Southwest Airlines Low Cost Airline Model

Published Date: 02 Nov 2017

Select a major company in the Irish business sector: review its history over the past five years and write a report on the company’s business strategy and performance over that period;

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Introduction

In the business world it is critical for any company to outperform its competitors in areas it can if it is to survive. Companies do this in different ways, by being unique, by being the cheapest, by being the best quality, but for companies to find and exploit their niche in their respective market they need to formulate a strategy.

Ryanair has been an Irish company that has gone from strength to strength and outperformed all other European airlines thanks to its clear, concise and innovative strategies that are executed by its CEO Michael O’Leary.

Southwest Airline’s Low-cost Airline model, Ryanair’s Operational Template

In the 1980s, the airline business had become one of the worst with many Airlines such as Eastern, Pan Am, Braniff, Continental, and Midway going bankrupt, with several others on the verge of also tanking. In this disastrous period, Southwest Airlines outperformed and prospered thanks to its new approach of a stripped down budget airline model. It garnished superior profits not from what it did but what it didn’t do, lt didn't fly long-haul, it didn't serve inflight meals , didn't leverage up too much to over expand its fleet, it didn't overpay management, and didn't mistreat its employees.

Southwest Airlines was the lowest-cost operator in the industry and by looking over the operation it wasn’t difficult to see why. Southwest Airlines headquarters operated for 8 years out of a warehouse in Dallas that provided the bare minimum in comforts to management. In 1990, the company splashed out and built a new three story Headquarters to replace the barn. Even in the new headquarters though, their roots were not forgotten and attempts from the interior designer to place grand paintings on the walls was suppressed by management and staff in favour of employee award plaques and photographs of company picnics. CEO Herb Kelleher fired the decorator and spent the weekend rehanging the plaques and the photographs himself. Kelleher was key to Southwest’s success and non-pretentious grounding. His office was decorated with turkeys and the annual company party was a chili cookout.

Pay raises for management were limited and kept in-line with the same percentage increments of all other employees. One day a month, all the senior management including, the CEO, would spend the day working as counter agents or baggage handlers to keep then humble and grounded. Southwest's Airhostesses wore blue jeans, T-shirts, and sneakers, meals were limited to peanuts and the pre-flight safety demonstration was delivered as a rap song.

While other airlines were flying their wide-bodies nationally between states in the US, Southwest found its niche in short-haul using cheaper narrow-body planes. It called itself "the only high-frequency, short-distance, low-fare airline." As the others killed themselves off, Southwest grew from a four-plane operation in 1978 to the eighth largest carrier in the US.

Ryanair was Europe’s first budget airline in the early 1990s but founded in 1985 by the Ryan family and headed by Tony Ryan. When founded the Company had taken the traditional approach of full-service airlines with different ticket classes, 3 types of aircraft and by the early 1990’s had run into a lot of trouble, loss making and without leadership. Ryanair then reinvented itself under the leadership of Michael O’Leary who remodeled the airline off Southwest’s budget model and since has been a huge success. O’Leary himself often admits and praises Herb Kelleher’s model saying: "It is okay doing the cheeky chappie, running around Europe, thumbing your nose, but I am not Herb Kelleher. He was a genius and I am not."

Today, twenty years later, Ryanair now has a market cap bigger than Southwest, is biggest budget Airline in Europe and 3rd biggest of all European airlines and 7th biggest in the world, so although Ryanair and O’Leary did not pioneer the budget model, they have certainly been the most successful with it.

Ryanair Company Overview

When Ryanair was founded in 1985 there were only 25 staff and one plane, a 15-Seater Bandeirante plane from Waterford in south Ireland to London-Gatwick which carried 5000 passengers on this one route that year. In 1986, after Regulatory approval, Ryanair challenged Aerlingus and British Airways for the Dublin-London route and gained a route from Dublin to London Luton to compete with the larger airlines initiating a price war. The Two routes allowed passanger traffic of 82,000 passengers for 1986. By 1989, although passenger numbers had grown to 644,000 for the year, and 9 Aircraft in operation, the company was making a loss and only getting worse forcing it to close its Business Class and Frequent Flyer programs.

