The Operational Management of British and Ryanair Airline Businesses - Case Study Example

Operational Management Work Introduction. One of the greatest roles of management in any business is the ability to run its operations in a competitive manner. Operation management should be aligned with the overall business goals and objectives. In essence, operation management is the process of designing, controlling and overseeing production and service delivery by redesigning business processes to fit customers needs. It is therefore, a field that runs physical and technical operations with an aim of ensuring that the company remain competitive in the market. Failure to study and align organizational activities within the customers taste has deleterious effects on the operations. This paper examines the operational management of British and Ryanair Airline businesses. To understand the operations strategy and management, a comparative analysis that delve into their operations will be explored. Background of British Airways British airline history goes back to August 1919 when it started its domestic and subsequent expansion Europe flights under different names. However, in 1974 there was merger among Cambrian, Caledonian, and the North West Airlines to become the modern day British Airline. Around 1980, the airline was operating at a loss due to rising fuel prices (Balmer, Stuart, & Greyser, 2009). The conservative government at then ran the airline into successive losses until it was privatized in 1987. Its journey to profitability became apparent in mid-1990s. However, by the year 2002, it was carrying about forty million passengers, and there were subsequent profits. Sadly, the 2008-09 financial year posed a tremendous challenge to the management following industrial dispute, Iceland volcanic ash cloud among many factors (Gaggero & Piga, 2010). Despite the unforeseen circumstances, its infrastructure, brand creation, and customer attraction remain illustrious. Today, the British Airways (BAs) is one of the leading market leader in United Kingdom and Europe. It has expansive operations in domestic and international passenger, freight, ancillary and mail services. It has over 300 destinations worldwide with its franchise and codeshare partners. According to 2009-2010 Annual Report, it had handled over 32 million passengers with 8 billion Starling pound revenue that was 11% lower than the previous year (Grundy & Moxon, 2013). Since its privatization in 1987, BA has continued to experience market expansion and business growth. However, in the recent years, its market shares has continued to dwindle as this leading airline face competition from growing markets. To ensure its continued operations, there is need to revamp its business processes. This can be achieved through a critical analysis of its operations with an aim of streamlining its operations to meet the current trends. However, its management remains optimistic about going round its current operations and logistic challenges. According to 2008 annual report, the strategic operation goal was to ensure that it enhances its competitiveness through investing in quality infrastructure so as to meet its customers demands (Balmer et al., 2009). It is an airline that is driven by the provision of high-quality services and infrastructure. A Brief Background of Ryanair Airways Ryanair is a low-cost Irish airline with its operation head office at Dublin Airport and a London-based Stansted Airport. It is a creation of Ryan family that came into existence in 1985 with only a single plane operating domestic flights between Waterford, South East Ireland to Gatwick airport in Landon (Datamonitor, 2009). Following 1997 European deregulation of the airlines industry, the company began its growth and expansion. Subsequently, the last decade has a continuous growth and expansions of its operations across Europe. Today, Ryanair airline is one of the most successful airlines and the leading low-cost airline in Europe. This has been made possible by rapid expansion in the number of passengers, provision of quality services at relatively lower cost (Diaconu, 2012). Indeed, the tremendous growth and expansion of these two airlines mainly depends on their operation management. Although the British carrier appears to have a less spectacular recent history, it has been echoed to have an illustrious record in Concord operations. Comparative Analysis of British and Ryanair Airways With increase competition in the ultra-modern airline industry, both BA and Ryanair has continued to respond to changing operational demands in with a number of strategies. Ryanair, for instance, has focused on the provision of cheaper air travel to maximize its revenue. This strategy has been successful because it has seen the company growth to its current capacity. On the other hand, the British airline has focused on providing upgraded services to its customers. The quality of infrastructure and customer service seems to be driving the operational company strategy; in essence, the two airlines have adopted two elements of operation management. Ryanair has its goals on utilizing price as a tool to enhance its competitive advantage while maintaining relatively quality services while BA strategy revolve around quality improvement. Certainly, there are many other airlines operating worldwide airlines, thus ensuring competitiveness is becoming gradually untenable. Traditionally, the choice of a customer would be centered on both quality and price of the flight. However, quality as an important element has a full dimension. It comes with other key concepts that include safety, on-time flights, and an excellent customers service response. Besides, lower pricing comes with issues of the flexibility of flight connections, convenience, and dependability. Unlike other industries, safety and flexibility of flight schedule are essential elements that the majority of these companies’ operational strategies revolves. Ryanair Operation Notably, the Ryanair operational strategy involved cutting down the cost of its products and services and ensuring that it does not cause inefficiency. British