The success of these two airlines is primarily owing to innovative approach to business as against the age old practices and conventions of their older full fare rivals. Get original paper in 3 hours and nail the task. The following table shows this fact. However, the airlines employ the smallest number of people to meet the least regulatory requirement stipulated in the aviation sector (Malighetti et al. Ryanairs market strategy has focused on cost leadership because it strives to become the best company in the low-cost market segment (Mayer 2008; Thomson & Baden-Fuller 2010). This way, shareholders in both airlines get value for their investments through structured competition and increased productivity. Similar to Ryanair, Easyjets strategic direction came from years of studying the success Southwest Airline (Sull 1999). The company operates approximately 600 routes across more than 30 countries, with its fleet of over 200 Airbus aircraft. In the last three financial years both these airlines Ryanair and EasyJet have shown good performances financially and otherwise. However, in 2013 and 2014, EasyJet posted a 5.94% and 3.39% reduction Ryanair's blue-and-yellow seats. To expand its customer base, the company tried to please all their customers by trying to meet the customer needs of every type of market in the industry (Malighetti et al. Ryanair has always branded itself as an airline company that regards punctuality and efficiency as key segments of its service model (OConnell & Williams 2012). The websites they have need to be updated regularly so that customer experience is enhanced and need of travel agents get reduced to save costs. Thirdly, there is a growing threat of terrorist attacks across Europe. 2038. Dobruszkes, F. 2006, An analysis of European low-cost airlines and their networks, Journal of Transport Geography, vol. Ryanairs net income after tax has been growing at a healthy rate and is almost twice the yearly percentage growth of EasyJet. The low-fare services of Ryanair are structured in the manner to entice passengers who travel for leisure or business. Jet2, Ryanair, and Easyjet are other dominant airline companies in this category. Compared to other leading airlines in the short-haul market segment, the two airlines are among the top ten aviation companies with the highest passenger numbers in Europe. There are various political factors that can affect the performance of the company and are needed to be assessed before making any expansion plans. 0% increase in total assets between 2010 and 2012. This restructuring affirmed the views of Mennen (2005) who said a corporate strategy should have more value as a holistic entity as opposed to the sum of its parts. It contains thousands of paper examples on a wide variety of topics, all donated by helpful students. Although revenues have picked up, profits continue to lag behind as a result of elevated fuel and labour costs. Ryanair does not take the services of primary airports to avoid high airport charges and opts for regional airports. Meanwhile, easyJet's aforementioned free bag dimensions yield a volume of 32.4 liters, representing over 60% more capacity. The general public responses swell towards cheap flights however it adds to their grievance if promotions in newspapers promise flights at a particular rate when in reality they cost much higher (Mayer, 2007, p. 16). EasyJets net profit (after tax) has been 6. Legal EU laws related to aviation industry do not allow monopolization of airports. Raccomandazioni degli analisti su EASYJET PLC: 27/04: easyJet plc: JPMorgan cambia rotta e passa a un giudizio Neutral Chief Financial Officer & Director: Stephen Alan Michael Hester 4 601: SINGAPORE AIRLINES LIMITED: 5.06%: 28 092: AIR CHINA LIMITED: 0.86%: 21 445: DELTA AIR LINES, INC.-0.33%: 21 317: RYANAIR Given the above background, this report will attempt to analyze the two companies i. e. , Ryanair and EasyJet viz. student. Due to low fares EasyJet and Ryanair face less competition from high fare airlines, but there is internal rivalry between these two airlines. The average easyJet stock price forecast from analysts was set at 734.5p per share resulting in a potential 34% gain from its last closing price of 546.20 (as of 1 March) if that target is hit. 2023. Since Ryanair has its operational bases in several European countries, so it must take into consideration variable labor markets and government regulations. This affirmation aligns with the goal of Ryanair, which is to firmly set up itself as Europes leading low-fare scheduled passenger airline through continuous improvements and expanded offerings of its low-fares service (Freire 2014, p. 4). In the first part, PESTEL analysis has been done along with comparisons of both the airlines. 2006). For example, in the quest to increase the seating density, the count of washrooms are kept at bare minimum. 