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Table of Contents
I. Ryanair Profile …………………………………………………………………………………………………………………….. 3 II. External Analysis…………………………………………………………………………………………………………………. 5 2.1. Porter’s five forces ………………………………………………………………………………………………………… 5 2.2. PESTLE Analysis …………………………………………………………………………………………………………….. 7 2.3. Conclusion……………………………………………………………………………………………………………………. 9 III. Ryanair resources and competitive position ………………………………………………………………………… 10 3.1. Evaluation of current strategy ………………………………………………………………………………………. 10 3.1.1. Definition of the current strategy ……………………………………………………………………………. 10 3.1.2. Evaluation of the current strategy …………………………………………………………………………… 11 3.2. SWOT on Ryanair resources …………………………………………………………………………………………. 18 3.3. Ryanair value chain ……………………………………………………………………………………………………… 20 3.4. Competitive position of Ryanair ……………………………………………………………………………………. 24 IV. Ryanair strategy: crafting and executing …………………………………………………………………………….. 26 4.1. Ryanair current strategies ……………………………………………………………………………………………. 26 4.2. Ryanair competitive strategy in the
marketplace worldwide ……………………………………………. 28 4.3. Ryanair business ethics ………………………………………………………………………………………………… 30 4.4. Ryanair key success factors ………………………………………………………………………………………….. 32 4.5. Ryanair TOWS Matrix…………………………………………………………………………………………………… 33 4.6. Framework for executing strategy…………………………………………………………………………………. 36 4.7. Best Practices and Implementation of Success Factors…………………………………………………….

. 38 4.8. Corporate Culture and Leadership ………………………………………………………………………………… 40 4.9. Conclusions & Recommendations …………………………………………………………………………………. 41 V. Sources and References …………………………………………………………………………………………………….. 43 VI. Appendices ……………………………………………………………………………………………………………………… 48


I. Ryanair Profile
Ryanair was founded in 1985 by Christopher Ryan, Liam Lonergan and Tony Ryan. The initial few years of Ryanair business were financially ambiguous and with advent of Michael O’Leary, currently Chief Executive Officer, the company embarked on discount flights which eventually transformed Ryanair into one of the largest European airlines by total scheduled passengers carried in the last decade1.

Business-wise, Ryanair is characterized by the strong growth and expansion into new markets.

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Ryanair currently flies to over 160 destinations around the world and expects to carry approximately 73.5 million passengers in the current fiscal year2. This can be compared to the 23 million passengers Ryanair carried in 1991, demonstrating the growth Ryanair has experienced over this period3

Industry definition and Ryanair position

The aggregate of enterprises of Rysanair’s operational activities can be defined as airline industry, namely “the business of transporting paying passengers and freight by air along regularly scheduled routes, typically by airplanes but also by helicopter”4.

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Ryanair is distinguised as a low-fares scheduled passenger airline serving short-haul, point-to-point routes primarily between Ireland and the United Kingdom including around 1400 routes in the Continental Europe. The company maintains the renovated fleet exclusively consisting of 275 Boeing 737-800 aircrafts which significantly increased the total carrying capacity as of 189 passengers per plane. Offering widely-available low fares, Ryanair has overtaken such companies as Easyjet and British Airway’s in the number of passengers carried in 2012 (See Appendix 1) and ended the 2011 financial year with the net profit of €374.6 million5.

4 The airline encyclopedia, 1909–2000. Myron J. Smith, Scarecrow Press, 2002 5 2


Mission & Vision
Although, Ryanair mission statement is not explicitly articulated to the general public its business purpose (the term which can be interchangeably used with mission) is to offer low fares that generate increased passenger traffic while maintaining a continuous focus on cost-containment. Since the very beginning, Ryanair has emphasized worthwhile commitment to passengers in terms of low fares and high punctuality both contributing to efficient operations and customer satisfaction. Its mission statement is thoroughly defined by understanding of customers’ needs for lowest possible charges, punctually and continuous standards; the capabilities which have been paving the path of success for Ryanair for many years.

Likewise the mission, Ryanair does not publish a formal vision statement. However, Michael O’Leary communicated in public statements the idea of simply continuing to be the largest Low Cost Leader in the European airline industry or in other words “to help people fly for free” 6 . Remarkably, the company is ranked the lowest average fares provider on the airline market which is a good indicator towards the ultimate destination of Ryanair (See Appendix 2).

The implementation of this vision has become a function of many individual tactics of the company including an absolute dedication to low cost performance in every element of the value chain, quick gate turnarounds, non union operations, performance-based incentive compensation plans, standardization on one type of aircraft and flying to secondary airports which provides significant savings for Ryanair. Strategy and current business model

Undoubtedly, any corporate level strategy is based on the objective of developing specific actions and business approaches that will allow a company to gain a competitive advantage over its rivals in a market or industry. Therefore, Ryanair’s cost-leadership strategy has evolved from the intent to outperform competitors (e.g. EasyJet, Lufthansa, British Airlines) by establishing a cost structure providing its service at the lowest price possible.

At the very heart of Ryanair cost

leadership stands its strategic vision portraying the future business scope of keeping fares conceivably low by living up to the name of “The Low Fares Airline”. The Ryanair business model, which can be defined as the plan implemented by the company to generate and make profit from operations, was heavily influenced by Southwest Airlines in the US



and the adaptation of it has led to the current success. Considering the company’s objectives of positioning itself as the leader in the European low-fares market by developing a close fit between customer preferences for low fares and services supplied, Ryanair’s business model can be broken down to the following elements:

Policy of ccomparatively lowest fares on the market: cutting costs to a minimum wherever possible

Industry leading customer service in terms of punctuality, luggage loss and number of customer complaints

Frequent flights on short-haul routes: using small regional airports results in both keeping costs lower, less air-traffic congestions and consequently fewer delays

Core emphasis on ancillary revenues: baggage fees, on-board food and services

Ticket sales disintermediation: the Internet enables prices to be kept low by removing the costs of agents

Commitment to safety and quality maintenance: Ryanair claims to operate Europe’s youngest, greenest, cleanest fleet.

Development of more bases and new destinations: one of the most effective ways for Ryanair to generate new income and to hold its market-leading position.

II. External Analysis
2.1. Porter’s five forces
The analytical tool of Porter describes the five forces with the aim to assess where competitive pressure is coming from and to distinguish possible sources of power in the business environment. Each force helps clearly define the degree of competitiveness and attractiveness of the market to identify possible strengths and weaknesses of Ryanair

1. Threat of substitute products: medium

Within the travel industry as a whole, there are many modes of transport. Especially inEurope, where destinations are not too far away, flying is not the only possible option. Substitute services for the airline industry are trains, ferries, buses and cars. Travelers have many options and often flying is viewed as a more expensive mode of transport, even before checking the prices. This means that Ryanair’s main competitors are not other airlines, but in fact the many other ways one can reach 5

their destination. Based on these assumptions, the pressure from substitute service providers to Ryanair is medium, as it is sometimes tough to compete with the ease of train travel, where the departure and arrival locations are much more convenient. Furthermore, often trains and buses can offer large discounts that airlines could not compete with.

2. Threat of new entrants: low
Ryanair is not confronted with high threat of new entrants as the entry and exit barriers are high. Capital requirements to start a business are quite high regarding the cooperation with Boeing 737800, meaning that it is an extremely capital intensive industry that requires large loans and many investors (consider the cost of buying planes & paying for the fuel). Therefore, Ryanair’s main concern is not new entrants, as there are many barriers to entry. It would be extremely difficult for an emerging company to come close to competing with Ryanair’s established flight routes and fleet of planes.

3. Industry rivalry: high
Think for a moment, of all of the European airlines that consumers can choose from. There are over 53 number of companies, including Air France, Lufthansa, KLM, EasyJet, British Airways, Scandinavian Airlines, Air Berlin, Turkish Airlines and Swiss International airline; to name a few. Due to this high number of competitors, Ryanair faces a great challenge in ensuring consumers fly with them. As a result, Ryanair must continually work to ensure their promise of having low flights is kept. Nevertheless, Ryanair as the current leader on the LCC market (in terms of passengers carried and profitability) encounters high rivalry followed by the two the main competitors: EasyJet and Air Berlin.

