Ryanair. Successful Low Fares. Airline Leadership.

By: Vishnu Vardhan Karukonda

Introduction

Ryanair has been the largest low-cost airline company in the Europe and Great Britain for past 30 years. The low-cost airline, Ryanair, has managed to compete successfully in the marketplace in spite of a poor brand image. It was rated as the worst short-haul airline in Europe and the worst brand in terms of customer service, and yet it is still the largest budget carrier in Europe. The company admits that they are not a tender airline that cares about goodwill, as it believes the major value for customer is a low-price. When the company issued an unexpected profit warning, Ryanair reconsider their view on what customers value. Therefore, the company publicly expressed their wish to change the culture and improve the image of Ryanair, in order to remain competitive in the marketplace. Through market research, they became successful in gaining a positive brand image.

History

Ryanair was established in 1985 by Irish business man Tony Ryan in Dublin, Ireland. The airline began with 15-seat aircraft, flying between London and Ireland. In 1986, Ryanair received permission from regulatory authorities to begin flying four flights a day on the Dublin-London route with two 46-seat turbo-props. They challenged the high-cost monopoly of British Airways and Aer Lingus with fares that were set at half the prevailing fare. Ryanair’s strategy (initially) was to offer simple, low-cost fares and exemplary customer service. In 1986 (the first full year of operations), they flew 82,000 passengers and began additional routes. Ryanair passenger numbers continued to increase, but the airline generally ran at a loss by 1991. It was in need of restructuring,  including the closure of Ryanair Europe/London Europe.

A new CEO, Michael O’Leary, was brought in to manage Ryanair. He was an accountant by training. O’Leary, at the suggestion of Tony Ryan, visited Southwest Airlines in Dallas, TX, to learn the fundamentals of low cost leadership in the airline industry. O’Leary is known for his cheeky, yet rigorous leadership style, and he managed to revolutionize European air travel by offering extremely low fares, although he is often criticized about strict cost-cutting policies. O’Leary also proved that the company can operate successfully with very little respect to its stakeholders. Ryanair is known for intentional bad publicity and its unfavourable attitude towards customers, especially its talk of introducing standing seats on board and charging for over-weight passengers and toilet usage, as well as the poor price transparency (hidden charges). Interestingly, O’Leary suggests that intentional negative publicity is very beneficial for the company – it increases brand awareness and generates sales. But profit gradually decreased, and Ryanair decided to do more market research.

Market Research

The quantitative research method was chosen for analysis, as it is the most convenient tool to determine the attitude of consumers, when a large number of respondents is needed. Since Ryanair does not strive to create different images among countries, the responses obtained in the research should represent the whole European market. Moreover, the quantitative method provides an opportunity to present the results in statistical expression, which eliminates the subjectivity and biases of the researcher.
The instrument chosen for data collection is the questionnaire. The research instrument was designed in a simple way. Four types of questions were used: multiple choice questions, open-ended questions and semantic differential scale questions. The questionnaire was created in the English language, as it is the most spoken language in Europe. In order to determine customer profile, the survey begins with two demographic questions. Firstly, participants were asked to identify the frequency of their flights with Ryanair (question 1). As people that do not use Ryanair services still have an opinion about the brand. It distinguishes passengers that form an opinion about the brand based on personal experience from those who form their opinion about brand based on social influence. The second question was designed in order to identify the target audience of Ryanair (question 2). The Ryanair target customer is a budget traveller. However, it would not be appropriate to ask respondents whether they consider themselves budget passengers. Therefore, identification of the target audience was based on respondent’s purpose of journey when using Ryanair services. The company considers leisure travellers and those passengers who use Ryanair services for visiting friends and family abroad as their primary customers. In order to find out how customers perceive the brand and what associations they link to the brand, respondents were asked to write the feelings and thoughts that come to mind when they think of Ryanair (question 3). This reveals the general picture of the Ryanair brand that customers have in their minds. Customer service (Friendliness of staff, Helpfulness of staff, Knowledge of staff skills, Staff’s ability to deal with complaints, Availability of staff ), in-flight comfort (meals, drinks, entertainment, legroom comfort, amount of liquids allowed), other features (Price of flight, Flying to primary airports [main airports located within the city], Ease of online booking).

The method chosen for data collection is an online survey. The main reasons of such choice are:
1. Global reach. Internet-based surveys allow companies to obtain results from respondents living in various parts of the world. In this case, online surveys allow the firm to survey air travel passengers from different countries in Europe.

2. Speed and timeliness. Online surveys can be administrated in a time-efficient manner: the response rate is almost instant.

3. Convenience. Online surveys allow respondents to take as much time as they need to answer individual questions. Besides, respondents can take an online survey at any time.

The sampling for this research was to target their customers. Non-probability convenience sampling was chosen as the most appropriate approach. This sampling method allows the researcher to choose respondents that are easy to access, which minimizes the cost and time of data collection. Finally, collected data is coded and verified.

The research revealed that negative perception of the brand comes from Ryanair’s bad publicity and overall consumption experience. Therefore, it is assumed that negative stories about the brand arise because of these aspects. However, if previously proposed recommendations for improvements of bad publicity and consumption experience are implemented, perceived quality and overall image of the brand would increase in passenger’s minds. In turn, people would be more satisfied with Ryanair services and would be less likely to spread negative stories about the brand.

As end of the year 2014, Ryanair carried 90 million passengers annually. Its 8500 staff include 1200 pilots, with 186 destinations around 30 countries.

References:
Table: The top ten airlines in Europe https://www.google.com/search?q=top+10+airlines+in+europe+2015&newwindow=1&es_sm=93&source=lnms&tbm=isch&sa=X&ved=0CAkQ_AUoA2oVChMI37DiwPmeyAIVQzs-Ch2rggmO&biw=1366&bih=627#imgrc=0_Zsz9Ihym6mdM%3A

Thomas M; Byus, kent. “Successful Low Cost Leadership”. Questia(2005).
https://www.questia.com/library/journal/1P3-1291468851/ryanair-2005-successful-low-cost-leadership

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