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Ryan air case study - Essay Example

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Summary
The Ryanair, written by Eleanor R.E. O'Higgins is a case study which illustrates the challenges and problems faced by the Irish airline "Ryanair". The study also shows the different business strategies the airline did in its success as an airline carrier through rendering quality service at a cheaper cost, as well as the challenges that the industry has been facing since 2004…
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Ryan air case study
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Download file to see previous pages The Ryanair, founded in 1985 by the Ryan Family, is an airline which provides airline services that cover routes between Ireland and the United Kingdom. This airline industry served first as a second choice for passengers because the main airline that time was Aer Lingus. During its first years of operations, Ryanair was a "full service conventional airline", with two different seat classes and renting three varied types of aircraft. (O'Higgins 2004)
In the early 1990's, Ryanair encountered problems in terms of management and profit gains. The lack of a stable management led by a good CEO resulted to losses amounting to 20 million Irish pounds. Before the appointment of Michael O'Leary as chief executive, five people have already held that same position in a short span of time. (O'Higgins 2004)
With the leadership of the newly appointed CEO Michael O'Higgins, Ryanair underwent reforms in order to recover the losses the airline had in the early years. The new formula includes setting-up cheap fares, having no frills or decorations, and adopting the Southwest Airlines model. These reforms started the big turnaround in the airline company in the latter years of the decade. In 1997, Ryanair was a company "floated in an IPO1 on the Dublin Stock Exchange and on Nasdaq- 1002 but the following year, it registered 9.1 million shares on the London Stock Exchange." By the year 2002, the company was included in the Nasdaq- 100. (O'Higgins 2004 p. 834)
III. STRATEGIC INTENT
Low Cost Airfares
The main goal of Ryanair is to keep the company as the leader of low fare airlines which operates "point-to-point short-haul flights" out of regional or secondary airports in Europe. (O'Higgins 2004, p.835) All the other strategies revolve around the primary objective of providing "no-frills service with low fares". This approach tries to target the budget conscious leisure and business travelers, as well as people who are never used to travel by air instead used other means of travel like land and water. (O'Higgins 2004)
The air company provided the cheapest way possible to travel by air. It distributed most of the seat inventories to the lowest fare class. The no frills services made the company focus more on other services that are essential to the customers like: (1) frequent departures, (2) advance reservations, (3) baggage handling, and (4) consistent on-time services. It also removed the "non-essential extras (advance seat assignments, free in-flight meals, multi class seating, and access to a frequent flyer program, complimentary drinks, and other amenities) that interfered with the reliable, low cost delivery of its basic flights." (O'Higgins 2004, p. 835)
Impacts
The strategies of Ryanair which are centered to providing the cheapest air travelling services contributed to very good results. The company surpassed the Aer Lingus as the number one airline covering travels between Ireland and United Kingdom. This fantastic result is due to increased number of passengers (4 million) availing the low cost airline services. The increase of the company's market share to 37 percent enabled them to expand from Irish-UK route to 133 routes, with 86 destinations from 16 countries around the world. (O'Higgins 2004) By the end of 2003, the company had achieved the following:
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