The intensity of competition within the industry is strong as services are less differentiated so that buyers have fewer reasons to be brand loyal and make their best deal and switch brands. Thus, price is the main differentiating factor among the low-cost carriers. A small advantage might just be that Ryanair offers different destinations in Europe whereas the competitors follow other regions. Therefore, Ryanair continually faces pressure on prices, performance, customer service as well as offering more features and must attempt to find the balance of attracting customers while remaining profitable.


4. Bargaining power of suppliers: high

The main supplier of Ryanair is Boeing, however there are just two suppliers of aircrafts (Boeing and Airbus), resulting in a duopoly on the market. This means high bargaining power of suppliers which stipulates that costs to switch from one to another would be high as pilots and mechanics would have to be retrained. Ryanair also has little control over how much they have to pay to get new planes, making it more expensive & challenging. Other suppliers are also the airports they are flying to. Whereas regional airports have little bargaining power as they are dependent on the airlines, the relative degree of power of bigger airports is greater, thus one of the Ryanair’s tactics is concerned with avoiding them.

5. Bargaining power of buyers: high
One of the Ryanair’s strength is the fact that their brand is highly recognized and well known for having discount flights. This brand awareness gives Ryanair a competitive edge, as while one would assume Ryanair will have a seat sale, they may not expect that from larger companies like Air France. However, air travels are not brand loyal, and rather are highly responsive to price changes. With the many discount air travel websites, consumers are able to search for the best possible and typically do not pay attention to which airline they choose. This means that Ryanair cannot expect their brand image to be able to sell tickets on its own. Therefore, the company still needs to continuously work to impress potential buyers with their product offerings.

2.2. PESTLE Analysis
A PESTLE analysis is a great analytical tool inthe field of advanced strategic management; it answers 6 industry-describing questions. By applying this useful tool to Ryanair we can get an insight in the industry Ryanair operates and realize the company’s future external threats and opportunities. What are the key political factors likely to affect the industry? Since Ryanair operates on the European continent mostly, EU regulations are the biggest (potential) influences on Ryanair’s strategic decisions. The relative stable political environment in Europe has been a tremendous advantage to Ryanair by not restricting an expansion in activity and additional routes and destinations. Besides, another very important organization that may have effect on Ryanair’s operations is OPEC, because of its potential influence on oil prices. To this point the global oil prices affect fuel prices and thus influencingRyanair’s operating costs. Furthermore in general 7

global political issues often have big influence on the world’s oil prices making it harder for Ryanair (and competitors) to keep their costs low, however Ryanair does a fantastic job in optimizing their flights meaning they do better than their competitors to avoid huge losses in this matter. What are the important economic factors?

The huge increase in per capita income over the past decades has resulted in more and more people being able to afford travel by aviation. There has been a change however in the trend in favor of Ryan air because of the recent economic crisis; due to a lower purchasing power people are more likely to fly with cheaper airlines. On the other side, the crisis and its following increase in oil prices negatively influence Ryan Air’s revenues through the following increase in fuel prices. What Social/cultural aspects are most important?

The aging of Europe means a small but significant shift in consumer preferences since people of higher age tend to prefer travelling by land. However at the same time the internationalization of Europe (and the Globe in general) means that it becomes more and more popular for younger people to travel by air across Europe, thus this trend is enforced by the low fares made possible by Ryanair. Another factor that might play a (rather small) role in consumer behavior is terrorism and disasters involving airplanes. These often have a negative temporary effect on cultural perception on the dangers of aviation and travelling in general. Times following these events one can find a tendency to avoid travelling, especially by airplanes.

What technological innovations are likely to occur and how will these affect the industry? The introduction of video conference possibilities has made a small dent in the industry due to a decrease in (relatively short) business travels. Though, technological improvements in the engines of airplanes have meant a significant decrease in emissions and most importantly fuel consumptions. The increased popularity of booking flights online has made it possible for Ryanair to avoid a lot of costs and push onward their cost reduction strategies.

What current and impending legislation may affect the industry? The emissions constraints set by the European Commission could potentially harm Ryanair if there should be an exceeding. The increased recognition of unions in the aviation industry could very well influence Ryanair’s HR policies. Considering that the company employs staff across Europe, legal


issues are more complicated – in some cases it’s unclear which labour law to apply – either the domestic or a foreign one
What are the environmental considerations?

The increased awareness of the environmental issues has translated into laws being passed or still pending about air pollution, emission constraints and noise pollution to name a few. This could pose a future threat through taxes and inhibiting laws. This notion of environmental awareness is also pushed forward by non-profit organizations. However, Ryanair’s commitment to safety and quality maintenance (claiming to have Europe’s youngest, greenest and cleanest fleet) proves the organization’s sensitivity to the issues.

2.3. Conclusion
In conclusion we can observe that Ryanair’s smart ways of dealing with these industry driving forces by both taking advantage of them (as with technological innovations) but also defending itself from them (for example with the political factors), has rightfully earned Ryanair the position of market leader. Ryanair will however have to keep a close eye on all the factors defining the industry, if they are to maintain this position. Especially the economic and political factors potentially can have a tremendous negative effect due to the record oil prices that stem from current political conflicts. Ryanair will therefore have to optimize their flights even more and be as cost effective as possible to avoid the full effect the increase of oil prices can have, especially on a low cost carrier since, as stated before, fuel prices are the biggest costs an airline company has.

The growing demand for an acknowledged union by the employees, following the growing trend of union recognition in the aviation industry, can also potentially harm Ryanair because they will have to make big comprises to meet the demands of their employees. A way to turn this negative into a positive would be to draw up a HR-plan that will not only cost money by compromising, but also make employees more effective, an elaboration on this can be found in the strategy execution part of this report.


III. Ryanair resources and competitive position
3.1. Evaluation of current strategy
3.1.1. Definition of current strategy

Considering Ryanair’s value proposition of low-fare transportation, the company aims at generating increased passenger traffic while maintaining a continuous focus on cost-containment and operating efficiencies. In retrospect, Ryanair entered the industry with large obstacles to overcome. Because of dramatic rise of operational costs, it accumulated losses of £20 million over the 4 consecutive years in the early 1990’s7. Despite a growth in passenger volume, the need for a new strategy was indispensable at that time, and under the management of Michael O’Leary the company designated its objective of becoming Europe’s “leading low-fares airline”. With the main focus on efficiency, Ryanair has changed its whole organizational culture to one which is much steeped in achieving the lowest costs possible, so as to provide a competitive advantage in every aspect of its operations: from removing in-flight amenities

to negotiating favorable rates for airport charges.

Nowadays, Ryanair’s strategy can be identified as “overall low cost provider” to increase market share by emphasizing comparably lower costs in a broad competitive scope. The focal point for Ryanair in achieving a cost advantage under this Porter’s generic strategy is not only to outperform its rivals by higher efficiency, but to revamp the overall value chain by bypassing some cost-producing activities. For example, the fleet consisting exclusively of Boeing 737-800 aircrafts allows Ryanair to take advantage of economies of scale in scheduling and training crews, maintenance, and stocking of spare parts. Moreover, the use of point-to-point secondary airports, disintermediation of sales (Internet technology applications) and other activities of the supply chain have had a positive effect of the overall profitability of the company.

However, by pursuing this approach, Ryanair should guard against complacency in terms of customer satisfaction when frills-free services can easily sabotage the attractiveness of Ryanair as cost reduction should not be achieved at the expense of a reliable service. Therefore, it is essential to maintain punctuality, low rates of flight cancellations, minimize the rate of baggage loss or damage and have helpful customer service personnel, which along with other operational aspects have an impact on the success of the company.



3.1.2. Evaluation of the current strategy

For the purpose of Ryanair’s current strategy evaluation, we will throw light on the efficiency and effectiveness of its comprehensible plans in achieving the desired results. Persistent failures in meeting objectives and comparably weak performance within the industry can be reliable signposts showing that the company suffers from a poor strategy, and meaning that some radical changes are required to ensure sustainable growth.

