Environmental And European Airline Industry Analysis

Environmental And European Airline Industry digestHistoryRyanair has grown since 1985 with provided 25 staff members and a star 15-seat turbo-prop commuter plane flying between Waterford and London. By 2001 in that location be much than 1500 employees working for Ryanair and more than 10 million passengers are carried to 56 cities in 13 European countries. Nowadays the company is named as the most popular airline on the web by Google and in like manner passed out British Airways to obtain the UKs favourite airline in United Kingdom and throughout Europe.Mission and ObjectivesRyanair does not publish a formal vision or mission statement. callable to the increase of passengers, the company has re-launched as a no frills airline to meet the needs of travelling at the lowest price. It aims to expand its market share, and increase more routes and destinations. Therefore it washbowl become the 1st largest airline and maintain the send in the industry.Reasons for successThe reaso n of Ryanair success because it implements different marketing strategy to prevail the company survive in the competition and to be able to gain competitive position in the airline market. For example, its no fills strategy. In order to position itself in the marketplace, Ryanair controls own its comprises to offer the lowest fares possible and remain profitable.Chapter 2 Environmental European Airline Industry Analysis2.1 The PESTEL AnalysisThe political FactorsThe Europe Union (EU) has expanded in the past few years, and it will be a big factor runs the direction and strategy planning for Ryanair. And more or less countries give preferential treatment to companies from their own country, i.e., France government has the policy to support its own national carriers which affects the expansion of Ryanair.The Economic FactorsThe unstable fuel price is modify the business. In the face of rising fuel, hedging on future buying of fuel to stable the cost as fuel is a major cost for every airline. Also, the depreciation of US dollars affects Ryanair because customers from United States will cut their orders as US dollars are depreciating.The Socio-cultural FactorsThe increasing travelling lifestyles become a factor to affect the business of Ryanair. Nowadays people are more enjoy a travelling lifestyle, i.e., graduation trips, backpack trips etc. They love to travel all approximately the world. Therefore, these people become the major customers for the company.The Technological FactorsTechnology is rapidly improving means the whole industry is changing, becoming more environmentally friendly and efficient. more(prenominal) effective infrastructure in the airports means that some airports can charge the airlines more for landing there.The Environmental FactorsUnder the new law, the airline industry has to be more environmentally friendly. Therefore the manufacturers, designers and airline companies have to combat this together to reduce carbon dioxide emission s and less harmful to the environment so its order to postdate with EU regulations.The Legal FactorsThe whole industry is heavily regulated due to laws and they have to constantly adapt to new changes in the law, such as not allowing liquid on board. After 911, the tighten security measure has also affected the business, the government reinforce security, it increases cost, and forcing to push the airline ticket prices up.2.2 The Five Forces AnalysisCompetitive RivalryRyanair has spicyly competitive rivalry because the large number of competitors and especially since the airline industry market is completely saturated. There are already many no frills airlines, i.e., easyJet, Monarch Airlines, and Air Berlin etc. If those companies decide to compete on the same basis as Ryanair, there will be a heavy pressure on prices and margins to Ryanair.Suppliers bargaining powerThe bargaining power of suppliers is high for Ryanair. Price of aviation fuel is directly related to the cost of oi l. The costs from one supplier to the other are high because all mechanics and pilots would have to be retrained. Therefore, Boeing is the main suppliers of Ryanair. For those bigger airports where Ryanairs competitors operate, have greater bargaining power. Ryanairs policy is tried to avoid these airports and sharpen on the regional airports.Buyers Bargaining PowerThe bargaining power of buyers is medium. As customers are price sensitive to choose Ryanair, they only choose for cheapness not quality. Therefore if the prices are increased or a competitor has a lower price then they will tag on to another airline.Threat of New EntrantsThe threat of potential entrants is low because set up an airline is high capital investment and the risk is high. Also there are some barriers to entry, such as a lot of regulation and the pressure to reduce carbon emissions.Threat of SubstitutesThe threat of substitutes is high because of the competition with buses, trains, cars and ferries. These ca n all substitute the low-cost airlines like Ryanair.2.3 The Scenario AnalysisAccording to the socio-cultural factors, the market is becoming more competitive because of having the emerging and developing countries, more people indigence flights therefore more airlines in order to accommodate this and it might decrease the profits in the market share. Furthermore, Ryanair is facing the increasing trade-union pressure in Europe. nigh of the countries in Europe have formed a trade-union among each others, thus it gives the pressure for Ryanair to do business in these countries.Chapter 3 SWOT Analysis3.1 StrengthsRyanair has real a very well recognized brand name by leading low cost airline. It provides high seat density and high good performance punctual, high rate of flight completion, low baggage loss, these give a good image of the companys reliability. Ryanair has first mover advantage in fortified bargaining power in airport deals and reduces barriers to its entry into new ma rkets and airports. Over 94% of all seats are sold online so the cost of dissemination by using internet booking is lower than phone booking, also eliminates the need of travel agents. Furthermore, the single model of Boeing aircraft saves on training, maintenance and supervisory costs.3.2 WeaknessesRyanair is establish on no frills strategy, it restricted expansion possibility. The long distances of its airport from city centers can become less attractive as markets mature. Over time customers whitethorn find this a big inconvenience. Besides, the morale of employee is low. The weakening employee relations are detrimental to success in any services industry. Other weakness of Ryanair is high turnaround would increase the fuel consumption and carbon dioxide emissions, therefore the costs will be increased.3.3 OpportunitiesAs the EU enlargement, there will be a lot of new destinations opened up and complete deregulation of airline industry in all EU markets. During any financial dow nturns, the new excrete could be leased out to undercut other sources and increase entrepreneurial activities will be a source for economy air travel.3.4 ThreatsThere are several threats on Ryanair. First, impending legislations for environment protection and customer compensations increase costs. Secondly, the increase in market share at the cost of network airlines could also increase airport service charges which are currently low. Then, traditional airlines are also cutting fares and costs which could affect the market share of Ryanair. Finally, landitional fleets may require new terminals and secondary airports which mean Ryanair would need to bear higher cost.Chapter 4 Evaluations Recommendations4.1 EvaluationThere is a point-of-difference between Ryanair and larger airlines such as British Airways (BA). Ryanair is the Europes largest low-cost carrier and provide only basic-level service but BA is a high-class airline company which provides high perceived service, and they focus on difference position and backside customers so it is quite tricky for larger airlines to imitate the strategy. More than that, Ryanairs no frill strategy is sustainable for identifying their target customers who are price-sensitive and wish to spend low price to fly safely.4.2 RecommendationsA low-cost image of Ryanair that has become its brand tag will be difficult to erase when it wishes to moves up the value chain, and the upper-middle class economy travellers may seek greater value proposition, not just for low fares. I suggest Ryanair add more routes to their already extensive network and plan for expanding operations into non-European markets in the near future. Furthermore, consolidation and integration would become necessary to grow further in maturing markets which could help Ryanair to offset pressure on its costs and fares.Reference ListsCase Study on Ryanair, the biggest low-cost European Airline (Jan, 2008) onlineAvailablefrom Accessed 21/07/10Thomas M. boxf ul (2005), RYANAIR (2005) SUCCESSFUL LOW COST LEADERSHIP, onlineAvailable fromAccessed 20/07/10Yahoo Knowledge (2007), Assignment for strategic analysis, online Available fromAccessed 20/07/10