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Cheap but no longer nasty: Evolution at Ryanair

Cheap but no longer nasty: Evolution at Ryanair

Introduction

Ryanair has grown from humble origins to offer more than 1,400 short-haul flights per day, combined with often controversial customer service practices. However the announcement of the 'Always Getting Better' program in 2014 marked an apparent change in direction. This case study examines the motivations and implications of this strategy and considers the future prospects of Ryanair.

Features and benefits

  • An in-depth analysis of the changing business strategy of Ryanair.
  • An evaluation of the potential application of Ryanair's business model to long haul aviation.
  • An assessment of the future direction of Ryanair.
Highlights

The changes introduced in 2014 were ostentatiously designed to improve the brand image of the business by removing measures which irritated passengers. However, the changes are arguably the product of an evolution of the business model rather than solely a response to consumer opinion.
The yield management model applied by Ryanair has established the business with a readily defendable market share, which is difficult for competitors or new entrants to capture, particularly as the pricing model used is effectively exempt from governmental competition regulation.

Your key questions answered
  • Why has Ryanair revamped its customer service proposition?
  • How will such changes effect the profitability of the business?
  • What are the prospects of Ryanair entering the transatlantic passenger aviation market, and is the airline's current business model transferable?


OVERVIEW
Catalyst
Summary
REFORMS TO 'STOP ANNOYING CUSTOMERS' PROVIDE BASIS FOR FURTHER GROWTH
Improvement program augments long term growth potential
Reducing punitive fees for passenger errors garners positive publicity
Streamlining of website offers long term revenue growth potential
Overdue improvement to mobile channel
Focus on business segment a reflection of changing market
THE YIELD MANAGEMENT MODEL HAS EVOLVED
Development of the business model has prompted reforms
Yield management model is moving towards maturation
Yield management pricing model is effectively exempt from competition regulation
Strategic decision on selective additions to capacity
Passenger-friendly reforms boost ancillary revenue and profits
RYANAIR WILL REMAIN A LEADING PLAYER IN EUROPEAN AVIATION
Rising passenger volumes key to strong cash generation
Continuation of improvement program will boost growth
Shareholders set to benefit from sustained period of strong cash generation
Intensification of competitor activity appears unlikely
Transatlantic expansion appears questionable
Aviation fuel price remain a concern
Discipline the key to maintaining a differentiated proposition
CONCLUSIONS
Ryanair has repositioned itself for future growth
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