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Ryanair Swot Analysis

1243 words - 5 pages

IntroductionThe Ryan family with a share capital of just £1, and a staff of 25 set up their own airline, Ryanair, in 1985. The airlines first route was then launched in July of that year, operating daily from Waterford in the southeast of Ireland to London Gatwick on a 15-seater Bandeirante aircraft. From those humble beginnings Ryanair has grown into one of Europe's leading Budget airlines currently employing a team of 2,700 people to fly approximately 35million passengers per year on 301 low fare routes across 21 European countries.By analysing the competitive forces at work in the Airline industry and analysing Ryanairs strengths, weaknesses, opportunities and threats this report seeks to highlight the current strategy employed by Ryanair and its future sustainability.Five Forces Analysis Analysis of the Low - Cost Airline IndustryBargaining Power of Suppliers-Boeing are RA's main suppliers-Only 2 possible suppliers of planes - Boeing and Airbus-Switching costs from one supplier to the other is high because all mechanics and pilots would have to be retrained.-Price of aviation fuel is directly related to the cost of oil (Ryanair controls these through hedging).-Regional Airports have little bargaining power as they are heavily dependant on one airline-Bigger airports, where Ryanair's competitors operate, have greater bargaining power.-Ryanair's policy is to try and avoid these airports.Bargaining Power of Customers-Customers are price sensitive-Switching to another airline is relatively simple and is not related to high costs(Internet-all airlines are online)-Customers know about the cost of supplying the service-No loyaltyNew EntrantsSome barriers to entry:-High capital investment,-Restricted slot availability makes it more difficult to find suitable airports.-Immediate price war if encroaching on existing LCC route.-Need for low cost base-Flight AuthorisationsThreat of Substitutes-No brand loyalty of customers-No 'close customer relationship'-No switching costs for the customer-Other modes of transport, e.g. Eurostar, TGV, Eurolines, Ferries, Cars etc.Competitive Rivalry-The LCC market is highly competitive-Most cost advantages can be copied immediately-Low levels of existing rivalry as the two major low-cost airlines have avoided direct headto head competition by choosing different routes to serve-However if any company does decide to compete on the same basis as Ryanair there will be heavy pressure on prices, margins, and hence on profitability-Not much differentiation between services. Price is the main differentiating factorSWOT AnalysisStrengthsRyanair's strengths are centred to a large extent on their ability to create cost advantages. For example the company uses its own engineers to carry out its routine checks and repairs on its aircrafts meaning some maintenance costs are included in its staff costs.Another cost advantage is derived from their 25minute turnaround time, which enables them to run two more flights per day than...

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