Operation and Strategy management for Ryanair Essay

IntroductionThe club chosen in this report is Ryanair in the airline indus pronounce. Ryanair is a pocket-size embody budget airline blendling across 1600 r show upes from 57 bases connecting clxxx destinations in 29 different countries (Ryanair.com). Ryanair first started its operations in 1985 surrounded by Ireland and London. The first year it commuted around 5000 customers that the social club re tot all(prenominal)y(a)y took light upon in 1990 when Michael O Leary was ap manoeuvreed the chief executive officer of the fellowship. The family was envisaged by its CEO Michael O Leary and adapted the Southwest airline sample from America and brought it to europium and since then the company has also embraced a no frills, low bell model where it plans to get their customers from A to B at the cheapest rate possible. This has revolutionised the travel assiduity and made travel cheaper and reliable within europium. Ryanair has a vigorous hold on market in near of the countries Europe with 44% in Ireland where its headquarters atomic number 18, followed by 23% to 21% in Poland, Italy and Spain (centreofavaiation.com). In the UK the company holds a modest 16% of the market with its overall customers estimated at 81.5 million for the year 2014. The company gets a stiff competition from Easyjet, Lufthansa, Aerlingus and Alitalia. These airlines try to follow the same model as well but Ryanair has been the leader by fargenerating r stock-stillues of 3.789 billion for the fiscal year 2013 with profits of 374.6 million. regard 1 Market sh be of different airlines ( Source centerfieldofaviation.com) PEST abridgmentPolitical FactorsThe political factors tend to affect the airline industry the most if they are flying from one country to anformer(a). In courting of Ryanair, it simply flies within the EU, thence there is no question of a personify increase uncertainties. unmatched factor which has helped the airline sector grow is deregulation. In 1978 the join States take ond(p) government control over many aspects of air travel, including fares and routes, in the air lane Deregulation Act (Liberty of Economics and Liberty). This shifted the power to the market sphere. Following the victory of this, Europe completed their throw faze of deregulation by April 1997. This allowed passenger planes to fly between member states freely. Ryanair added several hot routes to their repertoire subsequently deregulation, taking the opportunity to add routes to innovative parts of Europe and S bungholedinavia. A further form of deregulation came in March of 2008 when the EU and United States agreed to let any city within each others territory fly between each other. This was called the Open Skies Agreement. Although Ryanair drive lighten to take full improvement of this, they kick in announced their believe to start transatlantic flights at a very low appeal to the consumer (RTE, 2007). This unprecedented step could shak e the air flight market, increasing the script of passengers able to fly more freely across the Atlantic and could have a knock on effect with Ryanairs transatlantic competitors, forcing a change in the market. In 2012 a new law was introduced where all flights access to and from the EU had to buy their CO2 emission allowances, whereas before they were let off from the Emissions Trading Scheme. Many airlines have expressed their anger at their cellular inclusion in the scheme, pointing to the fact that only 2% of global CO2 emissions are caused locately by air traffic. Many airlines have change magnitude book prices to cope with the extra apostrophizes incurred. Ryanair have passed on the cost to customers in the form of a 25c charge (Irish clock meters.com)EconomicalDuring a deep break Ryanair has flourished, recording a +18.71% 1 year return in 2012 ( Bloomberg, 2014) and announcing that it is Europes leading scheduled airline. In comparison to other airlines that are cut ting jobs and have planes grounded, Ryanair are experiencing high demand and adding extra flights, creating new jobs for many sectors in their business, from pilots to gross r so farue and marketing batch (RTE, 2007) One of the top(prenominal) problems facing the airline industry is the fluctuating anoint prices. To over-correct the rising oil prices most airlines have to put ticket prices up, which directly affects their customers. However, chthonian the exceptional leadership of Michael OLeary, Ryanair has addressed the problem with hedging. hedging could be termed as an agreement between the oil companies and the airlines where oil prices are agreed in advance. In Ryanairs gaffe they have increased its fuel hedging capacity to 90% of its requirements (Centre of Aviation). This exceptional thinking by Ryanair gives them a cost cutting reinforcement over its competitors and consequently still being able to offer its customers the same low fares which have been Ryanairs fo rte.SocialThe airline industry as per any other industry has to comply with the customers requirement to sustain in the market. A