Background of Ryanair
Ryanair was founded in 1985 and positioned itself as a shy alternative to the duopoly of Aer Lingus and British Airways (BA). It implements the low-price strategy and gain a huge success. Later on, Ryanair want to expand the business. In 1987, the airline was covering 27 routes.
However, Ryanair was facing the problem of cost structure. The unit cost was low but still difficult to sustain the low fares it was selling. Moreover, the fast expansion also makes pressure on Ryanair’s resources. Therefore, the company was on the verge of bankruptcy in the end of 1990. Then Ryanair stated to transform into low-cost carrier. For example, they replaced with more economical Boeing 737-200 jets and minimize aircraft turnaround time. The Strategy was efficient and makes a large profit.
Competitors of Ryanair
Ryanair faced with strong competitors: easyJet, Virgin Express, Debonair and Buzz. All of them implemented similar Models with slight differences. easyJet foucused on high frequency rather than extensive geographical coverge. Virgin Express gave up part of “pure low cost” because of the higher taxes and social expense. Debonair tried to differentiate itself by offering low-fares with no compromise on comfort. They provided wider seat rows and automatically check-in system. Buzz, the newest low-cost carrier located in London-Stansted. However, it had incurred a huge loss because of the intense competition. After that, Ryaair announced to make acquisition with Buzz.
Since Ryamair faced with tough competition and tried to reduce cost. Therefore, we come up with the main issue: Can the low cost strategy of Ryanair lead to sustainable competitive advantage, thus leading them to compete with the big competitors?
Analysis of Ryanair
After Ryanair Airline’s transformation in 1991, the company is running a low cost strategy to compete with its competitors. We can see Ryanair Airline has many absolute cost advantages on this new strategy, leading...