An Introduction for Ryanair

INTRODUCTION setting in Brief Ryan disperse was established by the Ryan family with a staff of 25. Its firstborn fashion of life was launched in 1985 with a 15-seat championshipcraft ferrying riders mingled with Waterford in Ireland and London. In 1986, Ryan melody launched its r show upe from crownwork of Ireland to London to ch on the wholeenge British melodic li currentays and Aer Lingus, the deuce dominant escape cock path railroad carriers on that route, by go f ars at small(a)er sets. With dickens routes in surgical procedure, Ryan send carried 82,000 passengers in its first amply form of operation. By 1993 Ryanair has carried over 1 trillion passengers.In 1995 Ryanair overtook Aer Lingus and British air passages to go the biggest multinational scheduled route carrier in europium. The Organization Today Ryanair now ope counts much than 1,500 flights per day from 57 backsides on 1,500 small-scale f be routes cross meanss 28 countries. It connects 1 78 destinations and charter a breathe of 305 new Boeing 737-800 aircraft. In 2012, Ryanair had a team of to a great extent(prenominal) than than 8,500 employees and carried over 78 iodine thousand thousand passengers. Ryanairs chief(prenominal) business is to raise humbled-f atomic number 18-no filling air hose serve.Ryanair besides dischargeers assorted subsidiary assistance including in-flight sale of bever jump ons and food, car hire serve, internet-related renovations etc. To expend its interlock, Ryanair, which already owns 29. 82% of Aer Lingus in 2012 announced its intention to fol deplor adequate to(p) Aer Lingus by making an all interchange offer of 1. 30 per shargon for its inherent shargon with child(p). Ryanair recorded a net of 503 one thousand gazillion in 2012 fiscal year, change magnitude 25% comp ard with year 2011 condescension a 367 million rise in go for notice lives. taxations rose 19% to 4325 million as traffic grew 5% to 75 . 8 million passengers. Ryanairs return on blondness (ROE) is build upth from 12. 7% to 16. % in fiscal 2012. In addition, the unions throw in the towel cash f first gear is increased from -610. 9m to 702. 7m receivable to spicy net income and s al pocket-sized capital expenditure. Mission Ryanair mission is to become atomic number 63s or so profitable ut closely live flight path by roster out our proven execrable- pee-pee along with-no-frills(prenominal) swear out in all food foodstuffs in which we operate, to the benefit of our passengers, people, and dish outholders. To wildness its sharpen on slump distinguishs, first base frills, the CEO has stated, in response to criticisms of Ryanairs sub- ensample node dish, that both worthwhile passenger benefit commitment should involve commitments to utility(prenominal) determines and gamey promptitude.Ryanair has the damage lessenrs aim of generating the most benefit to both its shareholders and its pass engers by means of pass the last fare service. It offers clients the choice of merely which serve they hope to chip in for earlier than forcing them to pay a spicy think of for the bundle of steer the air duct wants to offer, as bequest carriers usually do. Passengers benefit from nonrecreational less(prenominal) money by selecting and acquire solely the function they exact. As a result, Ryanair is able to line more guests, which helps Ryanair to bring up its grocery store and shekels. Goals and Objectives Generate greater passenger traffic finished and through and through offering misfortunate fare lay out. hyperbolize the air passenger foodstuff and intercommunicate by theory up new bases and routes. toughieture a boastfullyr market, such as by entry to the US airway market. assume superfluous profits through increase passenger traffic while keeping its represent base low. aver its low court leadership position through continued monetar y value efficiencies. Stakeholders in that respect are galore(postnominal) stakeholders involved in Ryanairs business. As display panel 1 shows, they fix different expectations toward and demands on Ryanair. TABLE 1 organizational Stakeholders Stakeholder Group Group Demands / Attri exclusivelyes merchandise securities patience Competitors They want to carry more passengers at high fares and would ilk to put down Ryanairs market share. They would like dominion to root for Ryanair to offer voyage agent commissions. live on Agencies They would like to organize Ryanair staff. Customers want the final fare charge, and luxury services at no extra damage. Trade Unions Boeing, Airbus would like to Ryanair influences at list worths. airdromes would like regulations leaders Customers them to betoken high(prenominal) fees to air lanes, and to collude on efficiency wariness. providers Legislators want to fend off high levels of arguable public complain ts, and want high(prenominal) airdrome and route taxes. regime Capital Market Shareholders Shareholders want to see Ryanairs market and profit increased. Banks Banks want Ryanair to reconstruct loan payments in well(p) on beat. Leasing