very god example that could be stated in this slip is that of Ryanair, whereby, during the recession times when the unemployment grew to almost 15% and thus people did non have much money to spend, Ryanair gave its customers cheap flights to commute from one arrange to another taking away all the inflight luxuries. This has helped the airline grow even in the toughest times the economy has faced and thus also creating new jobs. But also to with stand the competition by other opulence airliners, Ryanair would offer its customers to book their cars and train tickets while booking their flights as it mostly flies to secondary aerodromes. This, therefore not only attracted middle path customers but also people on business. The airline industry in particular in Europe has had a last few troublesome old age due to natural disasters that have cost the c ompany extensive amounts. To point out a few, the ash cloud in 2010 cost the company 29.7 million Euros (Irish times, 2011) and these are huge costs for the airline to bear and thus, to compensate these compensation chargers Ryanair now chargers a 2 levy to compensate these claims in the future (Irish times, 2011).TechnologicalIn the current climate technology plays an big part in the airline industry. Firstly, with the increasing fuels costs, fuel efficient aircrafts can save the companies a substantial amount of money. Another way is the network with the growth of internet all the companies use online advert to push the sales and television advertising is also second to none. The internet is also a medium where people look for cheap airline tickets. In the case of Ryanair, the company makes the utmost use of technology to cut the pitying appointment out and thus keeping the costs down. It has a very sound online ticket booking system where 85% of its tickets are booked (Ryan air.com). In 2009, Ryanair introduces the self-service kiosks whereby the passengers can check in using the machine and thus taking the human element out of the equation. This service was already obtainable for passengers travelling without luggage but it was now developed for the customers travelling with sign in luggage. This was a chip and pin service developed in collaborationism with Ingenico and thus gave the company a competitive advantage over its competitors and thus delivering low price flights for its customers (BBC News, 2009).Value Chain AnalysisA impregnables competitive advantage could be determined by the comfort twine analysis. The value chain consists of primary and birth activities. Understanding the companys linkage between the primary and secondary activities gives the companys business model and helps one understand the secret of withstanding the competitive advantage. frame of reference 2 Value Chain Analysis modelIn the case of Ryanair, a clear linkage could be made between the inward and outbound logistics in the primary activities to the Technology development in the support activity. Now, to obtain a clear understanding of this model, inbound logistics are the deals that the company is able to acquire from its suppliers on the promise of higher volumes. These include food, drinks, transaction free goods, fuel which have to be delivered, stored and controlled on time as to avoid any delays for the aircraft. Ryanair, also puts a great deal of movement in its operations as it promises its customers a 25 minute policy change period which could be one of its core competencies and for the company to do so all the inbound logistics should be delivered on time. This 25 minute relapsing period also, gives the company the advantage of flying two extra flights on the same route compared to its competitors and enables high aircraft utilisation. The company also offers nonstop direct go to its destinations and does not link with any o ther airline, thus crowing them a timely departure from the airport and also avoiding the costs for by dint of services for its passengers and does not have to rely on other flights coming on time to schedule their departures. This has helped them gain a competitive advantage over its competitors as 95% of Ryanairs flights are on time compared to 88% that of EasyJet. Ryanair also uses the standard Boeing 737 model of aircraft and thus, the company manages to get living services and spares at a very minimum cost. This also reduces the cost of staff training and offers flexibility in scheduling aircrafts and crew assignments. On the outbound logistics, Ryanair operates to the secondary airports and thus have to arrange onward go for their customers. They have teamed up with certain vehicle companies to give its business customers the advantage of that service however some of the routes are so obscure that these services cannot be provided constantly, a prime example are some of th e Norse routes.Thus, Ryanair has certain limits when acquiring the market share. On the contrary, Ryanairs competitor EasyJet does the blow and flies to major airports and cities and thus paying higher landing charges which are then reflected in the fares for their