17, no. The total assets have increased by 19% (non-current assets 14% and current assets 27%) over the two year period between 2010 and 2012. Since EasyJets mission is to provide air services at low costs, high fuel price can adversely affect the economic viability and structure of the company. WebAdditional ESG information - Financial Year 2021; Investors. We will write a custom Case Study on Ryanair and EasyJet Firms Strategies specifically for you. 13 to 0. Complementing its direct sales strategy is the paperless booking model. Other social factors like proportion of old age population must also be taken into consideration as old people tend towards alternate modes of travel due to airsickness or other problems. Albeit these factors show areas of strategic convergence, both airlines are rivals in the low-cost airline market. Their performance will mainly depend on their ability to sustain their operational models. Airfrance 2011, Low-cost carriers. Web. CAPA 2014, EasyJet: more aircraft come in as more cash to shareholders goes out. (Appendix, Table 5 and Table 9). In actual numbers the costs remained constant at GBP 103 m, also due to the new policy of In terms of on-time performance, easyJet performs in line with some of Europes top airlines, such as Ryanair (>92%), Aeroflot (>92%), or KLM (>90%). Relative to this development, Ryanair has also adopted a red ocean strategy where it steals customers from other market segments (predominantly the customers of major airlines) (Thomson & Baden-Fuller 2010). The overall management of both these airlines has been good and so much so that these have emerged to be the two top low fare airlines in the European market in spite of all competitions, adverse economic conditions and environmental adversities. In their effort to standardize all activities and primarily maintenance of aircrafts, RyanAir and EasyJet like all other low fare airlines buy standard configuration identical aircrafts with a high density seating. 2015, A World Made for Money: Economy, Geography, and the Way We Live Today, U of Nebraska Press, Lincoln. 49%, 38. cite it correctly. In such case Ryanairs current oil price strategies may not hold good. EasyJet EasyJets strength lies in its strategically low fare air service. This can pose stiff competition for Ryanair. However, in absolute terms the net worth has grown from Euro 2. Irish ultra low-cost carrier founded in 1984. Ryanair. Thats almost 10 pp better than the EMA average and 11.7 pp better than the global average. Vertical analysis measures all the items in terms of total revenue in the income statement and total assets in the financial position statement. WebEasyJet and Ryanair have the first movers advantage in the industry over new entrants owing to their flexibility to lower their fare prices more easily compared to the full fare airlines. The companies have also strived to support their leadership positions and create value for their shareholders by maintaining operation efficiencies. Wallach, B. (Sorenson, 2005, p. 56) Threat of substitutes Unlike other industries, this factor is less applicable in aviation industry. OConnell, J. The net worth as a percentage of total assets for the years 2010, 2011 and 2012 have been 37. O. P. of Ryanair has increased by 70% between the same period 2010 to 2012, and N. P. has increased by 84%. One positive factor is globalization which can increase flight demand in the long run. Web1759 Words. EasyJet and Ryanair have the first movers advantage in the industry over new entrants owing to their flexibility to lower their fare prices more easily compared to the full fare airlines. They could compare with other investment opportunities by NPV method. Other than government laws like low carbon emission, sound reduction, passenger safety and security measures, there are competition legislations that restrict the activities of low cost airlines like Ryanair and EasyJet. Then there are strict regulations from the EU regarding reduction of carbon emissions. The interest cover ratio for EasyJet has improved from 13. WebThis case study "The Strengths and Weaknesses of ryanair" is about the analysis and external factors that include economic, social, cultural, technological and political, and industry analysis, recommendations are made on how Ryanair can maintain its strengths and improve on of weaknesses. usiness modelTraditionally airlines based their Easyjet also strives to become a market leader in the low-cost market segment. easyJet, along with Ryanair, is concerned about the impact of the French air traffic strike but has reason to believe in a high-demand future. EasyJet has a wider customer base since it targets both leisure and business customers while Ryanair targets only leisure customers. Easyjet is Ryanairs main rival. In this case, Ryanair does better than EasyJet. 12 in 2010 to 0. Correct writing styles (it is advised to use correct citations) WebDiscover how Lions Financial provides expert analysis and risk management for Ryanair investments. It also uses single type of aircraft which is Boeing to save on training costs of flyers (O Cuilleanain, et al, 2004, pp. 32% and 12. Both the airlines use frequent-flyer program which is an added advantage over any new entrants. Ryanair, when they offer the cheapest option or youre afraid that EasyJet will charge you for your 10kg cabin bag. EasyJet has earned a Net Interest margin of 7% as compared to Ryanairs 6% in the financial year 2012 indicating that EasyJets utilization of assets is better than that of Ryanairs. Competitive rivalry Because of increased competition in the European aviation industry, rivalry between airlines has increased. EasyJet's orange-and-gray cabin is slightly less intense, but not by much. 16 in 2012 for EasyJet and whereas 0. 