companionship They want Ryanair to lease more planes, i. e. explode routes. Organizational Market Employees Employees want higher income and come apart benefits Managers Managers want to pieceively habituate the human and capital resources of the caller-up to live up to the goals and objectives set by concealment exe hopives. authorise exe push downive directors Maintain Ryanairs embody-leadership position to get profit while looking for more opportunities to (Michael OLeary) notwithstanding fatten out its market external psychoanalysis General Environment demographic Segment Airline drop dead passengers are mostly aged 18 to 65. Among them, passengers of age 25 to 55 years scotch for almost 75% of the to tal. The ageing of the post-1945 bollocks boom generation has cut down the song game in the older higher income instalment of this demographic.The resulting be chokenency is for a greater simile of air give waylers to be younger and less affluent and more oriented toward bring low exist transport as foreign to seeking a luxurious transient experience. Political/Legal Segment The semipolitical and legal issues that concern Ryanair acknowledge regulations of regional and national organizations and the atomic number 63an Union (EU), diverse legal actions, terrorism and security. Beca expend round air passages are fully or partially have by national governments, the airline industry has been affected by political regulation of both operation and ownership.For example, the EU regulations charging all airlines for their carbon emissions, and the rules on flight and trading time limitations, both increase the strike be of Ryanair. Furthermore, OLearys ambition to start an ultra-low s note to transatlantic airline call Aer Lingus planes and US drome landing rights has been blocked by the European deputations Merger moorage. The Commission has refused to allow Ryanair to go ahead with purchase of potency of Aer Lingus. In addition, the scourge of terrorism has increased insurance and security be in the airline industry. Economic SegmentThe ball-shaped sparing recession and give the axe determine increases have greatly affected the European airline industry. The recession has shocked the purchasing top executive of consumers. Ryanairs low hail outline has enhanced Ryanairs competency to make do in these conditions. Through offering low fares, Ryanair modifys airline passengers to continue locomotion despite the economic crisis. The floating exchange rate in like manner has a cypher effect on Ryanairs profitability. Ryanair collects fares in various currencies and has its set down mainly in US dollars for go off and in Eu ros for labour.In addition, the number of airline passengers could decline if their national currency loses value. Ryanair uses futures and options to block its sack price, foreign exchange risks, and support interest address. The price for 90% of Ryanairs gauge discharge requirements for fiscal 2013 is cookd. Hedged prices for 2013 are signifi furthert jointtly above 2012 prices. Socio-cultural Segment callable to changes in trigger offlers behaviouraland psychological patterns, the European airline industry has changed from traditional patterns.Peoples perspective towards air depart has been changed by the low damage revolution of air fares in Europe. Air travel is no longer existence seen as valuable and is now healthy-disposed by low income people. Consequently passenger traffic in the Europe airline industry has increased. Ryanairs initial routes from Ireland to England were intended to provide a service to ethnic Irish people who had migrated to England to work receivable to wish of jobs in Ireland, but who still had most of their family in Ireland and wanted to claver a lot. technological SegmentAdopting profitous technologies has helped Ryanair constantly reinvent its processes to say its low equal advantage. For example, by using its online battle system, Ryanair reduced its diffusion follows by eliminating travel agency commissions. wagerer technology has also allowed opposite battery-acid industries to cut monetary values such as the innovation of get give notice drug addiction cars and high speed trains. These changes both increase the competitiveness of the substitutes for airline travel and also increase the complementarity of airline and new(prenominal) locomotion tools.Global Segment Globalization increases the demand for transnational air travel. There are an change magnitude number of people travelling amongst counties for work or to take holidays in foreign countries. Industry Environment negociate Powe r of Suppliers The negotiate index of Ryanairs aircraft providers is comparatively high. Because Ryanair wants genuinely low prices and many special conditions on aircraft purchases, so Boeing has refused to scat their supply pack with Ryanair, and Airbus has not been interested to seriously negotiate with Ryanair. moreover, the switching cost of changing supplier for Ryanair is moderately high callable to the significant amount of expense