Felicitas Fahrenkrog-Petersen, Marta Kędzierska,
Janani Pratap, Evelyn Kamau, Thomas Koch, Bastian Lorenz

The Low Cost Airline

24.05.2012

Strategic Management Case Study

Agenda

History /

Facts

Generic

strategies

model

Bowman‘s

clock

Core

competen

cies

Competito

rs

Alliance

option

Conclusio

n

2

History / Facts

History /

Facts

Generic

strategies model

Bowman‘s clock

Core

competencies

Competitors

Alliance option

Conclusion

198

7 -

89

199

1

198

5

200

0

199

7

•Website launch

•First routes to continental Europe

•Public limited company

•New CEO (Michael O‘Leary)

•Rapid expand

•Need for restructuring

•Foundation (Tony Ryan)

3

History / Facts

History /

Facts

Generic

strategies model

Bowman‘s clock

Core

competencies

Competitors

Alliance option

Conclusion

• Europe’s largest low fares carrier

• Headquarter in Dublin, biggest

operational base in London

• RyanAir’s numbers:

- 1 special type of boeing (737 -800)
- 14 further bases
- 250 destinations in all of Europe
- 2700 employees

4

History / Facts

Measurement

Factor

Ryanair

EasyJet

Lufthansa

Total number of

passengers

27.6 million

29.6 million

50.9 million

Average fare

€ 41

€ 62

NA

Average

revenue per

passenger

€48.4

€72

€333

Average Cost

per passenger

€38.7

€69.4

€328

Operating

Margin

25%

3.8%

1.6%

Total number of

planes

119

109

377

Plane Load

Factor

86.4%

85.2%

74%

Ground handling

+ airport

charges (000)

€178.4

€540.9

NA

History /

Facts

Generic

strategies model

Bowman‘s clock

Core

competencies

Competitors

Alliance option

Conclusion

Comparative Operating Figures for Ryanair and selected
competitors (2005)

Source: Neil Thomson and Charles Baden-Fuller, Basic Strategy in Context (Wiley, 2010)
Ryanair Case Study

5

History / Facts

Generic

strategies

model

Bowman‘s clock

Core

competencies

Competitors

Alliance option

Conclusion

Where is RyanAir on the Generic Strategies

Model and Bowman’s clock? Should they

move and if so where do you feel they

should move to?

Overall Cost Leadership

Cost Focus

Differentiation Focus

Differentiation

B

ro

a

d

N

a

rr

o

w

Low cost

Higher cost

Source: Neil Thomson and Charles Baden-Fuller, Basic Strategy in Context
(Wiley, 2010), 180.

Competitive advantage

C

o

m

p

e

ti

ti

v

e

s

c

o

p

e

6

History / Facts

Generic

strategies model

Bowman‘s

clock

Core

competencies

Competitors

Alliance option

Conclusion

Where is RyanAir on the Generic Strategies

Model and Bowman’s clock? Should they

move and if so where do you feel they

should move to?

Source: Neil Thomson and Charles Baden-Fuller, Basic Strategy in Context
(Wiley, 2010), 184.

Pric
e

Low

Lo

w

High

H

ig

h

Hybrid

Differentiatio

n

Low
Price

Focused
Differentiation

No
Frills

Differentiation

Strategies

Low Price

Strategies

Risk
Strategies

Increased
Price/ Standard
Value

Increased
Price/ Low
Value

Standard Price/
Low Value

1

2

3

4

5

6

7

8

P

e

rc

e

iv

e

d

A

d

d

e

d

V

a

lu

e

7

History / Facts

Generic

strategies model

Bowman‘s

clock

Core

competencies

Competitors

Alliance option

Conclusion

Where is RyanAir on the Generic Strategies

Model and Bowman’s clock? Should they

move and if so where do you feel they

should move to?

Short-haul

flights

(Point-to-

point)

Low costs

Single

aircraft type

Internet

booking

Secondary

airport

Basic

service on

board

Fast and

easy Check-

In

NO FRILLS

8

History / Facts

Generic

strategies model

Bowman‘s clock

Core

competencie

s

Competitors

Alliance option

Conclusion

What are RyanAir’s core competencies?

(max. 2) Why? Pick number one, why?

Core Competencies - A combination of

pooled knowledge, resources and

capabilities that enable a company to gain

competitive advantages

9

History / Facts

Generic

strategies model

Bowman‘s clock

Core

competencie

s

Competitors

Alliance option

Conclusion

What are RyanAir’s core competencies?

(max. 2) Why? Pick number one, why?