airline operational goal is to achieve a high quality of goods and services that provides customers quality. This has been justification for their relatively expensive flights. Also, BAs strategy aims at increasing productive capacity of its operation through employing the innovative use of its physical resources to enhance customers satisfaction. The logic in this mode of operational adjustment is based on the creation of a pool of consumers whom their focus is on quality and classic flights. As a result, their operation strategy has shifted to the secondary airport to ensure high utilization of airliners. Besides, Ryanair airlines makes 25minutes turnarounds to enhance its use (Barbot, 2006). In many ways, the company appears to have succeeded in cutting a competitive edge by using quality as a driving force for its services. A number of operational strategies appear to have placed Ryanair airlines in its current position. Initially, it was not a profitable business, and it was fragile within large European airlines before deregulation. One of the critical operation change of strategy was through merging with Southwest Airlines of the United States (Barrett, 2004). This is one of the most flourishing companies in the global arena. A model that was crafted included operating one type of flight using the smaller airport. Basically, this would translate into the lower cost of landing and subsequently lowering the flight charges (O'Connell & Williams, 2005). Also, the company cut its frill service on board and selling tickets directly to the customers. Following this change of operations there was a market decrease in the cost of flights that was entirely sustainable resulting in the influx of customers. Through establishing partnership, both the BA and Ryanair have been able to make an impact in the industry. Essentially, there is substantial evidence on how effective a change in strategy can influence the business. One of the challenges that established companies like the British airlines is to compete with low-cost carriers. However, there has been a three alternatives for BA, first to continue operating the full service that focus on quality and customer satisfaction, adopt the low-cost model or concentrate on high-yielding clients (Grundy & Moxon, 2013). BA operational management has opted for differentiation of clients base, invest on premium, and concentrate on both first and business class categories. Due to high expense on single flights and commitment to ensuring dependability, BA has rationalization of flight routes recently. Rationalization of routes has created two primary outcomes that have since built on competitiveness. It has resulted in cutting loss-making routes and creation of efficiency. Routes flexibility and connections creations have since created alternate profit-viable routes that continue to sustain the business operations (Mason, 2003). While BA focused on routes flexibility and quality services at their higher prices, Ryanair maintained a one-flight operation. This resulted in two ways of cost minimization; first, there has been a reduction in pilot cost and maintenance costs. In addition, they have embarked on diversification of services through focusing on maximizing on seats capacity, charges for seats only and ancillary services. Additionally, another revenue creation has been capitalized in online check-ins, luggage handling and on board food and beverages. Besides, provision of online advertising of low-cost services and services that have been discounted, a car for hire, affordable hotels, gift vouchers, and cruise holidays among other incentives. This appears to have been operational management strategy that continue to see the expansion of their products. Ryanair Company is an exemplary example of a cost adjustment competitive advantage strategy (Anonymous, 2011). Their principal aim is to continue attracting middle-class consumers whose choice of a flight primarily relies on its cost. Certainly, many customers fit into their strategic operation. British Airline Strategic Operation. Operation management is one of the crucial areas in the BA business strategic plan. Like any other enterprise, BA has undergone a couple of operational control adjustment to meet market competition. To enhance business operations, the company has focused its operation strategy in specific areas of airlines operations. Dependability is one of the crucial areas that has continuously shaped the company operations. Similar to any other airline, BA has an obligation to ensure speeded operational procedures to its customers. Notably, its current challenges, especially from the corporate world, have affected its dependability, flexibility, and costs. To avoid such issues, the company has embarked on the use of technology to improve its operations. The OM team has specifically continue to improve operational management systems and processes to ensure customers can be attended to efficiently and timely. Functional adjustment has seen network creation that ties information and material flow in an operating unit. This has ensured multi-firm functional systems to create efficiency in handling customers. Use of information systems has been adopted to enhance integration of operations and effectiveness in operations. Flexibility has been enhanced through the creation of 24/7 OM and logistic services to reduce possible inconveniences to their consumers. Call centres and electronic notification systems have been put in place that link with their clients to provide timely information in case of flight delays. In addition, BA has employed a team of experts to design competent operation team that has enabled the creation of the first Concorde airliner. Unlike any other airliner, the safety of this plane has been revamped through fitting of Olympus control system and RAFs strategic bombers. It is BA strategic goal to build its brand not only on good fitted seats, but also on ensuring safety. Speed of operations and customer services is a major factor when clients are evaluating their choice of flights. Like the Ryanair airline, the BA strategic management has a