By 1990 the company was making a 20m loss and decided to Change management and restructure the company based on Southwest Airlines budget Airline Model. It was at this Point that Michael O’Leary became CEO and started his mission of building Ryanair into a lean budget airline. Ryanair went from a slightly cheaper Aerlingus alterative to a low cost, high frequency Airline that replaced comforts with savings.

In 1994, Ryanair bought its first Boeing 737 aircraft, receiving 8 in total that year and replacing Aer Lingus on the Dublin-Gatwick route after Aer Lingus pulled out making Ryanair the biggest passenger carrier on the Dublin-London route, as well as by 1995 being the largest Irish Airline operating as they carried 2.26 million passengers.

In 1997, the EU air transport deregulation allowed the airline for the first time to open up new routes to Continental Europe with over 3 million passengers on 18 routes carried. Ryanair launched services to Stockholm, Oslo, Paris and Brussels and took time out to float Ryanair plc on Dublin and NASDAQ Stock exchanges. The company was awarded "Airline of the Year" in 1999 by the Irish Air Transport Users Committee.

In 2000, they announced the launch of 10 new European routes for the summer 2000 after much deliberation and watching others burning money. The company has also jump onto the internet with the launch of their new online booking site and in just 3 months the site is taking over 50,000 bookings a week. By 2001 there are more than 1500 employees working for Ryanair and more than 10 million passengers are carried to 56 cities in 13 European countries. The company has opened Frankfurt-Hahn in 2002 as their second continental European base and announce a long term partnership with Boeing which will see the company acquiring up to 150 new Boeing 737-800 series aircraft over an eight year period from 2002-2010.

The booking in their web accounts have increased to 94% which has probably has something to do with opening another 26 routes. In year 2003, the company is characterised by rapid expansion and the start the year by announcing that the company has ordered an additional 100 new Boeing 737-800 series aircraft to facilitate the rapid European growth plans (Binggeli and Pompeo, 2002). They acquired Buss from KL M in April and re-launched 13 buss routes in May. In February they opened their first base in Italy at Milan-Bergamo and launched their Stockholm Skavsta base in Sweden with six new European routes. In all 60 new routes are added throughout 2003 to bring the company a total of 127 routes. By 2004, the company is named as the most popular airline on the web by Google and they launched their 10th and 11th bases in Rome Ciampino and Barcelona Girona and continue to add more routes to their already extensive network. The company has also passed out British Airways to become the UK’s favourite airline in United Kingdom and throughout Europe (Binggeli and Pompeo, 2002).