Considering the complex nature of Ryanair’s functional areas, the approach of a balanced score card will be used in order to quantitatively analyze the performance indicators stemming from the 4 different perspectives: Financial perspective, Customer perspective, Learning and growth perspective and Business process perspective (See Appendix 3). The process of “benchmarking” of such functional areas will help us answer the questions whether the company’s strategy has been effective and how well it is doing compared to other players in the industry (apart from the overall industry performance, EasyJet was selected for comparison).

Financial perspective
The following table gives an overview of Ryanair’s financial indicators for the 2 consecutive fiscal years8. The number for general yield results, profitability ratios as well as the company’s measure of financial leverage (Debt-to-Equity ratio) are compared to one of the biggest competitor of

Ryanair9 – EasyJet; the relative performance of the industry will be also used in terms of a qualitative ranking based on the industry review provided by the Bloomberg Businessweek magazine10:


Ryanair annual report for 2010: and for 2011: 9

EasyJet annual report for 2011: 10


Ryanair 2010
€ Million

€ Million

performance in

Ryanair 2011
Change %


the industry

€ Million

Yield results:




the average

4152.33 €

Net profit after tax

305.3 €



the average


Net profit margin




the average





Top performer







the average







Financial Health:

Ryanair’s performance over the last 4 years has demonstrated yet again the strength of the “lowest fares/lowest cost” model in Europe (See Appendix 4), which enabled the company to deliver a 23% increase in after-tax profit to €374.6 million in 2011. Although, Ryanair’s revenue yield was at most 30% lower compared to EasyJet (2011), the 3,82% difference in the profit margin between these companies indicate that Ryanair has a better control over its costs and thus is more profitable. The relative performance of the company provides the evidence that Ryanair hold a solid position in the industry which can be rated as “above the average”.

Return on Assets (ROA) gives us an overview as to how efficient the management of Ryanair has been using assets to generate earnings. The airline industry is generally capital intensive 11 , thus requiring a substantial amount of capital and a high level of fixed costs. Therefore, ROA ratios for airline companies are usually lower (0.5-6%) in comparison to advertizing and software companies (20% and higher).

As a top industry performer (with the ROA’s of 4.4% and 4.6% for 2010 and 2011 respectively) Ryanair is very effective in terms of utilization of resources to make earnings. Ryanair’s Return on Equity measures the company’s relative profitability and efficiency of generating income for its shareholders. Bearing in mind that ROE’s between 10% and 15% are considered as generally acceptable12, Ryanair



shows a sustainable performance in the industry (12,9% in 2011 with 1,3% increase ), even though it’s slightly behind EasyJet (14%).

Comparably high Debt-to-Equity ratio of Ryanair (0.99) signifies that the company has been aggressively financing its growth with debt. To this point, Ryanair expects to increase the size of its fleet to as many as 299 Boeing aircrafts by March 2013 which significantly increases the amount of its outstanding debt to finance the new and existing planes. However, the costs of this debt financing are not expected to overweight the quite high return that the company currently generates (ROA and ROE), thus there is no any sign of insolvency to worry about.

Customer perspective
The following table summarizes the indicators which potentially have an impact on customer satisfaction and retention. Consequently, poor performance from this perspective can be a leading indicator of future decline, even though the current financial picture may look good. Relative




performance in the







% of complaints per 1000





Punctuality rate %




Above the average


Baggage loss %






35,00 €

39,00 €




Average fares


Despite Ryanair’s official claims about the very low percentage of customer complaints, let alone the prompt response to passengers (99.9% of passenger complaints within 7 working days of receipt), the empirical evidence shows that Ryanair makes it very difficult to complain to them personally. The fact that there is abundance of Internet communities sharing negative experiences ranging from confirmation problems to unhelpful and rude customer service indicates that Ryanair significantly scarifies customer loyalty.

Eventually, it may turn customers off even if its fares are comparably cheaper. Unfortunately, Ryanair is not a member of the International Air Transport Association (IATA) which provides data about punctuality rates of major European airlines. The key to Ryanair’s good punctuality record is a lot of routes that no-one else flies, thus the company can make up flight times. In this fashion, exaggerated flight times mean a flight that departs late will still arrive on time. According to the

organization that tracks airline punctuality, Ryanair average punctuality rate can be approximated to 82%13 compared to Ryanair’s claimed 88%. Anyway, this still beats EasyJet’s 65,8% and Air Berlin (81%), but Ryanair still loses out to Vueling (83%), making the company the second most punctual airline in Europe (as opposed to the first as they claim). Although, carriers like Easyjet and Ryanair, with their simple point-to-point networks, are less likely to mislay baggage which results in comparably low baggage loss rate, but once lost, “their passengers found it harder to get compensation” according to the BBC News14. Moreover, Ryanair is alleged to as one of the slowest to make compensations for a loss or damage which negatively influences its reputation and customer loyalty.

Ryanair positions itself as the cheapest air carrier in Europe (See Appendix 5). The official statistics shows that the average price between 2010 and 2011 rose from 35 to 39 Euro, mainly due to fuel surcharges. Ryanair is determined to encourage passengers to just take hand luggage. Keeping costs low means that the company can turn around planes in an average of 25 minutes. Therefore, the so-called “optional charges” can add up to 60-70% of the advertized price, which doesn’t mean the lowest price for a traveler. Furthermore, Ryanair’s big claim of being the cheapest doesn’t often represent the truth and this has a big potential to narrows its scope to buyer segments comprised of only price-conscious travelers.

Business process perspective

This perspective refers to internal business processes. Metrics based on this perspective will allow us to evaluate how well Ryanair’s internal performance is running, and whether its services conform to the mission:






performance in the







Number of aircrafts




Above average


Load factor





Break-even load factor






Aircraft utilization (hours per day)






Scheduled passengers (millions)




Top performer



2586 €

3113.3 €


Top performer

2 984

Average cost per passenger

38.9 €



Above the average



Total operating expenses

Given the fact that Ryanair is continuously increasing its capacity in terms of the number of planes to sustain its growth in Europe, there is a positive trend both for the load the break-even load factors (the percentage of the seats the airline has in service that it must sell at a given yield, or price level, to cover its costs). Airlines typically operate very close to their break-even load factor: the sale of just one or two more seats on each flight can mean the difference between profit and loss for an airline15.

In case of Ryanair, we can see that this difference is slightly widening (1%), meaning that the company has a good control over its operating costs. However, the industry comparison shows that Ryanair is lagging behind in aircraft utilization and load factor which can be explained again by an increase of the number of routes and destinations it currently flies to.

The total operating expenses were given a rise of 20% between 2010 and 2011, due mainly to a 37% increase in their fuel bill, the rise of airport charges at Dublin16, and again the higher level of activity associated with the growth of the airline. Nonetheless, Ryanair has been quite efficient (above the average of the industry) as shown by the average costs per passenger, though with a 12% increase due to the abovementioned reasons.



Learning and growth perspective

This perspective includes employee training and corporate cultural attitudes related to both individual and corporate self-improvement and motivation which are important factors for continuous growth of Ryanair.

As a fast growing company (as indicated by the increase in the number of passengers and routes), Ryanair is employing more staff to support its international operations. However, profit and growth rate should not be the only concerns for Ryanair. To this point, Ryanair underestimates the importance of employee motivation, which adversely affects customer relationships. Unfortunately, Ryanair doesn’t disclose the information about staff turnover and level of satisfaction, but according to Shay Cody, the deputy general secretary of the Irish trade union17, Ryanair has a very oppressive regime and extremely high staff turnover, particularly among junior pilots and cabin crew. Moreover, employees are expected to pay for their own uniforms, crew meals and training courses. The company also is very hostile to labor unions mainly for the reason of saving costs on non-unionized labor.

Ryanair describes its relationships with employees as “good”, but underpaid pilots and attendants tend to be unmotivated and the company lacks in customer service. No change in productivity-based incentives scheme between 2010 and 2011, makes it difficult to stay positive about Ryanair’s level of staff motivation & satisfaction. Furthermore, the company claims that it’s not possible to avoid decreases to its base salary levels due to high seasonality and volatile level of profitability, which brings uncertainty about pay-offs upfront. Despite the fast growth, Ryanair’s image and reputation to the customers can be significantly diminished if proper attention to H&R policies is not given. Consequently, its market share and Relative




performance in





the industry


Scheduled passengers (millions)




Top performer


Number of routes operated




Top performer










Below the average





Below the average


Average number of employees
Productivity-based incentive
payments (pilots)
Staff turnover



profitability can be at stake.

