Ryanair is Europe’s largest low-price airline,
operating since 1985. The airlines purpose is to give customers an opportunity
to fly around Europe for a cheap price, compared to its competitors, which is Easy
Jet and Lufthansa. According to Ryanair (2018), the airline carry “over 131m
customers p.a. on more than 2,000 daily flights from 86 bases, connecting over
205 destinations in 33 countries”. In addition to this, to help the business
fulfil its purpose and functions, Ryanair have employed 13,000 employees and
will continue to expand their business in the long-term.
Ryanair has a flat organisational structure, where
the levels of hierarchy between managers and employees are limited. Ryanair
have three levels of hierarchy. The CEO and directors are ranked at the top,
followed by the senior managers such as HR and operations, this is then
followed by employees who are managed by the senior managers. To compete with
its competitors successfully, Ryanair use a pricing strategy. This strategy is
known as cost leadership. With regards to BusinessDictionary (2018), the phrase
‘cost leadership’ means a “strategy used by businesses to create a low-cost of
operation within their niche. The use of this strategy is primarily to gain an
advantage over competitors by reducing operation costs below that of others in
the same industry.” Ryanair does this by offering cheaper tickets than its
competitors. The airline does this by monitoring their competitors’ prices and
then offering their customers a competitive price.
Generally, people are more cautious when it comes to
their health and safety, especially when it comes to travelling. This is
because of the attacks that we read about in the news, for example, the 9/11. After
the 9/11 attacks, the government was persistent that all airlines must increase
their security and ‘Health and Safety Regulations’. Due to this, Ryanair had to
cancel 279 flights affecting 40,000 passengers. This was done for the safety of
their customers. It was estimated that
Ryanair had loss over 1.9milion pounds. Therefore, customers look for an
alternative transport method instead of air travel. This is a disadvantage for
Ryanair; highlighting the fact that they only operate within Europe. There are
other transport methods available to travel around Europe. For example, ferry,
coach, high speed rail network etc. Ryanair have a lot of competition to think
about. Consequently, for the airline to come over this issue, they should focus
on how to ensure customers feel safe and comfortable. Customers should be made
aware of the airlines health and safety policy, during flights customers should
be given safety guides. This will allow customers to feel more confidents when
travelling by air.
Since Britain was voted out of Europe (BREXIT) by
the public, it had significantly affected the value of the pound. On the 1st
May 2017, the value of the pound was approximately valued at 1.20. A few month later, on the 11th
October 2017, the pound value was estimated at 1.12. Brexit Exchange Rate Tracker
(2018). From this we can see that the sterling value had decreased quickly in a
short space of time. We can also predict from this that the value of the pound
will continue to decrease in the next coming years. Since the introduction of
BREXIT, Ryanair was negatively affected. According to the Financial Time (2018),
“A falling pound and a flood of rivals moving into its profitable markets
dented Ryanair’s financial performance in the last three months of 2016”. Ryanair
profits had decreased more than the airline thought it would. Ryanair have been
very careful regarding what they would expect in the next coming accounting
period. For Ryanair to reduce the impact of being affected by the weak
sterling, the airline could potentially increase the prices of their flight
tickets sold to First class. By implementing this strategy, Ryanair profits
will increase. This will reduce the impact of Ryanair being affected by the
decrease value in sterling.
The Finance function is quite important in this
category. This is because it is very important that the employees working in
this department are on the look for any economic conditions that can affect the
business. For example, when BREXIT was in progress to whether or not it will
take place, the finance department should have looked at how Brexit will affect
the business financially and if it was to take place, how it will affect Ryanair’s
figures. By doing this it would allow the organisation a head start, allowing
the airline to make sure that their profits and sales do not decrease. The
Finance depart should explore for strategies that will decrease the effect of
being affected by BREXIT.
When people travel by air, they want to make sure
they get their money worth. Some people tend to not travel by cheap airlines
i.e. Ryanair. This is because of the risks that are involved. Ryanair has had
problems and complaints regarding major cancelations, lost luggage and delays.
This has put off customers and potential customers from flying with Ryanair. According
to the BBC News (2017), “Ryanair cancelled up to 50 flights a day through to
the end of October, affecting 315,000 passengers.” This had put a bad
impression on the airline, as it had affected many people and became public in
the news. However, Ryanair dealt with the issue by giving customers a refund
along with this, customer was able to book another flight free of charge.
Furthermore, customers who were given less than a week notice regarding their
flight being cancelled were able to claim compensation.
When Ryanair had been cancelling over 50 flights per
day in 2017, the operation function was partially responsible for this. This is
because they failed to recognise that Ryanair were over booking flights and did
not have enough pilots. At some point they should have realised that there were
internal problems going on in the business that had led to bigger issues. This is because the operation function is
responsible for making sure that services that take place within Ryanair, are
carried out in a smooth transaction. There were several issues that the
operation department had failed, for example, there was a possibility that
planning was adequate and organising was not done to its full potential.
Ryanair want to adapt to technological changes that
customers are being evolved around. For example, smartwatches are becoming
increasingly popular whereby customers are using smartwatches as an alternative
to a smart phone. There are approximately 453 million people using
smartwatches. Millions (2018). This is a large figure that Ryanair have taken
into accountability to allow customers to use smartwatches during checkouts.
