Why Has Ryanair Been Successful - Free Paper Example

Introduction

Among the reasons why Ryanair has been successful thus far include the adaptation of Southwest's low-cost model that makes the company operate on low-cost expenses that, in turn, make the company incur fewer expenses and thus making the company earn a profit (Antoinette, 2009). To achieve low costs expenses, the company flies to secondary cities and airports. The airports that the airlines flying to influences the expenses the companies incur; different airports charge different fees to airlines depending on the status of the airport and the costs that they charge airlines as landing fees (Diaconu, 2012). The strategy of landing in secondary airports and cities, the company avoids huge landing charges.

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Order now

Less Competition

The secondary cities and airports have less competition because of the limited number of airlines that land on the airports (Abdul-Kadir et al., 2020). This gives the company the opportunity to operate at full capacity. The secondary airports also have less traffic and no congestions. Ryanair Company is able to operate effectively without any delays that might affect the financial ability of the company in terms of planes wasting time during delays the time the plane could use to fly and earn income for the company.

There is also the first-mover advantage where Ryanair airline is able to negotiate with airports and to rates that will enable the company land and operate in a particular airport without incurring losses (Roberts and Griffith, 2019). The secondary airports want to attract airlines to use the airports and pay the landing fees; hence they are open to negotiations with airlines such as Ryanair. The employees of the company understand the culture of the company to low fares; hence they expect to be paid relatively low wages. The reduced expenses in the form of salaries reduce the operating costs of the company, thus the sustainability of the company.

The point to point operational strategy where the company avoids additional costs that could be incurred in baggage transfers. The company transfers its baggage without involving other companies that will require to be paid for the transfers (Weidema, 2011). The aircraft that the company uses is the single type of craft that incur lower maintenance costs. The low prices that the company charges clients make the company develop strategies that will enable it meets its operational costs through innovative measures to keep the operational costs lower. The company fills the niche of low-cost travel in the air travel industry; hence there is minimal competition.

Sustainable Strategy

Ryanair's business strategy aims at keeping the cost of fares low through discounts from plane suppliers such as Boeing and airports (Weidema, 2011). Sustainability of a strategy depends on adequate inputs that translate to long term success. Components of the sustainable strategy include internal processes, tools, roles, and organization. The success does not have to be absolutely economic but includes environmental, social, and local community benefits. Ryanair's components of strategy sustainability include the size of the company, leadership, low price, research, and development as well as a culture of cost-consciousness.

Ryanair’s strategy is based on low price fares, and although many compare have adopted a similar model and failed, Ryanair has succeeded in making profits through this model. To generate profits through low fares flight, the airline emphasizes reducing the cost of operations in order to compete effectively with other carriers (Antoinette, 2009). One of the strategies used by low-cost carriers such as Ryanair is the use of one brand of aircraft.

Ryanair uses Boeing 737-800 planes, which are environmentally friendly due to their reduced emissions (Antoinette, 2009). This helps in reducing the cost of staff training as well as maintenance costs. By purchasing from one manufacturer, a customer enjoys discounted prices, and the newer fleets are fuel-efficient that reducing the expenses of fuel. Low-cost carriers also generate more profit as they do not offer services such as free meals and drinks, and for the couriers that provide these services, it is for an extra cost. Ryanair, for example, generates ancillary revenues from flight meals and beverage, internet-related services, sale of merchandise, as well as charges for check-in bags. Strategies based on a company’s core competencies are usually successful and sustainable.

Leaders play a very significant role in sustainability strategy as they look beyond immediate and short term gains. Ryanair’s leaders are committed to the company's low-cost culture. All the strategies they adopt are aimed at sustaining this culture (Nwagbara, 2011). Ryanair’s strategy is not only sustainable but also gives the company a competitive advantage. The company’s resources are valuable, rare, inimitable, and organized. The success and sustainability of strategies depend on factors such as the needs and wants of the customers. Having witnessed the success of Southwest airlines in the United States of America, Ryanair established a low-cost strategy within the European routes. This gave them a competitive advantage over carriers such as Air France and British Airways. The airline's CEO believed that there was a need for low-cost flights, which would enable the customers to reach their destinations on time, although they would have to forfeit comfort.

Environmental Circumstances

Ryanair has the opportunity to change its environmental circumstances that will make the company become more competitive and deal with the challenges that it faces (Lamichhane, 2019). I would recommend the company improve on customer perception by customers who think that the lower the price of the fares, the poor the services they are likely to get when flying using the airline (Akguc et al., 2020). The perceptions of the customers influence the choice they make, whether to fly using the company or consider other options. The company customers are from all social groups; hence the company competes even with other airlines that charge higher costs in fares. The perception can be changed by the quality of the services they offer to clients.

