1717 words 7 pages
Ryanair – The low fares airline: Whither now?

Main Problems

Ryanair’s growth rate is affected by macroeconomic factors such as the recession, as seen in 2010 when Ryanair saw a 200% increase in profit and traffic growth, as the low fares became attractive for those suffering from the current climate. Uncertainty still remains regarding the economic climate; problems would arise if it continued, as passengers would reduce spending restricting the company’s passenger volume growth. If the economic climate was to grow, business and leisure passengers may choose to pay more and travel with a full service airline, this could consequently result in demand for low-cost flights to drop.

One of the greatest concerns is fuel prices the
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Air `France-KLM’ and `Scandinavian Air Systems’ (SAS) are both airlines that are currently generating large losses and are something for Ryanair to keep an eye on.

Ryanair should continue the push to purchase Aer Lingus, so they are able to expand into the US. This would mean a change in strategy for Ryanair, as it currently specialises in short haul routes between secondary and regional airports, whereas Aer Lingus flies in the long haul routes. This would allow greater market share and an increase in passenger traffic, as from the case it says demand for low-cost airlines in the US market is increasing. With the leading US airline Southwest generating over 3,200 flights a day and maintained financial strengths, with a total liquidity of $3 billion which was expected to rise, there is no question there is great demand for low-cost airlines in the US.

“Best” Solution and Argumentation

Ryanair’s main goal as a company is to “establish itself as Europe’s leading low fare scheduled airliner” therefore the best solution would be to expand the company. We can see in the case text “there is scope for growth in the sector in Europe”. Ryanair is currently successful in the Ireland-UK market and its expansion of services to continental Europe. In order to become leader in Europe’s leading low fare airline, Ryanair needs to introduce additional routes and increase the frequency of schedule flights, by acquiring WizzAir.

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