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8/8/2019 Ryanair Presentation_edited Version
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Pros and Cons of low cost carries: A
case study of RYANAIR
Allison Fernandes s3251936
October 12th 2010
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Low cost carrier; materialised in 1985.
Employs the low-cost, low-fare strategic business
model which is unique in the European market
Competitive with other airlines, Its largest competitoris Easyjet.
Competition with WizzAir as it also flies to smaller
secondary airports.
5 Sept 2009, fleet reached to 200 aircraft.
Ryan Air will operate a fleet of 292 aircraft by 2012.
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Pros of Ryan Air
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Pros of Ryan Air
Europes leading low-cost Airlines.
Operates short haul point-to-point routes, between Ireland, the UK
and continental Europe.
It enjoys monopoly in Dublin Airport.
Airline with best frequency & punctuality.
Reported a growth rate of 32.2% in the fiscal year ended by March
2007.
Increase in revenue is attributed to an increase in passenger
volumes.
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Pros of Ryan AirLaunch of new routes
The company announced new routes and extended its operations to three
new countries.
Started 16 new routes across Europe.
Expanding its operations to new countries would help in reducing thecompanys dependence on the UK-Ireland market (Cullinane 2006).
Fleet expansion
Apparently, Ryanair is having the youngest fleet carriers in its base with
average time of 2.4 years old carriers which is unprecedented in the
airline industry.
Ryanair entered into an agreement with Boeing to purchase new Boeing
737-800 series aircrafts over a five year period from 2006 to 2011.
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Cons of Ryan Air
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Cons of Ryan AirWeakening employee relations
Involved in a number of labour union disputes.
In 2006, Ryanair workers went on a series of one-day strikes.
Complains about the conditions of Ryanair ground staff in
airports (Cullinane2006).
Lack of scale
Small in size compared to its competitors.
Competitors such as Air France, Lufthansa, and BA are large insize and enjoys a competitive advantage.
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Cons of Ryan Air
Increasing aviation fuel prices
Due to the rising oil prices globally, the prices of aviation fuel have
gone up substantially in the past few years.
The rising fuel prices are likely to have a direct impact on the
companys margins (Ansoff & Mcdonnell 1990).
Threats to security
Security issues often pose a challenge to Ryanair. In August 2006, UK
security authorities arrested and subsequently charged eight
individuals in connection with an alleged plot to attack an aircraftoperating on transatlantic routes.
As a result, Ryanair cancelled 279 flights in the days immediately
following the incident and refunded a total of 2.7 million in fares to
approximately 40,000 passengers
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CONCLUSION
Ability to adapt to new customer demands and the increases in oil
prices along with any government changes.
Although Ryanair is able to project itself as a low-cost and low-fare
carrier, but in the long run, the model is unsustainable given that the
fuel market is becoming more and more volatile and the customer
service is degrading in Ryanair. It would lead to a potential loss ofcustomers.
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ANYQUESTIONS ??
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REFERENCES
Andrews, K 1999 The concept of corporate strategy, In: The Strategic Process, Mintzberg, H., et al (Eds),
Pearson Education Ltd, pp 51-60
Ansoff, I & McDonnell, E 1990 Implanting Strategic Management, 2nd Edn, Prentice Hall
Besanko, D, Dranavo, D & Shanley, M 1996 The Economics of Strategy John Wiley and Sons Inc, New York,
USA
Brook, I 2003 Organisational structures and theory Chapter Five. In Working in Organisations, J. Cullinane
ed. Harlow, UK, Pearson Custom Publishing, pp 160-223
Borenstein, S 1989 Hubs and High Fares: Dominance and Market Power in the U.S. Airline Industry Rand
Journal of Economics, Vol. 20.
Capon, C 2004 Managment and organisations Chapter One. In Working in Organisations, J. Cullinane ed.
Harlow, UK, Pearson Custom Publishing, pp 11-49
Cullinane, J 2005 Lecture Four: Organisational structures and theory BUSI 1067 Working in Organisationslecture delivered on 31 October 2005 at University of Greenwich, London
Cullinane, J 2006 Working in Organisations, Harlow, UK, Pearson Custom Publishing.
Culpan, R 2002 Global Business Alliance: Theory and Practice New York: Greenwood Press
Dalton, L & Porsche 1970 Organisational structure and design, London, Richard D. Irwin, Inc.
Datamonitor 2007 Company Profile: Ryanair
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