Ryanair – The Low Fare Airline
Being founded in 1985 by an Irish businessman, Tony Ryan, Ryanair today is Europe’s
first and largest low fares airline (Thomson and Bade-Fuller, 2010). Since 1991 with
Michael O’Leary taking a position of CEO of the company, Ryanair in 2008 had served
about 50.9 million passengers in around over 25 European countries with a total
number of 163 Boeing 737-800 planes (ibid). The low-cost model airline is pursuing
seem to be successful, resulted in continuously increasing margin rate and
overwhelming competition with other major airlines, like easyJet and Lufthansa
(ibid).
The predominance of Ryanair as Europe’s largest low cost carrier is a consequence of
the following cost advantage sources. Homogenous fleet, frequent short-haul flights,
high seating density and planes filled to capacity due to cheap early bird tickets allow
Ryanair to benefit from economies of scale (Thomson and Bade-Fuller, 2010).
Standardisation and simplification of jobs results in economies of learning and
residual efficiency. Process design, that includes 96% card only online bookings, fast
boarding, short haul flights, use of homogenous fleet with simplified aircraft design,
low number of staff, use of secondary airports and departures before 9pm leads to
efficient service delivery (ibid). Ryanair product design is aimed at delivering
customers no-frills service while keeping the company costs at the minimum. Input
costs are kept low by using secondary airports, and third party contractors for
aircraft and passengers handling. Using only Boeing 737-800 aircrafts provides high
bargaining power when purchasing fuel or ordering new planes. Finally Ryanair
