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Ryanair - Economic Analysis

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Ryanair - Economic Analysis
ANALYSIS OF RYANAIR LTD. IN EUROPE

OBJECTIVE
The objective of this report is to The aim of this report is to analyse Ryanair using appropriate economic tools and models such as Structure- Conduct- Performance Model, Porter’s Five Forces and PESTEL Analysis. Recommendations will then be provided based on the analysis.

INTRODUCTION TO RYANAIR
Ryanair is an Irish airline founded in 1985 by Tony Ryan who teamed up with Christy Ryan and Liam Lonergan to set up the airline (Creaton 2004). The company started off with 5,000 passengers in 1985 and in 2009, they carry over 65 million customers (Airport Watch 2009). In 1991, when Michael O’Leary became the deputy CEO, he developed a strategy heavily influenced by Southwest Airlines in the US, the world 's first low-cost carrier and has posted its first ever profit since it started operating (Vallely 2006). By December 2009, Ryanair is Europe’s leading low cost airline serving 26 countries with 150 destinations and through 1000 routes (ELFAA 2009). As shown in Appendix A, Ryanair is ranked the fifth in Europe for the largest airline company measured by the number of passengers carried (Europa 2010a). Among the low cost carriers in Europe, Ryanair has the biggest market share, accounting for 40% as shown in Appendix B. Besides air flights, Ryanair also provide non-flight services such as car rentals, accommodations, travel insurance, internet-related services and in-flight merchandise sales. These non-flight services have accounted for 20% of Ryanair’s total revenue for the financial year ended 2009 (Annual report 2009).

STRUCTURE-CONDUCT-PERFORMANCE

Structure
The aviation industry in Europe carried 798,324,338 passengers in 2008. In the low cost carrier (LCC) airline industry in Europe, the 3 largest companies hold approximately 79% of the market share in 2009 (ELFAA 2010). The rest of the market share is held by many other smaller LCC companies. The emergence of LCC airlines as drastically increased the number


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