Ryanair Strategic Position

Every company has a specific strategy it follows to thrive in the market. The strategy involves positioning the brand in a certain place within the marketplace. Strategic positioning refers to how a company sets itself apart from the competition and delivers a product to the customers. In this case study, we will examine the strategic position of Ryanair, a leading European airline.

Introduction to Ryanair

Ryanair Holdings plc is an Irish airline group and a parent company of Ryanair, Ryanair UK, Buzz, Lauda and Malta Air. It was founded in 1984 by Christopher Ryan, Liam Lonergan, owner of Irish travel agent Club Travel, and Irish businessman Tony Ryan , founder of aircraft leasing company Guinness Peat Aviation.

Ryanair started its operations in 1985 and began flying between Waterford and Gatwick Airport to compete with British Airways and Aer Lingus.

In 1986 the firm added the Dublin - Luton route.

In 1990 what it relaunched as 'Europe's first low fares airline' by implementing frequent flights, moving to a single aircraft fleet type and removing free drinks and expensive meals on board. Currently, Ryanair is Europe's largest airline group. It connects over 240 destinations in over 40 countries. Offering the lowest fares in Europe,

Ryanair brand positioning

Ryanair positions its brand as a low fare airline. The company does not try to place itself among airlines such as British Airways, Lufthansa or Air France which offer a relatively high-quality service at a higher price. Instead, Ryanair aims to satisfy people who are looking for the cheapest service possible, no matter the quality. Because Ryanair promotes its brand as:

Many customers have built trust in the company and believe that its prices are the lowest. In doing so, they might not bother checking offers from other providers as they know that Ryanair will still be cheaper. This way Ryanair has created many loyal customers. However, such a brand position puts off more demanding customers who do not mind spending more money to get better service. Such customers are less likely to opt for Ryanair and instead, they go for other, full-service airlines.

Ryanair's business strategy

Every company has a specific strategy that places it in a certain position in the market.

Based on these factors, companies can choose a suitable strategy to follow. As a result, are three main types of strategic positioning strategies: cost leadership, differentiation and focus strategy.

Ryanair Holdings plc uses the focus strategy, particularly the cost focus strategy.

As a result, Ryanair offers the cheapest flights in Europe. It addresses the market for people who look for a cheap, basic and efficient service. Ryanair's competitors include EasyJet, Aer Lingus Group, Vueling Airlines and Wizz Air.

Since Ryanair is cost-focused, it does not attempt to compete in all market segments. This means that it does not offer flights for customers with higher requirements, looking for high quality and luxury service. Instead, the airline targets those who have lower requirements and do not mind the lower quality of service for a cheaper price.

What is more, contrary to many other airlines, there are no free drinks on board. Food that customers can enjoy during the flight is very simple, such as heated sandwiches and ready meals. Ryanair flies point to point to mid-sized cities using secondary airports. Therefore, demanding customers are very unlikely to use Ryanair's service. Instead, they will go for airlines such as British Airways, Lufthansa or Air France, which are higher cost airlines that Ryanair does not compete with.

How does Ryanair make it so cheap?

Ryanair offers the cheapest fares across Europe. The company sells flights for as little as £ 7, sometimes even cheaper. Flights are not cheap to operate. Each flight is associated with expenses such as airport, aircraft and staff. Additionally, in the United Kingdom, airlines are charged a fee called Air Passenger Duty which is a tax applied to each passenger on each flight. For Ryanair, this comes in at £ 13 per passenger. In such a case, how does Ryanair make any profit?

The company charges additional costs for all additional services at a high price.

This means a pure profit for Ryanair.

If you wanted to order some drinks or water to consume on board, you would face high prices.

Secondly, there are many additional fees.

Thirdly, Ryanair flies to and from cheap secondary airports.

Lastly, there is only one aircraft type at Ryanair which is B737. In doing so, the company needs to keep parts in stock for one type of aircraft only. Furthermore, the crew only need to be trained on one aircraft.

To conclude, Ryanair positions itself as a low-cost and non-full-service brand. This makes the brand stand out from other full-service airlines to customers who are looking for the cheapest, most basic flight options. While offering low fares, Ryanair makes a profit on all additional services such as seat allocation, priority boarding, and food and drinks on board. It also charges extra for check-in at the airport and any flight changes. Moreover, Ryanair sees all the possible options to cut costs. It flies from secondary airports, does not pay to use jetbridges and uses one type of aircraft only. This way the airline implements the cost focus strategy.

Sources:

https://corporate.ryanair.com/

https://www.managementtoday.co.uk/brief-history-ryanair/food-for-thought/article/1449458

https://www.ryanair.com/gb/en

https://www.comparably.com/companies/ryanair/competitors

http://www.rapid-business-intelligence-success.com/ryanair-business-strategy.html

https://simpleflying.com/why-is-ryanair-so-cheap/