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Today Ryanair is the largest European discount airline, operating over 1,500 daily flights across 28 countries and 168 destinations with a young, fuel-efficient fleet of 294 Boeing 737-800 aircraft. In an extremely competitive industry with a notorious combination of poor profitability, insufficient return on capital, high capital intensity, a cash generation profile that results frequent bankruptcies, the company provides a exception to the rule and has a demonstrated track record of outperformance in any environment. The company has consistently delivered growth in profitability facilitating constant market share gains at the expense of rivals that are forced to consolidate ( KLM-AirFrance/Lufthansa Group/IAG) , reduce capacity or go out of business as evidenced by Ryanair’s passenger figures growing from 51 million 5years ago in 2007 to 75 million in 2012. For fiscal year 2013 (ended March), management forecast passenger growth to have continued up to the 79 million mark. To sustain growth, it has added bases in Cyprus, Denmark, Spain, Poland and Hungary, which are experiencing high passenger traffic, and sees significant opportunities for more expansion in Europe as secondary airports aggressively compete to attract Ryanair’s traffic to boost tourism, permitting the airline to negotiate considerable discounts on airport fees and secure marketing support for its activities (a cornerstone of its strategic model). In Eastern Europe, Ryanair has instigated a price war with Wizz Air in an effort to dethrone the Hungarian carrier from its leading position. The top five bases where the two airlines compete represent less than 10% of weekly departures for Ryanair as opposed to almost 70% for Wizz Air, thus, the stakes will be fierce since Wizz Air’s 12 million passengers in the region provide a huge incentive for Ryanair to aggressively take large amounts of market share. The focus on undercutting competitors to win market share or in some cases force bankruptcy is possible and ultimately successful due to its unmatched ultra-low cost structure, diverse route network and extremely strong financial standing. The airline holds the preeminent position in Europe across many metrics, including the lowest average fares (for the most recent quarter, its €44 average ticket price compared to €78 for the next-cheapest airline EasyJet, a 77% premium), international traffic (75 million passengers versus second-placed Lufthansa with 44 million according to IATA published statistics for the latest fiscal year), densest network coverage with 1,500 routes and highest customer service rankings for most on-time flights and fewest lost bags. Adjusted for the upcoming €0.34 dividend per share payment (equivalent to an 8% yield), the stock trades on 10 times prospective earnings and 5 times EV/EBITDA with a 15% free cashflow yield which is compelling value given its stature as the only genuine low-cost carrier in Europe, continual market share gains, net cash balance, unrivalled financial returns, scope for further yield enhancement as the average current fare is still 18% below the level in 2001 and sky-high cash creation – free cashflow generation over the next three years should reach €2.7 billion, representing 40% of the market capitalisation.

Performance

(In Millions)

FY 2013

FY 2012

FY 2011

FY 2010

FY 2009

FY 2008

FY 2007

For the period ending

31/03/2013

31/03/2012

31/03/2011

31/03/2010

31/03/2009

31/03/2008

31/03/2007

Market Cap

 

6,515.24

5,003.48

5,442.48

4,265.37

4,174.25

9,019.18

  Cash & Equivalents

 

3,480.50

2,897.70

2,745.60

1,986.60

1,877.12

1,939.19

  Preferred & Other

 

0.00

0.00

0.00

0.00

0.00

0.00

  Total Debt

 

3,625.20

3,649.40

2,956.20

2,398.44

2,266.50

1,862.07

Enterprise Value

 

6,659.94

5,755.18

5,653.08

4,677.21

4,563.63

8,942.05

 

 

 

 

 

 

 

 

Turnover

4,874.82

4,390.20

3,629.50

2,988.10

2,941.97

2,713.82

2,236.90

  Growth %, YoY

11.04

20.96

21.47

1.57

8.41

21.32

32.16

EBITDA

1,031.00

992.40

765.90

637.50

348.75

713.03

615.25

  Margin %

21.15

22.60

21.10

21.33

11.85

26.27

27.50

Net Income

560.90

560.40

374.60

305.30

-169.17

390.71

435.60

  Margin %

11.51

12.76

10.32

10.22

-5.75

14.40

19.47

Adjusted EPS

0.39

0.34

0.27

0.22

0.07

0.32

0.26

  Growth %, YoY

12.90

26.30

25.00

204.23

-77.67

22.31

30.01

 

 

 

 

 

 

 

 

Cash from Operations

988.85

1,020.30

786.30

871.50

413.13

703.90

900.84

Capital Expenditures

-321.50

-317.60

-897.20

-997.80

-702.02

-937.12

-525.96

Free Cash Flow

667.35

702.70

-110.90

-126.30

-288.88

-233.21

374.88

Performance Relative to Airline sector

Name

Mkt Cap (Million Euro)