The findings about evaluation of Ryanair’s current strategy will be qualitatively summarized in the following table representing the performance of the company from the 4 perspectives: Relative


in the industry



Above the average

Business process


Above the average




Learning and growth


Below the average

The overall conclusion about Ryanair’s strategy performance is good, thus not requiring dramatic changes. However, the big disparity between Ryanair’s financial performance & efficiency and customer & employee satisfaction gives us a sign of certain weaknesses which should be subsequently minimized to sustain the further success of the company. Fair enough, the financial indicators show that Ryanair is doing very well and considered one of the most profitable and financially healthiest companies in the industry.

From the perspective of the business processes, Ryanair is quite efficient and its Cost Leadership strategy has been implemented so far according to its mission of keeping on traffic growth while maintaining a continuous focus on cost-containment. However, a big share of operating costs from oil surcharges and airport charges can be minimized by a higher hedging of fuel prices and closer cooperation (alliance) with suppliers (airports) to reach a win-win situation and to avoid financial risks at the same time.

The findings about the customer and learning & growth perspectives show that Ryanair is becoming too fixated on cost reduction at the expense of its staff and customers. In the industry where price competition is vigorous and buyer switching costs are low it’s important to generate customer appeal. On the contrary, Ryanair is driving hard to push its costs down and ignores customer & staff satisfaction which are the dominant components of success. Therefore, Ryanair is seen by us a toofeatures poor company with a high need for explicit points of difference appealing to customers, let alone elaborated H&R policies to increase productivity and enhance customer service.


3.2. SWOT on Ryanair resources

Ryanair will be analyzed according to its internal strengths and weaknesses as well as their opportunities and threats they are facing from external forces. The SWOT serves to analyze where Ryanair has potential to develop further and whether there is a need to improve and modify strategic decisions. First, we will examine resource strengths to get an overview what the company does particularly well in relation to its rivals and we will assess some of its competencies. Afterwards, its resource weaknesses will be examined followed by market opportunities and identifying external threats:



Well-established brand name

Poor service

Operational cost minimization (low

Employee relation very low

airport charger)

Bad press

Efficient cost structure through cost &

Distance from airports to destinations

revenue synergies

High auxiliary costs

Uniformed fleet operation (all Boeing)

Low customer loyalty

Faster turnarounds and fewer terminal


Point-to-point routes


EU enlargement18

Economic crisis, terrorism

Price sensitivity of customers

Increasing operating costs22

Awareness of sustainability19

Entry of new players

Strategic alliances to increase

Environmental issues

competitive advantage20

Regulatory requirements

Potential to capture market share21

Substitute transportation

Future open skies agreements

22 19


Resource strengths
When we look at what Ryanair does very well in opposite to others companies in its industry we immediately notice that Ryanair is one of the leading low cost carriers ever. 23 According to ELFAA (European Low Fares Airline Association) Ryanair had the highest number of passengers between January – December 201124. Ryanair is able to offer low fares for several reasons: Ryanair is not offering any frills and is particularly focusing on carrying clients from point-to-point. In cutting these frills Ryanair consistently keeps on operational costs minimization. Another point is that Ryanair sells its tickets through the Internet to save money and forward these savings further to the customer.

With its 160 destinations all over Europe Ryanair is covering a wide geographic area which makes it even more competitive in its industry. Moreover, as Ryanair flies to small and regional airports it has a large bargaining power with the airports which charges them low fees; by 2013 Ryanair plans to increase the number of passengers and fleets by 10%25.

The main difference factor of Ryanair is the price. However, by cutting prices the service is left behind and passengers enjoy mostly the basic carriage from point-to-point. Being the only difference to its rivals Ryanair does not savor high customer loyalty and clients can easily switch from one low cost supplier to another. Another point is that the secondary and regional airports Ryanair works with are outside the destinations the clients want to go to, so that they have to travel longer distances to get to their final destination. As long as Ryanair offers fares which are perceived low (which is not always true) and a wide geographic coverage as well as high punctuality and fewer terminal delays, the company is not in a competitive vulnerable situation as its strengths can offset the weaknesses. Market opportunities

Customers of Ryanair are cost sensitive and any economic slowdown puts clients even more into the position to compare prices and look for the cheapest prices in the market. People are more aware of sustainability and support companies that do more for the environment. Ryanair is one of the greenest airlines in the world by cutting on CO² emissions which enhances a good brand image and helps to be



more attractive in the market. As the market for low cost carriage is still growing Ryanair can capture market share and makes it even harder for rival firms to compete on the same prices (costs). 26 External Threats27

Since the main difference of Ryanair from other companies is characterized by costs, any increase in its operational expenses makes is harder to compete with its rivals and still be attractive for the target group. An increase in oil prices can have a huge impact on Ryanair’s prices and the entry of other players with a better service and comparable prices is more probable. Therefore, Ryanair tries to hedge oil surcharges in order to minimize such a risk. Last but not least, there are new regulatory requirements imposed by the European Commission on CO² emission, where it is stated that aviation allowance must be decreased between 2013 and 202028.


In conclusion, we found that Ryanair has a very strong position within the airline industry and that there overall strategy is effective in enabling them to compete with other airlines. In addition, the face little risk of new entrants interfering with their brand image of being a great discount airline to use. However, like everyone company, there is always room for adjustments and improvements to hedge the economic, political and substitute risks.

In such a rapidly changing, highly competitive industry where there is little to no brand loyalty there is always a marketing and sales challenge for the company. We believe Ryanair is currently dealing with these risks rather effectively; however time will show if they can be highly adaptive and responsive to the ever changing world of travel.

3.3. Ryanair value chain
The value chain analysis is an important approach for companies how to compete successfully. The main aspects lie on the costs and the prices of the company, meaning its costs must be in line with those of close rivals. Therefore the analysis is the most telling sign of whether a company’s business position is strong or precarious regarding its prices and cost are competitive with industry rivals. The specific nature of a company’s business is reflected through the two categories of activities of the company’s value chain which are the primary activities and the support activities. Primary activities

26 28 27


create value for buyers and the related support activities smooth the progress and improve the performance of the primary activities. In addition, both activities define the major components of the

Ryanair’s internal cost structure by analyzing and comparing the costs of the segregation of company’s operations against the costs of key rivals, called activity based cost accounting to discover cost advantages or disadvantages.

Primary activities /support activities and Costs

According to Ryanair‘s strategy the company aims to be the Europeans leading low low-fares scheduled
passenger airline through continuous improvements and expanded offerings of its low low-fares service.29

The adapted business model of the Southwest airline has helped Ryanair to become the cost leader primarily due to high frequency flights, uniform fleet, scrapping free drinks and expensive meals on board. There is none extra service included in the final ticket price not even the difference between



business and economic class and no seat allocation preferences30. Therefore, the company strives to reduce and control costs of four primary activities31:

Aircraft equipment cost

Personnel productivity

Customer service costs

Airport access and handling costs

Aircraft equipment costs

Ryanair is saving costs in this particular area by using aircrafts of a single type (Boeing 737-800). The purchase from a single manufacturer leads costs reduction associated with personnel training, maintenance and the purchase and storage of spare parts, as well as affording greater
flexibility in the scheduling of crews and equipment.

Personnel productivity
Ryanair’s low-cost leadership strategy implies the necessity to control its labor costs and to improve staff productivity at the same time. The findings from the table below show that personnel productivity has decreased by 5% which can be partly corresponded to no change in productivity-based incentives (between 2010 and 2011) which again has a negative impact in employee satisfaction & motivation. Year



Change %

Average number of employees




Passengers per average n. of employees




Customer Service costs
To be competitive, Ryanair has agreements with third party contractors at certain airports for passenger and aircraft handling, ticketing and other services to increase the customer service. The contracts are made by negotiating multi-year contracts at prices that are fixed. Due to the own internet booking facility and reservation center of Ryanair a lot of costs are saved regarding Sales & Marketing. Ryanair 30



received the allowance to remedy travel agent commissions and focus on direct sales to end users and direct telephone reservations generating approximately 96% of the total. The speed of online checks-in makes Ryanair even more special and reduces waiting time to get a boarding card which is already done for their customers before entering the airports.

