In 2006-2007, Ryanair has become the world's most profitable airline on the basis of its operating and net profit margins and on a per-airplane and per-passenger basis. Indeed, the profits expected for the first half of fiscal 2007 were 329 million euros, which is a record for the Irish budget airline company. In addition to that, the air traffic grew by 23 percent to 22.1 million passengers, and yields increased by 9 percent and the total revenues have been improved by 33 percent to 1.256 billion euros. Companies can use five different generic competitive strategies. The one that best matches the competitive strategy that Ryanair is employing is a "Low-cost provider strategy". Ryanair strives to be the industry's overall low-cost provider, which is a powerful competitive approach in markets, such as the airline market, which has many price-sensitive buyers. Ryanair is the low cost provider because it is the company that provides the lowest cost on the European airline industry and not one of the companies that provide the lowest cost. This strategy is very difficult to copy for rivals which have high operating costs. Even other European budget airlines do not try to copy the Ryanair strategy. Moreover the brand image of big national carriers will be damaged if they choose to adopt a low cost strategy. Ryanair's success in matching this strategy is possible the firm is doing a better job, than rivals, of managing value chain activities cost-effectively and finding innovative ways to bypass high operating costs. This strategy works well because in the airline industry there are not many ways to offer high value to consumers.
[...] Thus, budget airlines will play on their low prices and the rapidity of the check-ins and boardings, whereas big companies will play on the aircraft seating space, class of service offerings and the aircraft type. - An effective management of the fleet: It is essential to manage the aircrafts utilization in an effective way. To maximise the profit making, airline companies must fill their aircrafts with the most passengers the airplane capacity allows. The best is to fill all the airplane seats for every flight. [...]
[...] We can say that Ryanair is the low cost provider because it is the company that provides the lowest cost in the European airline industry and not one of the companies that provide the lowest costs This strategy is very difficult to copy for rivals which have high operating costs. Even the other European budget airlines do not try to copy Ryanair's strategy. Moreover, the brand image of big national carriers will be damaged if they choose to adopt a low cost strategy. [...]
[...] Besides, the firm wants to preserve the brand image of a safe carrier and will never search to extend Ryanair's low cost operating strategy to elements of safety, maintenance or training What issues confronted the company as of 2006? What had Ryanair's management to be worried about? Ryanair has faced a lot of problems in the past years and the company still has to cope with future stakes. Indeed, since 2006, news issues confront the company, Ryanair has to face various challenges and the top management should be worried about several future events. [...]
[...] The new strategy was very clear: establish Ryanair as Europe's leading low-fares scheduled passenger airline through continued improvements and expanding offerings of its low cost services. By offering low fares, the company expected an increase of passenger traffic. Michael O'Leary's strategic vision differed from Ryan's on many points. First, O'Leary's strategic vision was to compete all over Europe against national carriers whereas Tom Ryan's vision was to compete against only one or two companies and not across Ireland and UK boarders. [...]
[...] - Crafting a strategy to achieve the objectives: The task of crafting a strategy entails answering what the company should do to become the low cost leader of European airline companies. So, it is by answering the questions how to achieve financial and strategic objectives, how to outcompete rivals and how to respond to changing market conditions. To have a sustainable competitive advantage, to build competitive valuable competencies and capabilities, Ryanair's management has launched several actions. Thus, Michael O'Leary and his team set up a plan to cut costs at the maximum. [...]
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