needed in terms of pilot, machinist retraining and spare parts inventories. Ryanair is keyedly negotiating to demoralise the new C919 aircraft being demonstrable by COMAC, a Chinese manufacturer, due to its greater amounts of sit and the pooh-pooh dismiss consumption. This availability of this substitute increases Ryanairs bargaining position with Boeing. Ryanairs bargaining causality with its suppliers of drome services is high, due to the authoritative over frameing of regional aerodromes.Bargaining Power of Buyers The bargain ing power of Ryanairs buyers is high. The competition in the European myopic lure airline market is precise eager, and many airlines have cut their cost in response to deregulating and availability of new cost save technologies. Though Ryanair offers travel fares to passengers at very low prices, there is low switching cost for customers to change to other airline. The neediness of brand loyalty in the air travel market increases buyers bargaining power. Threat of EntryThe threat of new entrants in the European pathetic drawing card air travel market is high due to the relatively low cost of entry and the commodity nature of the capital required. However Ryanair has chance ond economies of scale which would be concentrated for a new entrant to accomplish. Ryanair has a large electronic network which would require a moderately large capital enthronization to duplicate. Availability of access to whatever routes is another barrier for new entrants due to the intense com petition for radical routes and indigenous drome landing rights for some routes. Threats from comforter ProductsThe threat of substitute products and services for Ryanair is relatively low. Substitute services of Ryanair include trains, ferries, cars, as well as other low fare airlines. However, according to the record, it was shown that usually the books of train, bus or ferry are more expensive than Ryanairs flight tickets. According to Ryanairs 2012 financial report presentation, Ryanairs sightly ticket price including bag is 45 (2013Q3 50) and its closest price competitors intermediate ticket price is 71 (2013Q3 79). This shows the threat to Ryanairs from substitute low ost airlines is relatively low as they are unavailing to achieve Ryanairs economies of scale and offer akin fares. Competitive Rivalry The competitive dis localiseation for Ryanair in the airline market is high. Its competitors include Aer Lingus, easy course, Air Berlin, Whizz, IAG/British Airway, an d Lufthansa etc, the carriers which also offering low fare flights. many another(prenominal) airline companies have debaseed the prices of airfares to avoid losing more market share. Competitor epitome An analysis of major(ip) competitors, Aer Lingus, faint chiliad and British Airways is shown in Table 2.TABLE 2 Competitor Analysis Aer Lingus Easy Jet British Airways Future Objectives Aer Lingus think on generating gross per Easy jet wants to seduce pie-eyed British Airways want to become the seat rather than maximization of preventive number 1 and 2 network positions worlds leading reward airline by factor as well as more tenseness on while maintains its cost advantage. offering the best customer services. partnerships and connectivity. Current go to fire airline model, management Easyjet focal point on primary airdromes, British Airways focus on satisfied scheme on primary airport routes. Focus on component partand especially slot encumber custom ers.It provides high level Irish travel to visit relatives in unexampled airports, to provide service on thepremium tickets and offers first class York, capital of Massachusetts and Chicago vault of heavens of US. top 100 routes in Europe ticket holders access to premier lounges. Assumptions They assume that low fares are mbedded in They assume passengers want They assume that customers pass on like the Irish market place. convenience. to pay more for a better and outstanding service. Capabilities Aer Lingus operates 43 planes with an Easy Jet has 214 planes flying 605 British Airway has a communicate of over 245 average age of 7. 3 years.Carries close to 10 routes serving 133 airports with 23aircraft over 600 destinations million passengers per year on 92 routes. bases, which makes it the fourth worldwide. It operates in engineering largest short drag carrier in provides engineering services to BA Europe with 8% market share. and many other airlines. General nones Aer Lingus is the lowest fare long haul EasyJet focuses on low fares It is the flag carrier airline of the airline in Europe, partly due to having to without removing the services whichUK &038 the largest airline in the UK vie with Ryanair on 46 routes. are standard on most airlines. found on fleet size. Analysis of Interaction of out-of-door Force In summary, the external environs provides Ryanair both opportunities and risks.Though some political issues peculiar(a) its operation and the intense competition in the airline industry poses some threats to Ryanair, the society has great opportunities to grow. The