Since its establishment in 1984, Ryanair has grown from a small airline, flying the short journey from Waterford to London, into Europe’s largest carrier. Ryanair now has over 11,000 people working for the company. Most employees are employed and contracted by multiple agencies to fly on Ryanair aircrafts. As in the case for pilots, the vast majority are either agency employed or self-employed, and their services are contracted to Ryanair.
After the rapidly growing airline went public in 1997, the money raised was used to expand the airline into a pan European carrier. Revenues have risen from €231 million in 1998 to €1,843 million in 2003 and to €3,013 million in 2010. Similarly, net profits have increased from €48 million to €339 million over the same period.
The airline launched its website in 2000, with online booking initially said to be a small and unimportant part of the software supporting the site. Increasingly the online booking contributed to the aim of cutting flight prices by selling directly to passengers and excluding the costs imposed by travel agents. Within a year, the website was handling three-quarters of all bookings.
The rapid addition of new routes and new bases has enabled growth in passenger numbers and made Ryanair among the largest carriers on European routes. In August 2005, the airline claimed to have carried 20% more passengers within Europe than British Airways. Ryanair’s CEO, Michael O’Leary, stated in April 2007 that Ryanair planned to launch a new airline around 2009.
The new airline would be separate from Ryanair and operate under a different branding. It would offer both low cost with fares starting at €10.00 and a business class service which would be much more expensive, intended to rival airlines like Virgin Atlantic . The new airline would operate from Ryanair’s existing bases in Europe, to approximately six new bases in the United States. The new American bases will not be main bases such as New York’s JFK airport, but smaller airports located outside major cities. Since the Boeing 787 was sold out of production until at least 2012, and the Airbus A350 XWB will not enter service until 2014, this has contributed a delay to the airline’s launch. It is said that the name of the new airline will be Ryan Atlantic, and it will sell tickets through the Ryanair website under an alliance agreement.
Question One (40 Marks)
Discuss market environmental factors that will affect the Ryanair airline.
Question Two (50 Marks)
“Ryanair has grown into an international airline serving customers from several countries.”
With reference to the above statement, explain the macro environmental factors that impact on this airline business.
Answers to Above Questions on Ryanair Case Study
Answer 1: Every business is affected by the external environmental it faces. In the given case scenario of Ryanair, the company is also effected by a large number of environment factors. The most significant external factor is the economic factor because the economic measures such as recession, high inflation and unemployment rates are the crucial factor that affect the demand for travelling among passengers. Apart from economic factor, the environmental factor is another major external factor that can directly affect the performance of Ryanair. The airline operators are required to adapt green measures in their operations but the emission from aircraft requires them to be highly efficient in order to achieve their objective of green performance.
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