Airport access and handling costs
The record of delivering a consistently high volume of passenger traffic growth at many airports makes it doable for Ryanair to discuss favorable contracts for access to their facilities. Furthermore, the airline is reducing its airport charges by choosing less expensive gate locations as well as outdoor boarding stairs compared to more expensive options for Jetways. Another saving aspect, as already mentioned above, is taking advantage of the internet. Having converted its host reservation system to a new system called Flightspeed (Open Skies), Ryanair enabled customers to visit Ryanairs homepage and pay and confirm their reservation directly.

The web site became very famous for promotions through newspaper, radio and television advertising. As Ryanair is a 100% online check-in airline, its advertising is going on through passenger boarding passes with the brand message appearing once during the ticketing process and on the printed documents. Costs are reduced by using that type of advertising option32, and development of such technology makes it more comfortable for consumers, which are the main tasks of the R&D.

The Human Resource department operating as a support activity is responsible for the Commitment to safety and quality management. Ryanair puts a big emphasis on hiring professional personnel and offers certain trainings especially for pilots, cabin crews and maintenance staff. A policy of European airline industry standards is followed and the management is very strict regarding the safety, where the low cost operating strategy doesn’t imply maintaining the fleet at the expense of safety and sustainability. Conclusion

From the findings and facts above we can conclude that Ryanair’s business and internal operations, its technology, operating practices and approaches it employs has lead the airline to operate efficiently by saving on costs in its inbound logistics to execute its stated strategy. The points of differences compared to rivals are mainly based on the revamping of value chain by putting cost producing activities together, in our case cutting out value added activities (travel agents) and doing marketing directly to end users. The free publicity and the low cost promotion enabled the company to create a unique image in the



mind of consumers when advertized fares are perceived the lowest even if in effect they are not. Therefore, the competitive advantage of Ryanir lies in performing value chain activities more cheaply, by simply doing an overall better job than competitors of lowering its combined costs of performance. However, the warning sign for the company is the decrease in personnel productivity, which can make it more difficult for the company to gain a better cost advantage over the rivals.

3.4. Competitive position of Ryanair
Using the weighted competitive strength assessment is a great way of portraying the position Ryanair compared to its main competitors on the low cost carrier market. This analytical tool reveals the key success factors and how important these factors are in a specific industry by giving each key success factor a ‘’weight’’ or rate of importance. The exclusion of other factors doesn’t mean that they don’t play a role at all, it merely makes a discrimination between factors that determine the success of a company, and factors that have an influence on the success, though a subtle difference in words, the difference in implication is grand33.

The key success factors
In the low cost carrier industry the key success factors are: low costs, the flight network and high core service standards (these include overall average flight punctuality and percentage of baggage lost).The reason why customer loyalty and/or reputation/image is not included for this specific industry is because in the case of highly standardized services with little to no differentiation between companies other than costs, brand loyalty hardly plays a role and customers are keen to change between companies34. Another effect the highly standardized industry of low cost carriers has on the key success factors is that having low overall costs can make or break a company, since low costs mean low fares for the customers and in the low cost carrier market low fares is nearly all that the customer looks for. This is why the low overall costs have the highest weighting factor in this specific industry. Low costs can be achieved in many ways like a standardized fleet, exclusively internet sales and using cheaper secondary airports amongst others35.

One of the few other factors that differentiate carriers is the extent of the flight network. This includes the amount of destinations a carrier operates and the amount of daily departures/arrivals from each

33 “Crafting & executing strategy” 15th edition – Thompson, Strickland, Gamble.– chapter 4 page 124 35 34


individual destination. These two points (amount of destinations and number of departures/arrivals per destination) determine the quality of the flight network and the coverage of a specified area. This factor is not of very great importance since a carrier can be successful with a limited network as long as the carrier operates at a reasonable profit attending the destinations it provides. The last, and frankly the least important, key success factor is how high the core services standards are.

These core service standards are measured by the overall average flight punctuality and the percentage of baggage lost. The reason why this factor is of the least importance in this sequence is because, as said before, customers are not very loyal to brands in the LCC market and will almost always chose the carrier that provides the cheapest tickets for their destination/route. This is because people who decide to fly with low cost carriers already decided upon exchanging comfort and extras for an attractive price. The weighted competitive strength assessment for Ryanair36 37 38 39

Strengths factor
Overall low costs




Ryan Air







Air Berlin

Weighted Air Berlin Weighted



Flight network








Core service standards
Unweighted average











Weighted assessment




From the weighted competitive strength assessment applied to Ryanair one can deduce that Ryanair is doing considerably well compared to its competitors, this is also evident in Ryanair’s superb competitive position and huge market share. It also shows that the current strategy pays off: Ryan air focuses on the

36 38 39 37


most important key success factor and it succeeds in achieving it. However, these positive results have to be taken for what they are; a snapshot of the current situation, as stated above there is little to none brand loyalty and in an industry as reactive to changes like the LCC’s this means that the market position of Ryan Air could very well be less positive if they don’t watch their competitors closely.

IV. Ryanair strategy: crafting and executing
4.1. Ryanair current strategies
Basic competitive strategy
Fair enough, customers in the low-cost airline industry are price sensitive and this fact allowed Ryanair to take a low-cost leadership posture to have a strong competitive advantage in this industry. The fundamental objective of Ryanair lies in the corporate policy to contain the costs to the lowest relative to the industry rivals and, in essence, to create a sustainable cost advantage over the competition. To this point, the key to Ryanair’s strategy is that cost is not equal to price and Ryanair has gained the effective and sustainable cost advantage in a manner that it is very difficult to copy for rivals.

Moreover, the generic business model of Ryanair has followed its competitive strategy by translating the main notion about the translation of lower production costs to comparably lower prices for customers, which in effect it not always true and veiled by ancillary sources of revenues, altogether giving Ryanair a distinctive level of profitability. For the purpose of achieving corporate objectives and to nurture distinctive competences to provide the company with a competitive advantage, Ruanair follows its generic competitive strategy largely supplemented with supportive strategies breaking down the corporate objectives into more explicit approaches on the market. Complementary strategies

In order to utilize an attractive means of breaching technology and resource gaps, Ryanair has established collaborative partnerships with the companies which have better resources and capabilities required in the areas where Ryanair lags behind. As the company which is aiming at retaining a strong position in the industry it uses partnerships for the following reasons: •

To implement new technologies and build technological competencies faster that it would be possible with exclusive reliance on internal efforts

To catch up with new opportunities on the market by combining resources with partners


An example of such collaborative partnership is the label partnership with Expedia40 which supports Ryanair expansion into Spain and Italy by providing the company with a broad range of innovative e-commerce services. Priceline41 and Booking.com42 are the latest label partners on the accommodation site of Ryanair picking up where Expedia left off. This partnership network of Ryanair has helped the company to earn incremental revenue on every transaction and by keeping customers exposed to various features on their website which basically complement Ryanair’s core value proposition for transportation, accommodation and other. Last but not least, the network partners can perform the activities which are beyond the centre of Ryanair’s expertise more efficiently and effectively and allow the company to concentrate on the capabilities it is the best at.

The possibility of a strategic alliance for Ryanair was always considered cautiously since the management has feared that it might bring predicaments for the control over the costs. However, the only attempt of Ryanair to come into partnership with Aer Lingus (the second largest low-cost air carrier after Ryanair in UK) was blocked by the Irish government and the decision of the European Commission standing up for protection of the market from monopolization43. With the consideration of Ryanair commitment to the lowest operational costs possible, we can say that that company has sacrificed its processes and services.