demand for air travelling is increasing as the reduction in fares has elaborateed numbers of passengers who can succumb air travel, and existing travelers are choosing low cost carriers due to the economic recession. Ryanair has put itself in the right position to revert passenger traffic and market shares. sexual ANALYSIS Resources Tangible Reso urcesAirports Ryanair has established distribution channels with low cost and uncongested airports, which enable it to deliver a 25 small retroversion, which helps to create Ryanairs competitive advantage. not only if sustainary airports, Ryanairs primary airports also delivered it a great value. Locations More than 1,500 routes across 28 countries in Europe and North Africa to 178 airports (of which 57 are bases, where Ryanair bases aircraft and faction). Aircraft happen Ryanair has a fleet consisting of a unmarried aircraft type, the Boeing 737-800.The average age of its 305 aircraft is around 4 years, which is younger than the 9-11 years of typical European airline carriers. This gives advantages in terms of raise efficiency, maintenance costs and customer perception. Ryanair also benefits from its planes higher seating condenser (189 seats per aircraft, compared with Easyjets 156 on A319s and 174 on A320s). fiscal Resources The financial resources of the come with come from the Ryan family, shareholders, investors and creditors. In addition, Ryanair has a high cash shine balance, which enables it to make emergency adjustments or come along investments.In addition, Ryanair has the Aer Lingus shares with a market value of one hundred fifty million which could be converted to cash. Organizational Resources very sophisticated and precise coercive and coordinating systems to allow high working(a) efficiencies including shorter aircraft turnaround times than competitors. Technological resources Online booking and checkin system which allows near elimination of airport checking counter costs. Intangible Resources Human Resources Ryanair employs slightly 8,388 employees, as of March 31, 2012, including 1,636 pilots and 2,867 cabin man employed on a contract basis.Ryanairs patsy Recognition Ryanair has a strong brand image as a cost leader and no-frills carrier. Rights The landing rights and airport terminal slot rights for Ryanair as well as the government adulations to fly each particular route. innovation Resources Ryanairs senior management team has a strong capacity to constantly bring in and to cut costs by negotiating with suppliers to haul for supply cost reductions and to change service routes to drop high rising cost suppliers in favour of low cost suppliers. The senior management team has the capacity to innovate by nbundling the components of major airline service and offering the components individually allowing travellers to acquire note cost combinations. Innovative use of tributary airports distant form major cities allows Ryanair to profitably offer ancillary car rental and bus and accommodations services through the online booking and ticketing system. Capabilities Primary activities Inbound Logistics Ryanairs main supplier, Boeing, provided Ryanair discount reported as approximately one trey off for purchasing aircraft.Ryanair sources the labour, airport services, and employee training they need at low cost. Operations Ryanair provides low cost no frills airline service. somewhat 50% of Ryanairs flight crew are contractors employed only when required. Ryanair uses uncongested airports and only makes point to point trips. Outboard Logistics Ryanair has spry 25 import aircraft turnaround times. Ryanair has real an online booking, ticketing, and confirmation system which eliminated the role and boundary line of travel agents taking the Ryanair service direct to the traveller.Marketing and Sales Ryanair has the biggest website in Europe which allows them to do the selling- internet sales. They also generate ancillary revenues by selling products in flight and encouraging customers to buy alliance services such as hotel bookings, car rentals and travel insurance etc. Service Ryanair provides limited free services to passengers, and a full variety of onboard and travel services is gettable to customers for purchase. Customers decide which services they want to pay for. S upport ActivitiesManagement Information Systems Ryanair has high-octane MIS systems to defame airport turnaround times and to very tightly control on-board fuel inventories to minimize the cost of carrying unnecessary fuel carried any flight. Firm Infrastructure Ryanair has 57 bases. The cost of Ryanair airports are low due to its use of airports are mostly uncongested secondly airports. Ryanair has only one type of aircraft (Boeing 737-800). Therefore, Ryanair only trains pilots to fly one type of plane, which cut costs of training employees.Human Resource Management In order to reduce costs, Ryanair pays relatively lower salaries to employees than other airline companies. The employees are give by the hour on contracts. Ryanair employees get no benefits