TEST 1

Desirable to

customer?

Change over

time?

Defendable?

Cost

Leadership

Yes

Yes

Yes

10

History / Facts

Generic

strategies model

Bowman‘s clock

Core

competencie

s

Competitors

Alliance option

Conclusion

What are RyanAir’s core competencies?

(max. 2) Why? Pick number one, why?

TEST 2

Valuabl

e?

Rare?

Hard to

imitate?

Organiz

ed

Properl

y ?

Competiti

ve

Implicatio

ns

Cost

Leadersh

ip

Yes

Yes

Yes

Yes

Sustainabl

e

Advantag

e

11

Major competitors

History / Facts

Generic

strategies model

Bowman‘s clock

Core

competencies

Competitors

Alliance option

Conclusion

Imagine you are RyanAir’s major competitor.

How would you exploit RyanAir’s strategy to

your benefit?

12

• The Critical Success Factors (CSFs):

– lowest

prices

,

reliability

,

comfort

,

service

,

frequency

and

safety

• Cost reduction strategy:

– fleet commonality
– 3

rd

party service contractors

– low airport charges (secondary

airports)

– managed staff costs and productivity
– managed marketing costs (only

Ryanair.com)

History / Facts

Generic

strategies model

Bowman‘s clock

Core

competencies

Competitors

Alliance option

Conclusion

Imagine you are RyanAir’s major competitor.

How would you exploit RyanAir’s strategy to

your benefit?

13

History / Facts

Generic

strategies model

Bowman‘s clock

Core

competencies

Competitors

Alliance option

Conclusion

Imagine you are RyanAir’s major competitor.

How would you exploit RyanAir’s strategy to

your benefit?

DIFFERENTIATION

Result of efforts to make

a product or brand stand out as

a provider of

unique value to customers in

comparison with its competitors.

ADAPTATION

Modification of a concept or object to

make it applicable in situations different

from originally anticipated.

14

History / Facts

Generic

strategies model

Bowman‘s clock

Core

competencies

Competitors

Alliance option

Conclusion

Imagine you are RyanAir’s major competitor.

How would you exploit RyanAir’s strategy to

your benefit?

RyanAir

Competitor

ROUTES

Direct / short

distance /

Europe

Full range / worldwide

AIRPORTS

Secondary

airports

Primary airports /

infrastructure

AIRCRAFT

S

One type

One type

COSTS

Cooperations /

third

contractors

Cooperations / third

contractors

BOOKING

Mainly online

Exclusively online /

Permanent availability

SERVICE

Low service

Excellent Service

EXTRAS

Fee for extra

service

e.g. Frequent traveler

program

DIFFERENTIA

TION

ADAPTATION

15

Should RyanAir stay independent?
• Company philosophy clashes
• Security and quality differences
• Image destruction
• Higher failure rate
• More management required
• Long hall flight issues (higher cost)
• Current state of success

 

History / Facts

Generic

strategies model

Bowman‘s clock

Core

competencies

Competitors

Alliance

option

Conclusion

Should RyanAir stay independent?

Or should it join an alliance?

16

Should RyanAir join an alliance?
• increase passenger demand
• loyal customers
• more destinations, new market
• lesser competition
• benefits:

– faster and smoother transfer
– frequent flyer program
– easier booking

•if opponent airlines join an alliance

(“first- mover”)

 

History / Facts

Generic

strategies model

Bowman‘s clock

Core

competencies

Competitors

Alliance

option

Conclusion

Should RyanAir stay independent?

Or should it join an alliance?

17

 

History / Facts

Generic

strategies model

Bowman‘s clock

Core

competencies

Competitors

Alliance

option

Conclusion

Should RyanAir stay independent?

Or should it join an alliance?

Stay

Independent

18

Conclusion

History / Facts

Generic

strategies model

Bowman‘s clock

Core

competencies

Competitors

Alliance option

Conclusion

Pick and stick!

Adapt and

differentiate!

Stay

independent!

For now…

19

Outlook

History / Facts

Generic

strategies model

Bowman‘s clock

Core

competencies

Competitors

Alliance option

Conclusion

Present

• Profits rose 25 % to € 503 Mio.

• Passengers rose 5 % to 76 Mio.

• Average fares rose 16 %

Future

• Profits will sink 10 – 15 %

• Traffic will grow 5 %

• Average fares will continue to rise

Source: http://www.ftd.de/unternehmen/handel-dienstleister/:nach-
gewinnsprung-ryanair-kapituliert-vor-kerosinkosten/70039893.html

20