Furthermore, the human resources neither pertain to a potential source of competitive advantage. Nevertheless, in a fast-changing environment where technological innovations and other strategies can be copied by Ryanair competitors, it is the human resources that bring a sustainable competitive advantage. Strategic moves in the marketplace

As the low-cost carrier market leader, Ryanair should has a detailed plan for its strategic moves in the market and be able to provide good customer services to the customers like by having discounted flights and value promotion to keep the competitive advantage at a stable mode within its competitors and will need to focus more on the core competencies that allow Ryanair to practically and wisely designs suitable airline operations within the bracket of their marketing network services in a market standardbased perspective. Ryanair need to be goal oriented and must not stop to rejuvenate and change their marketing plan strategies from time to time in order to re-invent the performance process upon the

43 41


upgrading of rules and regulations mandated by the state. Ryanair is to overcome the lack of product differentiation and increase it that will have the ability to revive revenue generation. As a market leader in the market of low-cost airlines, Ryanair should have a through action plan of the future strategic moves, bearing in mind its core competencies, in order to keep a strong competitive position in the highly competitive market, e.g. assuring good customer service by providing discounted flights and value promotion.

The company has to keep on vitalizing the marketing strategies in order to freshen performance standards in respect to constantly changing rules and regulations and, undoubtedly, customers’ preferences. Therefore, the company has to improve the product differentiation leading to revenue generation which in turn will help to maintain the leadership on the market.

4.2. Ryanair competitive strategy in the marketplace worldwide Ryanair is operating across 28 countries in Europe, connecting 165 destinations. Basically the industry is using the same strategy in each region they are operating in. The division of their strategy includes following aspects for every market without any adjustments, which are low fares, customer service, frequent point to point routes on short haul flights and low operating costs. The idea behind low cost airlines is based on the demands of customers to fly more often if the expenses are not high and affordable.

Mature markets
Under mature markets there are potential buyers who are already users of the industry’s services and growth in the demand closely parallels that of the economy as a whole.44 Ryanair started to develop a mature market by completing a new strategy especially offering short haul flights. Ryanairs Strategic moves in mature markets to be competitive over rivals 1. Improve value chain efficiency

2. Acquire rival firms
3. Expanding strategies
4. High Potential of point to point flights


Crafting and Executing Strategy,16th edition by Thompson and Strickland , Chapter 6


1. Improve value chain efficiency
In our case Ryanair is performing their primary activities cheaper than competitors. One major competitive advantage lies in their technology of using e-commerce, the service of online check-in and online advertising tools, which makes Ryanair strong especially in saving costs from direct sales to end users. No frills, single type of class and no seating preferences support Ryanairs strategy offering low cost fares. In addition operating through secondary airports is cheaper compared to bigger major airports, by having great deals with the outlying airports and using their facilities for less cost.45 Another activity to reduce cost and be over the rivals is maintaining the single types of aircrafts from one supplier which leads to cost reduction as well in personnel training and greater flexibility of scheduling the crew.

2. Acquire rival firms
Ryanair is looking forward to merge with WizzAir, both LCC carriers share many similarities. Acquiring rival firms or merging allows for gaining their facilities and assets which includes also gaining their operational network and knowledge of the markets. By doing this Ryanair gains more competitive advantage and profits from the know-how of the partners.

3. Expanding strategies
Ryanair is already offering many routes and is still expanding further to gain more market share and to be more profitable by targeting a broad market. They keep on working to expand their internal network structure. Since 2011 they have included the new destinations such as Greece, Zypern, Scandinavia and Bulgaria. And from 2012 new airports (suppliers) such as in Germany which are Köln-Bonn und LeipzigHalle. 46 The pie chart below indicates that Ryanair is involved in each region and even in the Baltic market and play an important role by taking over 20,4% of the capacity after Eastonain Air.47

47 46


4. High Potential of point to point flights
Through the focus on short-haul flights Ryanair is specialized to strive the costs down to be the low cost leader in the industry. Daily they operate more than 1500 flights from over 50 bases and 1400 low fares routes across Europe. Ryanair has no stop over’s and no connection with other airlines and is specialized in being punctual because of the point-to-point routes. It has the ability to carry more passengers to the destinations and be ahead of rivals.

4.3. Ryanair business ethics
Demonstration of social responsibility
Ryanair has often been accused of very unethical operations and has even been declared one of the most unethical companies in the world, making the bottom 10th place in a list of 581 companies who were valued on their ethical behavior by Covalence, who ranked the companies based on 45 criteria such as labor standards, waste management, product social utility or human rights policy48. At times Ryanair not only puts no effort in ethical conduct, they don’t even abide international laws i.e. among other things, Ryanair denies all liability for passengers who miss their plane for further destinations because of delays. This is in defiance of the Warsaw convention49. Five Components of Social Responsibility

To evaluate and portray Ryanair’s social responsibilities on a strategic level we will look at the Five Components of Social Responsible Business Behavior. These five components are: 1. Actions to ensure the company has an ethical strategy and operates honorably and ethically There is ‘’Ryanair Code of Business Conduct and Ethics’’50 on their websites which holds a set of internal rules and regulations. Here it is also stated that Ryanair will always uphold local and international laws. The extent to which this document is lived up to in reality will be portrayed in the rest of these five components.




2. Actions to support charitable causes, participate in community service activities, and better the quality of life
Ryanair does not participate extensively in charitable causes though they did start a project themselves. It is called ‘’Girls of Ryanair – Cabin crew Charity Calendar’’. It is an endeavor where female cabin crew members working at Ryanair posed in lingerie for a calendar of which all earnings will go to various registered charity organizations. They did this in 2008 with an amount of €300,000 donated and in 2011 with an amount of €100,00051

However it should be pointed out that there have been complaints of unethical advertising from feminist support groups concerning these calendars, on the basis of being sexist52. Ryanair conducted a study amongst 100,000 of their passengers to indicate the general opinion on whether or not the calendar project was sexist, the results of the study show that 99.7% of the people questioned supported the project. No legal procedures followed.

3. Actions to protect or enhance the environment.

Ryanair has claimed often to have the newest greenest and quietest fleet and to have the lowest carbon dioxide emission per passenger per mile amongst the 20 largest airlines53. The origin of this claim comes from the fact that Ryanair has acquired many new planes for their fleet which is fitted with the newest technologies to fly as fuel efficient as possible54, so not only is this an economical advantage for Ryanair, but also an environmental advantage for the world. Also Rynair tries to maximize the amount of passengers per flight which means less flights are needed, again cutting carbon dioxide emissions. 4. Actions to enhance employee wellbeing and make the company a great place to work. Ryanair has been under heavy criticism on this matter.

Ryanair has rejected any form of unionization to much disappointment of many employees. Ryanair is however not obliged to recognize any company union or national union unless it is demanded by 50% of its employees, this is not the case. Critics say this is because employees fear counter-actions by management. These fears are not without ground as 2 thirds of Ryanair’s employees are ‘’flexible’’ or ‘’time-limited’’ employees, which means they can be fired without any external consent55.

51 52 53 54 55


Online where the employees can speak freely there are many complaints and the employees speak about wages paid with delay, non-existent breaks in the difficult working schedule, the obligation to pay even for the water on board and for the electricity used to recharge the cell phone. Employee dissatisfaction has even been so high that a group of anonymous employees set up a website called to express and share their experiences with their employer. However, Ryanair has forced this website to shut down on legal terms56. The website has since migrated to an alternative domain called

5. Actions to promote workforce diversity.
In ‘’Ryanair Code of Business Conduct and Ethics’’ the following is stated: ‘’Employees and candidates will be judged on the basis of their behaviour and qualifications to perform their jobs, without regard to race, gender, religion, disability, age, marital status, sexual orientation, political beliefs or any other characteristicprotected by applicable laws57.’’

4.4. Ryanair key success factors
Needless to say, there is always a big temptation to make business strategy too complicated to be viable which is why the idea of focusing on key success factors is important. Key success factors are the factors corresponding to necessary conditions for success in a given market. These conditions also delineate a dimension of business performance which influences customers in the choice of supplier, marketing efforts and other activities of supply chain.

Usually customers make their purchasing decision emotionally and logically on a perception of customer value for money. The unconscious mind communicates the decision to the conscious mind which looks for reasons to rationalise the decision. Therefore, the trade-off between rationality and perception is based on certain attributes which can be defined as the key success factors for Ryanair, namely:

56 57


Core service

of overall costs

Utilization of
the Internet

Operational efficiency. One of the crucial components for Ryanair operational efficiency is aircraft utilization, the factor which enables the company to maximize profits. Therefore, quick turnaround times at the gates are required to reduce the time on the ground, where aircrafts do not make profits. Moreover, maintaining a high passenger load is important to spread fixed costs, increase staff productivity and overall profitability.

