and shorter turnaround times. Quick
turnaround times allow a plane to fly more times per day than its competitors.
To avoid high costs, they can prevent high-skilled employees and can employ
low or minimum qualified employees. By lowering the cost of the ticket fare,
they should ensure that their aircraft would be full of passengers rather than
half of the passengers with the high price of ticket fare. By following the low-
cost strategy, US-Bangla Airlines will be successful in a very few years.