Est P/E Curr Yr

Est P/E Nxt Yr

P/B

FCF Yld %

Average

3,521.88

13.83

10.05

1.68

1.26

RYANAIR HOLDINGS PLC

8,617.19

15.47

13.91

2.67

3.10

EASYJET PLC

5,175.38

14.08

12.89

2.46

1.46

AIR FRANCE-KLM

2,057.40

N/A

6.55

0.41

N/A

INTL CONSOLIDATED AIRLINE

5,266.79

24.26

10.17

1.11

-16.07

DEUTSCHE LUFTHANSA-REG

6,434.66

11.06

7.09

0.78

5.76

NORWEGIAN AIR SHUTTLE AS

977.95

10.02

7.54

3.03

-10.20

SOUTHWEST AIRLINES CO

7,328.90

13.22

10.98

1.37

6.98

WESTJET AIRLINES LTD

2,459.92

11.87

10.62

2.23

13.36

KOREAN AIR LINES CO LTD

1,772.36

N/A

N/A

1.01

35.36

AIRASIA BHD

1,959.38

8.83

8.16

1.45

-7.79

THAI AIRWAYS

1,594.41

10.88

9.08

0.88

12.84

JETBLUE AIRWAYS CORP

1,547.31

12.18

9.90

1.07

7.70

ALLEGIANT TRAVEL CO

1,309.89

16.94

13.99

4.27

4.25

VIRGIN AUSTRALIA

850.22

15.54

9.89

0.98

-41.15

AEROFLOT-RUSSIAN AIRLINES

1,385.41

5.58

5.70

1.18

10.51

LATAM AIRLINES GROUP SA

7,612.97

23.66

14.22

1.95

-7.24

Strategy Analysis overview

The Firm

Ryanair uses powerful marketing strategies that leverage its unbeaten prices and superior on-time track record to re-enforce its branding and reputation. Ryanair’s growth into the biggest airline in Europe has helped it stay on the forefront of customers minds all the while, Michael O’Leary’s flamboyant and controversial showmanship keeps Ryanair constantly in the news. Despite the very basic service and additional charges so many people get caught out with, Customers still keep coming back as the value for money on getting where they need to go is unmatched. Ryanair is constantly expanding their ancillary services to try tap into every demand possible of their customers whose attention they have on flights. Ryanair scratch cards, call cards, smokeless cigarettes and fare raffle tickets are all innovative new ways to squeeze additional yield from each flight.

With the low cost structure and additional charges the firm risks irritating customers who are not overly price sensitive and can therefore choose to fly with a different airline. To ensure Ryanair does not fall behind in cost structure it must ensure its fleet are kept up-to-date with the latest in fuel efficient airplanes. Ryanair invests time and money training staff so it is critical they can maintain commitment and loyalty from staff, due to the low cost nature and tight margins, Staff can often have issue with the inferior pay received compared to their counterparts in competing non-budget airlines.

The Industry Environment

Ryanair has managed to significantly increase capacity throughout Europe over the last few years and done so by being affordable to a far bigger cost conscious demographic. Ryanair has only started to expand out into Eastern Europe with many local airlines still holding the majority of traffic which can be Ryanair’s for the taking. Due to the short-haul model Ryanair is not interested currently in flying to the USA or Asia but does have the opportunity in the future to open a base of operations in these regions to compete nationally with low-cost airlines. Ryanair is also trying to make a value proposition to get more business travelers due to the superior margin on such fares. As world economy improves and people become less price sensitive, this may start to erode Ryanair’s growth into the future. With Ryanair already being the biggest airline in Europe, the market is to a degree saturated and once again stunts growth for the company. With the tight margins Ryanair run on, relying on volume to gain superior return, they are sensitive to fuel prices and although hedge a lot of their fuel costs, cannot stop a general upward trend from eroding their margins and forcing their fares up.

Industry Analysis - Porter’s five forces

Porter’s five forces are the key structural forces that impact company’s competitiveness and in-turn profitability as Identified by Michael Porter of Harvard Business School. Although there are more influences outside the main four/five, most influences can be grouped or categorized into the five and allow for analysis of what drives the intensity of competition and the profitability of the industry.