Internet as the main distribution channel. Internet has enabled Ryanair to elevate sales, reduce costs per unit basis and to manage marketing costs at the same time.

Core service standards. High core service standards such as safety, reliability (punctuality, reliable baggage delivery) are fundamental for customer satisfaction. Moreover, the issue of high safety standards and safety concerns shouldn’t be avoided due to fact that they can have a particularly bad effect on Ryanair, since a trade of between low prices and air travel safety will be suspected.

Maintenance of overall low costs. It is the major part of Ryanair strategy since overall costs are essential to be able to offer cheap fares which are achieved by the cost-cutting business practices such as point-to-point routes (correspond to better punctuality and baggage loss rates and make the operational cycle of Ryanair less complex and time-consuming); cheap product design (no free food, drinks and newspapers); standardized fleet (lower aircraft capital outlay, lower training and maintenance costs); use of secondary airports (lower chargers).

4.5. Ryanair TOWS Matrix
Based on the overview of Ryanair critical success factors, the strengths of the company will be reviewed and coupled with weaknesses, opportunities and threats in order to come up to an optimal strategy. Strengths and Opportunities: considering Ryanair’s growing number of aircrafts and its internal capabilities of operational efficiency and quite high rates of punctuality and baggage delivery, it’s 33

prudent for the company to shift the focus from the mature Western European market to Central & Eastern Europe. Meanwhile, Ryanair has announced it will open its 46th base at Wroclaw Airport, Poland, in March 201258. With regard to the current economic turnover and its implications for customers’ solvency, Ryanair can use its opportunistic market approach to gain new customers seeking lower fares from other airlines.

Moreover, the demand for low-cost air travel in the deteriorating economic environment means that Ryanair could continue to increase market share on short-haul routes at the expense of flag carriers like Lufthansa and British

Airways59. Furthermore, by forming a strategic alliance with one of the European low-cost carrier (such as EasyJet) would grant Ryanair a lot of opportunities to supplant its competitors. Weaknesses and Opportunities:

one of Ryanair’s key edicts is that as long as it has low prices

customers will fly with them. This was a reasonable approach when Ryanair was the first mover. But as the competition has increased customers could switch to another carrier which might be slightly more expensive than Ryanair because of Ryanair’s perceived poor customer service policies. Under these conditions, even a marginal improvement in the company’s image could help the company to treat its reputation. Furthermore, introduction of frequent activity membership cards granting discounts or free flights against certain amount previously spent by a customer would enhance customer loyalty and minimize the negative effect of its main weaknesses.

Strengths and Threats: the question of oil prices is the biggest unknown regarding Ryanair’s future perspective. For the past few decades, oil prices have been slowly but surely rising60, and as oil is traded in US dollars in the international market and Ryanair’s income is solely in Euros, Ryanair has a substantial exposure to the vagaries of the currency market. Ryanair needs to improve its policy of buying US dollars to pay for aviation fuel. It would be beneficial for Ryanair to hire a specialist company that specializes in the futures markets to help it improve its hedging practices.

Fast turnaround time is one of the key success factors in Ryanair’s efforts to maximize aircraft utilization. Secondary and regional airports generally do not maintain slot requirements or other operating restrictions that can increase operating expenses and limit the number of allowed take-offs and landings. However, the company is slightly behind the industry average both in load factor and utilization. Thus a close coordination in Ryanair’s fleet planning, passenger reservation, flight and

aspx 60 59


ground operations, maintenance systems, as well as with airport traffic controllers must be taken into consideration. Last but not least, Ryanair should assure compliance with environmental and safety regulation in the long-term, even if it has one of the “youngest” and “greenest” fleet in Europe. Weaknesses and Threats: the relationship between employee satisfaction & productivity on the one side and customer satisfaction on the other side, make us suggest Ryanair taking H&R policies more seriously in order to minimize the weakness of providing a poor service and the threat of an increase in operating costs partially due to lower employee productivity. To this point, the airline is the object of regular attacks, and may suffer from a potential large-scale attempt at unionising its employees. Therefore, there is a big need for an H&R program to improve employee satisfaction and turnover which will also guard the company from strikes and legal actions of labor unions. Internal Strengths

1. Efficient cost structure through cost

Internal Weaknesses
1. Poor customer service

& revenue synergies
2. High employee turnover
2.Point-to-point routes and use of
secondary airports
3. Uniformed fleet
4. Internet-based sales and promotion
5. Punctuality and baggage delivery

3. Bad corporate image
4. Low customer loyalty
5. Distance from airports to destinations
6. High ancillary costs

6. High compliance with
environmental and safety standards
External Opportunities

3. Strategic alliances to gain

1. Continue aggressive growth by

1. Improve customer perception of
Ryanair as truly the lowest service

in Central & Eastern Europe



(W1,W3,W4, O2)

2. Gain new customers from other

2. Price sensitivity of customers


opening new routes and destinations

1. EU enlargement


2. Introduction of frequent activity

airlines as they seek lower fares

membership cards and discounts



competitive advantage


3. Seek opportunities for a strategic
alliance on LLC market to supplant

External Threats


1. Implement effective actions for

1. Improve employee satisfaction and

hedging oil prices



1. Volatility of oil market


(W1, W2, T2)

2. Increasing operating costs
3. More stringent EU environmental
and safety regulation

2. Enhance operational efficiency by
higher airplane utilization and
3. Assure compliance in the long-term

4.6. Framework for executing strategy
Executing the Strategy
For successful execution and implementation of a strategy a framework of several steps in necessary to be met in order to properly secure that such a strategy implementation is matched with the purpose of the company. Important consideration is that strategic targets have to be achieved showing financial performance and putting them into reality. Looking for the company´s specific situation and its environment where it is operating and then fitting it to its individual needs is the aim.

Accordingly we will examine some steps that need to be considered for Ryanair as well as expose what Ryanair does well according to their strategy and where there might be a need for improvements. First, we will have a look on how employees are treated and if their staff has the skills and abilities to support Ryanair. Further we will continue with their core competencies and capabilities and if they fit into the strategy and how they can be modified and strengthen to be at competitive advantage. 36

Staffing the Organization
For Ryanair´s strategy it is important to have the appropriate employees and management to make the strategy work. Every single employee has to keep up with the requirements needed for that particular job tasks to contribute best to the performance targets. Every company needs employees who follow their strategy and believe in what they do and how they do it. Weak staff needs to be trained or instead eliminated as they harm the success of the company. Right staff is needed and motivate time by time to keep on working and being company loyal. In the case of the low-cost-airline Ryanair it is not just charging low and cheap prices for tickets but also its service leaves a lot to be desired.

61 Ryanair is facing a high staff turnover, is charging their employees their own uniforms and for trainings. More and more negative publicity is coming up where passengers claim about customer support, poor first aid and low friendliness.

62 On the other hand, Ryanair does almost the same with its customers as with its employees. No frills, lack of good customer service but cheap and affordable prices. Customers fly by planes to go somewhere and spend their free time there but also going on business trips. They deserve a certain degree of friendliness and enjoyable time with staff loving their job and having a smile on their face. Intellectual capital helps to strengthen strategy execution and being at competitive advantage over others. For Ryanair it is not of huge importance to reinforce their strategy by the appropriate staff as the main focus lies on reducing costs in any way and forward these reductions further to the customers.

For gaining better image and improve their resources they should better treat their employees by certain incentives. Ryanair is not in a Union which puts their employees at disadvantage and their needs are not properly fulfilled. Improving steps lie in training them without charging any fees, helping and supporting them in developing their skills, paying them appropriately and offering a good working environment.