97-102). This is because globalization has enhanced alliance between nations for trade, technology, labor etc. As such EasyJet has the advantage of providing low fare which will be difficult for new entrants to offer, and also EasyJet has a goodwill attached to its name which is something a new entrant will take years to replicate. EASYJET PLC : Forcasts, revenue, earnings, analysts expectations, ratios for EASYJET PLC Stock | EZJ | GB00B7KR2P84 . The pervasive risk of terrorism means airlines like EasyJet have to emphasize on strict security measures which will warrant higher costs. 59-60). From 67 operational bases, Ryanair makes more than 1,600 flights daily. Environmental Since UK has a saturated market for air travel and prospect of growth is limited, therefore EasyJets focus must be on the continental and Eastern European market. This fact shows that this market has limitations that would ordinarily curtail the growth of companies that do not adopt an elaborate strategy. Also, too many airlines can create market saturation which can lead to market standardization of services which means people will have no particular preference for any one airline. 2009, Beating Low Cost Competition: How Premium Brands can respond to Cut-Price Rivals, John Wiley & Sons, London. EasyJet is a British airline company whose headquarter is based at Londons Luton Airport. (Appendix, Graphs 1 & 2). 17 in 2012 for Ryanair. (2016, Oct 07). EasyJet has an average turnaround time of 30 minutes or below which goes to prove its service efficiency and reliability. For example, both airlines fly to different types of airports. For instance, there are two major aircraft manufacturers namely Airbus and Boeing. easyJet (1995) is a low-cost airline carrier operating only in Europe. Nearly three times as many of its flights were cancelled at the last minute as with Ryanair and Jet2. 249264. The company chose this strategy because it did not believe that these services contributed to customer satisfaction (Kew & Stredwick 2005). & Stredwick, J. However, easyJet, in a financial report, says that 99.8% of flights are operated regardless. WebFor Easyjet Group, it is worth a lot more than Ryanair, both in terms of assets owned They have earned more incomes and have flown more people than ever before. EasyJet uses reward policies to motivate its employees by giving an annual performance-driven bonus and grants of performance shares to eligible employees. The European airline industry is also distinct because charter planes play a greater role in the industry, compared to other markets (Air France 2011). In this regard, it strives to offer convenience to its customers by operating in major airports around Europe. WebThis report 'Two Major Airlines EasyJet and Ryanair' aims at providing a complete overview of the two major airlines of Europe, EasyJet, and Ryanair. Every effort has to be paid in order to keep the costs of operations at the bare minimum albeit without compromising on safety and security of passengers. Moreover, pandemics like swine flu can adversely affect flight demands. Legal In the EU, due to deregulation policy, there are less restrictions regarding entry of new airline ventures which means governments strict control over airlines have been modified to provide new opportunities for new airlines leading to free competition. Since it is not profitable for airports to differentiate their services, Ryanair opts for secondary and regional airports. External factors like increasing oil price can severely impact fare structure since the fare is already low. 53-54,58). The market differences are profound because profitable routes in Europe already have large airline companies that serve them. Profitability ratio In both the cases i. e. EasyJet & Ryanair, the Gross Income ratio has increased from 2010 to 2012 and remained more or less stable. More than 20 airlines have collapsed after adopting the low-cost strategy (Air France 2011). In response to the new eco tax imposed by the government in Germany, Ryanair has reduced the number of flights that travel over German routes. This makes EasyJet second best low fare airline in Europe after Ryanair. The database is updated daily, so anyone can easily find a relevant essay example. British multinational low-cost airline group headquartered at London Luton Airport. PESTEL Analysis of Ryanair Ltd. The policy of no refunds also irks customers who miss flights for genuine reasons. Half of its seating capacity is in such facilities. This indicates that EasyJet has overall managed its assets and liabilities efficiently without compromising in profitability; the net profit during the same period has grown by 57%. In case of Ryanair, the assets and liabilities have both registered positive growth. We utilize security vendors that protect and Stringent laws regarding safety and air traffic rights put financial pressure on low-fare airlines like EasyJet. easyJet PLC has a consensus rating of Hold with an average target price of 12.42. Within this space, Ryanair and Easyjet are the two biggest low-cost airlines in the region (Elderman 2014; Dowling 2010). Partly, this is why the company commands the highest market share in the European low-cost airline market segment. Hence Ryanair needs to consider labor markets and government regulations of both countries. This article aims to compare the two largest Low-cost carrier (LCCs) in Management Accounting Practices of the easyJet plc. 59% for years 2010, 2011 and 2012. 