Factors contributing to Ryanair’s success
Ryanair is known as the leading low-cost airline services of Europe. There has been a shift in the business strategy followed by Ryanair. They have shifted their focus from the red ocean strategy to the blue ocean strategy. This was mainly an action taken by Ryanair to sustain in the market of high competitiveness. The existing strategies of Ryanair were not at all profitable. So, they thought of bringing about some changes like creating supreme value for all their customers, having a total possession over the resource base and also present their superior value-adding services in the most efficient and effective manner (DaSilva and Trkman 2014). However, it has been seen that right from the beginning of the changes that they have taken in terms of their business strategies, they have always tried to generate value for both the company and their shareholders as well. However, this transformation or the shift from the red ocean to the blue ocean strategy has been helpful for Ryanair airlines. They have been able to attract a large number of customers. This not only helped them increase their total sales and at the same time, they also have been able to check their overall operational costs.
Some of the important factors that are responsible for the success of Ryanair are as follows are
Low Prices
One of the most important strategies that were followed by Ryanair was to fly only across the small distances. This enabled in keeping the fares of the flights low. This indeed was a good strategy because there are different kinds of passengers having different economic status. There are many of the passengers who are the conscious travelers and look for lower priced tickets. These passengers would have opted for any other means of communication if the prices of Ryanair tickets have been very high. It was also seen that the European passengers are mainly choosing the low fare air tickets because it goes them the best value for money air services. One of the important strategies that have been used by Ryan air in this context is the Blue Ocean Strategy. It has made use of this strategy in order make itself the leading low-cost airlines to operate in Europe. The main objective of Ryan air in using this strategy is to emphasize more on the reduction of the operational cost and increasing the total volume of the passengers. The key objective of this strategy is to offer air tickets to the passengers at a considerably lower price so that it can be afforded by a large number of passengers.
Point to point model
Some of the key factors of this strategy are
Short distances traveling
Short distances traveling, which is also known as the point go pint operations or the short route traveling. Ryanair unlike its many other competitors like Easyjet, Norwegian, Vueling, Wizz Air,did not believe in carrying the passengers across a vast distance. They wanted to keep their distance short and maximize their efficiency and reducing their operational costs at the same time. Unlike the other airline service, Ryanair used to fly single aircraft fleet of Boeing 737-800. This naturally resulted in a smaller number of passengers. As the total volume of passengers was small, it also became manageable at the same time. As a result of this, the number of free services and customer services that had to be offered to the customers could also be checked and easily managed. The number of free services could also be stopped or at least reduced comparatively. The airline stuff could also function freely and peacefully without any compulsion of the European leader. Ryan air has also been highly successful in breaking the age-old normative belief that the basic rule of prospering on this business is by providing luxury goods and luxury services at a very high price. It has been able to grab the attention of media in the best way possible by creating a huge and vast marketing and advertising of the air tickets. The sales and marketing of any brand play a major role in promoting the success of the brand. The massive advertising of the Ryanair tickets has helped in attracting the attention of a huge number of passengers, who would have opted for any other possible means of transportation otherwise. This has proved to be a dual advantage for Ryanair. On one hand it increased its customer base to a great extent and on the other hand, it also had given a great challenge to the other competitors who now found themselves under a huge pressure. This pressure was the price wars. However, the classic carriers or the competitors have taken different strategies to deal with this problem. If they try to combat this problem reducing the amount of free or complimentary services on board in order lower their cost, then they would suffer a major loss in terms of their customer base. They will lose a large portion of the business clients. On the other hand, if they try to retain these business customers, then they will have to lose their regular customers. Even if these airlines increase the number of passengers they cannot maximize their profit because of less fare and often lose their regular customers. However, they try to maintain a high standard of the customer services that they provide on board so that they can attract more number of business passengers and travelers in comparison to those companies like Ryanair that has reduced its amount of on board of services (Peppard and Ward 2016).
No-frills policy
Point to point operation
Ryanair mainly carries on its operations by following the point to point model. They mainly carry on their flights among the short-haul routes. These destinations mainly connect the secondary and the regional airports. Ryan air has helped to reduce the unnecessary costs that were required in order to serve the passengers on board. Hence, it led to the foundation of no-frills policy. Ryanair carries on its point to point operations on a regular basis thus eliminating the necessity of frills. These frills or the extra costs are otherwise needed to be borne by the airlines in the long haul routes. Some of the strategies that were adopted as a part of the no-frills policy were to introduce the pay and use toilet and selling of food on board, in other words, the passengers would no longer get free food or any kind of complimentary food (DaSilva and Trkman 2014). No Frills policy meant that passengers will have to pay the necessary fares for buying any kinds of food or drinks that would be sold on board. Ryan air also believed that there must be extra charges charged from the passengers for carrying extra luggage, for changing the flights in between, in-flight retail and several other such facilities. Installation of pay toilets also had reduced the cost of the tickets and made the flight much easier.
