Ryanair began in 1985 operating a small 15-seat aircraft for scheduled passenger flights between Waterford and London. Through the 1990s, Ryanair grew but costs were rising. In response, Ryanair reorganized as a no-frills airline, reorganized its fleet and pricing structure. Since then, Ryanair has continued expanding its route network while keeping costs low through measures like charging for services that were previously free. However, this strategy has also led to criticism and conflicts with airports and governments over fees.

1. http://www.radarvirtuel.com/

3. History Ryanair (1985)
 Scheduled passenger airline service from Waterford to London-Gatwick
 15 seater turbo prop
 Full service conventional airline
 Leasing three different types of aircraft
 1986 Dublin - London for £ 95 (Aer Lingus/BA charges £ 209)

4. 1990’s
The company continued to grow,
but costs started to go out of
control. In 1989, they had 4
different types of planes, 350 staff,
600,000 passengers but were
£20m in the red.

5. What did Ryanair do?
- No frills airline
- Reorganised the fleet of planes
- Reorganised the pricing structure

9. September 2009
Ryanair says farewell to Manchester
(9 out of 10 flights have been cancelled due to a
dispute about landingfees)

10. www.ryanair.com
13.10.10
 RYANAIR ANNOUNCES CLOSURE OF MARSEILLE BASE
 4 AIRCRAFT, 13 ROUTES, 200 JOBS LOST AT MARSEILLE, AS AIRCRAFT
AND JOBS SWITCH TO SPAIN AND ITALY
 Speaking today in Marseille, Ryanair’s Michael O’Leary said:
 “We are very disappointed at this decision by the French
authorities to initiate proceedings against Ryanair’s base
in Marseille, which complies fully with EU regulations for
mobile transport workers. These are not French jobs, but
rather Irish jobs on Irish aircraft, which are defined by EU
regulations as Irish territory. All of these people pay their
tax and social insurance, in accordance with EU
regulations, in Ireland and they remain fully tax
compliant.

12. Ryanair’s Philosophy
Ryanair promises: „low fares, good on- time record,
few cancellations & few lost bags - if you want
anything more- go away“
Example of arrogance: “Will we give you a refund on
a nonrefundable ticket because your granny died
unexpectedly?” he asked. “No! Go away. We’re not
interested in your sob stories! What part of ‘no
refund’ do you not understand?”

13. *******236.20 EUR Taxes, Fees & Charges
********50.00 EUR Passenger Fee: Web Check in
********30.00 EUR Passenger Fee: Checked Bag(s)
********50.00 EUR Passenger Fee: Administration Fee
Ryanair now
*******891.10 EUR Total Paid
“ No-frills“ strategy, reduce as much costs as
possible, few or no customer service
Biggest „Low Fare“ airline within Europe
32 bases  800+ low fare routes
Operating in 26 countries
Connecting 146 destinations

14. Production process
Input
Throughput Output
Raw material price goes up (input).
Price of product goes up (output).
Ryanair adopts the concept of allocative efficiency

15. Latest Developments in Ryanair (2005 -
2010)
Personnel are not allowed to charge up their mobile phones at the office
Personnel have to pay for their own uniform, food and
(educational) courses
If the passenger wants a certain seat then she/he has to pay for
it.
Ryanair has asked Boeing to study the option of “standing’
places on the plane
Per June 2010 ther e will be vending machines on board (to reduce cabin
personnel)
Extra baggage will cost Euro 20.- in the future
Onboard toilets will be installed with coinslots

16. Strategic Positioning?
Strategic?
Positioning?

17. Strategic => Strategy
“The direction and scope
of an organisation over the long term, which achieves
advantage for the organisation through its configuration of
resources within a changing environment and to fulfil
stakeholder expectations”

18. Positioning
The way the product is defined by consumers on important
attributes.
=> the place the product occupies in consumers’ minds
relative to competing products

19. A Positioning Strategy =
Concerned with creating and maintaining distinctive
differences that will be noticed and valued by
customers

20. Passenger costs of landing on Schiphol (2008)
 - Landing € 4.06
 - Noise markup € 1.30
- Navigation costs € 2.42
- Passenger service charge € 13.46 (point to point)
- Security € 17.47 (point to point)
- Fly tax € 11.25 (point to point)
- Passenger service charge € 5.65 (transit)
- Security € 9.79 (transit)
- Fly tax € 0 (transit)
- Total amount for point to point - €48.96
- Total amount for transit - € 22.22
- => Price bundling

21. Strategic Positioning:
Is concerned with the impact the external
environment, internal resources/competences and
expectations/influence of stakeholders have on
strategy

22. What changes are going on in the environment and
how will they affect the organisation and its
activities? (opportunities and threats -provide a view
of the key environmental impacts on the
organisation)

23. What are the resources and competences of the
organisation and can these provide special
advantages or yield new opportunities? (strenghts
and weakness –strategic capability– provide a view
of the internal influences and limitations on strategic
choices for the future)

24. What is it that the stakeholders aspire to, and how
do these affect what is expected for the future
development of the organisation?

