Ryanair : an undeniable actor in the tourisme industry

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RYANAIR: AN UNDENIABLE ACTOR IN THE TOURISM INDUSTRY

Written Presentation by: Abouhasba Chaimaa; El Jamal Adnan; Ladid Imane; Sokaki Manal

INTRODUCTION:

Mobility is key in the tourism field, which makes transportation irrefutably important in the sector. Reason why, we saw crucial to choose a company operating in the transport field. Ryanair is nowadays, a globally known low-cost airline, it has lived for many years now great success and significant profit, it now conquers against giants in the field leaving them no choice but to upgrade their lifetime business strategies.

The primary part of this case will be about the history of Ryanair, mergers or removals that it has suffered, then will follow the internal organization of the low-cost Irish airline company, we will focus after that on the customer’s profile (what kind of customers Ryanair attract), and move to Ryanair’s suppliers, …

1. HISTORY OF RYANAIR:

Ryanair was founded in 1985, by Cathal and Declan Ryan with the financial help of their father, Tony Ryan, the origin of the company’s name. The elder Ryan had, for many years, been the leasing manager of Aer Lingus, Ireland’s national airline, principally owned by the Irish government. Tony Ryan had gone on afterwards, to found Guinness Peat Aviation, which eventually became the largest aircraft leasing company in the world. Ryanair began operations with a staff of 25 and a single 15-seat Bandeirante turboprop, flying between Waterford and London.

In 1986, Ryanair received permission to begin flying four flights a day on the Dublin-London route, from the responsible authorities, with two 46-seat BAE748 turboprops. In doing so, they challenged the high-cost monopoly of British Airways and Aer Lingus with fares that were half the prevailing fare of £209. Ryanair’s strategy (originally) was to offer simple, low-cost fares and exemplary customer service. In 1986 (the first full year of operations), they flew 82 000 passengers and began negotiations to acquire their first jet aircraft and additional routes.

During the latter part of the 1980s, Ryanair continued to compete vigorously with British Airways and Aer Lingus while adding additional routes and jet aircraft. By the end of 1989 Ryanair had six BAC-111 jets and three ATR 42 turbos. In 1990, Ryanair suffered a £20 million loss and was forced to completely restructure. A new, brash CEO, Michael O’Leary, was brought in to manage the turnaround and the Ryan family invested an additional £10 million. O’Leary, at the suggestion of the father, Tony Ryan, visited Southwest Airlines in Dallas, TX, to learn the fundamentals of Low-Cost Leadership in the airline industry. Dallas’ Southwest Airlines TX, of course, were by far the most profitable of the American carriers, and their business model was quite different from the traditional flagship carriers.

Gulf War I broke out in January of 1991, and airline traffic around the world collapsed. Despite the decline in overall airline traffic, Ryanair made a profit of £293 000 for the year and carried 651 000 passengers with a total workforce of 477 people. In May 1991, Ryanair switched its London base from Luton Airport to Stansted Airport in Essex. By 1999, the Irish company added a number of European destinations, switched the aircraft fleet to Boeing 737s and carried over 5 million passengers, profitably.

In January 2000, Ryanair introduced Europe’s largest travel website, www.ryanair.com. Within three months, the site was recording 50 000 bookings per week. The website also facilitated car and hotel rentals, rail services and travel insurance, all at low prices. In September the same year, the first new base since 1991 was established at Glasgow Prestwick (Scotland), and three new Boeing 737-800s were stationed there. The base provided Scots customers direct flights to Paris, Frankfurt, Dublin and London. In 2000, Ryanair carried over seven million passengers with a workforce at year end of 1 262 people. The company had, by the end of 2000, formalized its business model to include:

• All Boeing aircraft (primarily 737-800s).
• No “free” amenities such as snacks and drinks.
• Non-reclining seatbacks.
• Quick flight turnarounds – averaging 45 minutes.
• An in-flight magazine that was really a catalog for food, beverage and a multitude of duty-free products, sold at a considerable profit by the cabin attendants.
• Minimum baggage allowances.

In 2001, Ryanair opened its first European base at Brussels’ Charleroi Airport with five more new Boeing 737-800s. Service was provided from Charleroi to Dublin, London, Glasgow, Shannon, Venice, Paris and Carcassonne. The agreement at Charleroi was negotiated with airport authorities at a considerable savings in landing fees and gate charges in addition to subsidies for Ryanair. Despite the cost advantages, many predicted failures for Ryanair because the airport is located so far (about 65 km) from the capital (Brussels). This, however, was not the case. Despite the industry- wide downturn in airline traffic due to the terrorist attack of September 11 and an increase in operating costs resulting from the upward spike in the price of oil and petroleum products, Ryanair performed very well.

For example, in August, the airline carried more than one million passengers, more than the total passengers carried in the year 1993. By year-end, Ryanair had carried over nine million passengers with a staff of 1 477.

Frankfurt (Hahn) was selected as the second European base in 2002. It was necessary to prevail in the German courts to overturn Lufthansa’s high price monopoly of German aviation, and customers responded enthusiastically. During this year, Ryanair increased an order at Boeing from forty-five to 125 737-800s with an option for an additional 125 aircraft. In 2003, Ryanair acquired Stansted-based Buzz Airlines from KLM and as a result of the acquisition, got access to an additional eleven French regional airports. By the end of 2004, Ryanair was the largest low-cost airline in Europe, flying almost 25 million passengers with a staff of only 2 288.

Over the last decade, the number of passengers carried by Ryanair has grown at an annual rate of about 25%, from just under 700 000 in the early 1990s to over 21 million in 2003. This is mainly due to the creation of new lines and correspondence platforms throughout Europe. Ryanair has thus become one of the largest European carriers and even, in August 2004, carried 20% more passengers in Europe than British Airways.

In 2015, Ryanair sold 29.8% of its stake in Aer Lingus for €398 million following its acquisition by the International Airlines Group (IAG). The company announces that it carried 117 million passengers in 2016 compared to 101.4 million in 2015.

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