Why ryanair is so successful

Downgrading an existing economy product is simply not an option. Yes, I did and I stand by my words. In fact, they are the exact reason why this article was not written and published many months ago.

Rynair has recently started changing its policies, allowing better customer service and even taken some tentative steps towards social media. The airline has, however, avoided making noise about this issue, most likely to avoid creating excessive expectations in users and losing the cheap image that works so well for it. If there is one thing airlines must learn from Ryanair, it is not its treatment of passengers but rather a key element to any conversation: coherence.

As I said in my previous article, the iceberg is melting, airlines — including Ryanair — must learn to talk to their customers. To do so, however, they must first get their act together and provide a coherent message.

Our question as always is a simple one, can you swim? User tolerance for traditional communication is eroding fast. You can get in touch with me at marco simpliflying. The Ryanair brand is smart and other airlines should learn from it. By Marco Serusi. A brand that is reflected in any aspect of the company and that sends users a very clear message: This is a cheap airline, expect nothing else.

With the possible exception of easyJet , no European airline has done more to change the nature of short-haul flying than Ryanair. It started the low-cost revolution in Europe by copying the business model of Southwest Airlines , but, after this initial act of imitation, innovation became the key to Ryanair 's success. As Southwest evolved from the original purist LCC model, for many years Ryanair simplified it further and developed an even purer form.

It 'out-Southwested' Southwest. Direct on-line distribution, on-line check-in, automated bag drop and hand luggage-only travel are now all a commonplace part of the experience of short-haul flying in Europe , mainly thanks to Ryanair innovations. In addition, Ryanair also opened up relatively unknown regions of Europe to air travel with its network of smaller airports.

It is number one by passenger numbers, with Ever since making the transformation to the LCC model in the mid s, Ryanair has operated with a single aircraft type, the Boeing Initially, these were s, but the airline took delivery of its first in and it has operated only the latter variant since Operating a single fleet provides economies of scale and flexibility in terms of aircraft deployment, crew rostering and crew training.

Ryanair has built on its strong financial position to place significant orders with Boeing in the past, in and in Although the pricing of these orders has never been made public, its strong negotiating power - and willingness to trade off the two large manufacturers - has undoubtedly provided Ryanair with significant discounts to list prices and, importantly, lower prices than most competitors.

In turn, this has fed into Ryanair 's unit cost advantage. The Sep order for up to Boeing MAX aircraft firm and options continues this approach see Opportunities below. Under the leadership of CEO Michael O'Leary, who has been with the company since and CEO since , Ryanair 's management has shown a strong focus on doing what it does best: keeping costs and fares low. This does not mean that it has been afraid to innovate see above , but innovation has generally been aimed at finding new and better ways to keep costs and fares low.

For example, the introduction of bag charges was aimed at reducing the number of checked bags, thereby reducing handling costs. For many years, Ryanair has trumpeted its success in providing what it believed customers want, namely safe air travel at a low fare and with high levels of punctuality. Indeed, this is the core of what short-haul passengers require from a low-cost carrier. However, for many years, Ryanair 's brand has performed poorly in a range of polls, surveys and awards.

In , Ryanair signalled moves towards enhancing the quality of its passengers' interactions with the airline. This included a re-designed website, with a more attractive look and feel and with fewer clicks to make a booking; a new mobile app; the reintroduction of allocated seating; a relaxation of baggage restrictions for both on-board and checked bags ; a reduction in the charges levied for printing boarding passes at the airport and for making changes to bookings.

The changes have progressively taken root during and it is too early to evaluate their impact. These cost-saving techniques are the fundamental elements of the LFA business model. As a result profit margins and return on assets in the low-fare business are among the highest in the market. When it comes to flying, most customers are very price sensitive which means that demand for air travel is highly elastic.

Since by reducing prices the sales would rise sharply, price wars are common in the airline industry. The low costs and fare prices of the LFAs do pose a major threat to the traditional full service carriers as they cannot, for numerous reasons outlined in this paper, simply adopt the cost saving measures developed by the LFAs. These two airlines have developed as the most effective cost and price competitors in the business and are furthermore the most consistently profitable airlines in the world.

They even proved to be highly robust in times of economic crisis and market decline Lawton There are numerous questions about LFAs today. Why are they so successful?

Will they be able to remain profitable and competitive in the long-run? What will happen to the airline market in the future? This paper will try to give an answer to these questions by taking a closer look at Ryanair. It will start out by describing the preconditions of the emergence of LFAs in Europe. It will then briefly talk about the emergence of Southwest Airlines in the United States as this was the first true low-cost airline in the world.

Afterwards attention will be paid to the emergence in Europe; why it was considerably late and why it all started in the UK and Ireland. The next section will focus on Ryanair, its history, business model, success in the market, and also some limitations. The last part will be more general and talk about the impacts that airlines like Ryanair have on the European aviation market.

The paper will then be concluded by a brief look at the emergence of LFAs outside of the US and Europe and a short conclusion. Traditionally the aviation market in Europe was purely national and controlled by the national carriers and their respective governments.

In order to be competitive and achieve some kind of a monopoly, these airlines were often heavily protected by the governments. As a result the market was not working efficiently and the passengers had eventually to carry the additional costs. European airfares were repeatedly the highest in the world Barrett Whenever new and cheaper airlines tried to enter the market, they faced hostilities by the existing airlines and were, most of the time, driven out of the market.

By the mid s the European governments realised that this interventionist policy was no longer tenable Lawton Doganis argued that this process was precipitated by mounting pressures emanating from consumer groups, the European Parliament, and the European Commission.

The move towards a more liberal European policy for airlines began in with a bilateral agreement between Britain and the Netherlands to open up their markets Button and Swann The deregulation of air services between these two countries can be seen as one of the first steps towards a European-wide airline deregulation process and marked a significant break from the past which was mainly characterised by state intervention.

Similar bilateral agreements between other countries in the EU followed soon thereafter. These bilateral agreements then paved the way for a multilateral liberalization at a European level in the late s Lawton This subsequently aimed at opening up the European airline market to greater internal competition.

The competence has been moved to Brussels in a number of areas and now the European Union instead of the nation states is controlling the instruments for regulating the airline market.

Each airline with a valid air operations certificate can operate within the EU at market-determined prices Gillen and Lall Remember Me. Lost your password? Launched 30 years ago, the Irish low-cost carrier Ryanair disrupted the European airline industry and started the low-cost revolution in Europe. Behind the success of Ryanair is the very effective alignment of its customer value proposition with its low-cost operating model.

S-based airline Southwest. Ryanair targets customers who might otherwise choose alternative modes of transportation or not travel at all [1]. The company focuses mostly on inter-European, short-haul flights. Operating Model: Structure:. Similarly, because the business model is centered on low prices, the value proposition means that customers have lower quality expectations, which in turn allows the company to not offer free checked-in luggage or meals, something that leads to even lower costs and prices [2].

This allowed the company to significantly reduce their costs. Ryanair is currently undergoing a shift in its strategy: It is now aiming to improve its customer service and target business travelers [5].