The company should also consider marketing itself because there are few people who know the services the company offers. There are people who use other forms of transport because they believe they cannot afford air transport; therefore, they opt out and use other forms of transportation (Decker, 2016). The marketing will enable people to know that the airline offers low-cost air transport. Marketing will help the company increase its customer base and increase its revenue generated where more passengers travel using the airline (Olischer and Nagel, 2015). The marketing will also help Ryanair Airline Company to be competitive in the industry that has many companies offering similar services. Marketing can be done on social platforms and mainstream media.

I also recommend the company to consider contracting companies that offer discounts to ensure the company reduces the costs it incurs when getting the services that the company requires to operate (Caputo, 2016). The partnerships can belong long-term to assure the company that the business will continue to offer an agreed period of time (Kotze, 2017). The company has to reduce the costs of operations; therefore, discounts and other advantages that make the company save money and thus earn a profit. The company can also consider the selling of ancillary products during flights to make the company earn additional income.

I would recommend the Ryanair Company to create a brand that reflects the quality of services it offers and the market niche that the company focuses on (Edith et al., 2018). Having a brand will enable the company to have an easy time marketing its services and customers identifying and knowing the quality and costs of the services offered by the company? The brand will make the company stand out in the industry that has many companies competing for the same customers (Hegde, 2019). The brand will also help the company in the long run by retaining its customers who like its services and want to be identified with the brand.

Strategic Sense

In a bid to have a strong Irish airline group Ryanair attempted to acquire Aer Lingus, a rival airline (O’Higgins, 2007). One of the factors that affect the sustainability of mergers and acquisitions is a disparity in the organizational culture. For a successful merger, the companies should have a common objective and culture to avoid conflicts that may arise in establishing a common culture. Since both Aer and Lingus and Ryanair provide low-cost flight, the bid to combine the two airlines was strategic at the time, but its sustainability was a challenge.

To deal with competitors competing for industries, establish strategies that help them attract new customers, and retain the existing ones (King and Schriber, 2016 111). Therefore the bid to combine the two airlines did not make strategic sense because, in the long run, other airlines would lower their flight fares. Before merging, the bidding company should evaluate whether combining the companies would significantly help in reducing competition (González-Torres et al., 2020)).

Mergers nay result in ineffective communication and lack of transparency, thus resulting in internal disputes (De Man et al., 2005). Mergers and acquisitions may also reduce profitability as employees may find it difficult to adapt to new cultures (Vijaywargia, 2016). Even when both the merging organizations have been doing great, the conflicts are likely to arise as either may feel that they were better when they operated independently than after merging.

Key stakeholders play a role in the success or failure of a merger, acquisition, or joint venture (Bosse et al., 2020). Although the combined Ryanair-Aer Lingus would result in an 80 percent market share of Ireland and European countries' flights Aer CEO believed that there was no way that the two companies would work harmoniously.

The Aer Lingus bid does not make sense; hence the strategy should not be implemented. The two companies are the main companies that offer low-cost air transport; hence the merger would reduce the competition in the air travel industry and, in the long run, reduce the quality of services they offer to passengers (Ettel, 2019). The competition in the air travel industry makes the industry players improve the quality of service that they offer to clients, and the passengers have the freedom to choose from a couple of airlines depending on the services offered by different companies.

Conclusion

Ryanair can get financiers to expand its business instead of merging with another company. The merger would confuse the customers whether the company will still offer affordable air travel (Rotondo, Corsi, and Giovanelli, 2019). Aer Lingus was performing poorly at the time when the company wanted to merge with Ryanair; hence the challenges would be faced by the new merger (Geller, Folan, and Shain, 2013). The new merger would also fail in the long run because Aer Lingus has more expenses than Ryanair; therefore, the merger would result in Ryanair to incur more operational costs than it was spending before the merger. I would recommend the two companies remain independent and competitive to avoid the risks associated with the merger.

Reference List

Abdul-Kadir, A., Sadat, A.A., and Sadick, A.A., 2020. Global Strategies of The Airline Industry: A Case Study Of Ryanair, Emirates, Netjets, And Thomas Cook. Student, 3(3).

Akguc, M., Beblavy, M., and Simonelli, F., 2018. Low-Cost Airlines: Bringing the EU Closer.