customers. The advantage of flying to secondary airports is that Ryanair pay little chargers and they are also in a seat to bargain with the airport authority and get a deal that favours them and the secondary airports are less congested and thus turnaround times are much faster (Centre of Aviation), 2014). The inbound and the outbound logistics are coupled nicely with the technology to gain a competitive advantage over its competitors. Ryanair has tried to eliminate the human element as much as they can. They have introduced kiosks at the report desks for customers to check-in themselves at their own leisure. Thus, reducing staffing costs which is then reflected in the prices they charge their customers. The compa ny does not invest much in advertising as well, the main advertising isdone through its very own website and 90% of the tickets are booked through the website as well( Ryanair.com). It only uses ticketing agents when theyre opening new routes and trying to venture into unknown markets otherwise it is the website that people book their tickets through. The company constantly monitors its planes minute by minute through its own website and thus, keeping the human element out and using its website for in the main everything saves them on an average 6 million a year (BBC news, 2014). Amongst all the competitive advantage the company have, the one that has not been mentioned is the good leadership of Michael O Leary and his ability to create a vision for the company. He has successfully managed to adapt to the change as and when required and adopt different model to envisage the change for the betterment of the company which has helped the business to grow.ConclusionTo give over this r eport, Ryanair has emerged as a successful company since it was established in 1985. It had a few hiccups on the way for the first 5 years but since Michael O Leary took the reigns over in 1990 as the CEO the company has kaput(p) from strength to strength. Its success has been helped by the conducive nature of the industry and the outdoor(a) elements within the airline industry. This industry has its threats but since the de regulation act and the magnification of EU, there have been a lot of commuters within these countries for business and leisure, thus this higher demand and low costs have helped Ryanair emerge as a low cost budget airline. Just because the company operates all its routes within the EU, it does not really have to deal with changing political factors and that it has always used them to their advantage. Ex. De regulation act and the open skies act even though the company has not started its flights to the US as of yet. The changing oil prices are a concern for e very airliner but Ryanair counteracts through a process call hedging and uses the most advanced technology to remove the human element to curb the costs down for its customers and another motive for its success even during recession is because it gave the customers cheap flights to commute taking the luxuries out which were the demands at that time. Ryanair has a competitive advantage by the virtue of its inbound activities and the outbound activities combined with the technologicalaspect of it. It uses the same standard Boeing so the costs are less and also, flying at secondary airports hatch less landing charges and theyre also in a position to get a favourable deal for themselves from the airport authorities. The turnaround time is only 25 minutes as well and thus big their customers more daily flights from the same destinations compared to its competitors.RefrencesBelobaba, P., Odoni, A., & Barnhart, C. (2009). The global airline industry. Hoboken AIAA, Inc Helm, C., & Jones, R. (2010). Extending the value chain A conceptual framework for managing the governance of co-created brand equity. The Journal of daub Management, 17(8), 579-589. McCormick, T. (2010). Understanding costs using the value chain a ryanair example. capital of Ireland Institute of Chartered Accountants In Ireland. Research and markets European low cost airline industry continues to prosper.(2004, Business Wire, pp. 1. Research and markets European low cost airline industry continues to prosper.(2004, Business Wire, pp. 1. Research and markets PEST analysis.(2003, M2 Presswire, pp. 1. RTE 2007.http//www.ryanair.com/doc/investor/2012/q1_2012_doc.pdfAccessed 20 March 2014. http//www.ryanair.com/en/about/ryanair-and-the-environmentAccessed 20 March 2014. Aviation, C. C. (2011, May 25). CAPA Centre for Aviation. Retrieved March 20, 2014, from Ryanairearnings up 26% but change in order for 2012 http//www.centreforaviation.com/analysis/ryanair-earnings-up-26-but-change-in-tack-for-2012- ht tp//www.irishtimes.com/newspaper/breaking/2012/0112/breaking26.htmlEdwards, N. (2012). http//investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=27620789 accessed on 2/04/14. http//www.bbc.co.uk/news/magazine-22659822 accessed on 1/04/2014 http//www.air-passenger-rights.co.uk/tag/the-irish-times/ accessed on 5/04/14 http//wwwnews.live.bbc.co.uk/news/business-23487106 accessed on 10/04/14