comprehensive stipulation on enhancing customers timely response. Flying a Concorde airliner through a wire control system that uses hybrid circuits was a remarkable achievement. It ensured not only safety, but also speed. BA has, therefore, become among few airlines to enhance their speed of flights among the existing companies (Belobaba, Odoni, & Barnhart, 2009). Using this integrated circuit system, BA has created its unique competitive advantage that gears towards promoting quality services in line with its strategic objective. Besides, the "know me" program launched which is a computer program allows the cabin crew and staff members to identify their customers faces. It has enhanced retention and promoted customers loyalty. Challenges Facing Ryanair and British Airlines the cost of its operation remains high in a very competitive market industry. More importantly, the fluctuating cost of fuel in the global market continues to pose enormous threats to the companys operations ( Dana & Vignali , 1999). The price of fuels is mostly external force that the industry has no control over. In addition, flights connections and logistical challenges remain greatest challenges to operations and logistic managements. Besides, rising insecurity and global threat of terrorism is continuously limiting international routes and destinations. Despite the continued operational improvement in both platforms, dependability has not been satisfactorily improved. Unlike BA, Ryanair continues to face advanced technological limitations in enhancing security and operations. Recommendations The two models of airline operation have continues to face a myriad of operational challenges. For British carriers, there is a need to continue focusing on reduction of cost of service and emphasis on revenue creation. Much as quality and safety are essential elements, there is need to concentrate more on flight connection processes that will ensure customers meet their schedules. Ryanair continues to face quality and infrastructure related issues. They should invest in security and advanced technology to fix security systems and infrastructure. Working through mergers and establishing a purposive partnership based on mutual benefits should be the principal targets of the industry. Increasing competitive advantage should focus on sustainable competitive strategies. These two models of operations should blend cost and quality of services. In reality, operation flexibility should drive the strategic goals of this organization. As more companies enter the market, the existing airliners should ensure a continuous quality management and research on better ways ensuring continued existence. Reference List Dana , L.-P., & Vignali , Daniella . 1999. British Airways plc. International Marketing Review. http://doi.org/10.1108/02651339910280957 Anonymous. 2011. -Ryanair adopts revenue management system from RMS. Airline Industry Information. Balmer, J. M. T., Stuart, H., & Greyser, S. a. 2009. Aligning Identity and Strategy: CORPORATE BRANDING AT BRITISH AIRWAYS IN THE LATE 20TH CENTURY. California Management Review, 51(3), 6–23. http://doi.org/10.1108/09600030310502894 Barbot, C. (2006). Low-cost airlines, secondary airports, and state aid: An economic assessment of the Ryanair-Charleroi Airport agreement. Journal of Air Transport Management, 12(4), 197–203. http://doi.org/10.1016/j.jairtraman.2006.04.001 Barrett, S. D. 2004. The sustainability of the Ryanair model. International Journal of Transport Management, 2(2), 89–98. http://doi.org/10.1016/j.ijtm.2004.12.001 Belobaba, P., Odoni, A., & Barnhart, C. 2009. The Global Airline Industry. The Global Airline Industry. http://doi.org/10.1002/9780470744734 Datamonitor. 2009. Ryanair Holdings plc. Ryanair Holdings, PLC SWOT Analysis. Diaconu, L. 2012. The Evolution of the European Low-cost Airlines‘Business Models. Ryanair Case Study. Procedia - Social and Behavioral Sciences, 62, 342–346. http://doi.org/10.1016/j.sbspro.2012.09.054 Gaggero, A. A., & Piga, C. A. 2010. Airline competition in the British Isles. Transportation Research Part E: Logistics and Transportation Review, 46(2), 270–279. http://doi.org/10.1016/j.tre.2009.08.009 Grundy, M., & Moxon, R. 2013. The effectiveness of airline crisis management on brand protection: A case study of British Airways. Journal of Air Transport Management, 28, 55–61. http://doi.org/10.1016/j.jairtraman.2012.12.011 Mason, K. 2003. Cleared for take-off: structure and strategy in the low fare airline business. Journal of Air Transport Management. http://doi.org/10.1016/S0969-6997(02)00073-X O'Connell, J. F., & Williams, G. 2005. Passengers’ perceptions of low cost airlines and full service carriers: A case study involving Ryanair, Aer Lingus, Air Asia and Malaysia Airlines. Journal of Air Transport Management, 11(4), 259–272. http://doi.org/10.1016/j.jairtraman.2005.01.007 Ryanair British Airways Single class of seat (yes or no?) yes No Seating (high or low seat density?, Seat pre-allocation possible? Low seat density Seat pre-allocation. High seat density. Seat pre-allocation Load factors (high or low occupancy?) High Low occupancy Catering (no, little or always?) Little Always Network (point to point or hub and spoke?) Point to point Point to point Frequency of flights (high or low?) No yes In-flight entertainment (yes or none?) none yes E-ticketing (essential or not necessary?) Not necessary Not necessary Frequent flyer schemes (yes or none?) None Yes Single aircraft type in fleet (Does the company operate with both large and small aircrafts or only one type?) One type Both large and small aircraft Airport choice (main or secondary?) Secondary main Aircraft utilisation (Does the aircraft spend much time on ground or is it highly utilised?) Highly Utilized Spend time on the ground. Fast turn around (yes or no?) yes no Flight distance operated (long and short hauls or only short?) Short hauls Long Cargo (do they carry cargo besides passengers?) Yes Yes 1.0 Appendix Low cost – Ryanair Traditional – British Airways Qualifiers Winners Qualifiers Winners Table1: Order qualifiers and order winners of Ryanair and British Airway Read More