Ryanair: Defying Gravity Essay

Questions:

1. What is your appraisal of Ryanair’s launch scheme?

1. Focused to develop nucleus competency in low-priced short-haul air hose. 2. Scheme was “lower than lowest current fares” on short high-demand high-growth paths. 3. Cut win-win trades with under-utilized 2nd grade airdromes.

4. Marketing nonsubjective: Acquisition-Stimulate demand with oculus on stealing portion from flag European bearers. 5. Target market was fare witting clients who otherwise wouldn’t have travelled by air.

2. How do you anticipate Aer Lingus and British Airways to react? There could be 4 ways to react:

1. Start monetary value war with Ryanair by instantly cut downing AL and BA monetary values: unsustainable due to high operating expenses. 2. Gradual cost film editing ( staff decrease. less client service. less fringe benefits. lower quality travel. outsourcing of services. etc. ) to convey pricing construction in line with Ryanair: without losing nucleus competency. trade name value and net income at bigger phase where they are now profitable. However subsidising non-profitable short-haul concern with profitable long-haul concern is unsustainable in long tally.

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3. Most likely response: Stick to have nucleus competency as a high quality long-haul planetary air hose. Let Ryanair wing on short-haul European paths and do affiliation with Ryanair or similar low-cost air hoses to wing to little finishs for multi-point travellers to salvage ain costs. 4. Acquire Ryanair and run it as independent division keeping Ryanair’s old direction.

3. Reasons behind Ryanair’s profitableness?

Profitableness:
1. Low Fixed Costss:
•Long-term trades with secondary airdromes inquiring low-fee that are closer to major airdromes.
•Purchase second-hand or low-priced planes.

2. Low operating expenses:

•Commonizing full fleet to fuel efficient 737’s.

cut downing operating expenses and complexness in care. preparation. service. measure price reduction. •Outsourcing of support services. e. g catering. luggage handling. care. call centres. •Variable wage to employees based on public presentation.

•Low admin and client service costs with no-frill attack.
•Low cost but attention-getting advertisement.
•Promote no checked-in bags. usage gates w/o extendible jetways.
•Saving employee preparation. ID. uniform costs. No-refund to salvage paperwork costs. 3. Gross:
•High plane use with low turn-around clip.
•Aggressive enlargement on major or high-demand European paths.
•Ancillary gross revenues 15 % of entire gross.

Sustainability:

1. 2004 Income statement and balance sheet looks solid. 2. However. operating disbursals. particularly fuel. airdrome and path charges. have increased with higher rate than gross. reduction net income borders. 3. To remain sustainable in long-term. Control costs: demand to fudge for low fuel monetary values. make trades with airdromes and new path governments for low fees. i. e. maintain fixed costs and overhead costs every bit low as possible. Increase gross: base on balls on portion of fuel monetary value hikings or any fixed cost hikings to clients.

4. What are the most serious menaces to Ryanair?

1. Rising fuel costs. 2. Rising airdrome and path charges particularly while spread outing to new airdromes and paths. 3. BA short-haul division easy alining concern theoretical account with low-priced air hoses and still being successful or favourite bearer for menu witting riders.