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Ryanair SWOT & PESTLE Analysis

ID : 52215053| Oct 2018

COMPANY PROFILE -Ryanair

Business Sector :Aviation

Operating Geography :Europe, Global

About Ryanair :

Ryanair is an Irish airline established in 1984 and is headquartered in Dublin, Ireland.It is the largest European carrier in terms of passenger volume in 2016 (Lufthansa wrestled the top spot in 2017) and is largely characterized by the successful implementation of the low-cost business model. It has over 12,438 employees as of 2017.Being a pioneer in offering low fares to its passengers on short European routes, Ryanair has earned the reputation to offer lowest fares in the industry and hence turns out to be the toughest competition to the newbies in the aviation industry.During the 90’s Ryanair operated as an airline serving short point to point European routes. Later it entered the Dublin-London route hitting the market with its attractive strategy of lowest fares and increased routes between Ireland and UK. Gradually Ryanair started new routes in various other countries, keeping its business model simple and focused towards providing lowest possible fares with increased frequencies to destinations and emphasizing on safety and security of passengers.In 2017, albeit facing a lot of internal and external problems, Ryanair managed to be a low-cost carrier and became the first European airline to fly with more than 1 billion customers. FTE Europe and FTE Ancillary awards 2018 acknowledged Ryanair and it was awarded the Future Travel Experience Ancillary Silver award for its continuous efforts to create innovative ancillary revenue streams.Strategic capacity expansion over the last few years, ultra-low operating costs aided by growth in passenger volumes and an overhauling of customer experience have resulted in record load factor and profit of 95% and €1.45 billion respectively for Ryanair in 2018. These headwinds have propelled Ryanair’s stock prices to all time high’s.

Ryanair’s unique selling proposition or USP is to provide lowest fares in the airline industry with increased frequencies for short point to point routes.Ryanair's mission statement reads as “to offer low fares that generate increased passenger traffic while maintaining a continuous focus on cost containment and efficiency operation.”Ryanair's Vision is “to firmly establish itself as Europe's leading low-fares scheduled passenger airline through continuous improvements and expanded offerings of its low-fares service”

Ryanair Revenue :


Euro 6,648million - FY ending 31st March 2017 (y-o-y growth 2%)
Euro 6,536 million - FY ending 31st March 2016

Ownership / Major shareholders :

As of August 2018, the major shareholders of the company are as follows –
1) Fidelity Management & Research Co. (4.40%)
2) Michael O’Leary (3.84%)
3) Jupiter Asset Management Ltd. (2.74%)
4) Baillie Gifford & Co. (2.21%)
5) Allianz Global Investors GmbH (1.66%)

Competitive Analysis of Ryanair

SWOT
PESTLE

SWOT / TOWS analysis of Ryanair is a framework to evaluate the factors that create an impact on the airline industry at large and wield its influence on Ryanair. The SWOT analysis gives insights into the internal and external factors, namely, strength, weakness, opportunity, and threats of Ryanair. The strategic analysis of Ryanair’s internal factors demonstrates strengths that are also its key success factors. Some of these are low cost, low fares, innovation in terms of leadership and strategies, increased routes and frequencies to destinations. These factors are creating a competitive advantage for Ryanair and keeping it ahead of its competitors and rivals in the ever evolving and militant aviation industry where airlines are battling out to grab the smallest of market shares.

Though Ryanair’s business model is simple and focused in providing low fares, on time service and passenger’s safety as a priority, it scores low in customer satisfaction being plagued with problems like poor customer service, hidden charges, ambiguous agreements and misleading advertisements about fares. Clearly, these are some of the major weakness for any low-cost airline in general. Despite all the ups and downs, Ryanair has seen throughout its journey it has some great opportunities that will help sustain its growth. For instance, acquisition and mergers with other airlines, code sharing and sector consolidation, significant hike in number of short distance travellers teamed with a swelling market share and market growth are some factors in the macro environment of Ryanair that act as achievable opportunities. External factors like hike in fuel price, currency movements, competition from local carriers and natural disasters are some major threats to Ryanair.

The SWOT analysis for Ryanair is presented below in a matrix followed by the detailed analysis report.:

Strengths
Weaknesses
1. Established in the European market covering more than 200 destinations and 1800 routes
2. Strong balance sheet and consistent shareholder returns
3. Ryanair’s low cost base is a key competitive advantage
4. Ryanair operates point-to-point flights within short distance locations
1. Labor Relations and change in employee compensation arrangements could impact Ryanair’s business
2. Aggressive fleet expansion may result in overcapacity in the near future
Opportunities
Threats
1. Ryanair has good scope to increase ancillary revenues through myRyanair
2. Focus on customer experience through Always Getting Better (AGB) program
1. Weaker GBP post Brexit to put downward pressure on prices
2. Fluctuations in fuel prices can affect the company’s business model and profitability
3. Competition from other low cost regional carriers
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Detailed SWOT Analysis of Ryanair

 

Strength

1. Established in the European market covering more than 200 destinations and 1800 routes: Ryanair has the most comprehensive coverage by any airline across destinations in Europe and North Africa. It covers more than 200 destinations across 33 countries with more than 1800 routes. Ryanair also has the leading market share of 15% overall in Europe as of 2016 and also is the leading player in five countries and the Central and Eastern Europe (CEE) region. With 86 bases and a fleet of 427 aircrafts, Ryanair served over 120 million customers in FY 2017.

