Bringing Ryanair to the United states

SWOT Analysis – With Marketing/Financial StrategyClaudiel TejedaMeghan BistanyMarcus FergusKeith MurphyAngela Hebb

FALL 2015Professional Communications

Professor Ken Lazer

Table of ContentsEXECUTIVE SUMMARY 2

Purpose of Report 2

Why Ryanair? 3

What is Ryanair? 3

History of Ryanair 4

Ryanair Today 4

Key People 5

Why the United States? 6

STRENGTHS 8

Low Cost 8

High Demand in Competitive Market 9

WEAKNESS 10

Seasonality Earnings 10

Low Frequencies 11

Poor Service 11

Brand/ Media Perception 12

Legal Proceedings 12

OPPORTUNITIES 13

Competitiveness in an Expanding Market 13

Tax Incentives in the United States 14

Safer, Faster, and Cleaner Travel 14

THREATS 16

American Airline Competition16

Hidden Fees 16

MARKETING 19

FINANICAL SUMMARY 20

CONCLUSION 21

WORKS CITED 22

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Figure 1 Top 10 US Cites by Number of Flights. - WSJ

EXECUTIVE SUMMARY

Purpose of Report

The purpose of this report is to present our dynamic plan to establish Ryanair airline

company operations in the United States of America. The overall goal is to create as many

startup locations as possible throughout Atlanta, Chicago, Dallas, Los Angeles and other major

cities within the United States. According to The Wall Street Journal, the top cities by number

of flights from July 2011-July 2015 are as follows: Atlanta was number one with an average of

8,824 flights from July 2011-2015.

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In our mission to establish Ryanair across the United States we will attempt to create

airports in as many as these top 10 major cities as possible. Starting with Atlanta and going in

order chronologically from highest to lowest number of flights.

We are in negotiations with Boeing, one of the largest airline manufacturers on the planet

in, which they will provide us with the airplanes and other resources to successfully launch this

operation.

Why Ryanair?

Ryanair is considered by many to be Europe’s favorite airline. Ryanair comes in

operating more than 1,800 daily flights from over 76 bases, and is connecting 200 destinations in

31 countries on a fleet of over 300 Boeing 737 aircrafts. Ryanair has orders for a further 380 new

Boeing 737 aircraft, which will enable Ryanair to lower fares and grow traffic from 105 million

this year to a whopping 180 million. Ryanair has a team of more than 10,000 highly skilled

aviation professionals delivering Europe’s No.1 on-time performance, and has an industry

leading 30-year safety record. – History of Ryanair. Over 200 destinations in 31 different

countries and at very affordable prices are the primary reasons we chose to bring Ryanair to the

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United States. We want our citizens to take full advantage of the benefits brought by Ryanair for

more affordable international travel.

What is Ryanair?

“Ryanair, you know who we are. You know what we do. You know that when you travel

with Ryanair you’ll get where you want to go cheaply, reliably and without any fuss.” – About

Ryanair By establishing a low cost model Ryanair revolutionized the air travel industry and

allowed Europe to become a hot destination for the entire globe. Ryanair continues to lead the

industry in low cost travel with unbeatable deals and prices. Ryanair is also proud of the fact that

they have the most on-time flights of any airline within the region. They have established a 30-

year safety record amongst the airline industry. They have an excellent handling of luggage and

an outstanding anti-pollution policy.

History of Ryanair

In 1985 Ryanair is set up by the Ryan family with a share capital of just £1, and a staff of

25. In 1985 Ryanair is launched by the Ryan family with a staff of only 25 people and a capital

of 1 euro. In July they launched their first route with daily flights going from Waterford, Ireland

to London, England. Total passengers for that year are about 5,000. As of 2013 Ryanair’s traffic

is now at about 82 million passengers with an average fair of just 46 Euros even though fuel

prices were continually rising. They opened 4 new bases in Athens, Rome, Brussels and Lisbon

and planned on 3 more new locations for winter of 2014. With a total year net profit of 523

million Euros.

