RyanAir: The ' Southwest' of European Airlines
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Case Details:
Case Code : BSTR059
Case Length : 14 Pages
Period : 1985 - 2003
Organization : Ryanair
Pub Date : 2003
Teaching Note : Available
Countries : Europe
Industry : Aviation
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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EXCERPTS
The Recipe for Low Fares
Ryanair followed a strategy of cost focus. The airline served a class of flyers who looked for functional and efficient service rather than luxury. It did not aim to satisfy all segments of the market. The airline's operational policies supported its strategy of cost focus.
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The operational model of the airline included the following components:
Simple Fleet
Ryanair flew a fleet comprising entirely of Boeing 737s. This focus on standardization was a key feature in keeping the costs of the airline low, thus allowing it to offer low fares. Flying a standard fleet had the advantage of simplifying the maintenance function of the planes. The airline did not have to stock spares for different types of planes. As spares and other aircraft parts could be purchased in bulk, it resulted in economies of scale. It also reduced training requirements for the pilots and the cabin crew, as they had to only learn to operate a single type of plane...
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Ryanair's Publicity
Ryanair had a publicity program, which though sometimes unconventional, nearly always achieved its aim. The 'attack' on easyJet was one of the typical publicity exercises of Ryanair.
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The CEO of an airline blatantly waging war against another airline was a topic guaranteed to generate publicity, and Ryanair leveraged the publicity by bringing it to the notice of the public that easyJet's fares were much higher than those of Ryanair. One ad released by the airline featured the Pope whispering into a nun's ear. Many people felt the ad had gone too far and was in bad taste. The Vatican even sent out a press release accusing the airline of insulting the Pope. The release attracted so much attention that it got reported in newspapers as far away as India, and generated a great deal of free publicity. "I thought I died and went to heaven," said O'Leary. Added David Bonderman, the chairman of Ryanair, "It's hard to think of another CEO of a company with a $4 billion market cap who would run those ads... |
Excerpts Contd... >>
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