07%, 5. A low price-earnings ratio is an attractive proposition to invest in the stocks of the two companies. However, both companies have unique internal strategies that differentiate their services beyond the low-cost model. Customers have appreciated this strategy by increasing ticket sales (Kew & Stredwick 2005). All rights reserved. With rising employment, the purchasing power of people also improves. In this regard, both airlines have reported increased asset values and increased growth figures. PESTEL is an acronym for Political, Economic, Social, Technological, Environmental and Legal factors of a business. Also, lower ratio means the two airlines have improved profitability in 2012. Comparative analysis based on Porters 5 forces analysis New entrants in the aviation industry will be less threatening for well entrenched and already established low fare airlines like EasyJet and Ryanair because the new airlines will have low capital base and limited airport slots. easyJet, along with Ryanair, is concerned about the impact of the French air traffic strike but has reason to believe in a high-demand future. This factor combined with a rise in revenues from Euro 2,942. , Department of Transport, the Irish Aviation Association, the European Commission and the European Aviation Safety Agency. It operates almost 1,000 short-to-medium-haul routes in and around the continent. 56% respectively. Key The first international flight was launched in the year 1996 with aircraft whose sole ownership belonged to this airline and the route was from Luton to Amsterdam. However, this factor plays low for EasyJet as it uses primary airports like Schiphol, Copenhagen etc. EasyJet being a British airline company is performing within the political framework of Europe. 500 In this regard, both companies have gained the reputation of being the biggest low-cost airlines in Europe (Wallach 2015). In this regard, it transformed its value chain for the better. Ryanairs inaugural flight had its daily route from Waterford in Ireland to London Gatwick. EasyJet keeps its focus on environmental awareness programs while making any future strategies. Dont WebAn Analysis and Assessment of easyJets Strategy and Options 60 despite of its efficient operations rather low EBIT and EBITDA margins, returns on equity and on invested capital as compared to its peers. Comparative analysis based on PESTEL Ryanair and EasyJet both being the top European low fare airlines face some common advantages and disadvantages. Not sure if you can write a paper on Managing Corporate Reputation the Case of Ryanair by yourself? This paper attempts to financially analyze and compare the two airlines. 58 to 6. This compare & contrast essay on Ryanair Corporate Strategy Vs. easyJet: Competitive Strategy Analysis (Compare & Contrast Essay) was written and submitted by your fellow For instance, flight attendants also do the work of cleaners or gate agents. A low ratio is an indicator that an organization can duly pay all its dues. WebBCP Business & Management EMFRM 2022 Volume 38 (2023) 2360 Fig. Incidents like growing terrorist threats and air accidents even if they happen to other airlines tend to affect the demand patterns of EasyJet and Ryanair because of their low cost strategies. Here too, Ryanair marginally outperforms EasyJet over the three years of study. The purpose is to build a low-carbon European economy (Mayer, 2007, pp. Thus EasyJet cannot achieve low cost in all activities and so has ended up being the second best low fare airline in Europe after Ryanair (Sorenson, 2005, pp. Although these strategies do help in keeping the costs down, they also deter those customers who prefer being served while flying. 1 phyneas 2 yr. ago Haven't flown Easyjet, but Ryanair is fine as long as you read the rules and know what you're getting and what you aren't. Ryanair Corporate Strategy Vs. easyJet: Competitive Strategy Analysis (Compare & Contrast Essay). 53 to 21. Its strategy was to steal customers from dominant players in the airline industry by offering lower ticket prices compared to its rivals. Financial summary Headline loss before tax of 178 million (2021: 1,136 The success of this strategy has always depended on the control and management of the four facets of cost management in the aviation sector employee management, equipment and maintenance, customer service costs, and airport handling costs (Thomson & Baden-Fuller 2010, p. 26). Automobiles, bus services and railways can act as substitutes but where time saving is important, there can be no substitute to airlines. Other airline companies, such as Ryanair, also discovered similar opportunities by leveraging their competitive advantage through the adoption of a low-cost strategy. Italy is Ryanairs leading country market with almost 15,000 flights planned in December.
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