Low operating costs
Ryanair believes in lowering the operational costs. One good step that was used by the company was using the policy of lowering the aircraft equipment cost. Ryan air believed in using one single kind of aircraft. However, these aircrafts were later upgraded to the modern versions for meeting the stiff competition.
(B) Using appropriate strategy and innovation frameworks, critically analyze the different approaches taken by Ryanair in shaping its entrepreneurial vision and identifying market opportunities
The marketing strategy used by Ryanair
Price
The two important strategies used by Ryan air are low price and price with a different arrangement. They have selected a very good and working strategy. They sell out major portion (70%) of their seats at the lowest price. The remaining 30% are sold at a higher price and the rest 6% of the seats are sold at the highest price. So, it is evident that only a small handful of seats are sold at a high price whereas the majority of the air tickets are sold at a much lower price so that it can easily be afforded by a major number of people (Shaw 2016). This is really very beneficial because most of the customers are highly price sensitive and they would otherwise opt for other alternatives. However, they also face several problems with their advertised price and the real price. They often have faulty advertisements and the advertised prices are very controversial. Often legal actions are also taken against it.
Marketing strategy
Product or service
Ryan air started charging an extra amount of money from the passengers on carrying an extra amount of luggage, priority boarding. As per the opinion of Ryan air’s manager, they were targeting to generate about 20% of the total revenue from ancillary sources. They also decided to cut down their expenses on all the additional services, like serving all minds of complimentary food to the passengers on board and also all the other customer services (Shaw 2016). However, Ryanair has been criticized for the improper handling of the disabled passengers(Small & Harris, 2014). This is because if they cut down their expenses on all the customer service facilities then it will be a great problem for the disabled and the aged people. In the year 2002, Ryanair refused to provide wheelchairs for some of the disabled passengers. So, it is advised that Ryan air must carry ion their strategies in such a way that it does not overlook the welfare of the passengers on board.
Place
They do not use any agency commissions so they do not have to pay any extra amount of money. They mainly use the marketing techniques to hire and retain their customers. It mainly used the secondary destination airports so that the flying experience is easier. It is also very easy to afford the flight. The cost required to operate the aircrafts in these places is comparatively lower. The aircrafts can be turned around easily and Ryanair also tries to keep the aircraft in the air for the maximum time possible. Skylights have been invented by Ryanair which is their new reservation system. However, Ryanair does not have any online medium to the customers for reaching out to the company. They can only use the phone lines by paying the standard rates to call up and contact the Ryanair Company. So, it would be good if, Ryanair introduces many new communication channels so that people can reach out to the company easily (Chiu et al. 2016). It is needed for every company to provide a proper place or a platform to enable their consumers to contact them easily.
Promotion
Ryanair uses very little expenditure to carry on their advertising and marketing activities. They do not use any showy or massive advertising methods. The advertising is usually carried on through newsletters, brochures, leaflets or posters to make the passengers aware of the new offers or the low tickets that they have. The advertising is mostly carried on an in-house basis. However, they have not really updated themselves as per the modern scientific and technological developments. In the present day scenario, the world is developing rapidly and the internet has become one of the unavoidable things. It has also become mandatory for each and every company to make sure that they are carrying on their marketing and advertisements through the internet so that maximum customers can easily reach out to them. Ryanair must make efforts to increase more e-marketing tools and launch several web pages, which will be a good platform for the promotion of their products and services. They can also try social media marketing. Most of the people nowadays are active social media users. So, if Ryanair can grab this opportunity, then they will be much more successful in promoting their activities. They can post any new offers or discounts on the ticket prices over the web pages or over social media networking sites like Facebook, MySpace, LinkedIn and many other such popular and well known social media networking sites (Florido-Benítez and Martínez 2015).
Critically analyzing Ryanair’s entrepreneurial vision
Figure1: Innovation strategy of Ryanair
(Source: Baker 2014)
Reducing the costs below Industry
Ryan air has tried their level best to reduce the operational costs so that they can provide their services to a large number of customers at the same time. There are many customers who are price sensitive and would always opt for low priced air tickets. So, Ryanair started offering the air tickets at a very low price.
Create new commercial value
As they have started with a totally new business idea, so they have to carry on their advertisements and marketing in a proper way so that they can easily promote their products and reach out to the customers (Taneja 2017).