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Ryanair Today

As of today Ryanair operates in 31 countries, out of 195 different airports. Each day

Ryanair flies more than 1,600 flights with its fleet of 300 Boeing 737-800 aircrafts. Ryanair has

had a perfect safety record for the last 30 years and they are proving themselves as an airline.

Every month Ryanair publishes their customer service statistics. Below are the statistics for the

month of September 2015.

9.5 million customers

54,000 flights

92% of flight arrived on time

Ryanair compared to its competitor EasyJet has a better airline punctuality. Airline punctuality

includes both arriving on time and departing on time. EasyJet is only at 85% while Ryanair is at

90%.

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Key PeopleListed below are the Executives of Ryanair

Michael O’Leary,Chief Executive Officer & Executive Director

John Hurley,Chief Technology Officer

Howard Michael Miller,Non-Executive Director

John Leahy,Non-Executive Director

Michael Cawley,Director

Kenny Jacobs,Chief Marketing Officer

Dara Brady,Head-Web Development

Neil Sorahan,Chief Financial Officer

Derek Thaddeus Quinn,Director-Engineering Division

Greg O’Gorman,Director-Ancillary Revenue

Michael Hickey,Director-Group Operations

Carol Sharkey,Director-Safety & Security Division

John Tuite,Head-Finance

David O’Brien,Chief Commercial Officer

Eamonn Hackett,Group Treasurer

Lesley Kane,Head-Groups & Corporate Sales

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Why the United States?

With a population of more than 318 million people (info-please) and a land area density

of 3,539,225 total square miles (info-please) the United States is one of the largest countries in

the world in terms of population and land area. As well as a GDP of about $16.72 trillion (info-

please); and a per capita average income of $52,800 (info-please) this makes the United States

one of the wealthiest countries on the planet in terms of GDP and average income per citizen.

These facts are the main contributing reasons why we have decided to bring Ryanair to the

United States. The sheer size of the population and the average income per citizen makes perfect

sense for any corporation that has not established itself in the states to do so as soon as possible.

As we can see from the following tables US based airlines rank 1 in both revenue and

passengers carried respectively, while at the same time rank 5 out of 10 times in the top 10 for

both categories. These tables show the amount of revenue to be made and number of passengers

to be flown within the United States. And as such we need to implement Ryanair U.S based

operations immediately. Ryanair ranks 4th in passengers carried and is the top ranking in that

category for a non-US based Airline Company with about 91 million passengers. It is time

Ryanair be established within the United States seeing as there is a substantial amount of market

opportunity that must be taken advantage of.

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Figure 2 Flight-Global – Top 10 Airlines based on Revenue

Figure 3 Flight-Global - Top 10 Passenger Carried Airlines

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STRENGTHSLow Cost

Ryanair has many strengths that will be appealing to the citizens of the United States. If

we are not benefitting from the brand name alone, (25+ years), Ryanair is the lowest cost per

passenger in Europe. With Ryanair being the lowest cost per passenger in Europe, we should

flourish in the United States. The United States does not have many domestic airlines that are

low cost. Their biggest competitor is Spirit Airlines, which in our opinion, is still not that cheap.

The lowest fare we could find from Spirit Airlines was from Massachusetts to Myrtle Beach

round trip, which was $230. While this is relatively cheap compared to other options, Ryanair

has had flights as low as $10. Ryanair in the United States would definitely appeal to high

school and college students, young adults, and frequent travelers.

CEO Michael O’Leary has an aggressive force for leadership. keeping our low cost is the

main force behind every decision made in this company. Things that help us keep our low cost,

are the small and low cost airports with fast turn-around times that we use. In addition to revenue

growth, this cuts back on late fees, cancellation fees, and any other fees that can pop up during a

regular work day. Ryanair is also committed to hiring and maintaining a productive and flexible

labor force. More than half of our employees are only signed into contracts when required. By

signing into contracts only when required, you can pay more attention to training new employees

that are going to be long term. This is more efficient cost wise.