Ryanair have demonstrated the use of smartwatches by allowing customers to show
their boarding tickets, allowing access to information such as boarding gate
closing. This is an advantage for the customers and the business, as
transactions can take place much quickly and smoothly. This is because
customers do not have to constantly take out their boarding tickets when been
asked to, they are given the opportunity to show their watch which displays
their tickets. Although the smart watch does present its advantages there are
some disadvantages to consider. For example, the screen size of a smartwatch is
quite small, making it impractical to use in situations such as carrying online
transactions. Therefore, Ryanair’s website or app will need to be used along
with the smart watch to get the best out of the wearable device.
According to the Telegraph (2017), Ryanair had been
“accused of breaking EU law over passenger compensation”. In October 2017, when
the airline was facing major cancellations and delays, Ryanair had failed to
let customers know of their rights. The airline had not given any notice to
passengers, regarding their flight being cancelled. In addition to this,
Ryanair did not make passengers aware of having ‘right to compensation”.
Ryanair had emailed affected passengers informing them what rights they were
entitled to. However, the email sent to Ryanair did not mention passengers
being authorised for compensation. This is where Ryanair had failed to take the
“Flight, Compensation Regulation 261/ 2004” into consideration. The purpose of
this legislation is that airlines inform passengers that they are obliged for
compensation. From this we can see that Ryanair had failed to do so, if a
situation like this occurs again then the airline knows what legal actions
should take place.
From the legal issues that Ryanair had faced in
2017, we can see that Human Resource Management is key. This is because
employees were not doing their jobs correctly, where it led to Ryanair being
exploited to not informing passengers regarding their rights to compensation. HRM
were at fault with this because they failed to recognise that the employee’s
skills were under developed and needed training. To begin with the HR
department should enforce their recruitment process, to get the best workforce
for Ryanair. According to Bratton and Gold (1999) when managing and measuring employee’s
performance, it should be taken into consideration what employees need further
development. If an employee from the HR department sees that an employee is
lacking and struggling, they should offer training courses that the employee
must attend. Appraisals are also very important because it gives employees the
opportunity to discuss their work life and if struggling or need further
development they should be given training. By doing this it will help reduce
problems within the business. Moreover, Ryanair’s workforce will improve and
become stronger. However, HRM are also
responsible for making sure that employees are rewarded for their hard work,
this is so that the employees feel valued within the company. This is a theory of the model of HRM by Bratton
& gold (1999).
Ryanair uses the least amount of CO2 emissions
compared to other airlines. The airline operates with environmentally friendly
machinery. Ryanair is known for being the world’s greenest airline. Most
airlines goals are to reduce the level of noise pollution and carbon dioxide.
However, Ryanair have already demonstrated and succeeded in this manner as they
are eco-friendly. Ryanair is becoming increasingly popular, where the number of
flights are significantly increasingly. This means the airlines CO2 level will
increase. The government and EU demand airlines to reduce their level of carbon
dioxide emissions. The government has enforced this law by increasing taxes to
airlines who discharge CO2 emissions. For Ryanair to reduce the level of carbon
dioxide, they should implement strategies that will help reduce expenditure on
taxes. For example, I have researched that for airlines to reduces CO2,
airlines can invest into lighter seats, which leaves additional leg room. By
reducing weight in the aeroplane, it would decrease CO2 by approximately 1.2%
Strengths – Compared to Ryanair’s competitors,
the airlines cost base is the lowest. It is “approximately one third lower than
that of EasyJet”. EasyJet’s cost for one passenger is approximately 46%. While
Ryanair’s cost is much lower, which is approximately at 27%. The airlines cost
is much lower, due to Ryanair operating in airports which have lower charging
rates. The reason behind Ryanair’s success is that the company is attentive
towards lowering their cost rates as low as possible.
Weaknesses- Ryanair marketing side is
very weak, where it is seen “the weakest brand in European aviation or even in
any consumer business”. In the publics eyes it is that Ryanair do not pay
attention to advertising for money to be saved within the business. Ryanair is
currently Europe’s largest low-price airline. However, this may not be for long-term
as profits and sales can begin to decrease.
Ryanair declined a deal from Boeing. This is an American Company that supplies
businesses with airplanes, rockets, equipment such as batteries etc. Although
Ryanair had not made a deal with Boeing, both companies are still in contact.
In 2017, Boeing had supplied the airline with aircrafts. With communication
still taking place between both airlines, Ryanair get good deals from Boeing.
Threats- Levels of taxes are growing
significantly, where the government demands for air taxes are increasing. Taxes
are higher for short period flights rather than long period flights. This is a
threat towards Ryanair, because the airline operates within the Europe Zone.
This puts Ryanair into a difficult position as the airline will generally pay
higher taxes than most airlines who fly internationally.
To conclude, from the PESTLE analysis I have discovered
that Ryanair has made many mistakes within the business, nevertheless the airline
makes up for it to make sure that they keep their customers satisfied. For example,
when Ryanair had many cancelations in 2017, the airline dealt with the solution
by refunding customers their money and giving them an opportunity to book another
flight for free. Ryanair is a strong business
which will continue to be successful as long as they put the customers first.
From the group presentation, I was given feedback regarding
my presentation skills. My presentation skills were lacking. This is because I was
reading off the paper and had made little eye contact with the audience. I should
have prepared my self more by making sure I research about the business thoroughly.
By doing this it would have made me more confident to not to rely on the paper.