Pros and Cons of low cost carries: A

case study of RYANAIR

Allison Fernandes – s3251936

October 12th 2010

Overview of Ryan Air
• Low cost carrier; materialised in 1985.
• Employs the low-cost, low-fare strategic business
model which is unique in the European market
• Competitive with other airlines, Its largest competitor
is Easyjet.
• Competition with WizzAir as it also flies to smaller
secondary airports.
• 5 Sept 2009, fleet reached to 200 aircraft.
• Ryan Air will operate a fleet of 292 aircraft by 2012.
Pros of Ryan Air
 Pros of Ryan Air
• Europe’s leading low-cost Airlines.
• Operates short haul point-to-point routes, between Ireland, the UK
and continental Europe.
• It enjoys monopoly in Dublin Airport.
• Airline with best frequency & punctuality.
• Reported a growth rate of 32.2% in the fiscal year ended by March
2007.
• Increase in revenue is attributed to an increase in passenger
volumes.
 Pros of Ryan Air
Launch of new routes
• The company announced new routes and extended its operations to three
new countries.
• Started 16 new routes across Europe.
• Expanding its operations to new countries would help in reducing the
company’s dependence on the UK-Ireland market (Cullinane 2006).
Fleet expansion
• Apparently, Ryanair is having the youngest fleet carriers in its base with
average time of 2.4 years old carriers which is unprecedented in the
airline industry.
• Ryanair entered into an agreement with Boeing to purchase new Boeing
737-800 series aircrafts over a five year period from 2006 to 2011.
Cons of Ryan Air
 Cons of Ryan Air
Weakening employee relations
• Involved in a number of labour union disputes.
• In 2006, Ryanair worker’s went on a series of one-day strikes.
• Complains about the condition’s of Ryanair ground staff in
airports (Cullinane2006).
Lack of scale
• Small in size compared to its competitors.
• Competitors such as Air France, Lufthansa, and BA are large in
size and enjoys a competitive advantage.
 Cons of Ryan Air
Increasing aviation fuel prices
• Due to the rising oil prices globally, the prices of aviation fuel have
gone up substantially in the past few years.
• The rising fuel prices are likely to have a direct impact on the
company’s margins (Ansoff & Mcdonnell 1990).
Threats to security
• Security issues often pose a challenge to Ryanair. In August 2006, UK
security authorities arrested and subsequently charged eight
individuals in connection with an alleged plot to attack an aircraft
operating on transatlantic routes.
• As a result, Ryanair cancelled 279 flights in the days immediately
following the incident and refunded a total of € 2.7 million in fares to
approximately 40,000 passengers
 CONCLUSION

 Ability to adapt to new customer demands and the increases in oil

prices along with any government changes.

 Although Ryanair is able to project itself as a low-cost and low-fare

carrier, but in the long run, the model is unsustainable given that the
fuel market is becoming more and more volatile and the customer
service is degrading in Ryanair. It would lead to a potential loss of
customers.
 ANY
QUESTIONS ??
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