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Ryanair

Ryanair

Ryanair is an Irish airway company that was established by Christopher Ryan in 1985. At the beginning, the firm had only one flight between London Gatwick and southeastern Ireland. Ryanair’s first aircraft had only 15 seats. Because of tiny cabins, the firm hired only people who were less than 5 foot and 2 inches tall. Soon after its launch, the company decided to work on Dublin-London route. This time was very prosperous. During this period, a number of the firm’s passengers grew from five thousand to eighty-two thousand. However, in 1990, Ryanair accumulated big losses and after that, it started to position itself as the greatest European low-cost airline company. It was completely new model in the transportation industry. Everyone wanted to buy a ticket from the Ryanair Company. In 1997, the firm launched its first low-cost airfares in Europe. The same year, it got listed on Irish Stock Exchange. The company also has created different kinds of promotions, which is very attractive to the customers. Today, Ryanair is the largest low-cost airline in Europe. Every year, it carries more than seven million passengers. It has two hundred and twenty routes and operates in nineteen countries. The company concentrates its activity in 12 European bases and has more than 2,600 employees. Many different factors have an influence on Ryanair’s success. For example, its services, materials, work force, money, equipment, work system and other elements. The current paper examines the company’s services, capacity planning, facilities, equipment and work system design that help Ryanair achieve success.

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Services

The Ryanair Company offers a low-cost service stimulating demand. It is designed mostly for passengers who can choose an alternative kind of transportation or can decide not to travel at all. The major goal of the company is to provide the best service for its customers. Association of European Airlines shows statistics, which says that Ryanair is more punctual, has less cancelations and less lost bags than its competitors. Satisfaction of clients is very important to the company. Customer service is also assessed by mystery-passengers and other kinds of surveys. Ryanair comes up with frequent point-to-point service. Now, its routes are not only short-haul. Ryanair provides flights to different countries and various destinations. However, it cooperates with secondary airports, which are located in remote cities. That is what actually makes Ryanair a low-cost company. It provides point-to-point flying. This type of flying allows the firm to offer direct non-stop routes. Such strategy helps the company to avoid different costs such as for connecting passengers, baggage transfer, and transit passenger assistance.

When planning flights, Ryanair usually chooses secondary airports, because they are less congested than major ones. It also provides lower rates of on-time departures, fewer delays, and lower handling costs. Moreover, the company has its own Internet booking facility. This service allowed Ryanair to remove travel agent commissions. That is why the company receives 99% of its revenues from direct sales from its website.

The company is trying to reduce its costs by choosing less expensive gate locations. Ryanair prefers outdoor boarding stairs because they are much cheaper and more efficient to use when comparing with jetways. Since 2009, the firm has required all passengers to check-in on the Internet. The company chose this to reduce waiting times at airports and airport handling costs. Moreover, it is much more convenient to the customers because they spend less time in the queue. Ryanair also has a checked-bag fee. If the customer wants to take the big luggage, he/she should book this service in advance and pay an additional fee. That gave the company an opportunity to reduce the number of bags carried by passengers.

Ryanair has an Internet booking facility. It enables customers to make reservations through the Internet and make a payment in the real time on Ryanair.com website. After the reservation service was launched, the company started to promote its system through television, newspaper and radio advertising. As a result, online sales grew very fast and now Internet reservations take up to 99% of all reservations.

In 2013, Ryanair made its website much easier to use. The process of the reservation was reduced from seventeen to five clicks. It also has a convenient fare finder facility that enables customers to find the lowest rates and book a flight without any troubles. On July 15, 2014, the company launched a new mobile app. Ryanair also provides the in-flight sale of beverages, food, and merchandise.

Capacity Planning

The resources of the company include physical resources (headquarter, aircraft fleet, secondary airports), financial resources (come from the founder’s family, creditors , shareholders and investors) and human resources (knowledgeable employees).

Safety is the primary priority of Ryanair. That is why the company hires only professional pilots and flight attendants. All aircraft crew is being trained in accordance with the highest European airline industry standards. During its thirty-year operating history, the company has not any fatal accident happened with the aircraft. It is a low-cost airline. However, this strategy does not have any reflection on safety, maintenance or training within the company.

Ryanair‘s pilots, flight attendants, maintenance and ground operations personnel should be trained, both initially and recurrently, to cope with unusual situations. An initial training for the company’s flight attendants is based on safety procedures. Ryanair also provides higher salaries to those of its engineers who complete advanced training in certain fields of aircraft maintenance. The company has four its own Boeing 737-800 aircraft simulators for training of its pilots. IAA (Irish Aviation Authority) regulations require pilots to have the license and specific ratings in order to be permitted to work as commercial pilot. In addition, all pilots have adhere to IAA regulations while executing their functions. They should also have a good physical form and have a medical certificate that confirms it.