2. Strong balance sheet and consistent shareholder returns: Ryanair has a fairly strong balance sheet with low debt of €244m as of FY 2017. Share buybacks by Ryanair have also resulted in enhanced shareholder returns. In FY 2016 Ryanair returned €1,104m to shareholders via share buy-backs and has returned an overall €4.2bn to its shareholders since 2008. Further, Ryanair has announced plans for a €600m buyback in FY 2018. The company has also paid special dividends amounting to €1,512 over the last decade.

3. Ryanair’s low cost base is a key competitive advantage: Ryanair pioneered the low cost operating model in Europe in the 90’s and its passenger volume has significantly increased from 0.9 million in the year 1992 to 120 million passengers in FY 2017. This growth in passenger volumes can be attributed to the low fares charged by the airlines with average fares in FY 2017 being €41, 24% lower than its nearest competitor, Wizz Air. It has achieved these targets by maintaining low operating costs and high load factors. Its fleet has a single aircraft type - Boeing 737-800s which helps it to control acquisition, training and maintenance costs. It also strives to maintain high worker productivity by emphasizing on productivity-based pay incentives. Ryanair also strives to reduce airport access and service charges by focusingon airports that offer competitive prices.

4. Ryanair operates point-to-point flights within short distance locations: Frequent point-to-point service on short haultroutes to major and regional airports across population and tourism centers helps Ryanair garner high passenger volumes while keeping costs under control. Short routes eliminate need of frill services like meals and entertainment and also direct flight avoid costs of baggage transfers and transit assistance which help to save on overall costs. For FY16, Ryanair’s average flight duration was of 1.8 hours with average distance covered being 762 miles.

Weakness

This section is available only in the 'Complete Report' on purchase.

Opportunity

This section is available only in the 'Complete Report' on purchase.

Threat

This section is available only in the 'Complete Report' on purchase.

Major Competitors :

Major Brands :

  • Ryanair
  • Ryanair Sun
  • Laudamotion
  • Buzz(Subsidiary)
  • Ryanair rooms
  • Ryanair holidays

Key Business Segments / Diversification :

Ryanair
Passenger transportation Cargo transportation Car hire
Holiday packages Hotel bookings

Recent Acquisition / Mergers / Alliance / Joint Ventures / Divestitures :

Name
Business Segment
Year
Type
Objective/Synergy Achieved
LaudamotionAviation2018MergerRyanair has taken 75% stake in Austria based airline Laudamotion for $62 million after approval from the EU commission. It has plans to establish Laudamotion as an Austrian low-fare airline for the scheduled and charter market.
Air EuropaAviation2107AllianceIt has entered a long haul flights partnership with Air Europa via Madrid providing reduced check-in baggage fees.
BuzzAviation2003AcquisitionIt had purchased the Dutch low cost airline for 23.9 million euros; for the consolidation of Europe's low-cost airline industry.
Source: Company website and other reliable sources. The detailed table is available in the Complete Report.
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WHY BUY THIS REPORT?
TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
The Ryanair SWOT and PESTLE Analysis report will offer the following:
  • The report gives a brief overview of, Ryanair’s history, founders, its corporate headquarters, owners & stakeholders and revenue jumps.
  • Comprehensive company analysis to gain knowledge about company information, company profile, business model, business plans and marketing strategy.
  • Utilizing strategic tools like SWOT and PESTLE, the analysis strives to evaluate the performance of Ryanair in both the micro and macro environment.
  • The SWOT analysis report covers all the internal factors that describe the major strengths and weaknesses of the largest low-cost carrier of Europe, Ryanair
  • The report lends intelligence on the external analysis, comprising of the achievable opportunities that would lead to international growth and expansion.
  • Gain understanding of challenges and threats posed by major competitors, that would impede Ryanair’s growth.
  • The analysis also talks about appreciation in the share price of Ryanair, opportunities for mergers and acquisitions, partnership and alliances.
  • Gives insight into Ryanair’s strategy and business model that has helped it to become a successful pioneer brand in providing low fares for its passengers.
  • Interpretation of Ryanair’s USP or unique selling proposition, mission statement and vision statement that has set a benchmark in the airline industry.
  • Core competitive advantages enjoyed by Ryanair over its rivals and competitors from the aviation industry
  • In-depth analysis of external factors like political, economic, social, technological, legal and environmental and highlighting their impact on the operation of Ryanair.
  • An insightful view of the business model of Ryanair, along with further breakdown and examination of key business segments and business case study
  • A peek into the Ryanair’s key performance indicators, success factors, value proposition and core competencies
References used in Ryanair Analysis Report

1. Ryanair Annual Report 2016: https://investor.ryanair.com/wp-content/uploads/2016/07/Ryanair-Annual-Report-FY16.pdf

2. Ryanair FY17 Presentation: https://investor.ryanair.com/wp-content/uploads/2017/05/FY17-Presentation.pdf

3. Ryanair FY17 Results: https://investor.ryanair.com/wp-content/uploads/2017/05/FY17-Results.pdf

4. Wizz Air SWOT: ultra-low costs drive high growth and margins, in spite of Ryanair competition: https://centreforaviation.com/insights/analysis/wizz-air-swot-ultra-low-costs-drive-high-growth-and-margins-in-spite-of-ryanair-competition-251605

5. Ryanair to expand fleet faster to steal a march on struggling rivals: http://www.telegraph.co.uk/business/2017/05/30/ryanair-ticket-prices-set-fall-7pc-year/

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Ryanair SWOT and PESTLE analysis has been conducted by and reviewed by senior analysts from Barakaat Consulting.

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Ryanair SWOT & PESTLE Analysis
Price : USD 12.53