Airline Revenue Management - Essay Example

The company blames the strike action of cabin crew and planned winter capacity reduction as a major cause of decline in revenues, capacity and traffic.1 The reported loss of British Airways in 2010 was £531 million as compared to £401 million loss in 2009 (Table I).2 On the other hand, according to information taken from official website of Ryanair, the low cost airline Ryanair reports increase in its passengers’ traffic by 14% (from 58.6m on March 31, 2009 to 66.5m on March 31, 2010), increase in revenues by 2% (from €2,942m in 2009 to €2,988m in 2010) and increase in Earnings per Share by 204% (from 7.

10 in 2009 to 21.59 in 2010). Furthermore, the company started its services on 284 new routes and now it is providing services on 940 total routes.3 Moreover, the number of passengers of Ryanair is also increasing rapidly for example, in June 2009; the number of travellers served by the company was 5,836,355 as compared to 6,713,559 travellers served in 2010 (Table II).4 The price structure of Ryanair is very simple and company only charges ticket price and for using other facilities customers have to pay extra charges.

On the other hand, British Airways includes everything such as food, toilet etc in the ticket prices which enhances the cost of ticket. Since the competition among airlines is increasing, therefore, airlines are coming up with distinct strategies for example, Ryanair is seeking to reduce its costs and lower its profit margin to offer lowest possible prices to customers. On the other hand, British Airways has kept her prices high because of the slowing down of global travelling demand, increasing fuel costs, high insurance costs and increasing airport taxes (Ivythesis, 2009).

Being a legacy carrier, British Airways is only serving the primary and major airports whereas, being a low cost carrier, Ryanair is serving secondary airports. Ryanair has been given the award of lowest cost airline by Budgies