Ryanair has an unique resource. It is its employees. The company is trying to improve their skills, because it helps to achieve excellence in their service. Ryanair wants to improve staff by promoting young talents. One more resource that is special is professional pilots. They should be informed about any changes in international flying regulations as that is necessary for them to do their work efficiently.

As long as the Ryanair Company provides services to its customers, it does not need any materials to produce any goods. Specification of the firm’s work requires it to buy a lot of fuel. Operating expenses include the cost of jet fuel, which makes 45% of Ryanair’s total operating expenses. Prices on fuel quoted in the US dollars depend on oil prices that change respectively to the prices on the stock market. These costs (in Europe they are expressed in euro) may increase in case of strengthening of the value of the US dollar against the euro. The company is trying to reduce consumption of fuel and protect the environment.

Layout and Design of the Facilities

Facility layout and design is an important component of Ryanair’s operations. It helps to smooth flow of work, material, and information through the system. Facility is the space where a business activity is taking place. The company has good facility layout and design because they meet the needs of its customers and personnel.

The principal properties owned or leased by Ryanair are Dublin Airport (corporate headquarters), Phoenix House in Dublin (reservation center), Stansted Airport (sales office and operation center), Dublin Airport (aircraft maintenance), East Midlands Airport (simulator and training center), Stockholm Skavsta Airport and Glasgow Prestwick Airport (aircraft maintenance), Stansted storage facilities (aircraft maintenance). In all airports, the company provides efficient, user-friendly facilities, for example, ample room for passengers. They also can easily access to the runway and terminal building. Ryanair has built headquarters near Swords. Moreover, the company has spent almost eleven million euros to buy new premises in the Airside Business Park and five million euros to furnish it.

Employees enjoy their workplace because it is equipped with the indoor slide, a pool table, pinball machines and many more other possibilities.

Equipment

The Ryanair Company is focused on operating a single aircraft type, because it makes controlling of acquisition costs much easier. For now, the airline operates only next generation Boeings 737-800s and plans to increase their amount. Ryanair has signed a very favorable contract with the Boeing Company. That is a great advantage to the former. First, it enables Ryanair to reduce costs associated with maintenance, purchase and storage of spare parts. Second, the company does not need to schedule additional personnel training. It gives Ryanair flexibility in scheduling of crews and equipment.

Ryanair fleet consists of 297 Boeings 737-800, which are short-to-medium range aircrafts each having 189 seats. The basic price for each of Boeing 737-800 is approximately $78.1 million. Each such aircraft is equipped with effective save systems that include advanced traffic collision avoidance systems, auto land capability and enhanced ground-proximity warning systems.

Design of Work Systems

Ryanair has its own interesting type of work system. The company also has a monopoly on almost all its routes. The key component of Ryanair’s success is its Chief Executive Officer Michael O’Leary, who has a lot of enthusiasm and energy. His leadership style is autocratic, he effectively manages the firm’s resources. Ryanair is famous for being tough on its employees. The company also ignores trade unions because it prefers to hire outsourced contract staff. An interesting feature of Ryanair is that it does not provide meals to the passengers. The company is always trying to find and implement new sources of revenue. For example, it charges for television, on-board shopping and gambling. The salaries of all the flight attendants depend on the quantity of items that were sold onboard. Ryanair has removed traditional services such as seat allocation, meals and drink unlike other airway companies usually offer their passengers free meals and drinks. The company also earns profit from secondary services. For example, it charges its customers for services offered on board, travelling insurance, car rentals and the Internet.

Ryanair has a good relationship with its employees. The company motivates them. There is an Employee Representation Committee, which is a group of employees, including pilots. The company negotiates different issues with this organization. Mostly, these negotiations concern salaries, work practices and conditions of employment. The senior management of Ryanair regularly meets with the representative of ERC. They usually discuss all aspects of the business and those issues that relate to different employee groups. Ryanair is trying to improve the productivity of the staff. Moreover, its personnel are already highly productive. The compensation system emphasizes productivity-based pay incentives. For example, the employees receive bonus payments from onboard sales of products. Another payment system is based on the number of hours or sectors flown by pilots and flight attendants.

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In conclusion, the Ryanair Company created a revolutionary business model in the airline industry. It uses modern aircrafts, which helps to reduce consumption of fuel and, in addition, environmental damage inflicted. The company’s business is accumulated mostly in remote cities. As a result, economic activity in these regions has increased. Ryanair expects to have approximately 426 aircraft in its operating fleet by March 31, 2019. The company is very popular in Europe. This gives it great competitive advantages. That is why the firm has low costs and high profits. However, as the European airline industry continues to grow, Ryanair has to work hard to remain the cheapest airway company for years.

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