Ryanair also benefits from high seat density, 189 passengers per fleet. Even though we

are a “no frills” airline, we routinely invest in the newest airlines so we can benefit from the

bigger capacity and their efficiency. In addition, new airplanes will avoid legacy pension costs.

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High Demand in Competitive Market

Costs per passenger (euros, excluding fuel)

Ryanair EasyJet Norwegian Air Berlin

Staff 5 8 15 14

Airports & Handling

8 18 8 26

Route Charges 6 6 13 8

Aircraft Maintenance

6 8 17 20

Sales & Marketing

2 6 12 31

Total 27 46 65 99

% vs Ryanair - +67% +137% +262%

Source: CAPA – Centre for Aviation and latest available accounts via Ryanair presentation 28 January 2013

Ryanair is the best among our competitors in Europe. We could easily monopolize the

market if we came to the United States. Low oil prices and high demand would be able to

maintain our low prices in the U.S. Our founder and CEO modeled Ryanair after Southwest

Airlines after he had a fantastic experience with them. Southwest holds top four spots in the

market share of domestic airlines, so with Ryanair being similar, we should flourish.

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Figure 4 Ryanair's quarterly operating profit (EUR, mill): 1Q2000/01 to 3Q2012/13

WEAKNESSESSeasonality of Earning

The earnings of Ryanair have recently started to show a pattern where quarter 1 and

quarter 2 have high earning and quarter 3 being the worst time for Ryanair. As of 2009 quarter 3

has cause us to lose money. The company believes this drop in sales to the season. In the fall and

summer the company is above the break-even point. For example, in quarter 2 2012, 400 million

euros and in quarter 3 the company only around 50 million euros. Summer, quarter 2, always

seems to bring in the most money. In 2012, we grounded 80 planes during quarter 3 to save

money, and in the graph below it shows that it helped improve operating profits, however it

looks like we should keep the planes grounded for longer, until quarter 1 since quarter 4 showed

a decrease as well.

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Low Frequencies

Ryanair has been seen as an inconvenient airline to many people. In comparison to other

airlines in Europe, our departure times are limited to certain times during the day and week for

example if you wanted to travel from London, England to Seville, Spain you can only get a flight

on Tuesday, Thursday, or Saturday and there is only one time you can fly. If this time does not

fit into your schedule you will have to travel with a different airline or rearrange your schedule to

make the flight. This is a weakness since potential customers like business people will not want

to fly Ryanair if it does not fit their busy schedules.

Another low frequencies problem is that Ryanair does not fly out of or into primary

airports in Europe. For example, we fly into Milan Bergamo Airport, in Milan, Italy. There are

three airports in Milan Bergamo, Linate, and Malpensa. Bergamo is about 30 miles away from

Milan, and the public transportation to get to Milan from the airport can difficult. The other

airport Malpensa only has departures from Milan. Lastly, main domestic airport near Milan is

Linate Airport and Ryanair does not fly in or out of this airport. If Ryanair choices secondary

airports in America it could be a weakness for the company.

Poor Service

There was a survey done in 2012 that rated Ryanair as the worst in customer service out

of all budget airlines worldwide. The survey was conducted by WhichBudget and Budget Airline

Watch, two websites that are devoted to consumers looking for cheap flights. According to the

survey we received 77% of the votes for worst customer service. The overall value of a trip with

Ryanair is rated the experience was not worth the price they paid to fly.

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Brand/ Media Perception

Our company has been fined and had multiple lawsuits brought up against us, mostly

over false advertising and passenger complaints. In 2013, Hungary’s Completion Office fined

Ryanair for unfair business practice the fine was for 50,300 euros. The Hungarian office claim

we were advertising a discount in 2012 but failed to mention the additional costs and the limited

flights it was applicable to.

