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This report will look in to changes faced by Ryanair over the last ten years and try to identify the impact of the changes on its strategic leadership, structure, culture, market forces, environment and strategic directions by using different strategic tools.
Ryanair was set up in 1985 by Tony Ryan to operate low-cost flights from Waterford and Dublin in the Republic of Ireland to London with a staff of 57 people. In its initial few years of operations, it struggled financially. Michael O'Leary, was the chief financial controller at that time persuaded Ryan to let him try and redress the situation that the company was facing.
Ryanair operates more than 1,500 flights per day from 51 bases to 1,500 low fare routes across 28 countries, connecting more than 168 destinations. Ryanair operates a fleet of 290 new Boeing 737-800 aircraft. Ryanair has to carry a team of more than 8,500 people and expects more than 80 million passengers in the current fiscal year.
This report will identify Ryanair's internal and external changes the company has faced in the last ten years i.e. 2002 to 2012.
This report will try to establish the impact of the strategic changes on the strategic leadership, structure, culture, market forces, environment and strategic directions of Ryanair.
A swot analysis is a tool used by business's when planning a project of a venture. It analyses the company's strength, weakness, opportunities and threats. The company should identify the project before using swot analysis to identify the internal and external factors which are either favourable or failure to the forthcoming project. The strengths and weakness are both at the present and in the past whereas the opportunities and threats are for the future. When a company is compiling a swot analysis they see it only useful on day it was done as within a week the company's strengths can become its weakness.
PESTEL Analysis is a framework used by companies to examine the external factors which they must consider when launching a product. It is a valuable tool for companies to analyse the current market. The term PESTEL stands for political, economic, social, technological, environmental and legal. The PESTEL factors once analysed are often used as either opportunities or threats in swot analysis.
The British government has increased Air Passenger Duty of £ 11 in 2009. The Directive must be transposed into national legislation across the EU in March 2011, which can lead to higher airport charges, depending on how its provisions are implemented and enforced by Member States and subsequently by the courts and thus affecting the costs of Ryanair.
In October 2010, British court has asked BAA to sell Stansted and either Edinburgh or Glasgow airports in the interest of competition and a better deal for consumers. This can help to cope with Ryanair new owners of Glasgow and Stansted Airport, which in case of sale, improve traffic at Stansted which has declined recently because of "high costs of BAA and management missions.
With the impact of the global economic crisis subsides, the International Air Transport Association predicted that the aviation industry in 2010 net profit after tax of $ 15.1 billion. However, the European airline industry still suffers from a weakness of the economy, labor disputes and loss of revenue losses caused by volcanic ash from Iceland. In addition, the expectations of European banks and sovereign debt crisis forced new measures to weaken the European economy.
Ryanair has decided to freeze its base in the United Kingdom due to the weak economy, British growth and reduce its flights from London Stansted Airport. As a result, the total capacity of the United Kingdom decreased by 16% during the period 1 November 2010 to March 31.2011.
While the global economic crisis recedes, IATA expects the net profit after tax in 2010 for the airline industry will be U.S. $ 15.1 billion. But European airline industry was still a loss because of weak economies, labor disputes and revenue losses of ash from the Icelandic volcano. In addition, banking and sovereign debt crisis in Europe require additional measures that would weaken a number of European economies.
Due to weakness of the British economy, Ryanair has decided to freeze the growth of its bases in the UK and reduce its flights from London Stansted. As a result, the total capacity in the UK fell by 16% during the period 1 November 2010 to March 31.2011.
Rising fuel prices have been affecting the operating costs associated with the growth of Ryanair. The impact is huge on Ryanair as in the short, medium and long term, as fuel prices rise. These strategies can not be expected to eliminate the impact on the Company increased market price of kerosene. At the end of 2010, the fuel, which represents 40% of total operating costs compared to 35% in the period preceding comparative rose 42% to â‚¬ 943.9m due to a higher price paid per gallon , and an increase in the number of flying hours. In future fuel costs may also increase due to the depletion of oil reserves, the lack of capacity of fuel and / or restrictions imposed by the production of petroleum fuel producers.
The fluctuation of interest rates in the UK may affect both the income and expenditure of Ryan Air. RyanAir interest income and similar income decreased by 68.8% in the year of 2010 due to lower market interest. On the other hand, interest expense and similar charges Ryanair declined from 44.7% in fiscal 2010, primarily due to the impact of lower interest rates in the market. (Ryan Air Holdings PLC 2010)
Fluctuations in exchange rates may affect the turnover by Ryan Air. Ryanair has recorded losses of $ 1.0 million in fiscal 2010. This is due to the strengthening of the pound sterling in the UK and the exchange rate of the U.S. dollar against the euro during the year 2010
With the growth of globalization, people have become more open to travel as his regular visits for business or student exchange programs. This can directly affect the growth of the travel industry in the future.
Ryanair is currently the industry leader in terms of environmental effectiveness and constantly working to improve its performance using the following strategies:
Ryanair operates a fleet of single aircraft type Boeing Next Generation 737-800 with an average age of only 2.94 years, which aim to minimize drag, which lowers levels of fuel burn and noise. The emission per passenger due to the increased capacity inherent in Boeing 737-800 is also reduced.
Ryanair offers direct services rather than connecting flights, to reduce the need for passengers to transfer to major intersections and thus reduces the number of takeoffs and landings per trip from four to two, which reduces fuel consumption and emissions per trip;
Ryan Air operations, such as the removal of most airports Ryanair operates from the lack of night operations, etc. Reduces environmental impact
CO2 Emission Control: On 19 November 2008, the European Council of Ministers added to aviation EU ETS allowances from 2012. This system is a system of cap and trade CO2 emissions to encourage industries to improve their efficiency in CO2. Accordance with the law, airlines will be granted initial CO2 quotas based on historical data "tonne-kilometers" and an efficiency criterion CO2. Response to any additional requirements, allowances must be purchased on the open market and / or public auction. This may affect the cost management based on Ryanair quotas to be necessary in 2012.
Internet is the most powerful tool available for marketers of travel. It is now used to buy a ticket, and also to compare prices online. Ryanair as well as some of its competitors have their booking system based on the Internet that helps to increase the number of passengers, but once again the possibility to compare prices of different travel options increases competition.
Many airlines have started using the GPS receiver to fly better and synchronize their operations in and out of congested airports. These tools can help smart and expensive all airlines flying safely and better.
The repeated European government-owned air traffic control strikes can cause great loss for the airline industry as recently led the strikes Ryan Air to cancel many flights. Ryanair also had to pay compensation to passengers on the basis of the reform EU261.