Beruflich Dokumente
Kultur Dokumente
1. Summary
This report aims to analyze Ryanair’s operations strategy by identifying its strategic decisions. The five
performance objectives quality, speed, dependability, flexibility, and cost will be looked at individually and put
in context with its operations.
The focus will then be on suggestions for improvements, so that Ryanair will be able to maintain or even
strengthen its position. The approach chosen is based on an importance/ performance matrix to determine
2
Ryanair’s current position in the landscape of low-cost carriers. These suggestions will include marketing,
expanding supplementary services, reducing costs through fuel-efficient aircrafts, increased load factors, further
streamlining of operations, and improving staff-customer interactions.
Finally, the report will conclude that in the long run Ryanair will have to extend its destinations and services in
order to maintain its leading position as a low-cost carrier in Europe.
3
2. Discussion
2.1. Ryanair’s strategic decisions
Ryanair, as the leading low-cost carrier in Europe, has an operations strategy to provide air travel at minimal
cost, while maximizing its operating margin.
To achieve this, strategic decisions such as implementing a lean structure and cutting back on operations,
services and overheads have been rigorously pursued. These include
Maintaining a common aircraft fleet resulting in utmost efficiency in operations and maintenance;
Increasing the aircraft seat capacity;
Its “seat only” policy, charging for all additional services such as luggage, online check-in, priority
boarding, snacks, etc.;
Supplementary services such as hotel bookings, car rentals, or online gaming;
Using secondary airports;
Keeping wages, maintenance and other operating costs to a minimum;
Outsourcing some operations, such as non-routine aircraft maintenance, ticketing, and luggage
handling;
Aggressive marketing.
These strategic decisions have a significant impact on the operational structure and infrastructure, since
structural decisions can only be made in the framework of the infrastructural setting.
Quality: In the long run, even the most competitive price structure will not attract customers if the quality of the
service offered is below a certain standard. This includes maintenance, efficient booking and luggage handling,
reliability, punctuality, and interaction with Ryanair staff.
Speed: The areas where speed matters most for Ryanair are turnaround time of aircrafts, reservations, luggage
handling, and aircraft maintenance, all of which have a direct impact on costs. Although Ryanair has
implemented many steps to increase speed, it also depends on service providers that are not directly under its
control.
Dependability: This relates mostly to flights being on schedule and reliability of luggage service. The figures
for the third quarter of 2009 indicate 89% on-time flights and 0.3 missed bags per 1,000 passengers (Table 1).
This compares very favourably with competitors, where punctuality is similar, but the missed bag/passenger
ratio is orders of magnitude higher. This excellent record has to do with the fact that Ryanair offers only point-
to-point flights, thereby eliminating the risk of luggage mismanagement during connecting flights.
4
Flexibility: Customers have a high degree of flexibility in choosing the level of service, since only the basic
airfare is charged and any additional services must be paid for. Increasing flexibility for the customer would
mean offering additional options. From Ryanair’s perspective, flexibility comes with diversification of
supplementary services on the one hand, and, with increasing market strength, the ability to negotiate
alternatives for various service sectors, such as maintenance agreements, outsourced functions, etc.
Cost: The most critical cost factor for any airline operations is fuel prices. There are enormous fluctuations, and,
unlike its competitors, Ryanair has committed to a policy of not imposing fuel surcharges. Thus any fluctuations
have to be absorbed by Ryanair. As a result, Ryanair reported its first annual loss in 2009 when oil prices were at
a record high. (BBC Online News, 2 June 2009)
Short-term capacity management can be determined by external factors that are beyond the control of the
management. Examples are the Gulf War in 1991 or the terrorist attacks in 2001 which led to a drastic downturn
of passengers. While such events have dramatic negative impacts, experience has shown that these are relatively
short-term and therefore have only limited reflection on capacity management.
5
3. Suggestions for improvements
Since any such analysis has the ultimate goal of improving operations while simultaneously reducing costs, the
following suggestions are offered on how to achieve this. Before doing so, it may be useful to look at the
importance/performance matrix described by Slack (1994), to determine where Ryanair stands with respect to its
competitors regarding its objectives and performance. Using this matrix, one can distinguish between order-
winning (i.e., those that determine the competitive advantage), qualifying (i.e., those that are comparable with
competitors), and less important objectives (i.e., those that are not critical elements in the considerations of
potential customers). Regarding order-winning objectives, the most outstanding advantage of Ryanair is low-cost
and reliable service. Concerning qualifying objectives, one might mention areas such as supplementary services
offered; for less important objectives, comfort or service on board comes to mind.
Once these objectives are determined, one can measure performance to identify whether the company is doing
better, equal, or worse than its competitors and identify where improvements are necessary. Ryanair clearly has
better performance in terms of airfares, punctuality and luggage reliability. It is comparable to competing airlines
in the services on the ground and on board. However, its policy to fly to secondary airports can be seen as a
disadvantage.
6
Improvements in staff-customer interactions. Numerous complaints have been filed against Ryanair for
inadequate staff training and appalling services. A survey carried out by the German Stiftung Warentest
in 2009 saw Ryanair in last place out of 10 low-cost airlines in terms of information and booking. This
shows that there is a considerable need to improve this aspect.
7
4. Conclusion
The steady growth of Ryanair, in a time when some of its competitors have disappeared from the landscape,
indicates that operational decisions taken by the management have so far been correct. (Table 2) One could
argue that the quality of services provided by Ryanair is held at the absolute minimum to ensure low cost for the
airline as well as for its passengers. While Ryanair customers do not have high expectations of what they can get
for the price they pay, they do expect on-time flights and reliable luggage handling.
The competition Ryanair is facing is fierce. The challenges for the airline industry are growing since the terrorist
events of recent years, and the cost of security can be expected to increase. It is therefore essential for Ryanair to
look for expansion in terms of destinations and services offered, much in the sense of the motto of its CEO
Michael O’Leary: “We pile it high and sell it cheap.”
8
5. References
Mullins L.J. (2007) Management and Organisational Behaviour. 8th ed. Harlow, FT Prentice Hall
Slack N., Chambers, S., Johnston, R. (2010) Operations Management. 6th edition, Harlow, FT Prentice
Hall
9
6. Appendix
Source: http://www.ryanair.com/en/investor/investor-relations-news
Source: http://www.ryanair.com/en/about
10