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Analysis Low Price Airline Raynair

2628 words - 11 pages

1. Executive summaryIn the European airline industry, the low cost carriers have been so profitable that they have been looking to expand. Ryanair has become the Europe's No.1 low fare airline company. In this report, with the aid of Porter's PEST model the group analyse the environment influences on aviation industry. As part of political factors of PEST, 9/11 has raised opportunities for Ryanair to expand their market share. Then we will attempt to explore how Ryanair keeps their sustainable competitiveness with the D'Aveni's concepts of hypercompetition. We also adopt the value chain analysis to understand how the different activities of the low-cost airlines (Ryanair) add their value ...view middle of the document...

The company offer approximately 475 scheduled flights per day serving 84 locations in 14 EU countries.4. Environmental analysis:4.1 Political factors:4.1.1 9/11, SARS & Iraq WarThe worldwide commercial aviation has suffered from terrorist attacks of 9/11. The tragedy dramatically decreases the number of passengers and pushed Airline industry facing deterioration in their financial positions. Similarly, impact of SARS and Iraq War reduce willingness of people to travel outside their countries.4.1.2 The EU policy on aviation industrySince 1997, the European market has been completely deregulated. For example, any airlines holding a valid Air Operators Certificate in the EU have right to operate on any route within the European Union, including flights wholly operating within another country. On May 1st 2004, ten new members joined the EU as part of EU enlargement. The era of single European sky related to Open-Sky Treaty, allowing point-to-point service between any EU countries is approaching and airline companies will benefit from consolidation; on the other hand, they will have to confront fiercer competitions against each other. The price-sensitivity for routes to and within accession countries is naturally suited to low cost airlines.4.2 Economic factors:4.2.1 Economic recessionOverall, the world's economy is slowdown, which affects European economy as well. People are reluctant to spend money in leisure activities.4.2.2 Currency fluctuationIn related to companies' operating costs, currency fluctuation affects those companies' revenues that are not in US dollars. Weakness in US dollars enables fuel cost reduction.4.3 Social and cultural factors4.3.1 Population intensityHigh level of population density in the EU region (six times larger than the USA) is likely to stimulate the growth of short-haul point-to-point routes within Europe, which provides major opportunities for low-cost airlines.4.3.2 Airport expension in UKUK airport expansion plan will raise passengers charge to help fund a new runway. This will particularly impact on ticket price of low-fare airlines and lose their low price advantage.5. Dealing with questions5.1 9/11 & RyanairAs the flag carriers struggle to cope with the crisis of 9/11, they have left more scope for low-cost competitors to enter the market segments abandoned by flag carriers.5.1.1 Policies adopted by Ryanair5.1.1-1 Promotion enhancementRyanair lower airfares by offering one million seats for sale at just £9.99 to stimulate air travel demand. They also lead the campaign within Europe to maintain consumer confidence in, stimulate demand for great value air travel. Additionally, they open new routes As a result, Ryanair are carrying more than 10 million passengers in 2001.5.1.1-2 Increasing capabilities:Ryanair opened 7 new routes from their second Continental base in Frankfurt Hahn in 9 days time at the end of 2001. Moreover, in January 24, 2002 they drew up contract with Boeing to purchase 100...

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