There are many news articles that take consumers’ view point that show Ryanair in a bad

light. For example back in 2002, the was a news article about Ryanair charging a disable person

18 pounds for them to bring their wheelchair on the plane. This article made people perceptive us

as uncaring, and just wanting more money.

Legal Proceeding

Michael O’Leary, the chief executive of our company, cares about two big things one his

company and two the illegal state aid given to other airlines, and airports throughout Europe. In

2007, Ryanair filed over five lawsuits against the European Commission. We have accused Italy,

Germany, and Greece of all “illegally bailing” their airlines. Ryanair’s focus is on the European

Commission and how they are just ignoring the situation. It is believed since we have had many

complaints about our businesses practices, it is the reason why the European Commission does

not take them seriously.

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OPPORTUNITIES

Competitiveness in an Expanding Market

The United States has always been a leader in new and expanding markets. The market

for airlines and travel is expanding at a rapid pace. Travelers are always looking for the best

deals and easiest ways to save money. This is why we could have a chance to expand on this

discount travel market. Travel websites such as Expedia, Priceline and Kayak could all include

advertisements for Ryanair and help to bring our presence to the people of the United States. Not

only is this good for Americans who are traveling but it also helps expand the market as a whole.

This could mean better costs and more incentives offered by airlines in order to compete in the

market. According to and IBIS world study, there are six key factors used to determine whether

or not a business can be successful in the domestic airline market:

“Optimum capacity utilization: Airlines need to have the ability to match certain aircraft with certain

routes for better utilization. The use of code sharing agreements is also valuable to the operation of

domestic airlines.

Prompt delivery to market: Competition is fierce in this industry. The inability to deliver services on time

may result in the loss of customers to a competitor.

Well-developed internal processes: Domestic airlines require reservation systems and e-commerce

products that provide good access for clients to the services provided.

Effective cost controls: Good cost control systems can help manage yields better and increase earnings.

This is particularly important in times of operational uncertainty (e.g. volatile fuel prices).

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Ability to expand and curtail operations rapidly in line with market demand: Having flexible capacity to

meet troughs and peaks in demand is vital to profitability in the industry. Airlines must be able to service

markets precisely or risk operating losses on a given route.

Access to the latest available and most efficient technology and techniques: The use of up-to-date

technology and new aircraft can improve operating efficiencies.”

Looking at the broader spectrum of the market and comparing it to the success that

Ryanair has had preforming in Europe, it is not hard to see that there are a wide range of

opportunities for us if we were to move into the American domestic flight market.

Tax Incentives in the United States

Just like in Europe and in most countries around the world, the United States offers many

tax incentives to new and growing companies. Especially when said companies are able to bring

secure, well paying jobs to American workers. This also means that making the transition into

the American market may be a lot easier and cheaper than some would expect. It also means that

we could use the money we save and further invest that money towards expanding the company.

Safer, Faster and Cleaner Travel

In 2016 and beyond many airlines will begin to face the challenge of making their

airlines safer, faster and cleaner for the environment.

Safety: Right now many travelers worry about the global threat of terrorism and want to

feel safe while they are flying. This is something we could use to our advantage and help prove

to Americans that flying is a safe way to travel. As of 2015, we have never experienced any

types of safety issues resulting from outside forces or mechanical issues. If Ryanair was to

expand to the United States right now it would prove to many that we are not scared of terrorist

on our flights and this could help ease the minds of many travelers. If Ryanair was to uphold its

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record for safety this could potentially bring in many new customers who previously may not

have wanted to choose flying as their main form of travel.

Faster Flights: Since we are choosing to be a domestic flight market we would be a

domestic airline only they could offer more one-way flights. Many customers when choosing

what airline to fly with look for flights that do not include making stops along the way. These

types of flights could be the niche that would bring in more passengers looking for quick non-

stop flights to their destinations.