These five forces of competition include three sources of "horizontal" competition: competition from substitutes, competition from entrants, and competition from established rivals; and two sources of "vertical" competition: the power of suppliers and power of buyers

Competitive rivalry

Increase rivalry

Deregulation

Increase in competitors

Formation of strategic allicances

Mergers and acquisitions (AF-KLM , IAG)

Increase customers loyalty through freququent flyer programs

Competiors focus on comfort and extra services to boost higher yield business travel customers.

Global downturn had reduced international flight to more local European destinations

We expect competitor contraction to continue into

the summer, which could support initial FY14 RYA yields.

European restructure announcements made since the Winter

season began, but which have yet to be executed, include:

Iberia’s network capacity to reduce by 15% in 2013 (9 Nov)

SAS’s headcount to reduce by 40% and Wideroe to be sold (12 Nov)

Polish LOT’s headcount to reduce by at least 30% (3 Jan)

Air Berlin’s headcount to reduce by 10% (15 Jan)

Flybe’s headcount to reduce 10% (23 Jan)

We expect such initiatives to begin to take effect in Summer 2013. This could mean further competitor supply restraint and additional support for yield enhancement. We maintain our forecast for 4% ticket and 4% total yield growth in FY14.

Potential Entrants

In Europe regulation passed to remove barriers for external airlines

New Entrants in national markets were existing European airlines

New Entrants face large financial hurdle getting routes

Many slots were resereved to local carriers and from scarcity act as barrier while incumbants can just add little extra capactity

Suppliers

Aircraft Suppliers: oversupply of aircraft and components due to fierce rivalry between Boeing and Airbus pushing prices down.

Fuel Suppliers: Fuel supply and demand fluctuates and in-turn so does the price. Fuel hedges can be bought to decrease risk on these fluctuations , Ryanair always hedging out a large proportion of their 12 month fuel costs

Airports: These can be broken down into primary and secondary. Primary are more central higher traffic airports that demand higher fees while secondary are more rural airports that are more competitive in price to boost traffic. Ryanair although traditionally has gone for secondary airports, due to primary airports weakening position with lower premium traffic, they have had to lower their prices to compete and try take routes from secondary airports which Ryanair is happy to facilitate if it does not impact their margin.

Buyers

The ease or movement between European states has facilitated millions of Europeans to travel around Europe due to low cost flights

Distribution: Travel agents traditional role or booking consumers flights was diminished as customers go straight to the airline via internet and remove the need for a middle man

Due to Ryanair’s guaranteed lowest fares, customers are already getting the cheapest flight they can so their only alternative is to go with a more expensive airline. It would take significant amounts of customers protesting and changing to more expensive airlines before Ryanair would be losing power to customers and provided they maintain the cheapest fares they are likely to suppress buyer power

Substitutes

Alternative Transport: Around mainland Europe and thanks to the channel tunnel, including UK, it is relatively easy to get around anywhere by train and even by car. Although this substitute of land travel does get one there, it takes significantly longer and with Ryanair’s low fares, it will not work out much cheaper either

Other Airlines: Customers may choose to switch to another low cost airline if they found the value proposition being offered was worth the slight premium. Ryanair’s lowest fare guarantee means that other airlines will not be a true substitute and instead a more premium offering which many likely and current Ryanair Customers cannot afford or justify

Compliments

Hertz car rental

International Call Cards

Airport Transfers

Hotels

Cycles of Competition from Ryanair

Companies Profile

Resources + Capabilities

Resources for a company are the raw materials (assets) that are used to create products or services and are the fuel to give companies their capabilities. In order to have capabilities that provide competitive advantage and out-performance in the industry the company must combine all its resources together to give it enhanced capabilities, organisational capabilities.

