Ryanair - Porter 5 Forces Approach
A) Competitors:
Industry concentration: All low-cost airlines are competitors.—Ex: EasyJet announced flights to Ireland for the first time. In 2004, approximately 60 new low-cost airlines were formed.
Diversity of competitors: Competition is geared toward international, but not intercontinental flights. Ryanair pioneered the road for low-cost airfare, beginning its flight operations in 1985; EasyJet imitated the business model of Ryanair, also having a “fly greener” policy related to environmental protection.
Product differentiation: The Association of European Airlines stated that Ryanair has achieved better punctuality, fewer lost bags and fewer cancellations than the rest of its peer grouping in Europe. Ryanir achieves this by focusing strongly on the execution of these services and by operating from uncongested airports.
Excess capacity and high exit barriers: In 1992 the EU started to liberalize the internal market for air transportation, allowing airlines to set fares and routes within the EU.
Economies of Scale: The average fixed cost to Ryanair for flying from point A to point B is the same whether the flight has 2 passengers or 92 passengers. Ryanair’s cost advantage comes from regularly fully booked flights because of its low-cost strategy.
Cost structure: Ryanair’s operating costs are among the lowest of any European scheduled passenger airline controling the most relevant expenses for this type of company: Aircraft equipment costs, Personnel productivity, Customer services costs, Airport access and handling costs.
Dynamic----some airlines traditionally a full-service airline, developed strategies geared toward servicing specific regions, especially to Ireland.
Ryanair won a case against Go, a competitor that attempted to offer similar services between Ireland & Scotland.
B) New Entrants:
The main entry barriers for the industry are economies of scale and cost...
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