Why Has Ryanair Been Successful So Far? Is Ryanair's Strategy Sustainable?

1. Why has Ryanair been successful so far? Is Ryanair's strategy sustainable?

Ryanair has been successful due to Michael O’Leary’s leadership skills and implementing of cost-cutting culture. As the first European airline that implemented low-cost/low-fares (O’Higgins, 2011. str. 3) it had the first-mover advantage. It stuck to their low-cost strategy, constantly focused on cutting costs and adapted to changing conditions in the market. Ryanair uses only Boeing 737 airplanes in their fleet, thus is able to negotiate greater discounts and additionally minimise aircraft maintenance and staff training costs. With implementing expensive check-ins and luggage handling at airports it was able to reduce necessary ground staff (The Economist, 17 October 2013). This diverted passengers to using online check-in and discouraged them from bringing additional luggage which also led to reducing airplanes weight and fuel costs.

Ryanair’s strategy can be sustainable for many years ahead. Its main competitive advantage is offering its services with lower costs that no other airline has been able to come close. According to Airlines for America survey, flyers in United States would most likely to see improvements in their comfort and legroom (The Economist, 21 April 2016). If we can expect similar results for European flyers this does not bode well for Ryanair. However, the same survey showed that the number one factor in choosing the airline is the total travel price. As a low-cost/low-fares operator, Ryanair can still benefit from passengers looking for the cheapest prices.

1. Would you recommend any changes to Ryanair's approach in changing environmental circumstances? Does the proposal to introduce long haul flights make strategic sense?

In times of modern technology where information spreads fast and travellers collect information from online reviews of other passengers it is important for Ryanair to pay attention to their public image. Passengers see comfort, reliability and safety as important concerns that airlines should continue to keep improving (The Economist, 21 April 2016). Ryanair should take safety seriously if it does not want to scare passengers away.

Long-haul flights have not proven to be profitable for low-cost airlines as the cost advantages that they can achieve on short-haul flights are difficult to replicate on long-haul flights (LeighFisher, May 2015). Air Asia had to suspend their long-haul flights from London, Paris, Delhi and Mumbai to Kuala Lumpur due to unprofitability of their routes (AirAsia.com, 12 January 2012).

As Ryanair is the leader in providing low-cost short-haul flight services, focusing their strategy also to long-haul flights would turn their attention on the market where they do not have a competitive advantage. Long-haul flights would require from Ryanair to acquire a fleet of different airplane models as their fleet of Boeing 737s have limited maximum range. This would bring extra maintenance and staff training costs. Additionally, usual long-haul flights require more luggage handling which increases ground staff and longer ground times for aircraft services which reduce cost efficiencies (LeighFisher, May 2015).