Ryanair The Low Fares Airline Case Study
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Ryanair: The Low Fares Airline
Irish-owned Ryanair's mission is to firmly establish itself as Europe's leading no-frills, low-cost passenger airline. It was modelled on the success of America's Southwest Airlines, and its fundamental business strategy is to offer low airfares in competition with traditional high fare airlines such as Aer Lingus and British Airways. Overall, its business is to offer the lowest price in a high market industry.
Ryanair operates no frills point-to-point and short-haul flights, mainly out of regional and secondary airports within Ireland, the UK and Europe. It began its operations in 1985, and since 1991, has made profitable growth at high margins, with an objective to achieve a growth rate of 25% per annum. The airline has a disciplined growth strategy that is based around introducing new routes rather than saturating existing ones. This component of Ryanair's strategy is believed to generate demand from people who would not normally travel.
An important element of Ryanair's business strategy is that it operates a low cost structure, which enables the company to sustain its promise of low fares. The main elements of Ryanair's low cost structure include: operating point-to-point flights mainly out of regional and secondary airports; operating a fleet that consists primarily of used Boeing 737-200s; running a no frills service; minimising staff costs through outsourcing and performance-related pay, and; introducing direct ticketing.
Firstly, operating point-to-point flights eliminates the need for additional staff to check and transfer luggage through to subsequent destinations...