Cleaner Travel: Many Americans see flying as a cleaner way to travel rather than

driving to their destination. Ryanair could use this to our advantage by advertising cheaper

flights to common destinations. For example, if we could advertise our flights as being cleaner

way to travel then by individual cars or carpooling. Then more people to travel on a single plane

rather than driving to their destinations. This is better for the environment and its better for the

people who decide to fly because they can save money on gas and the other things they will

probably buy on the trip to their destination.

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Figure 5 IBISWorld - Major Players in United States Domestic Flights

THREATSAmerican Airline Competition

The amount of American airline companies can possibly be the most relevant threat that

we face bringing our company to America. The top competitors in the American airlines are

American Airlines Group Inc., Delta Airlines Inc., United Continental Holding Inc. and

Southwest Airlines Co. American Airlines Group Inc. alone holds 20% of the market share.

Delta Airlines Inc. holds 18.6% of the market share while United Continental Holding Inc. holds

16.4% and Southwest Airlines Co. holds 13.8% of the market share. Just those four American

airlines companies accumulate 68.8% of the market share.

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The market is made up of more airline companies then Americans actually realize. There

are currently 330 different domestic airline companies in America and there is not much leeway

for another one airline to come in. This means that 326 other domestic airline companies make

up 31.2% of the market share.

Hidden Fees

American customers are price sensitive to hidden fees that would cause the price of the

ticket to increase. Ryanair has many hidden fees that result in the price of the ticket going up

which are, an airport check in fee, infant fee, infant child equipment, bike fee, large sports item

fee, golf clubs, musical instrument, flight change fee high season and low season, name change

fee, booking fee, Therapeutic Oxygen Reservation Fee, Missed Departure Fee and a hold fare

fee. There are so many fees that can make your base ticket price so much higher.

Fees Prices

Airport check in Fee $67.67

Infant Fee $30.08

Infant Child Equipment $30.08

Bike Fee $105.27

Large Sport Items Fee $90.23

Golf Club Fee $52.64

Musical Instrument Fee $90.23

Flight Change Fee(High Season) $90.23

Flight Change Fee(Low Season) $67.67

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Name Change Fee $240.62

Booking Fee $30.08

Therapeutic Oxygen Reservation Fee $75.19

Missed Departure Fee $150.39

Hold Fare Fee $3.76

These fees can add up very quickly and Americans do not handle hidden fees as well as

European citizens. Americans are usually conservative with their money and want to know the

price of something before they commit to it and we do not allow that to happen most of the time,

which can prevent us from having a high costumer base in America.

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MARKETING CAMPAIGN

There are several different marking schemes that my team and I plan to execute in order

to make Ryanair appealing to the American people. Ryanair is one of the cheapest airlines in the

world and we plan to make it clear that price is why you should fly with us. The way we plan to

market our brand is by have commercials on the travel channels. America is notorious with their

travel channels, which has a lot of viewers. The reason why this is one of our approaches is for

the simple fact that the people watching these channels are the ones planning to travel. This

method is the simple and easiest way to reach our target audience, which is the overall goal.

Our second marketing scheme is to offer flights that are not as common in the United

States. The reason why this is beneficial to Ryanair is because it allows us to reach a different

target group who the other airlines do not pay as much attention too. By doing this we will have

a loyal group of customers who will take our services in order to reach their destination.

Another marketing scheme that we plan to perform is to offer first time promotions and

returning promotions. The reason why we plan to offer first time promotions is to attract people

to our airline and give them an incentive to fly with us. Our airline is already cheap and to make

it a slight cheaper to obtain more customers is worth it in the beginning stages. The reason why

we also plan to give promotions to returning customers in the beginning stages is because we

value loyal customers. Loyal customers are also great marketers for our company, they can

recommend our service to their friends and family bringing in more customers and profit. Loyal

customers are the ones that help define what we want our company to be. If customers return and

use our services it displays that we are doing something dead-on on our part, which is only good

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for the company. Those are three marketing schemes in which we plan to market to the

American people.

