Ryanair airline Case Study Example | Topics and Well Written Essays - 3000 words

Ryanair airline - Case Study Example Yet it raises opportunities for the low-fare carrier segment, such as Ryanair that is a rising star in the skies of Europe, having been performing well post 9/11. The aim of this report is to analyse the overall performance of Ryanair in the fast-changing environment, and then few recommendations will be provided. Conclusions will be drawn at the end of this report. Irish-owned Ryanair, founded in 1985, began to introduce a low cost operating model in the early 1990s. The company primarily serves short-haul, point-to-point routes that target business commuters and leisure travellers by offering low, multi-tier fare pricing and sngle-classs air transportation. Having overtaken EasyJet, Ryanair is now the largest low-cost carrier in Europe In January 2000. (Doganis, 2001) The company offers approximately 475 scheduled flights per day serving 84 locations in 14 EU countries. The worldwide commercial aviation has suffered from terrorist attacks of 9/11. The tragedy dramatically decreases the number of passengers and pushed Airline industry facing deterioration in their financial positions. Similarly, impact of SARS and Iraq War reduce willingness of people to travel outside their countries. Since 1997, the Euro... For example, any airlines holding a valid Air Operators Certificate in the EU have right to operate on any route within the European Union, including flights wholly operating within another country. On May 1st 2004, ten new members joined the EU as part of EU enlargement. The era of single European sky related to Open-Sky Treaty, allowing point-to-point service between any EU countries is approaching and airline companies will benefit from consolidation; on the other hand, they will have to confront fiercer competitions against each other. (Loddenberg, 2004) The price-sensitivity for routes to and within accession countries is naturally suited to low cost airlines. The average Ryanair fare in 2003/4 was 40 and the expectation is a 38 average fare in 2004/5. The net margin fell from 28% in 2002/3 to 21% in 2003/4 and is predicted to fall to 18% in 2004/5. The net margin has thus fallen by 10 points in two years. While the margin exceeds the industry average, it may come under pressure from factors such as further falls in yields and the lack of scope for more reductions in an already low cost base. Economic factors Economic recession Overall, the world's economy is slowdown, which affects European economy as well. People are reluctant to spend money in leisure activities. Currency fluctuation In related to companies' operating costs, currency fluctuation affects those companies' revenues that are not in US dollars. Weakness in US dollars enables fuel cost reduction. Social and cultural factors Population intensity High level of population density in the EU region (six times larger than the USA) is likely to stimulate the growth of short-haul point-to-point routes within Europe, which provides major opportunities for low-cost