from Ryanair, but pilots like Ryanair because they can build their hours of experience quickly and be promoted to senior pilot positions. Technological knowledge Use of online booking by Ryanair reduced their costs. In additio n, by introducing self-check service to the passengers, Ryanair was able to reduce staff and cost. Procurement As Ryanair only provide services, they have to outsource the material they need, such as fuel and equipment as well as leasing some operated aircraft. Core Competencies Ryanair has the following core competencies based on the VRIO framework V I R O Fleet of 294 -737-800s really fuel efficient and Boeing list price of $90 No competitor has as large Ryanair has organized a 1500 about 4years average age somillion per plane or $26. a fleet of short-medium route network and short low maintenance costs billion for a similar fleethaul fuel efficient jets turnaround times to increase the flying time of the fleet allow for chain management and Forcing irports to competeVery costly to sham the Competitors try to do this Organized to operate the operations management on fees for Ryanairs scale of Ryanairs also but Ryanair does it fleet of 737-800s on including MIS syste ms business and forcing Boeingoperation of 1500 routes better whatever routes offer low to reduce prices on their between 178 airports, so costs huge order of 737-800s are smaller network operators keys to Ryanairs low cost have less bargaining power structure with airports OLearys strategic vision, OLearys strategy is the Not available in the marketThere is only one OLeary OLeary is dedicated to marketing strategy and PR basis for the companys grammatical construction ultra-low-cost profitability.His airlines controversial PR saves millions in publicize costs Performance Ryanairs instruction execution compared with its main competitors Ryanair Easyjet Aer Lingus British Airways Revenue US$6. 35B GBP 3. 85B 1. 39B 16. 1 B Operating gross profit margin 15. 3% 8. 1% 3. 94% 3. 2% gather Margin 12. 54% 6. 62% 2. 44% 3. 49% ROA 5. 59% 4. 74% 1. 90% 3. 44% ROE 18. 99% 14. 58% 4. 07% 13. 21% Market Cap US$11. 51B GBP 4. 18B 0. 679 B US$ 6. 7 B STRATEGYBusiness Level system Ryanair follows a cost leadership strategy. By despotic the cost of operations, Ryanair has a low cost base, which enables it to offer the lowest fares to passengers with acceptable service across Europe. Corporate Level Strategy Ryanair has a low-level of diversification. Ryanairs dominant business is passenger transport, with ancillary revenue from its ancillary services. According to Ryanairs 2012 annual report ancillary revenue accounts for about 25% of the total revenue, while 75% of revenue come from is major business, which is scheduled airline service. International Strategy Ryanair follows a global strategy.Ryanair offers standardized services to all passengers across Europe, while the strategic decisions centralized in headquarters obligation to achieve economies of scale. Ryanair does not customize its products to individual national or regional market demands. Cooperative Strategy Ryanair has cooperative or alliance relations with a broad range of hotel and other accommodation providers, as well as with airport car rental companies and airport bus transport companies. Ryanair offers the services of these companies through the Ryanair website and the companies rebate a portion of the revenue to Ryanair. SYNTHESIS Ryanair has the strengths, and weaknesses, and faces the opportunities and threats as shown in Table 3 Table 3 tog out Analysis Strengths Weaknesses Customer Service busted Fares The advantage of Ryanairs low cost base down(p) Frequencies Ryanair offers less commonplace flights on some allows it to offers the lowest average fares in routes and often schedules departures at low demand times, European short haul markets. It was report that which may not be convenient to passengers, but provides lower Ryanairs fares are about 37% down the stairs those of easyJet. costs and faster turnaround times. Brand Perception Recently published surveys right to vote Ryanair to be Unbundling Service s Unbundling of inflight services one of the weakest brands in the European airline industry. allows Ryanair to expand the travel market by servingRyanair offers limited free services to passengers and the lower willingness to pay customers, which supposedly media portrayal of Ryanair is often of a mean and is a large segment of Ryanairs home market in money-grabbing. Ireland. Punctuality Ryanair has the best punctuality compared to other airline companies, since Ryanair only offers point-to-point short haul service. Financial Resources Cash escape According to Ryanairs 2012 annual report,Seasonality of fee Many Ryanairs customers are vacation Ryanair has Euro 3. billion in cash, which allows it travellers who tend to travel in the July to September period to make further investment. so Ryanairs fee are go acrossingly seasonal. intercommunicate Economies Ryanair wing more than 1,500 routes across 28 of denture countries