Physical Resources

Aircraft [130]

Destinations [127]

Countries [27]

Financial resources

Total asset 4634m

Total debt 1787m

Total equity 1992m

Technology

Latest Boeing 737-800s: High fuel efficiency, less noise and carbon emissions

Internet online booking systems for direct selling to customers

Online access and management of ancillary services such as car rental and hotels

Reputation

Allegations of misleading advertisements

Ruthless on terms and conditions of additional charges

Best punctuality record in Europe to add to low cost offering

No-Frills Experience that gets you from A to B

Culture

Thrift

No Nonsense

Direct

Lean

Skills/Know-how

Capacity for communication and collaboration

Motivation

Intellectual Resources

35 million Customers

Most profitable, on-time airline

Low cost player

Human Resources

Total Employees 3500

CEO Michael O’Leary

DCE and COO-Michael Cawley

The Skills are the ability to accomplish the stage for the surveillance in the market. It bak be

Cost strategy

To gain advantage over competitors, Ryanair follows the ‘Cost-reduction’ Strategy which implies five major features of the aviation industry

Fleet Commonality

Subcontracting out services

Airport charges

Route policies

Manageable Staff Costs productivity and managed marketing costs

Ryanair achieves its goal of having a competitive position in the airline market, Ryanair uses a cost reduction strategy. Such cost reduction strategy relies on five main aspects like fleet commonality, contracting out services, airport charges and route policies, managed staff costs and productivity and managed marketing costs. In terms of fleet commonality, the company used only one kind of plane which limits the cost for staff training, maintenance services and facility of obtaining spares, facility in scheduling aircraft and crew assignment.  With their purchase of aircraft Boeing 737, Ryanair has been able to gain capacity and reduces the average age of fleet which means savings on maintenance costs and avoiding the fit of European Union-conform equipment on old feet.

The next factor under the cost reduction strategy of Ryanair is contracting out services.  In this manner, aircraft handling, ticketing, handling and other functions are contracted out by Ryanair to third parties. In addition, in order to limit their expenses engine and heavy maintenance are also contracted out whereas the staff of Ryanair carries out routine maintenance. 

Another factor for the cost reduction strategy of the company is in terms of airport charges and route policies. Herein, Ryanair has made judicious choice of dealing with secondary and regional airports, where the traffic is not jammed and fees incomparably lower. Since Ryanair, is a true windfall for such airports, the airline company has a bargaining power which enables it getting favourable access fees. In addition, Ryanair provides only a point-to-point service, thus, it has no cost concerning connecting passengers.  Moreover, the company pays special focus to on-time departures because it means maximising aircraft utilisation.

Managing staff costs and productivity is another factor used for reducing the cost for Ryanair. In this manner, the company pays its staff on modest salary but has set up a performance related pay structure which urges employees to maximise the number of sectors flown daily. This way, Ryanair both controls productivity and keeps staff costs down.  Lastly, managing marketing costs is another factor that makes the company reduces it costs. Ryanair advertises mainly on it website with its logo "Ryanair.com, the Low-Fare Airline". In addition, it is also advertised in national and regional Irish and UK newspaper, on radio and on television.

Value Chain

The firm Ryanair had fine tie-ups with its contractors which was useful for the firm to have an advantage in the cost reduction as well as in time, Boeing served as its main supplier where was helpful for the timely delivery and also for the delivery of auxiliary products and safeguarding it. Here the lost cost can be added up as its adjacent application. There was an excellent acquaintance with the vicinity of European airport where they subvention to the airlines by which they promote the airlines to offer low cost to customers. The airports were in turn modified into the storage space residences as where as the flights that land in the place routinely gets the entire essential things at low rates and in a rapid instance. It has its constructive influence because as they contract out some services actions such as safeguarding and refurbishing inside the organization but which they boarder the entrance of the foreign players. It also kept back compensation for acts package and revenue sharing models for its domestic associates, this inspiring them to exert tough.

Additionally, they maintain burly good tie-ups with their employees. They instruct them and enlighten their workers to be prepared for any undesirable circumstances, which helps Ryanair in their encompassing their employees for their customers

Sources of cost efficiency

Findings of cost efficiency

Economies of scale

Ryanair as the low cost airlines in the European market has attained ‘economies of scale from first to last function process. They have amplified the efficiency of their staffs better than the pilots in their air time and they have even condensed the hald point in time of flights in airports. During bulk purchase of flights from suppliers Boeing , Ryanair got various discounted prices.