Raise profits above industry
Ryanair has adopted several strategies for increasing its sale and check its operational costs at the same time.
Eliminate fares in Industry
The main objective of Ryanair was to provide low priced tickets to a large number of customers. It is for this reason that they have taken several strategies like using a single aircraft, reducing the number of onboard customer services, pre-booking of seats and many other such things to check the additional operational costs. This has attracted a large number of customers thus giving a tough competition to the rest of the competitors in the industry.
(C) Critically analyze the view that Ryanair’s success can be attributed to the successful application of the Blue Ocean strategy
Ryan air is known to be Europe’s leading low priced airline service. One of the most important strategies that it is followed is the Blue Ocean Strategy. This was a new business model that was launched in the 2nd half of the 1970s. The main key aspect of this new strategy is using a low-cost model (Bowie et al. 2016). This meant that the companies using this new approach will be able to check the operational costs yet utilize the fleet unification, modern technologies, and the reduction of free services.
This is a new business approach that Ryan air has adopted in order to maximize their sales volume. They have left the Red Ocean Strategy and adopted the blue ocean strategy. This shows how they have been able to grab the business opportunity and make the fullest use of it. The main objective of Ryanair was always to provide low fare tickets to a large volume of passengers. In order to do this, Ryan air had reduced its overall operations cost by reducing the number of aircrafts being used. They started using only one single aircraft fleet of Boeing 737-800. This resulted in the increased motivation of staffs. However, an author like Baker (2014), is of the opinion that though blue ocean strategy might be very helpful but it is often very tough to get hold of the right kind of new business idea. Often selecting the new business idea or the new business strategy is a matter of huge time and discussions. There can also be some mistakes in selecting the right kind of business strategy which might make the company suffer a loss. However, in case of Ryanair, nothing has really taken place. The other step that was followed by Ryan air was to reduce the amount of customer service facilities that had to be provided to the passengers on board (Kesting and Günzel-Jensen 2015). There would be no free or complimentary food provided to the passengers. The passengers on board will have to buy the foods that will be sold on board. The other strategies that were taken included, implementing a complete no towards the usage of paper tickets, passenger meals, pre-booked seats and many other such services. By checking all these, Ryanair were able to check the major grounds of expenditure in running the aircraft. They also introduced the pay and use toilet service on board. This really made flying easier. However, as per the opinion of Thomas (2015), this could also have been very risky for Ryan air because they brought in an entirely new strategy that had the chances of not being well accepted by the public. Following blue ocean, the strategy is dusky because it is an altogether a very new concept (Chiu et al. 2016). A good example in this context can be that of the Amiga computer which was a new and brilliant technological marvel but it could not flourish as the customers in the market did not accept it. It is never a cake walk for any brand new business idea to flourish in the market just after it is launched. Same was the case with Ryanair’s usage of the blue ocean strategy. However, Ryanair did not face any such issue with their usage of the blue ocean strategy.
Identifying market opportunities
Though it was new and different, they could channelize it well among all their customers. Apart from this, they also made it sure that they only carry on their operations over short distances. They made sure that their distances ate only restricted to small regions. They made sure that they are concentrating on carrying the passengers only across short-haul routes so that the number of passengers can be kept within a manageable range and can easily be managed. This has helped Ryanair to attract a large number of customers. All these additional charges would otherwise have added to the ticket fares and many passengers would then have given up boarding Ryanair and would have selected some other means of transportation. However, an author like Johnson (2017), was of the opinion that Ryanair would also have suffered a major loss if there was lack of proper clarity about their new business strategy. As it was a very new concept and it had to be implemented among the customers in such a tough competitive market, so it would have totally gone wrong if the concept was not clearly defined and explained to all the staffs of Ryanair. Trust and patience was another important factor that had to be considered in case of this blue ocean strategy (Taneja 2017). As the shift that Ryanair took from the red ocean to the blue ocean strategy was a new one, there had to be enough trust and patience built both among the company stuff and among the customers as well. This was because using the results would not be seen immediately but only with the due course of time. It had really been a tough challenge for Ryanair to build the correct level of trust and patience among their company and among the customers as well. At the same time, Ryanair air also had to be very defensive so that the sharks (competitors) from other oceans are not able to snatch the competition from them.
Conclusion
Thus, it can be concluded that Ryanair has adopted many new strategies for providing their customers tickets at a low price. However, there are also several loopholes within these strategies. Hence, care has to be taken that that these strategies do not make any compromises with the welfare of the passengers. Ryanair has to keep in mind that though there are many price sensitive customers, who look for low priced tickets, but at the same time there are some who are also in need of some welfare services. So, there are still some areas of improvement that Ryanair has to look after.
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