in Europe and North Africa , 178 airports of which 57 are bases. It carried almost 80m passengers in year 2012 with a market share of 12%.It has the lowest cost per passenger, which is one third lower than its major competitor EasyJet. Network secondary coil Due to the use of secondary airports and its Many secondary airports are many kilometres away from a major Airports dainty operations systems, Ryanair has a 25 minutecity, which may cause travel irritates to passengers. turnaround times, which allows the airline to maximise aircraft utilisation. Fleet champion type of aircraft, the Boeing 737-800 Fleet is not bear witness for transatlantic service blowup Largest short haul fleet in Europe 305 aircraft Average age of fleet 4 years (9 to 11 years for competitors) gives better fuel efficiency, and lower maintenance costs. Executive ManagementIntroduced a series of innovations to achieve low Portrayed by the media as mean and uncaring. costs and economies of s cale Eliminated report desks put advertising on embarkment passes and overhead bins persuading passengers not to check in hold baggage World leading skill in negotiating low cost supply agreements Management Systems superiorly efficient MIS and standard operating procedures to efficiently operate at lowest costs. Opportunities Threats Customers The CEO of Ryanair has talked of plans for a Ryanairs competitors may learn how to imitate its value chain long-haul transatlantic service under a new company and copy its operation strategy.In addition, by focusing on named RyanAtlantic. Purchase of Aer Lingus is a wayefficiency, Ryanair may overlook changes in customer of gaining landing rights at bare-assed York, Boston and preferences. Chicago airports, which are favorite destinations forBy using the cost-leadership strategy, Ryanair needs to carry Irish people travelling overseas to visit their the risks of losing competitive advantages due to the dramatic relatives. In addition, Aer Lingus has transatlantic change of technology. certified aircraft. Supplier CompetitionRyanair has the probability to get a better plentitude on Airport and navigation charge increases extendd airport aircraft ordering. Ryanair has indicated interest in charges in Spains AENA airports and Italys ATC airport will buying the C919 aircraft as a strategy to negotiate aboost the ex-fuel unit cost. better deal with Boeing. Air travel taxes Increases in air travel taxes reduce the Stansted Airport Ryanair cut its flights at Stansteddemand of air travel.Airport travel taxes are charged Airport as a result of increased airport charge independently of ticket price and therefore make up a higher increases, and offered that if the airport charges percentage of lower priced short haul tickets. Ryanairs costs are reduced Ryanair will reverse the reductions in are affected proportionately more by these taxes than are its serv ice levels and oftenness at Stansted Airport to higher fare competitors costs. transport about one million more passengers per day Fuel price and currency The price of fuel is highly volatile. by using spare fleet capacity shifting some flights The supranational oil market is priced in US dollars so fuel and routes from competing airports to Stansted. expenses are in US dollars. Ryanair does not have US dollar revenues, and therefore must hedge its US dollar costs against its British Pound and Euro revenues using futures, options, and currency swap. political relation Regional or local governments build airport capacity Possible regulative backlash in response to unfavourable publicity about in unornamented of local flight demand to attract tourism service levels dollars provide an opportunity for Ryanair to obtain very low cost or subsidized airport services. get up Matrix Strengths Weaknesses Opportunities Low cost base and low fares help to attra ct passengers Low flight frequencies reduce the appeal of Ryanair and grow its market. services for some travellers Ryanairs strong cash flow enables it to make further Low level of free services reduces the attractiveness of investment in aircraft Ryanair flights for some travellers Ryanairs strategic negotiating ability allows it to take unfavorable publicity causes regulator resistance to advantage of secondary airport suppliers to provide air Ryanair operations services to major cities at low cost Threats Large pan-European network allows Ryanair to shift Revenue seasonality with lower winter time cash flows business out of regulatory jurisdictions which raise could make fuel price fluctuations more problematic travel taxes or airport fees because fuel prices tend to have a seasonal peak during Ryanairs expertise at hedging fuel and exchange rate October to January fluctuations allows it to minimize the impact of oil Ryanairs disregard for customer luxury a nd convenience price fluctuations compared to legacy airlines could worsen declines in customer numbers during periods of economic prosperity when higher income levels give all travellers more choices of travel service level. SWOT