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Figure 6 IBISWorld - United States Domestic Flights Statistics

FINANCIAL SUMMARY

Domestic Airlines in general are having a tremendous run in profit. Including rapid

revenue growth, increasing demand in and continuously improving profit margins are all

accredited to this. Domestic airlines have done a complete turn-around since September 11, 2001

by completely reconstructing security policies. In addition, recent decline in oil prices has

improved the profit margin for domestic airline companies and improves the industries outlook

overall. “They have not only reduced costs for operators, but have also stimulated downstream

demand by lowering the cost of travel and aiding consumer per capita disposable income levels.”

“Consequently, IBISWorld expects industry revenue to grow at an annualized rate of 3.5% to

$157.1 billion over the five years to 2015.”

With Ryanair being modeled after Southwest Airlines, we will prosper and reach new

levels of success in the United States. Southwest holds 13.8% of the domestic airline market

share, and with our airline being the cheapest price per passenger in Europe, it would just make

sense to bring our company to the United States. It is a competitive market but if we position

ourselves correctly we shwould easily monopolize the market and be fierce competitors for

current opponents. In addition, there is currently an increased demand for travel and this demand

does not show any signs of declining. “IBISWorld expects revenue to grow at an annualized rate

of 4.6% to $197.1 billion over the five years to 2020.”

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CONCLUSION“Our no frills, low cost model revolutionized the air travel industry and opened up

Europe to the masses. And we continue to lead the way in great value travel, doing whatever it

takes to guarantee that our fares are the lowest out there.” (Ryanair, 2014). This is our mission

statement; we believe that we can become a leader in domestic flights in America. The top four

passenger airlines in America are American Airlines, Delta Airlines, United, and Southwest

Airlines. We believe we can came become the 5th highest ranking airline in America just by

bringing our fleet to the United States. We believe that when our company has been in America

for a few years we will be able to pass the lower ranking airlines and become the number one

airline for domestic flights in America. We believe our airline will have a great impact on

America and not just improve our business but the American domestic flight industry.

Ryanair’s mission statement has become ours. With the top 3 airlines in passengers

carried ranking inside the United States and Ryanair being at the 4th spot with 90 million

passengers. While the top 2, and 5 out of the top 10 airlines in revenue generated being in the

United States it’s time we bring Ryanair’s fare price, lowest cost model home.

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WORKS CITED

Chipchase, J. (2012, November 2012). Survey finds Ryanair has worst customer service, easyJet best. The Trabel Magazine.

Domestic Airlines - United States. (2015). Retrieved from IBISWorld: http://clients1.ibisworld.com/reports/us/industry/ataglance.aspx?entid=1125

Hungary's Competition Office fines Ryanair for unfair business practices. (2013, May 19). Regional Today, p. 3.

Infoplease. (2015). Retrieved from United States.

McCartney, S. (2015). The Cities that Have Lost the Most Flights. Wall Street Journal.

Ryanair. (2015). Retrieved from Ryanair: ryanair.com

Ryanair Holdings plc SWOT Analysis. (2015). MarketLine, 1-9.

Ryanair SWOT analysis. (2013, Feburary 6). Retrieved from Centre for Aviation.

Tait, N. (2002, September 3). Ryanair to be sued over Pounds 18 wheelchair fee. National News, p. 4.

Terri Morrison, W. C. (2006). Kiss, Bow, or Shake Hands: The Bestselling Guide to Doing Business in More Than 60 Countries. Avon: Adams Media and F + W Publications Company.

Top ten: How the world's biggest airlines ranked in 2014. (2015, July 31). Retrieved from Flight Global: https://www.flightglobal.com/news/articles/top-ten-how-the-worlds-biggest-airlines-ranked-in-415274/

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