Ryanair has faced many challenges over the years and 2007 was no different. Fuel prices are an economic concern for Ryanair, increasing fuel costs are a current, and from the forecasts will be a future threat. Fuel costs were 40% of operating costs in 2007, an 5% increase. Ryanair has pledged to low-fares, which means they won’t pass the fuel costs onto passengers or impose a fuel surcharge on them. (Ryanair Holdings PLC, 2007) There have been some political and legal issues concerning Ryanair such as, a new European Union (EU) regulation came into effect, various legal actions, terrorism, and security.
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The new EU regulation was to compensate air passengers that were inconvenienced by delays, cancellations and denied boarding. This was intended to enforce the reduction of these inconveniences. Terrorism and Security increase had an impact on costs and risks in the airline industry worldwide. Ryanair suffered a loss of about 1. 9 million in just a few days following an incident in the United Kingdom. In addition Ryanair has been in dispute with several airports over landing charges. A recent dispute is with a rival Air France over Marseille airport, which Ryanair air planned on basing two aircrafts serving 13 routes.
The dispute was mainly about unfair discounted landing and passenger charges on flights within France. (Thompson, Strickland, Gamble, 2008) Other socio-cultural topics have emerged like environmental concerns, safety issues, and customer services or perceptions. Green houses gases have been a major concern for many people worldwide, which has caused an increasing pressure on there to be a tax on aviation fuel. Ryanair argued that aviation only contributed a small percent of carbon emissions, but still pledged to behave responsibly by arranging more efficient aircraft that uses less fuel and produces less pollution.
There have been accusations of lax safety protocols, because of various incidents, but Ryanair has continued to acclaim its safety record through publications, new services, and free flights. (Thompson, Strickland, Gamble, 2008) Ryanair has incurred many complaints about its actual service, like comfortable seats, amenities, and poor treatment of customers with canceled flights, despite them being the most punctual and voted number one for low-fares. (Thompson, Strickland, Gamble, 2008) These complaints are all opportunities for Ryanair to improve the service they give their customers.
These issues mentioned are very similar throughout the world like; fuel, environment, safety, and terrorism which are things that affect the airline industry. Some of the concerns are regionally focused on the European area, like the EU regulation, which only affects airlines going into and out of Europe and the tighten security in Untied Kingdom. Some of the forces that drive industry competition are the increasing traffic growth of travelers, families, and business as well as the overall revenues of the industry.
These forces are generally the same for most industrialized countries and some developing countries, but can vary from country to country. Ryanair has a good position in as a budget carrier; from the experience of past ventures the threat of new entrants that will succeed is very low. There is a threat of substitute services, like driving, trains, buses, and ferries. Driving long distances has become expensive, because of raising fuel prices. Trains are not as fast, but are a comparable way of travel, unless the location is overseas.
Again buses take longer, but fees are less, and the location cannot be overseas. Ferries are limited, but can be a decent way to travel over waters. The bargaining power of buyers is strong, because there is a multitude of airlines they can chose to fly with. Plenty of customers are price concise, so Ryanair’s strategy of low-fares really uses that conciseness as an opportunity to be the best low-cost carrier. There is a very predominant competition within the airline industry, some are budget carriers, and others come with high prices and many frills.
Ryanair is 29. 9% of the market share for budget airlines in Europe, so their bargaining power is good with its suppliers. Government and unions affect the way most airlines have to do business, constantly regulating and implying or changing policies. Their power is strong among the airline industry. The immediate environment that’s currently affecting the corporation has been a cash offer by Davy Corporate Finance and Morgan Stanley on behalf of Ryanair for the purchase of the company, Aer Lingus.
Aer Lingus, if merged with Ryanair would account for 80% of all flights between Ireland and other European countries. The following are the current key factors that are the most important to Ryanair and the airline industry in present time are fuel costs and political/government regulations. Fuel costs affect costs for the whole industries, but really is a concern for budget carriers. Ryanair has pledge to not impose these increases costs on customers, so it accounts for 40% of its operating costs, cutting into profits.
These fuel costs consuming a large percent of the operating costs will still be a concern in the future. This relies on the forecasts that fuel costs won’t be coming down, which it’s highly likely for costs to increase in future. Ryanair consists of a board of directors, officers, and shareholders. There are many pieces to Ryanair and authority is decentralized to many units including: operating, piloting, personnel and in-flight, engineering, customer service, flight operations, ground operations, and finance. These are mainly organized on the basis of functions, and geography also plays a key role.
The structure is easy to understand, being based around function and appears to be implicit by everyone in the corporation. The present structure is consistent with the current corporate objectives, strategies, policies, and programs as well as with the firm’s international operations, because it operates smoothly being organized through function then geographically. The corporate structure is similar to other airlines, which also operate through function then location, but its main difference is the focus on cost cutting techniques.
present structure consistent with the current corporate objectives, strategies, policies and programs as well as with the firm’s international operations present structure consistent with the current corporate objectives, strategies, policies and programs as well as with the firm’s international operations Ryanair has a well-defined corporate culture composed of shared beliefs, expectations, and values, which are clearly defined in their code of ethics. The things mentioned in the code of ethics are consistent with the current objectives, strategy, policies in place, and other programs within the company.
The culture’s position seems to be positive on important issues such as the quality of performance and adaptability to changing conditions, as well as internationalization. The culture compatible with diversity currently has many employees of diverse backgrounds, which have been successful. Ryanair takes into consideration the values of each nation’s culture in which the firm operates and also under law has to treat each employee with regards to laws of their own nation.