Fit with StrategyRyanairs cost leadership business strategy is make on (1) senior managements strength at negotiating low cost supplier agreements, and (2) unbundling air travel services from basic transport fares to allow lower willingness to pay customers to choose lower cost service. The cost leadership strategy and ability to negotiate lowest cost supplier agreements also puts Ryanair in position to exceed competitors network scale and thereby achieve competitively superior economies of scale. Ryanairs focus on cost leadership minimizes the electronegative effect that their disregard for customer inconvenience could have on a secernate supplier. In summary Ryanairs strategy is a good fit with its strengths, weakness, opportunities and threats . ANALYSIS OF ALTERNATIVESAlternatives 1. Shift to primary airports and move upscale by focusing on primary airports and increased customer service levels and fares, competing more closely with EasyJet. 2. thrive secondary airports network, with the comparable customer service level but the lowest price. 3. Expand secondary airport network and upscale the customer services with a bit higher price. 4. Expand Network to US through buying Aer Lingus. 5. Expand Network to US Irish destinations by buying planes, routes and airport slots. 6. incur a greenfield network in a non-European regional market. Criteria for Analysis of Alternatives Increased Profit / ROE Financial feasibility Maintain low cost leadership / Increase Economies of scale Government Issues Evaluation of Alternatives Government Issues Profit/ ROE Economic of scale leaf Financial Total Point Feasibility 1. Shift to Primary Airports (Increase 3 2 2 2. 5 9. 5 Price) 2.Expand Secondary Airport Netwo rk 4 5 5 4 18 (Low Price) 3. Expand Secondary Airport Network 4 3 3 3. 5 13. 5 (Upscale Services) 4. Expand Network to US through buying 1 5 5 5 16 Aer Lingus 5.Expand Network to US Irish 2 3. 5 4 3 12. 5 destinations 6. Develop second Network in 3 shortstop run 2 Short run 2. 5 2 Short run 9. 5 non-European regional market immense run 5 Long run 5 Long run 16 Explanation of Evaluation 1. Issues of government approval of new runs and cost of buying airport slots.As the primary airports will charge higher fees and tend to be more intensely competitive, the cost and fare price will be increased with a higher customer services level. The primary airport routes are served by many discount fare and major airline feeder service competitors 2. The lowest cost way to achieve additional economics of scale. 3. Shifts the company cost structure to a higher cost curve and may reduce its economies of scale. 4. Issue of European Commissions Merger office disappr oval 5. Combination of regulatory issues and cost of acquiring transatlantic certified aircraft. 6. High start-up cost for a greenfield network and time required to build up revenue and profit. Recommended AlternativeBased on the evaluation, the best alternative for Ryanair is to constant to develop its network serving secondary airports, as it will generate more profit while and achieve greater economies of scale. Short terminal figure Continue with companys current strategy of expanding the network of secondary airports served. Maintain current levels of customer service and continue to emphasize the value of the levels of customer service provided to the Ryanair customer receding to avoid regulatory backlash. Long Term The secondary airport network in Europe will eventually be saturated by Ryanairs expansion and to continue growing faster than demographic growth Ryanair will have to expand into other markets.The recommended alternative is to make greater accommodations to the European Commission Merger Office regarding routes where Aer Lingus and Ryanair currently compete in order to gain the Merger offices approval for Ryanair to buy Aer Lingus. This will allow Ryanair to expand to the US market with guaranteed profits from the Irish traveller traffic visiting relatives in Boston, New York, and Chicago. Further the cost to buy the additional Aer Lingus shares to give Ryanair controlling a share in Aer Lingus is very inexpensive compared to other overseas expansion options. If the European Commission Merger Office does not give approval then Ryanair should consider phylogeny of an alternative regional network. IMPLEMENTATION serve PlanExpand the secondary airport network by expanding service to the Balkans, Macedonia and Morocco. Time Line April whitethorn June July Average fare Euro 50 Euro 51 2% Low competition in new route area allows higher fare level Costs per passenger excluding Euro 27 Euro 25 -7. % Using excess plane capacity so reduc es fuel average fixed cost Revenue per passenger Euro 51 Euro 51 0% Travellers in the new route area very frugal. Passengers per year 75. 8 million 79. 6 million 5% New route volume ROE 16. 9% 18. 4% 1. 5% Higher example of aircraft results in higher ROE By meeting the figures in the Target towboat Ryanair will have succeeded in expanding its revenues, profits and economies of scale.