25. Expectations
Case 2 & Theory Resources&
& Purposes
The
Competencies
Environment
Strategic
Positions
Corporate
Strategic Strategy into
level Organizing
Choices Action
strategies
Development, Managing
Business
directions & Change Enabling
level
Methods
strategies

26. Low Cost Carriers and Flag Carriers
2010
Ryanair 72 million passengers
Easyjet 49 million passengers
KLM 21 million passengers
Air France 50 million passengers
Lufthansa 90 million passengers

27. Airline to halve Newquay flights
 Ryanair says 100,000 fewer people will come to Cornwall
 Low cost airline Ryanair is halving the number of
flights to and from Cornwall in protest at the county
council's new passenger surcharge.
 The airline claims that the £5 per person charge is a "draconian anti-tourist
tax".
 Airport owner Cornwall County Council said the levy of up to £5 on all
departures was needed to ease its losses of more than £1m a year.

28. Criticism over Ryanair terror ad
 The ad appears in a number of national papers
 An advert for low cost airline Ryanair which refers to
the London bombings has received almost 200
complaints.
 It features Winston Churchill saying: "We shall fly
them to the beaches, we shall fly them to the hills, we
shall fly them to London!"
 The Advertising Standards Authority has received 192
complaints that it was crass or offensive and is
considering whether to investigate.
 But Ryanair said it was stimulating the tourism
market after the attacks.

29.  Budget airlines attack fee rise
 Increases in airport charges could help fund a new runway
 Budget airlines Easyjet and Ryanair have
condemned a planned increase in charges at
Stansted Airport in Essex.
 Luton-based Easyjet and Ryanair, who say they account for
about 80% of Stansted's passengers, said the charges are
set to rise by almost 300%.
 This comes despite the British Airports Authority (BAA),
which runs Stansted, seeing its profits rise by 19%,

32. M. O’Leary
“Any fool can sell low airfares and lose money! The
difficult bit is to sell the lowest airfares and make
profits.
If you don’t make profits, you can’t lower your
airfares or reward your people or invest in new
aircrafts or take on the BA and Lufthansa’s!”

33. Latest news
Per 1 january 2011 the German government has
imposed a flight tax (8 Euro for domestic flights and
25 Euro for european flights).
?
As a consequence Ryainair has cancelled 13 flight
routes from Weeze (Germany) and from other
german airports.

35. Game theory
Strategic behaviour and Gametheory
Oligopolic markets
Airline market is an oligopolic market

36.  Relation to airline market
• Competition would be suicide.
• Ryanair searches for new
 markets(price,geographically)
• Traditional airlines and other (big)discounters
 don’t have to be afraid.


37. Dominant strategy- optimal strategy no matter what the opponent
does.
Equilibrium
(4,3)

38. Game theory
Core assumptions
I’m in the arena for my own benefit
Interdependant relationship with other
competitors
Aware that we are dependant upon each other

39. The Rise of SkyEurope
(what is more rational than a pricefighter in a low
cost country)

40. The first price fighter airline
in Central Europe
 6 september 2001
 Slovakia has their
own air carrier

41.  6 September 2001 – SkyEurope Airlines was registered
 11 September 2001 – World Trade Centre in New York became a
heap of rubble
 The biggest crisis in the airline industry followed
 How would you feel standing in the shoes of C. Mandl and A.
Skowronek?

42. Good idea to stop
Save yourself going bankrupt
Save your name
Try again in 5 years time

44. The 11 Sept. attacks were a blessing in disguise
Aeroplanes became cheaper to buy
Pilots were cheaper
Slots were available at the main European airports
ABN Amro wanted to finance SkyEurope

45. SkyEurope takes off
13 FEBRUARY 2002

46. What was happening in the
“air transport” industry
 Aeroplanes became cheaper
 (supplier power)
 Pilots became cheaper
 Slots were available at international airports like
Schiphol and Orly (competitive rivalry)
 Demand diminished due to fear of flying (buyer
power)
 Rail, ship and road transport grew (substitutes)

47. Threat of Entry (barriers)
 Economies of Scale – decline in unit cost of airtransport as the absolute
volume per period increases
 Product differentiation – being the first, brand identification, customer
loyalty
 Capital Requirements
 Switching costs – one time costs facing the buyer of switching from one
supplier’s product to another’s
 Access to distribution channels
 Cost disadvantage independant of scale – locations, govt. Subsidies,
experience curve
 Government policy

48. Why start in Slovakia?
 after the split of Tsjecho-Slovakia in 1993, there was no
national airline
 this meant no competition in the market (easy startup)
 there were no connections with main European hubs like
Amsterdam, London and Paris
 no connection between Bratislava and Kosice (2nd city)
while there was a demand
 Bratislava is 50 km. From Vienna (big flow of customers
from Austria)

54. Kondratieff Curve