Experience

Ryanair has familiarity of 28 years in the field. It has achieved and executed as it had expanded out into each of the 26 countries utilizing their experience.

Process/Product design

Innovation and succession blueprint cost has been reduced by distant over the ground effectiveness, strategy of the fleet team spirit to continue the ground work and maintenance of aircraft as little as possible, the firm has acquired by means of greater seat capacity, 45% less fuel burn and noise then older models on competing airlines

Supply Cost

By historically choosing secondary airports with a much lower traffic density Ryanair has managed to take advantage of much lower fees and these savings are passed to the customer.

Benchmarking

Ryanair has used Southwest airlines as a bench mark against which to compare operational cost controls as they are the original low cost airline upon which O’Leary based Ryanair

Critical success factors of Ryanair

As Ryanair's low cost/price approach leads to overlapping value chains, the company is a perfect example of linking its opportunities, as outlined by Campbell and Goold (1998, in Meyer and de Witt, 2004). From a Value Based Management point of view, Porter's Value

Chain framework can be seen as one of two dimensions in maximizing corporate value creation, outlining how well a company performs relatively towards its competitors (`Relative Competitive Position'). Even Ryanair subscribes to a similar basic model compared to e.g.

Easyjet, the airline has an entirely different value chain.

Ryanair's low cost/price approach adds value to most of Ryanair's processes, e.g. clear corporate identity and brand image in addition to limited organisational complexity, increasing the differentiation towards their competitors. Ryanair maintains their efficient, high quality and low cost services through operating from secondary airports and by exploiting the advantages of outsourcing, a strategic management model, transferring the business processes

of services to outside firms, e.g. passenger and aircraft handling, ticketing. This allows the

Key Success Factors of Ryanair

These are the important factors which are necessary in business

Following successful model of Southwest Airlines

Receiving bulk discounts from Boeing

Expansion and easy access from European Union

Successful promotion and unbeaten price mantra

Michael O’Leary’s charisma and execution

Although the company had encountered different problems, specifically in line with its cost structures, the company had been able to survive and grow in the marketplace.  Ryanair implement different marketing strategy to make the company survive in the competition and to be able to gain competitive position in the airline market.  It is said that the company was regarded recently as the most punctual airline between Dublin and London. And because of the strategy of the industry, Ryanair is now recognised as the second largest airline in United Kingdom and Europe’s largest low-fares airline having a network of over 57 routes in 11 countries and served by a fleet of 31 Boeing 737-200 and -800 aircraft with over 1,400 staffs and personnel.

In order to position itself in the marketplace the company continuously concentrates on driving own its costs to offer the lowest fares possible and remain profitable.  In addition, Ryanair offer minimum standards of service and very low prices for point-to-point, short haul flights.  The goal of Ryanair is to meet the needs of travelling at the lowest price.  The Critical Success Factors (CSFs) are as follows in airline industry: the strategic focus of having the lowest prices, being reliable within the marketplace, comfort and service and frequency. 

It is noted that low-cost companies concentrate on this first critical success factor by trying to offer the lowest prices.  Although Ryanair has eliminated extras such as in-flight meals, advanced seat assignment, free drinks and other services, it still prioritises features which remain important to its target market. Such features include frequent departures, advance reservations, baggage handling and consistent on-time services.

Core Competencies

Success Factors

Organizational knowledge

Organizational knowledge is of three specific types such as:

Core Knowledge

Advanced Knoledge

Innovative Knoledge

Ryanair has the contemporary information in its processes and decision making actions

Core Values of Ryanair

The Core values of Ryanair are, removal of all unnecessary bloat costs to make flights as cheap as possible for the customer while maintaining a superior yield on capital.

Conclusion

Ryanair the other word for success- in providing lowest fares then others without imposing fuel surcharges on customers. But this company has to think about giving value to customers

We can conclude from the above analysis that Ryanair should develop its market globally. According to t

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