Build and maintain core competencies
Ryanair has its core competencies and competitive capabilities in low costs, flying to small airports, having strategic alliances that enable them to reduce costs and being punctually especially as a lot of business people use their service. They are continuing to increase their destinations as well as the regional airports they are working with to increase the number of passengers as they only need is to come from point A to point B. They differentiate from their competitors mostly on prices charged and services offered; Ryanair should continue to keep their costs low as this is the main success factor such as by providing online systems. On the other hand people are aware of the fact that for a low charge



people just pay basic needs to be covered and everything extra you desire you have to pay. Actually they can choose between Ryanair and other suppliers in this industry but they appreciate the low cost travel. Unfortunately for rivals to compete it is not a huge challenge as they compete on low prices and customer choose the one with the lowest price. For Ryanair, as to make it harder for competitors to compete with them on the same basis, they might motivate their employees to keep them in house. Ryanair should make its company more customers friendly and service-orientated. Customers should not be treated less valuable just because they made a good deal with low-cost travelling.

4.7. Best Practices and Implementation of Success Factors
Ryanair’s use of best practices implies that the airline is performing its value chain activities more effectively and efficiently as possible which leads to operational excellence and better strategy execution. A best practice describes a technique for performing an activity or business process that at least one company has proved working particularly well. In case of Ryanair, the main best practice lies on On-time performance63. According to monthly based customer service statistics it is proved that the airline belongs to Europe’s No. 1 on time Airline delivering continuous substantial punctuality improvements.64 Due to the airline is ahead of rivals and deliver value for money to its customers by building trust and reliability through its best practice in punctuality, Ryanair is catching automatically the attention from the society and gets more customers.

The board of directors has established number of committees who have certain responsibilities regarding the institution of policies and procedures inside the organization. The following committees are: Executive Committee, Audit Committee, Remuneration Committee, Nomination Committee and Air safety Committee. 65As the board of Ryanair is taking care of the leadership, strategic direction and overall management of the group, the intention behind these committees will help enforcing needed consistency in how particular strategy critical activities are performed in geographically scattered operating units, and well conceived policies and procedures support the creation of a good work climate that facilitate good strategy execution.

63 65


Executive Committee
The members of the Executive Committee can exercise the powers of the full Board of directors in circumstances, meaning if it’s not possible to convene a meeting of the full Board of directors. Audit Committee

The committee periodically reviews practices in the area of corporate governance and the members are all non-executive directors of the company.

It’s necessary that each member have the skills and experience appropriate to the business and everyone has to be a financial expert. Responsibility of the Audit committee is to report to the board of directors about any key issues identified in financial reporting, internal control, compliance with law and regulations, external and internal auditors to make sure that every activity is carried out in accordance with professional standards and good practice. Remuneration Committee

It has the authority to determine the remuneration of senior executives of the organization and to administer stock option plans.
Nomination committee
The committee assists and gives recommendation to the Board in ensuring that the composition of the Board and its Committees as matching to the needs of the company by controlling and assessing the skills, knowledge, experience and diversity.

Air safety committee
The focus lies on air safety and other relevant issues. They have to report quarterly to the board about the actual condition.

Finally we can conclude that Ryanair is implementing its key success factors which are operational efficiency, utilization of the Internet, core service standards and maintenance of overall costs by doing regularly quality controls through the different committees. The organizational arrangements are divided into pieces and the performance takes place from different departments. It’s matching the Six Sigma Quality control tool to contribute to operating excellence.

The tool is based on statists who state existing processes failing below specification and needing improvement. The Committees work in the DMAIC improvement system by defining, measuring, analyzing, improving and controlling the whole process going inside the company to improve the performance on a continuous basis and to enhance the quality, especially if there are wide variation how well an activity is performed which is linked to 39

Ryanairs punctuality. The main purpose of using the benchmarking system in comparison to rivals and the six sigma program is to create sustainability and a unique culture in operating excellence. Ryanair is looking forward to build a competitive edge over rivals by well conceived state of art operating systems to strengthen its organizational capabilities which can’t be adapt by its competitors.

4.8. Corporate Culture and Leadership
As Ryanair aims to be cost leader on the low cost carrier market, they have often (rightfully) been accused of having very poor corporate culture and employee morale. This has made for a lot of negative publicity and Ryanair has often been portrayed as a greedy company that will ignore morals and values for financial gains. So far this hasn’t resulted in significant losses of market share but this may change over time. Not only does the lack of a proper corporate culture cause negative publicity and a nasty reputation, it could also prohibit Ryanair from effectively executing strategies. In this section of the report we will look at the current corporate culture and how any changes in it can help with the execution and implementation of a new strategy.

Current Corporate Culture

High-performance culture. Looking at the key success factors for Ryanair, it is self-evident that Ryanair has and should have a high-performance culture. Ryanair’s high performance culture expresses itself from the CEO Michael O’Leary’s driven passion for optimizing all processes to the work floor where a no-frills mentality sets the mood. However, currently only the negative aspects of this type of culture are present on the work floor. Most notably the unrelenting pressure which resulted in a relatively high staff turnover.

Weak culture company. Ryanair is a weak culture company. This does not mean that there is a bland and meaningless culture (or a lack thereof) but it simply means that no distinct values and principles are constantly preached and there are no widely shared traditions, there is no particular business philosophy. On a brighter side this does mean that any changes in corporate culture can more easily be implemented as there is no pre-existing corporate message that needs to be over written by upper management. Also any new efforts and/or additions to the corporate message can come as a welcome change to the employees and even the customers.

Company culture in strategy execution
As stated above Ryanair currently has a high-performance culture but upper management has not yet utilized the potential positive aspects of this type of company culture. A suggestion would be to 40 promote a can-do spirit and pride in doing things right66 rather than the penalty based system Ryanair employs currently67.

This includes constructive criticism and rewarding top performers on the work floor. Focusing on the strengths rather than the weaknesses of employees can motivate them to outperform themselves and take pride in their work. Ryanair is currently the cost leader and the most punctual low cost carrier in the industry, upper management could use these in their management efforts to induce pride in the employees and to make them realize that hard work does pay off.

4.9. Conclusions & Recommendations
Having done the analysis anchored around the conceptual framework for Ryanair we can conclude the following:

Ryanair has built the resource and organizational capabilities which are definitely congruent with the requirements of the industry including employees with appropriate technical skills and experience. However, the issue of staff retention leaves a lot to be desired in the company which is due to the lack of a good reward & incentive system. To this point, even though it’s inconsistent with Ryanair’s policy on saving costs, certain concession should be made which will finally make a positive effect on customer service and a better corporate image for customers.

The company can also implement customer-based incentive programs to mitigate its poor image and to foster loyalty.

With the aid of appropriate organizational structuring comprising of certain committees as well as Ryanair’s information and operational systems (Six Sigma, DMAIC) company’s personnel is able carry out their strategic roles according to corporate policies and procedures that facilitate the strategy execution. Furthermore, the adoption of the best cost-cutting practices in the value chain has secured sustainable growth and leadership in the industry For Ryanair. Nevertheless, there are certain areas for improvement concerning hedging oil prices as well as better operational efficiency in aircraft utilization; any possibility of a strategic alliance will be welcome for Ryanair as it will supplant some competitors from the market

Fair enough, Ryanair’s corporate culture based on high performance has deteriorated the work environment of the company and the internal leadership and charisma of the CEO are evidently


Crafting and executing strategy 15th edition – Thompson / Strickland / Gamble. Ch. 13 page 424 67


not enough to make everything fit to the strategy. This again requires additional economic efforts and motivation programs from the company to mitigate its high employee turnover and to instill a strong corporate identity and pride.


V. Sources and References

Text book “Crafting and executing strategy”, Thompson, Strickland, Gamble, McGraw-Hill, 12th edition
1) Accessed 05.02.2011 2) Accessed 05.02.2011
3) Accessed 05.02.2011 4) “The airline encyclopedia, 1909–2000.” Myron J. Smith, Scarecrow Press, 2002 5) Ryanair. (2012). About U: Fleet. Retrieved February 2, 2012, from Ryanair:

6) Ryanair. (2011) Annual Report 20011. Retrieved February 2, 2012, from Ryanair: 7) Bloomberg Business Week (September 2, 2010). Ryanair’s O’Leary: The Duke of Discomfort. Retrieved February 2, 2012, from: 8), retrieved on 09.02.2012
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Ryan air Marketing analysis. (2016, Apr 13). Retrieved from

Ryan air Marketing analysis

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