Ryanair business competitive sustainability

Posted on Posted in General

Evaluation of possible future strategies

The following section will refer to well-known marketing analysis tool of Ansoff’s market/product matrix (Curry et al, 2006) and Porter’s generic strategies (Akan et al, 2006).

Offering long-haul flights

As supposed to Michael O’Leary plan to offer a discount Trans-Atlantic airline service (Alloway & Doyl, 2007), through a sister company call “RyanAtlantic”. This is an offspring of the EU-US Open Skies Agreement (ASIL, 2007). Ryanair strength in its knowledge of operating an effective budget airline; therefore makes the company in the position to take up this strategic option. Fracis et al (2007) clearly argues whilst not all aspect of low-cost are transferable to long-haul operations. It should also be noted that a cost leadership strategy applied to long-haul routes is not necessarily dependent on achieving all the cost efficiencies in the same way as how short-haul low-cost carriers operate.

Traditional airline in general already obtain low seat per mileage cost and hence already offer a competitive fares on long-haul service, whilst in long-haul markets remain a significant demand from those willing to pay a premium price for sleeper seats and other comforts. Another consideration is the difficultly for low-cost airlines to match the utilization improvement that have been achieved on long-haul routes (Fracis et al, 2007).

It is also difficult to eliminate ‘frills’ altogether, the longer the flight is the more frills required to service the customers. Seats must be allocated as families are unwilling to be split up for that length of the long journey. In-flight entertainment is also more important on long-haul than short-haul. Large amounts of checked baggage must also still be handled.

Hubs are much more crucial for long-haul operations than for short-haul. Hooper (2005) demonstrates that the economics of scale in consolidating traffic at hubs and using much large aircraft have becomes so compelling over longer distances. While Alderighi et al (2005) agree that need of long-haul flight does reinforce and preserve the hub-and-spoke configuration.

The above discussion has shown the major challenges that Ryanair will be facing when implementing long-haul service, in which foremost does conflict with its strengths in operation of point-to-point, no-frills, high frequencies turnaround of aircraft. If failed, RyanAtlantic would be joining Oasis Airline into liquidation (Robertson, 2008).

Offering Business Class additions

Business class concept has proven to a hard learn trial for numerous budget airlines, like the failure of Debonair (BBC, 1999). While McWhirter (2000) point out that passengers travelling on low-cost airlines are on business regularly between 40% and 80%, thus most likely to be small and medium sized companies (Mason, 2000). This will provide the opportunity for no-frill carriers to utilize their existing customer base whom are travelling on business. But if the airline lack in focus, along with a host of other problems could cause the airline to fail entirely (Mason, 2001). Separating business travellers on a low-cost airline would prove to be difficult to achieve as it increases the vitally important costs to the airline and requires reconfiguration of the aircraft. The introduction of a separate business class would possibly reduce the number of seat on board and would require an increase in the number of cabin thereby further increasing costs, which is a major contrast to the business model and its strength that Ryanair has been utilizing.

Also prior the above reconfiguration, human resource training is another issue to battle with. Mason (2001) has help asserts that managers of low-cost airlines would need understand about the nature of the business travel market so that they can assess whether they ought to be targeting, explicitly, such travellers. Sales team of traditional carriers would visit corporates and try to negotiate route deals where possible, which is the strength of large network carriers whom hold deals with many corporates in supplying the majority of their travel needs on a global scale (Mason, 2001). This has proof to be another blockage to current Ryanair value chain inbounds logistic of 100% sales through their website.